increased from 3,967 in 1923 to 5,475 in 1927. The total amount of tolls
turned into the Treasury is over $166,000,000, while all the operations
of the canal have yielded a surplus of about $80,000,000. In order to
provide additional storage of water and give some control over the
floods of the Chagres River, it is proposed to erect a dam to cost about
$12,000,000 at Alhajuela. It will take some five years to complete this
work.
AGRICULTURE
The past year has seen a marked improvement in the general condition of
agriculture. Production is better balanced and without acute shortage or
heavy surplus. Costs have been reduced and the average output of the
worker increased. The level of farm prices has risen while others have
fallen, so that the purchasing power of the farmer is approaching a
normal figure. The individual farmer is entitled to great credit for the
progress made since 1921. He has adjusted his production and through
cooperative organizations and other methods improved his marketing. He
is using authenticated facts and employing sound methods which other
industries are obliged to use to secure stability and prosperity. The
old-fashioned haphazard system is being abandoned, economics are being
applied to ascertain the best adapted unit of land, diversification is
being promoted, and scientific methods are being used in production, and
business principles in marketing.
Agriculture has not fully recovered from postwar depression. The fact is
that economic progress never marches forward in a straight line. It goes
in waves. One part goes ahead, while another halts and another recedes.
Everybody wishes agriculture to prosper. Any sound and workable proposal
to help the farmer will have the earnest support of the Government.
Their interests are not all identical. Legislation should assist as many
producers in as many regions as possible. It should be the aim to assist
the farmer to work out his own salvation socially and economically. No
plan will be of any permanent value to him which does not leave him
standing on his own foundation.
In the past the Government has spent vast sums to bring land under
cultivation. It is apparent that this has reached temporarily the
saturation point. We have had a surplus of production and a poor market
for land, which has only lately shown signs of improvement. The main
problem which is presented for solution is one of dealing with a surplus
of production. It is useless to propose a temporary expedient. What is
needed is permanency and stability. Government price fixing is known to
be unsound and bound to result in disaster. A Government subsidy would
work out in the same way. It can not be sound for all of the people to
hire some of the people to produce a crop which neither the producers
nor the rest of the people want.
Price fixing and subsidy will both increase the surplus, instead of
diminishing it. Putting the Government directly into business is merely
a combination of subsidy and price fixing aggravated by political
pressure. These expedients would lead logically to telling the farmer by
law what and how much he should plant and where he should plant it, and
what and how much he should sell and where he should sell it. The most
effective means of dealing with surplus crops is to reduce the surplus
acreage. While this can not be done by the individual farmer, it can be
done through the organizations already in existence, through the
information published by the Department of Agriculture, and especially
through banks and others who supply credit refusing to finance an
acreage manifestly too large.
It is impossible to provide by law for an assured success and prosperity
for all those who engage in farming. If acreage becomes overextended,
the Government can not assume responsibility for it. The Government can,
however, assist cooperative associations and other organizations in
orderly marketing and handling a surplus clearly due to weather and
seasonal conditions, in order to save the producer from preventable
loss. While it is probably impossible to secure this result at a single
step, and much will have to be worked out by trial and rejection, a
beginning could be made by setting up a Federal board or commission of
able and experienced men in marketing, granting equal advantages under
this board to the various agricultural commodities and sections of the
country, giving encouragement to the cooperative movement in
agriculture, and providing a revolving loan fund at a moderate rate of
interest for the necessary financing. Such legislation would lay the
foundation for a permanent solution of the surplus problem.
This is not a proposal to lend more money to the farmer, who is already
fairly well financed, but to lend money temporarily to experimental
marketing associations which will no doubt ultimately be financed by the
regularly established banks, as were the temporary operations of the War
Finance Corporation. Cooperative marketing especially would be provided
with means of buying or building physical properties.
The National Government has almost entirely relieved the farmer from
income taxes by successive tax reductions, but State and local taxes
have increased, putting on him a grievous burden. A policy of rigid
economy should be applied to State and local expenditures. This is
clearly within the legislative domain of the States. The Federal
Government has also improved our banking structure and system of
agricultural credits. The farmer will be greatly benefited by similar
action in many States. The Department of Agriculture is undergoing
changes in organization in order more completely to separate the
research and regulatory divisions, that each may be better administered.
More emphasis is being placed on the research program, not only by
enlarging the appropriations for State experiment stations but by
providing funds for expanding the research work of the department. It is
in this direction that much future progress can be expected.
THE PROTECTIVE TARIFF
The present tariff rates supply the National Treasury with well over
$600,000,000 of annual revenue. Yet, about 65 per cent of our imports
come in duty free. Of the remaining 35 per cent of imports on which
duties are laid about 23 per cent consists of luxuries and agricultural
products, and the balance of about 12 per cent, amounting, to around
$560,000,000 is made up of manufactures and merchandise. As no one is
advocating any material reduction in the rates on agriculture or
luxuries, it is only the comparatively small amount of about
$560,000,000 of other imports that are really considered in any
discussion of reducing tariff rates. While this amount, duty free, would
be large enough seriously to depress many lines of business in our own
country, it is of small importance when spread over the rest of the
world.
It is often stated that a reduction of tariff rates on industry would
benefit agriculture. It would be interesting to know to what commodities
it is thought this could be applied. Everything the farmer uses in
farming is already on the free list. Nearly everything he sells is
protected. It would seem to be obvious that it is better for the country
to have the farmer raise food to supply the domestic manufacturer than
the foreign manufacturer. In one case our country would have only the
farmer; in the other it would have the farmer and the manufacturer.
Assuming that Europe would have more money if it sold us larger amounts
of merchandise, it is not certain it would consume more food, or, if it
did, that its purchases would be made in this country. Undoubtedly it
would resort to the cheapest market, which is by no means ours. The
largest and best and most profitable market for the farmer in the world
is our own domestic market. Any great increase in manufactured imports
means the closing of our own plants. Nothing would be worse for
agriculture.
Probably no one expects a material reduction in the rates on
manufactures while maintaining the rates on agriculture. A material
reduction in either would be disastrous to the farmer. It would mean a
general shrinkage of values, a deflation of prices, a reduction of
wages, a general depression carrying our people down to the low standard
of living in our competing countries. It is obvious that this would not
improve but destroy our market for imports, which is best served by
maintaining our present high purchasing power under which in the past
five years imports have increased 63 per cent.
FARM LOAN SYSTEM
It is exceedingly important that the Federal land and joint-stock land
banks should furnish the best possible service for agriculture. Certain
joint-stock banks have fallen into improper and unsound practices,
resulting in the indictment of the officials of three of them. More
money has been provided for examinations, and at the instance of the
Treasury rules and regulations of the Federal Farm Board have been
revised. Early last May three of its members resigned. Their places were
filled with men connected with the War Finance Corporation. Eugene Meyer
being designated as Farm Loan Commissioner. The new members have
demonstrated their ability in the field of agricultural finance in the
extensive operations of he War Finance Corporation. Three joint-stock
banks have gone into receivership. It is necessary to preserve the
public confidence in this system in order to find a market for their
bonds. A recent flotation was made at a record low rate of 4 per cent.
Careful supervision is absolutely necessary to protect the investor and
enable these banks to exercise their chief function in serving
agriculture.
MUSCLE SHOALS
The last year has seen considerable changes in the problem of Muscle
Shoals. Development of other methods show that nitrates can probably be
produced at less cost than by the use of hydroelectric power. Extensive
investigation made by the Department of War indicates that the nitrate
plants on this project are of little value for national defense and can
probably be disposed of within two years. The oxidation part of the
plants, however, should be retained indefinitely. This leaves this
project mostly concerned with power. It should, nevertheless, continue
to be dedicated to agriculture. It is probable that this desire can be
best served by disposing of the plant and applying the revenues received
from it to research for methods of more economical production of
concentrated fertilizer and to demonstrations and other methods of
stimulating its use on the farm. But in disposing of the property
preference should be given to proposals to use all or part of it for
nitrate production and fertilizer manufacturing.
FLOOD CONTROL
For many years the Federal Government has been building a system of
dikes along the Mississippi River for protection against high water.
During the past season the lower States were overcome by a most
disastrous flood. Many thousands of square miles were inundated a great
many lives were lost, much livestock was drowned, and a very heavy
destruction of property was inflicted upon the inhabitants. The American
Red Cross at once went to the relief of the stricken communities.
Appeals for contributions have brought in over $17,000,000. The Federal
Government has provided services, equipment, and supplies probably
amounting to about $7,000,000 more. Between $5,000,000 and $10,000,000
in addition have been provided by local railroads, the States, and their
political units. Credits have been arranged by the Farm Loan Board, and
three emergency finance corporations with a total capital of $3,000,000
have insured additional resources to the extent of $12,000,000. Through
these means the 700,000 people in the flooded areas have been adequately
supported. Provision has been made to care for those in need until after
the 1st of January.
The Engineering Corps of the Army has contracted to close all breaks in
the dike system before the next season of high water. A most thorough
and elaborate survey of the whole situation has been made and embodied
in a report with recommendations for future flood control, which will be
presented to the Congress. The carrying out of their plans will
necessarily extend over a series of years. They will call for a raising
and strengthening of the dike system with provision for emergency
spillway’s and improvements for the benefit of navigation.
Under the present law the land adjacent to the dikes has paid one-third
of the cost of their construction. This has been a most extraordinary
concession from the plan adopted in relation to irrigation, where the
general rule has been that the land benefited should bear the entire
expense. It is true, of course, that the troublesome waters do not
originate on the land to be reclaimed, but it is also true that such
waters have a right of way through that section of the country and the
land there is charged with that easement. It is the land of this region
that is to be benefited. To say that it is unable to bear any expense of
reclamation is the same thing as saying that it is not worth reclaiming.
Because of expenses incurred and charges already held against this land,
it seems probable that some revision will have to be made concerning the
proportion of cost which it should bear. But it is extremely important
that it should pay enough so that those requesting improvements will be
charged with some responsibility for their cost, and the neighborhood
where works are constructed have a pecuniary interest in preventing
waste and extravagance and securing a wise and economical expenditure of
public funds.
It is necessary to look upon this emergency as a national disaster. It
has been so treated from its inception. Our whole people have provided
with great generosity for its relief. Most of the departments of the
Federal Government have been engaged in the same effort. The governments
of the afflicted areas, both State and municipal, can not be given too
high praise for the courageous and helpful way in which they have come
to the rescue of the people. If the sources directly chargeable can not
meet the demand, the National Government should not fail to provide
generous relief. This, however, does not mean restoration. The
Government is not an insurer of its citizens against the hazard of the
elements. We shall always have flood and drought, heat and cold,
earthquake and wind, lightning and tidal wave, which are all too
constant in their afflictions. The Government does not undertake to
reimburse its citizens for loss and damage incurred under such
circumstances. It is chargeable, however, with the rebuilding of public
works and the humanitarian duty of relieving its citizens from distress.
The people in the flooded area and their representatives have approached
this problem in the most generous and broad-minded way. They should be
met with a like spirit on the part of the National government. This is
all one country. The public needs of each part must be provided for by
the public at large. No required relief should be refused. An adequate
plan should be adopted to prevent a recurrence of this disaster in order
that the people may restore to productivity and comfort their fields and
their towns.
Legislation by this Congress should be confined to our principal and
most pressing problem, the lower Mississippi, considering tributaries
only so far as they materially affect the main flood problem. A definite
Federal program relating to our waterways was proposed when the last
Congress authorized a comprehensive survey of all the important streams
of the country in order to provide for their improvement, including
flood control, navigation, power, and irrigation. Other legislation
should wait pending a report on this survey. The recognized needs of the
Mississippi should not be made a vehicle for carrying other projects.
All proposals for development should stand on their own merits. Any
other method would result in ill-advised conclusions, great waste of
money, and instead of promoting would delay the orderly and certain
utilization of our water resources.
Very recently several of the New England States have suffered somewhat
similarly from heavy rainfall and high water. No reliable estimate of
damage has yet been computed, but it is very large to private and public
property. The Red Cross is generously undertaking what is needed for
immediate relief, repair and reconstruction of houses, restocking of
domestic animals, and food, clothing, and shelter. A considerable sum of
money will be available through the regular channels in the Department
of Agriculture for reconstruction of highways. It may be necessary to
grant special aid for this purpose. Complete reports of what is required
will undoubtedly be available early in the session.
INLAND NAVIGATION
The Congress in its last session authorized the general improvements
necessary to provide the Mississippi waterway system with better
transportation. Stabilization of the levels of the Great Lakes and their
opening to the sea by an effective shipway remain to be considered.
Since the last session the Board of Engineers of the War Department has
made a report on the proposal for a canal through the State of New York,
and the Joint Board of Engineers, representing Canada and the United
States, has finished a report on the St. Lawrence River. Both of these
boards conclude that the St. Lawrence project is cheaper, affords a more
expeditious method of placing western products in European markets, and
will cost less to operate. The State Department has requested the
Canadian Government to negotiate treaties necessary to provide for this
improvement. It will also be necessary to secure an agreement with
Canada to put in works necessary to prevent fluctuation in the levels of
the Great Lakes.
Legislation is desirable for the construction of a dam at Boulder Canyon
on the Colorado River, primarily as a method of flood control and
irrigation. A secondary result would be a considerable power development
and a source of domestic water supply for southern California. Flood
control is clearly a national problem, and water supply is a Government
problem, but every other possibility should be exhausted before the
Federal Government becomes engaged in the power business. The States
which are interested ought to reach mutual agreement. This project is in
reality their work. If they wish the Federal Government to undertake it,
they should not hesitate to make the necessary concessions to each
other. This subject is fully discussed in the annual report of the
Secretary of the Interior. The Columbia River Basin project is being
studied and will be one to be considered at some future time.
The Inland Waterways Corporation is proving successful and especially
beneficial to agriculture. A survey is being made to determine its
future needs. It has never been contemplated that if inland rivers were
opened to navigation it would then be necessary for the Federal
Government to provide the navigation. Such a request is very nearly the
equivalent of a declaration that their navigation is not profitable,
that the commodities which they are to carry can be taken at a cheaper
rate by some other method, in which case the hundreds of millions of
dollars proposed to be expended for opening rivers to navigation would
be not only wasted, but would entail further constant expenditures to
carry the commodities of private persons for less than cost.
The policy is well established that the Government should open public
highways on land and on water, but for use of the public in their
private capacity. It has put on some demonstration barge lines, but
always with the expectation that if they prove profitable they would
pass into private hands and if they do not prove profitable they will be
withdrawn. The problems of transportation over inland waterways should
be taken up by private enterprise, so that the public will have the
advantage of competition in service. It is expected that some of our
lines can be sold, some more demonstration work done, and that with the
completion of the Ohio project a policy of private operation can be
fully developed.
PROHIBITION
After more than two generations of constant debate, our country adopted
a system of national prohibition under all the solemnities involved in
an amendment to the Federal Constitution. In obedience to this mandate
the Congress and the States, with one or two notable exceptions, have
passed required laws for its administration and enforcement. This
imposes upon the citizenship of the country, and especially on all
public officers, not only the duty to enforce, but the obligation to
observe the sanctions of this constitutional provision and its resulting
laws. If this condition could be secured, all question concerning
prohibition would cease. The Federal Government is making every effort
to accomplish these results through careful organization, large
appropriations, and administrative effort. Smuggling has been greatly
cut down, the larger sources of supply for illegal sale have been
checked, and by means of injunction and criminal prosecution the process
of enforcement is being applied. The same vigilance on the part of local
governments would render these efforts much more successful. The Federal
authorities propose to discharge their obligation for enforcement to the
full extent of their ability.
THE NEGRO
History does not anywhere record so much progress made in the same
length of time as that which has been accomplished by the Negro race in
the United States since the Emancipation Proclamation. They have come up
from slavery to be prominent in education, the professions, art,
science, agriculture, banking, and commerce. It is estimated that 50,000
of them are on the Government pay rolls, drawing about $50,000,000 each
year. They have been the recipients of presidential appointments and
their professional ability has arisen to a sufficiently high plane so
that they have been intrusted with the entire management and control of
the great veterans hospital at Tuskegee, where their conduct has taken
high rank. They have shown that they have been worthy of all the
encouragement which they have received. Nevertheless, they are too often
subjected to thoughtless and inconsiderate treatment, unworthy alike of
the white or colored races. They have especially been made the target of
the foul crime of lynching. For several years these acts of unlawful
violence had been diminishing. In the last year they have shown an
increase. Every principle of order and law and liberty is opposed to
this crime. The Congress should enact any legislation it can under the
Constitution to provide for its elimination.
AMERICAN INDIAN
The condition of the American Indian has much improved in recent years.
Full citizenship was bestowed upon them on June 2, 1924, and
appropriations for their care and advancement have been increased. Still
there remains much to be done.
Notable increases in appropriations for the several major functions
performed by the Department of the Interior on behalf of the Indians
have marked the last five years. In that time, successive annual
increases in appropriations for their education total $1,804,325; for
medical care, $578,000; and for industrial advancement, $205,000; or
$2,582,325 more than would have been spent in the same period on the
basis of appropriations for 1923 and the preceding years.
The needs along health, educational, industrial and social lines
however, are great, and the Budget estimates for 1929 include still
further increases for Indian administration.
To advance the time when the Indians may become self-sustaining, it is
my belief that the Federal Government should continue to improve the
facilities for their care, and as rapidly as possible turn its
responsibility over to the States.
COAL
Legislation authorizing a system of fuel administration and the
appointment by the President of a Board of Mediation and Conciliation in
case of actual or threatened interruption of production is needed. The
miners themselves are now seeking information and action from the
Government, which could readily be secured through such a board. It is
believed that a thorough investigation and reconsideration of this
proposed policy by the Congress will demonstrate that this
recommendation is sound and should be adopted.
PETROLEUM CONSERVATION
The National Government is undertaking to join in the formation of a
cooperative committee of lawyers, engineers, and public officers, to
consider what legislation by the States or by the Congress can be
adopted for the preservation and conservation of our supply of
petroleum. This has come to be one of the main dependencies for
transportation and power so necessary to our agricultural and industrial
life. It is expected the report of this committee will be available for
later congressional action. Meantime, the requirement that the Secretary
of the Interior should make certain leases of land belonging to the
Osage Indians, in accordance with the act of March 3, 1921, should be
repealed. The authority to lease should be discretionary, in order that
the property of the Indians way not be wasted and the public suffer a
future lack of supply.
ALIEN PROPERTY
Under treaty the property held by the Alien Property Custodian was to be
retained until suitable provision had been made for the satisfaction of
American claims. While still protecting the American claimants, in order
to afford every possible accommodation to the nationals of the countries
whose property was held, the Congress has made liberal provision for the
return of a larger part of the property. All trusts under $10,000 were
returned in full, and partial returns were made on the others. The total
returned was approximately $350,000,000.
There is still retained, however, about $250,000,000. The Mixed Claims
Commission has made such progress in the adjudication of claims that
legislation can now be enacted providing for the return of the property,
which should be done under conditions which will protect our Government
and our claimants. Such a measure will be proposed, and I recommend its
enactment.
RAILROAD CONSOLIDATION
In order to increase the efficiency of transportation and decrease its
cost to the shipper, railroad consolidation must be secured. Legislation
is needed to simplify the necessary procedure to secure such agreements
and arrangements for consolidation, always under the control and with
the approval of the Interstate Commerce Commission. Pending this, no
adequate or permanent reorganization can be made of the freight-rate
structure. Meantime, both agriculture and industry are compelled to wait
for needed relief. This is purely a business question, which should be
stripped of all local and partisan bias and decided on broad principles
and its merits in order to promote the public welfare. A large amount of
new construction and equipment, which will furnish employment for labor
and markets for commodities of both factory and farm, wait on the
decision of this important question. Delay is holding back the progress
of our country.
Many of the same arguments are applicable to the consolidation of the
Washington traction companies.
VETERANS
The care which this country has lavished on its veterans is known of all
men. The yearly outlay for this purpose is about $750,000,000, or about
the cost of running the Federal Government, outside of the Post Office
Department, before the World War. The Congress will have before it
recommendations of the American Legion, the Veterans of Foreign Wars,
and other like organizations, which should receive candid consideration.
We should continue to foster our system of compensation and
rehabilitation, and provide hospitals and insurance. The magnitude of
the undertaking is already so large that all requests calling for
further expenditure should have the most searching scrutiny. Our present
system of pensions is already sufficiently liberal. It was increased by
the last Congress for Civil and Spanish War veterans and widows and for
some dependents.
It has been suggested that the various governmental agencies now dealing
with veterans’ relief be consolidated. This would bring many advantages.
It is recommended that the proper committees of the Congress make a
thorough survey of this subject, in order to determine if legislation to
secure such consolidation is desirable.
EDUCATION
For many years it has been the policy of the Federal Government to
encourage and foster the cause of education. Large sums of money are
annually appropriated to carry on vocational training. Many millions go
into agricultural schools. The general subject is under the immediate
direction of a Commissioner of Education. While this subject is strictly
a State and local function, it should continue to have the encouragement
of the National Government. I am still of the opinion that much good
could be accomplished through the establishment of a Department of
Education and Relief, into which would be gathered all of these
functions under one directing member of the Cabinet.
DEPARTMENT OF LABOR
Industrial relations have never been more peaceful. In recent months
they have suffered from only one serious controversy. In all others
difficulties have been adjusted, both management and labor wishing to
settle controversies by friendly agreement rather than by compulsion.
The welfare of women and children is being especially guarded by our
Department of Labor. Its Children’s Bureau is in cooperation with 26
State boards and 80 juvenile courts.
Through its Bureau of Immigration it has been found that medical
examination abroad has saved prospective immigrants from much hardship.
Some further legislation to provide for reuniting families when either
the husband or the wife is in this country, and granting more freedom
for the migration of the North American Indian tribes is desirable.
The United States Employment Service has enabled about 2,000,000 men and
women to gain paying positions in the last fiscal year. Particular
attention has been given to assisting men past middle life and in
providing field labor for harvesting agricultural crops. This has been
made possible in part through the service of the Federal Board for
Vocational Education, which is cooperating with the States in a program
to increase the technical knowledge and skill of the wage earner.
PUBLIC BUILDINGS
Construction is under way in the country and ground has been broken for
carrying out a public-building program for Washington. We have reached a
time when not only the conveniences but the architectural beauty of the
public buildings of the Capital City should be given much attention. It
will be necessary to purchase further land and provide the required
continuing appropriations.
HISTORICAL CELEBRATIONS
Provision is being made to commemorate the two hundredth anniversary of
the birth of George Washington. Suggestion has been made for the
construction of a memorial road leading from the Capital to Mount
Vernon, which may well have the consideration of the Congress, and the
commission intrusted with preparations for the celebration will
undoubtedly recommend publication of the complete writings of Washington
and a series of writings by different authors relating to him.
February 25, 1929. is the one hundred and fiftieth anniversary of the
capture of Fort Sackville, at Vincennes, in the State of Indiana. This
eventually brought into the Union what was known as the Northwest
Territory, embracing the region north of the Ohio River between the
Alleghenies and the Mississippi River. This expedition was led by George
Rogers Clark. His heroic character and the importance of his victory are
too little known and understood. They gave us not only this Northwest
Territory but by means of that the prospect of reaching the Pacific. The
State of Indiana is proposing to dedicate the site of Fort Sackville as
a national shrine. The Federal Government may well make some provision
for the erection under its own management of a fitting memorial at that
point.
FOREIGN RELATIONS
It is the policy of the United States to promote peace. We are a
peaceful people and committed to the settling of disputes by amicable
adjustment rather than by force. We have believed that peace can best be
secured by a faithful observance on our part of the principles of
international law, accompanied by patience and conciliation, and
requiring of others a like treatment for ourselves. We have lately had
some difference with Mexico relative to the injuries inflicted upon our
nationals and their property within that country. A firm adherence to
our rights and a scrupulous respect for the sovereignty of Mexico, both
in accordance with the law of nations, coupled with patience and
forbearance, it is hoped will resolve all our differences without
interfering with the friendly relationship between the two Governments.
We have been compelled to send naval and marine forces to China to
protect the lives and property of our citizens. Fortunately their simple
presence there has been sufficient to prevent any material loss of life.
But there has been considerable loss of property. That unhappy country
is torn by factions and revolutions which bid fair to last for an
indefinite period. Meanwhile we are protecting our citizens and stand
ready to cooperate with any government which may emerge in promoting the
welfare of the people of China. They have always had our friendship, and
they should especially merit our consideration in these days of their
distraction and distress.
We were confronted by similar condition on a small scale in Nicaragua.
Our marine and naval forces protected our citizens and their property
and prevented a heavy sacrifice of life and the destruction of that
country by a reversion to a state of revolution. Henry L. Stimson,
former Secretary of War, was sent there to cooperate with our diplomatic
and military officers in effecting a settlement between the contending
parties. This was done on the assurance that we would cooperate in
restoring a state of peace where our rights would be protected by giving
our assistance in the conduct of the next presidential election, which
occurs in a few months. With this assurance the population returned to
their peacetime pursuits, with the exception of some small roving bands
of outlaws.
In general, our relations with other countries can be said to have
improved within the year. While having a due regard for our own affairs,
the protection of our own rights, and the advancement of our own people,
we can afford to be liberal toward others. Our example has become of
great importance in the world. It is recognized that we are independent,
detached, and can and do take a disinterested position in relation to
international affairs. Our charity embraces the earth. Our trade is far
flung. Our financial favors are widespread. Those who are peaceful and
law-abiding realize that not only have they nothing to fear from us, but
that they can rely on our moral support. Proposals for promoting the
peace of the world will have careful consideration. But we are not a
people who are always seeking for a sign. We know that peace comes from
honesty and fair dealing, from moderation, and a generous regard for the
rights of others. The heart of the Nation is more important than
treaties. A spirit of generous consideration is a more certain defense
than great armaments. We should continue to promote peace by our
example, and fortify it by such international covenants against war as
we are permitted under our Constitution to make.
AMERICAN PROGRESS
Our country has made much progress. But it has taken, and will continue
to take, much effort. Competition will be keen, the temptation to
selfishness and arrogance will be severe, the provocations to deal
harshly with weaker peoples will be many. All of these are embraced in
the opportunity for true greatness. They will be overbalanced by
cooperation by generosity, and a spirit of neighborly kindness. The
forces of the universe are taking humanity in that direction. In doing
good, in walking humbly, in sustaining its own people in ministering to
other nations, America will work out its own mighty destiny.
***
State of the Union Address
Calvin Coolidge
December 4, 1928
To the Congress of the United States:
No Congress of the United States ever assembled, on surveying the state
of the Union, has met with a more pleasing prospect than that which
appears at the present time. In the domestic field there is tranquility
and contentment, harmonious relations between management and wage
earner, freedom from industrial strife, and the highest record of years
of prosperity. In the foreign field there is peace, the good will which
comes from mutual understanding, and the knowledge that the problems
which a short time ago appeared so ominous are yielding to the touch of
manifest friendship. The great wealth created by our enterprise and
industry, and saved by our economy, has had the widest distribution
among our own people, and has gone out in a steady stream to serve the
charity and the business of the world. The requirements of existence
have passed beyond the standard of necessity into the region of luxury.
Enlarging production is consumed by an increasing demand at home and an
expanding commerce abroad. The country can regard the present with
satisfaction and anticipate the future with optimism.
The main source of these unexampled blessings lies in the integrity and
character of the American people. They have had great faith, which they
have supplemented with mighty works. They have been able to put trust in
each other and trust in their Government. Their candor in dealing with
foreign governments has commanded respect and confidence. Yet these
remarkable powers would have been exerted almost in vain without the
constant cooperation and careful administration of the Federal
Government.
We have been coming into a period which may be fairly characterized as a
conservation of our national resources. Wastefulness in public business
and private enterprise has been displaced by constructive economy. This
has been accomplished by bringing our domestic and foreign relations
more and more under a reign of law. A rule of force has been giving way
to a rule of reason. We have substituted for the vicious circle of
increasing expenditures, increasing tax rates, and diminishing profits
the charmed circle of diminishing expenditures, diminishing tax rates,
and increasing profits.
Four times we have made a drastic revision of our internal revenue
system, abolishing many taxes and substantially reducing almost all
others. Each time the resulting stimulation to business has so increased
taxable incomes and profits that a surplus has been reduced. One-third
of the national debt has been paid, while much of the other two-thirds
has been refunded at lower rates, and these savings of interest and
constant economies have enabled us to repeat the satisfying process of
more tax reductions. Under this sound and healthful encouragement the
national income has increased nearly 50 per cent, until it is estimated
to stand well over $90,000,000,000. It gas been a method which has
performed the seeming miracle of leaving a much greater percentage of
earnings in the hands of the taxpayers with scarcely any diminution of
the Government revenue. That is constructive economy in the highest
degree. It is the corner stone of prosperity. It should not fail to be
continued.
This action began by the application of economy to public expenditure.
If it is to be permanent, it must be made so by the repeated application
of economy. There is no surplus on which to base further tax revision at
this time. Last June the estimates showed a threatened deficit for the
current fiscal year of $94,000,000. Under my direction the departments
began saving all they could out of their present appropriations. The
last tax reduction brought an encouraging improvement in business,
beginning early in October, which will also increase our revenue. The
combination of economy and good times now indicates a surplus of about
$37,000,000. This is a margin of less than I percent on out,
expenditures and makes it obvious that the Treasury is in no condition
to undertake increases in expenditures to be made before June 30. It is
necessary therefore during the present session to refrain from new
appropriations for immediate outlay, or if such are absolutely required
to provide for them by new revenue; otherwise, we shall reach the end of
the year with the unthinkable result of an unbalanced budget. For the
first time during my term of office we face that contingency. I am
certain that the Congress would not pass and I should not feel warranted
in approving legislation which would involve us in that financial
disgrace.
On the whole the finances of the Government are most satisfactory. Last
year the national debt was reduced about $906,000,000. The refunding and
retirement of the second and third Liberty loans have just been brought
to a successful conclusion, which will save about $75,000,000 a year in
interest. The unpaid balance has been arranged in maturities convenient
for carrying out our permanent debt-paying Program.
The enormous savings made have not been at the expense of any legitimate
public need. The Government plant has been kept up and many improvements
are tinder way, while its service is fully manned and the general
efficiency of operation has increased. We have been enabled to undertake
many new enterprises. Among these are the adjusted compensation of the
veterans of the World War, which is costing us $112,000,000 a year;
amortizing our liability to the civil service retirement funds,
$20,000,000; increase of expenditures for rivers and harbors including
flood control, $43,000,000; public buildings, $47,000,000. In 1928 we
spent $50,000,000 in the adjustment of war claims and alien property.
These are examples of a large list of items.
FOREIGN RELATIONS
When we turn from our domestic affairs to our foreign relations, we
likewise perceive peace and progress. The Sixth International Conference
of American States was held at Habana last winter. It contributed to a
better understanding and cooperation among the nations’. Eleven
important conventions were signed and 71 resolutions passed. Pursuant to
the plan then adopted, this Government has invited the other 20 nations
of this hemisphere to it conference on conciliation and arbitration,
which meets in Washington on December 10. All the nations have accepted
and the expectation is justified that important progress will be made in
methods for resolving international differences by means of arbitration.
During the year we have signed 11 new arbitration treaties, and 22 more
are tinder negotiation.
NICARAGUA
When a destructive and bloody revolution lately broke out in Nicaragua,
at the earnest and repeated entreaties of its Government I dispatched
our Marine forces there to protect the lives and interests of our
citizens. To compose the contending parties, I sent there Col. Henry L.
Stimson, former Secretary of War and now Governor General of the
Philippine Islands, who secured an agreement that warfare should cease,
a national election should be held and peace should be restored. Both
parties conscientiously carried out this agreement, with the exception
of a few bandits who later mostly surrendered or left the country.
President Diaz appointed Brig. Gen. Frank R. McCoy, United States Army,
president of the election board, which included also one member of each
political party.
A free and fair election has been held and has worked out so
successfully that both parties have joined in requesting like
cooperation from this country at the election four years hence, to which
I have refrained from making any commitments, although our country must
be gratified at such an exhibition of success and appreciation.
Nicaragua is regaining its prosperity and has taken a long step in the
direction of peaceful self-government.
TACNA-ARICA
The long-standing differences between Chile and Peru have been
sufficiently composed so that diplomatic relations have been resumed by
the exchange of ambassadors. Negotiations are hopefully proceeding as
this is written for the final adjustment of the differences over their
disputed territory.
MEXICO
Our relations with Mexico are on a more satisfactory basis than at any
time since their revolution. Many misunderstandings have been resolved
and the most frank and friendly negotiations promise a final adjustment
of all unsettled questions. It is exceedingly gratifying that Ambassador
Morrow has been able to bring our two neighboring countries, which have
so many interests in common, to a position of confidence in each other
and of respect for mutual sovereign rights.
CHINA
The situation in China which a few months ago was so threatening as to
call for the dispatch of a large additional force has, been much
composed. The Nationalist Government has established itself over the
country and promulgated a new organic law announcing a program intended
to promote the political and economic welfare of the people. We have
recognized this Government, encouraged its progress, and have negotiated
a treaty restoring to China complete tariff autonomy and guaranteeing
our citizens against discriminations. Our trade in that quarter is
increasing and our forces are being reduced.
GREEK AND AUSTRIAN DEBTS
Pending before the Congress is a recommendation for the settlement of
the Greek debt and the Austrian debt. Both of these are comparatively
small and our country can afford to be generous. The rehabilitation of
these countries awaits their settlement. There would also be advantages
to our trade. We could scarcely afford to be the only nation that
refuses the relief which Austria seeks. The Congress has already granted
Austria a long-time moratorium, which it is understood will be waived
and immediate payments begun on her debt on the same basis which we have
extended to other countries.
PEACE TREATY
One of the most important treaties ever laid before the Senate of the
United States will be that which the 15 nations recently signed at
Paris, and to which 44 other nations have declared their intention to
adhere, renouncing war as a national policy and agreeing to resort only
to peaceful means for the adjustment of international differences. It is
the most solemn declaration against war, the most positive adherence to
peace, that it is possible for sovereign nations to make. It does not
supersede our inalienable sovereign right and duty of national defense
or undertake to commit us before the event to any mode of action which
the Congress might decide to be wise if ever the treaty should be
broken. But it is a new standard in the world around which can rally the
informed and enlightened opinion of nations to prevent their governments
from being forced into hostile action by the temporary outbreak of
international animosities. The observance of this covenant, so simple
and so straightforward, promises more for the peace of the world than
any other agreement ever negotiated among the nations.
NATIONAL DEFENSE
The first duty of our Government to its own citizens and foreigners
within its borders is the preservation of order. Unless and until that
duty is met a government is not even eligible for recognition among the
family of nations. The advancement of world civilization likewise is
dependent upon that order among the people of different countries which
we term peace. To insure our citizens against the infringement of their
legal rights at home and abroad, to preserve order, liberty, and peace
by making the law supreme, we have an Army and a Navy.
Both of these are organized for defensive purposes. Our Army could not
be much reduced, but does not need to be increased. Such new housing and
repairs as are necessary are tinder way and the 6-year program in
aviation is being put into effect in both branches of our service.
Our Navy, according to generally accepted standards, is deficient in
cruisers. We have 10 comparatively new vessels, 22 that are old, and 8
to be built. It is evident that renewals and replacements must be
provided. This matter was thoroughly canvassed at the last session of
the Congress and does not need restatement. The bill before the Senate
with the elimination of the time clause should be passed. We have no
intention of competing with any other country. This building program is
for necessary replacements and to meet our needs for defense.
The cost of national defense is stupendous. It has increased
$118,000,000 in the past four years. The estimated expenditure for 1930
is $668,000,000. While this is made up of many items it is, after all,
mostly dependent upon numbers. Our defensive needs do not can for any
increase in the number of men in the Army or the Navy. We have reached
the limit of what we ought to expend for that purpose.
I wish to repeat again for the benefit of the timid and the suspicious
that this country is neither militaristic nor imperialistic. Many people
at home and abroad, who constantly make this charge, are the same ones
who are even more solicitous to have us extend assistance to foreign
countries. When such assistance is granted, the inevitable result is
that we have foreign interests. For us to refuse the customary support
and protection of such interests would be in derogation of the
sovereignty of this Nation. Our largest foreign interests are in the
British Empire, France, and Italy. Because we are constantly solicitous
for those interests, I doubt if anyone would suppose that those
countries feel we harbor toward them any militaristic or imperialistic
design. As for smaller countries, we certainly do not want any of them.
We are more anxious than they are to have their sovereignty respected.
Our entire influence is in behalf of their independence. Cuba stands as
a witness to our adherence to this principle.
The position of this Government relative to the limitation of armaments,
the results already secured, and the developments up to the present time
are so well known to the Congress that they do not require any
restatement.
VETERANS
The magnitude of our present system of veterans’ relief is without
precedent, and the results have been far-reaching. For years a service
pension has been granted to the Grand Army and lately to the survivors
of the Spanish-American War. At the time we entered the World War
however, Congress departed from the usual pension system followed by our
Government. Eleven years have elapsed since our laws were first enacted,
initiating a system of compensation, rehabilitation, hospitalization,
and insurance for the disabled of the World War and their dependents.
The administration of all the laws concerning relief has been a
difficult task, but it can safely be stated that these measures have
omitted nothing in their desire to deal generously and humanely. We
should continue to foster this system and provide all the facilities
necessary for adequate care. It is the conception of our Government that
the pension roll is an honor roll. It should include all those who are
justly entitled to its benefits, but exclude all others.
Annual expenditures for all forms of veterans’ relief now approximate
$765,000,000, and are increasing from year to year. It is doubtful if
the peak of expenditures will be reached even under present legislation
for sonic time yet to come. Further amendments to the existing law will
be suggested by the American Legion, the Veterans of Foreign Wars of the
United States, the Disabled American Veterans of the World War, and
other like organizations, and it may be necessary for administrative
purposes, or in order to remove some existing inequalities in the
present law, to make further changes. I am sure that such
recommendations its may be submitted to the Congress will receive your
careful consideration. But because of the vast expenditure now being
made, each year, with every assurance that it will increase, and because
of the great liberality of the existing law, the proposal of any
additional legislation dealing with this subject should receive most
searching scrutiny from the Congress.
You are familiar with the suggestion that the various public agencies
now dealing with matters of veterans’ relief be consolidated in one
Government department. Some advantages to this plan seem apparent,
especially in the simplification of administration find in the
opportunity of bringing about a greater uniformity in the application of
veterans’ relief. I recommend that a survey be made by the proper
committees of Congress dealing with this subject, in order to determine
whether legislation to secure this consolidation is desirable.
AGRICULTURE
The past year has been marked by notable though not uniform improvement
in agriculture. The general purchasing power of farm products and the
volume of production have advanced. This means not only further
progress, in overcoming the price disparity into which agriculture was
plunged in 1920-21, but also increased efficiency on the part of farmers
and a well-grounded confidence in the future of agriculture.
The livestock industry has attained the best balance for many years and
is prospering conspicuously. Dairymen, beef producers, and poultrymen
are receiving substantially larger returns than last year. Cotton,
although lower in price than at this time last year, was produced in
greater volume and the prospect for cotton incomes is favorable. But
progress is never uniform in a vast and highly diversified agriculture
or industry. Cash grains, hay, tobacco, and potatoes will bring somewhat
smaller returns this year than last. Present indications are, however,
that the gross farm income will be somewhat larger than in the crop year
1927-28, when the total was $12,253,000,000. The corresponding figure
for 1926-27 was $12,127,000,000, and in 1925-26, $12,670,000,000. Still
better results would have been secured this year had there not been an
undue increase in the production of certain crops. This is particularly
true of potatoes, which have sold at an unremunerative price, or at a
loss, as a direct result of overexpansion of acreage.
The present status of agriculture, although greatly improved over that
of a few years ago, bespeaks the need of further improvement which calls
for determined effort of farmers themselves, encouraged and assisted by
wise public policy. The Government has been, and must continue to be,
alive to the needs of agriculture.
In the past eight years more constructive legislation of direct benefit
to agriculture has been adopted than during any other period. The
Department of Agriculture has been broadened and reorganized to insure
greater efficiency. The department is laying greater stress on the
economic and business phases of agriculture. It is lending every
possible assistance to cooperative marketing associations. Regulatory
and research work have been segregated in order that each field may be
served more effectively.
I can not too strongly commend, in the field of fact finding, the
research work of the Department of Agriculture and the State experiment
stations. The department now receives annually $4,000,000 more for
research than in 1921. In addition, the funds paid to the States for
experimentation purposes under the Purnell Act constitute an annual
increase in Federal payments to State agricultural experiment stations
of $2,400,000 over the amount appropriated in 1921. The program of
support for research may wisely be continued and expanded. Since 1921 we
have appropriated nearly an additional $2,000,000 for extension work,
and this sum is to be increased next year under authorization by the
Capper-Ketcham Act.
THE SURPLUS PROBLEM
While these developments in fundamental research, regulation, and
dissemination of agricultural information are of distinct help to
agriculture, additional effort is needed. The surplus problem demands
attention. As emphasized in my last message, the Government should
assume no responsibility in normal times for crop surplus clearly due to
overextended acreage. The Government should, however, provide reliable
information as a guide to private effort; and in this connection
fundamental research on prospective supply and demand, as a guide to
production and marketing, should be encouraged. Expenditure of public
funds to bring in more new land should have most searching scrutiny, so
long as our farmers face unsatisfactory prices for crops and livestock
produced on land already under cultivation.
Every proper effort should be made to put land to uses for which it is
adapted. The reforestation of land best suited for timber production is
progressing and should be encouraged, and to this end the forest
taxation inquiry was instituted to afford a practical guide for public
policy. Improvement has been made in grazing regulation in the forest
reserves, not only to protect the ranges, but to preserve the soil from
erosion. Similar action is urgently needed to protect other public lands
which are now overgrazed and rapidly eroding.
Temporary expedients, though sometimes capable of appeasing the demands
of the moment, can not permanently solve the surplus problem and might
seriously aggravate it. Hence putting the Government directly into
business, subsidies, and price fixing, and the alluring promises of
political action as a substitute for private initiative, should be
avoided.
The Government should aid in promoting orderly marketing and in handling
surpluses clearly due to weather and seasonal conditions. As a beginning
there should be created a Federal farm board consisting of able and
experienced men empowered to advise producers’ associations in
establishing central agencies or stabilization corporations to handle
surpluses, to seek wore economical means of merchandising, and to aid
the producer in securing returns according to the a14 of his product. A
revolving loan fund should be provided for the necessary financing until
these agencies shall have developed means of financing their operations
through regularly constituted credit institutions. Such a bill should
carry authority for raising the money, by loans or otherwise, necessary
to meet the expense, as the Treasury has no surplus.
Agriculture has lagged behind industry in achieving that unity of effort
which modern economic life demands. The cooperative movement, which is
gradually building the needed organization, is in harmony with public
interest and therefore merits public encouragement.
THE RESPONSIBILITY OF THE STATES
Important phases of public policy related to agriculture lie within the
sphere of the States. While successive reductions in Federal taxes have
relieved most farmers of direct taxes to the National Government, State
and local levies have become a serious burden. This problem needs
immediate and thorough study with a view to correction at the earliest
possible moment. It will have to be made largely by the States
themselves.
COMMERCE
It is desirable that the Government continue its helpful attitude toward
American business. The activities of the Department of Commerce have
contributed largely to the present satisfactory position in our
international trade, which has reached about $9,000,000,000 annually.
There should be no slackening of effort in that direction. It is also
important that the department’s assistance to domestic commerce be
continued. There is probably no way in which the Government can aid
sound economic progress more effectively than by cooperation with our
business men to reduce wastes in distribution.
COMMERCIAL AERONAUTICS
Continued progress in civil aviation is most gratifying. Demands for
airplanes and motors have taxed both the industry and the licensing and
inspection service of the Department of Commerce to their capacity.
While the compulsory licensing provisions of the air commerce act apply
only to equipment and personnel engaged in interstate and foreign
commerce, a Federal license may be procured by anyone possessing the
necessary qualifications. State legislation, local airport regulations,
and insurance requirements make such a license practically
indispensable. This results in uniformity of regulation and increased
safety in operation, which are essential to aeronautical development.
Over 17,000 young men and women have now applied for Federal air pilot’s
licenses or permits. More than 80 per cent of them applied during the
past year.
Our national airway system exceeds 14,000 miles in length and has 7,500
miles lighted for night operations. Provision has been made for lighting
4,000 miles more during the current fiscal year and equipping an equal
mileage with radio facilities. Three-quarters of our people are now
served by these routes. With the rapid growth of air mail, express, and
passenger service, this new transportation medium is daily becoming a
more important factor in commerce. It is noteworthy that this
development has taken place without governmental subsidies. Commercial
passenger flights operating on schedule have reached 13,000 miles per
day.
During the next fortnight this Nation will entertain the nations of the
world in a celebration of the twenty-fifth anniversary of the first
successful airplane flight. The credit for this epoch-making achievement
belongs to a citizen of our own country, Orville Wright.
CUBAN PARCEL POST
I desire to repeat my recommendation of an earlier message, that
Congress enact the legislation necessary to make permanent the Parcel
Post Convention with Cuba, both as a facility to American commerce and
as a measure of equity to Cuba in the one class of goods which that
country can send here by parcel post without detriment to our own trade.
“MAINE” BATTLESHIP MEMORIAL
When I attended the Pan American Conference at Habana, the President of
Cuba showed me a marble statue made from the original memorial that was
overturned by a storm after it was erected on the Cuban shore to the
memory of the men who perished in the destruction of the battleship
Maine. As a testimony of friendship and appreciation of the Cuban
Government and people he most generously offered to present this to the
United States, and I assured him of my pleasure in accepting it. There
is no location in the White House for placing so large and heavy a
structure, and I therefore urge the Congress to provide by law for some
locality where it can be set up.
RAILROADS
In previous annual messages I have suggested the enactment of laws to
promote railroad consolidation with the view of increasing the
efficiency of transportation and lessening its cost to the public.
While, consolidations can and should be made under the present law until
it is changed, vet the provisions of the act of 1920 have not been found
fully adequate to meet the needs of other methods of consolidation.
Amendments designed to remedy these defects have been considered at
length by the respective committees of Congress and a bill was reported
out late in the last session which I understand has the approval in
principle of the Interstate Commerce Commission. It is to be hoped that
this legislation may be enacted at an early date.
Experience has shown that the interstate commerce law requires
definition and clarification in several other respects, some of which
have been pointed out by the Interstate Commerce Commission in its
annual reports to the Congress. It will promote the public interest to
have the Congress give early consideration to the recommendations there
made.
MERCHANT MARINE
The cost of maintaining the United States Government merchant fleet has
been steadily reduced. We have established American flag lines in
foreign trade where they had never before existed as a means of
promoting commerce and as a naval auxiliary. There have been sold to
private American capital for operation within the past few years 14 of
these lines, which, under the encouragement of the recent legislation
passed by the Congress, give promise of continued successful operation.
Additional legislation from time to time may be necessary to promote
future advancement under private control.
Through the cooperation of the Post Office Department and the Shipping
Board long-term contracts are being made with American steamship lines
for carrying mail, which already promise the construction of 15 to 20
new vessels and the gradual reestablishment of the American merchant
marine as a private enterprise. No action of the National Government has
been so beneficial to our shipping. The cost is being absorbed to a
considerable extent by the disposal of unprofitable lines operated by
the Shipping Board, for which the new law has made a market. Meanwhile
it should be our policy to maintain necessary strategic lines under the
Government operation until they can be transferred to private capital.
INTER-AMERICAN HIGHWAY
In my message last year I expressed the view that we should lend our
encouragement for more good roads to all the principal points on this
hemisphere South of the Rio Grande. My view has not changed.
The Pan American Union has recently indorsed it. In some of the
countries to the south a great deal of progress is being made in road
building. In, Others engineering features are often exacting and
financing difficult. As those countries enter upon programs for road
building we should be ready to contribute from our abundant experience
to make their task easier of accomplishment. I prefer not to go into
civil life to accomplish this end. We already furnish military and naval
advisors, and following this precedent we could draw competent men from
these same sources and from the Department of Agriculture.
We should provide our southern neighbors, if they request it, with such
engineer advisors for the construction of roads and bridges. Private
interests should look with favor upon all reasonable loans sought by
these countries to open main lines of travel. Such assistance should be
given especially to any project for a highway designed to connect all
the countries on this hemisphere and thus facilitate, intercourse and
closer relations among, them.
AIR MAIL SERVICE
The friendly relations and the extensive, commercial intercourse with
the Western Hemisphere to the south of us are being further cemented by
the establishment and extension of air-mail routes. We shall soon have
one from Key West, Fla., over Cuba, Haiti, and Santo Domingo to San
Juan, P. R., where it will connect with another route to Trinidad. There
will be another route from Key West to the Canal Zone, where connection
will be made with a route across the northern coast of South America to
Paramaribo. This will give us a circle around the Caribbean under our
own control. Additional connections will be made at Colon with a route
running down the west coast of South America as far as Conception,
Chile, and with the French air mail at Paramaribo running down the
eastern coast of South America. The air service already spans our
continent, with laterals running to Mexico and Canada, and covering a
daily flight of over 28,000 miles, with an average cargo of 15 000
pounds.
WATERWAYS
Our river and harbor improvements are proceeding with vigor. In the past
few years Ave have increased the appropriation for this regular work
$28,000,000, besides what is to be expended on flood control. The total
appropriation for this year was over $91,000,000. The Ohio River is
almost ready for opening; work on the Missouri and other rivers is under
way. In accordance with the Mississippi flood law Army engineers are
making investigations and surveys on other streams throughout the
country with a view to flood control, navigation, waterpower, and
irrigation. Our barrier lines are being operated under generous
appropriations, and negotiations are developing relative to the St.
Lawrence waterway. To Secure the largest benefits from all these
waterways joint rates must be established with the railroads, preferably
by agreement, but otherwise as a result of congressional action.
We have recently passed several river and harbor bills. The work ordered
by the Congress not, yet completed, will cost about $243,
000,000, besides the hundreds of millions to be spent on the Mississippi
flood way. Until we can see our way out of this expense no further river
and harbor legislation should be passed, as expenditures to put it into
effect would be four or five years away.
IRRIGATION OF ARID LANDS
For many years the Federal Government has been committed to the wise
policy of reclamation and irrigation. While it has met with some
failures due to unwise selection of projects and lack of thorough soil
surveys, so that they could not be placed on a sound business basis, on
the whole the service has been of such incalculable benefit in so many
States that no one would advocate its abandonment. The program to which
we are already committed, providing for the construction of new projects
authorized by Congress and the completion of old projects, will tax the
resources of the reclamation fund over a period of years. The high cost
of improving and equipping farms adds to the difficulty of securing
settlers for vacant farms on federal projects.
Readjustments authorized by the reclamation relief act of May 25, 1926,
have given more favorable terms of repayment to settlers. These new
financial arrangements and the general prosperity on irrigation projects
have resulted in increased collections by the Department of the Interior
of charges due the reclamation fund. Nevertheless, the demand for still
smaller yearly payments on some projects continues. These conditions
should have consideration in connection with any proposed new projects.
COLORADO RIVER
For several years the Congress has considered the erection of a dam on
the Colorado River for flood-control, irrigation, and domestic water
purposes, all of which ma properly be considered as Government
functions. There would be an incidental creation of water power which
could be used for generating electricity. As private enterprise can very
well fill this field, there is no need for the Government to go into it.
It is unfortunate that the States interested in this water have been
unable to agree among themselves. Nevertheless, any legislation should
give every possible safeguard to the present and prospective rights of
each of them.
The Congress will have before it, the detailed report of a special board
appointed to consider the engineering and economic feasibility of this
project. From the short summary which I have seen of it, 11 judge they
consider the engineering problems can be met at somewhat increased cost
over previous estimates. They prefer the Black Canyon site. On the
economic features they are not so clear and appear to base their
conclusions on many conditions which can not be established with
certainty. So far as I can judge, however, from the summary, their
conclusions appear sufficiently favorable, so that I feel warranted in
recommending a measure which will protect the rights of the States,
discharge the necessary Government functions, and leave the electrical
field to private enterprise.
MUSCLE SHOALS
The development of other methods of producing nitrates will probably
render this plant less important for that purpose than formerly. But we
have it, and I am told it still provides a practical method of making
nitrates for national defense and farm fertilizers. By dividing the
property into its two component parts of power and nitrate plants it
would be possible to dispose of the power, reserving the right to any
concern that wished to make nitrates to use any power that might be
needed for that purpose. Such a disposition of the power plant can be
made that will return in rental about $2,000,000 per year. If the
Congress would giant the Secretary of War authority to lease the nitrate
plant on such terms as would insure the largest production of nitrates,
the entire property could begin to function. Such a division, I am
aware, has never seemed to appeal to the Congress. I should also gladly
approve a bill granting authority to lease the entire property for the
production of nitrates.
I wish to avoid building another dam at public expense. Future operators
should provide for that themselves. But if they were to be required to
repay the cost of such dam with the prevailing commercial rates for
interest, this difficulty will be considerably lessened. Nor do I think
this property should be made a vehicle for putting the United States
Government indiscriminately into the private and retail field of power
distribution and nitrate sales.
CONSERVATION
The practical application of economy to the resources of the country
calls for conservation. This does not mean that every resource should
not be developed to its full degree, but it means that none of them
should be wasted. We have a conservation board working on our oil
problem. This is of the utmost importance to the future well-being of
our people in this age of oil-burning engines and the general
application of gasoline to transportation. The Secretary of the Interior
should not be compelled to lease oil lands of the Osage Indians when the
market is depressed and the future supply is in jeopardy.
While the area of lands remaining in public ownership is small, compared
with the vast area in private ownership, the natural resources of those
in public ownership are of immense present and future value. This is
particularly trite as to minerals and water power. The proper bureaus
have been classifying these resources to the end that they may be
conserved. Appropriate estimates are being submitted, in the Budget, for
the further prosecution of this important work.
IMMIGRATION
The policy of restrictive immigration should be maintained. Authority
should be granted the Secretary of Labor to give immediate preference to
learned professions and experts essential to new industries. The
reuniting of families should be expedited. Our immigration and
naturalization laws might well be codified.
WAGE EARNER
In its economic life our country has rejected the long accepted law of a
limitation of the wage fund, which led to pessimism and despair because
it was the doctrine of perpetual poverty, and has substituted for it the
American conception that the only limit to profits and wages is
production, which is the doctrine of optimism and hope because it leads
to prosperity. Here and there the councils of labor are still darkened
by the theory that only by limiting individual production can there be
any assurance of permanent employment for increasing numbers, but in
general, management and wage earner alike have become emancipated from
this doom and have entered a new era in industrial thought which has
unleashed the productive capacity of the individual worker with an
increasing scale of wages and profits, the end of which is not yet. The
application of this theory accounts for our widening distribution of
wealth. No discovery ever did more to increase the happiness and
prosperity of the people.
Since 1922 increasing production has increased wages in general 12.9 per
cent, while in certain selected trades they have run as high as 34.9 per
cent and 38 per cent. Even in the boot and shoe shops the increase is
over 5 per cent and in woolen mills 8.4 per cent, although these
industries have not prospered like others. As the rise in living costs
in this period is negligible, these figures represent real wage
increases.
The cause of constructive economy requires that the Government should
cooperate with private interests to eliminate the waste arising from
industrial accidents. This item, with all that has been done to reduce
it, still reaches enormous proportions with great suffering to the
workman and great loss to the country.
WOMEN AND CHILDREN
The Federal Government should continue its solicitous care for the
8,500,000 women wage earners and its efforts in behalf of public health,
which is reducing infant mortality and improving the bodily and mental
condition of our citizens.
CIVIL SERVICE
The most marked change made in the civil service of the Government in
the past eight years relates to the increase in salaries. The Board of
Actuaries on the retirement act shows by its report, that July 1, 1921
the average salary of the 330,047 employees subject to the act was
$1,307, while on June 30, 1927, the average salary of the corresponding
405,263 was $1,969. This was an increase in six years of nearly 53 per
cent. On top of this was the generous increase made at the last session
of the Congress generally applicable to Federal employees and another
bill increasing the pay in certain branches of the Postal Service beyond
the large increase which was made three years ago. This raised the
average level from $1,969 to $2,092, making an increase in seven years
of over 63 per cent. While it is well known that in the upper brackets
the pay in the Federal service is much smaller than in private
employment, in the lower brackets, ranging well up over $3,000, it is
much higher. It is higher not only in actual money paid, but in
privileges granted, a vacation of 30 actual working days, or 5 weeks
each year, with additional time running in some departments as high as
30 days for sick leave and the generous provisions of the retirement
act. No other body of public servants ever occupied such a fortunate
position.
EDUCATION
Through the Bureau of Education of the Department of the Interior the
Federal Government, acting in an informative and advisory capacity, has
rendered valuable service. While this province belongs peculiarly to the
States, yet the promotion of education and efficiency in educational
methods is a general responsibility of the Federal Government. A survey
of negro colleges and universities in the United States has just been
completed by the Bureau of Education through funds provided by the
institutions themselves and through private sources. The present status
of negro higher education was determined and recommendations were made
for its advancement. This was one of the numerous cooperative
undertakings of the bureau. Following the invitation of the Association
of Land Grant Colleges and Universities, he Bureau of Education now has
under way the survey of agricultural colleges, authorized by Congress.
The purpose of the survey is to ascertain the accomplishments, the
status, and the future objectives of this type of educational training.
It is now proposed to undertake a survey of secondary schools, which
educators insist is timely and essential.
PUBLIC BUILDINGS
We, have laid out a public building program for the District of Columbia
and the country at large running into hundreds of millions of dollars.
Three important structures and one annex are already, under way and one
addition has been completed in the City of Washington. in the country
sites have been acquired, many buildings are in course of construction,
and some are already completed. Plans for all this work are being
prepared in order that it may be carried forward as rapidly as possible.
This is the greatest building program ever assumed by this Nation. It
contemplates structures of utility and of beauty. When it reaches
completion the people will be well served and the Federal city will be
supplied with the most beautiful and stately public buildings which
adorn any capital in the world.
THE AMERICAN INDIAN
The administration of Indian affairs has been receiving intensive study
for several years. The Department of the Interior has been able to
provide better supervision of health, education, and industrial
advancement of this native race through additional funds provided by the
Congress. The present cooperative arrangement existing between the
Bureau of Indian Affairs and the Public Health Service should be
extended. The Government’s responsibility to the American Indian has
been acknowledged by annual increases in appropriations to fulfill its
obligations to them and to hasten the time when Federal supervision of
their affairs may be properly and safely terminated. The movement in
Congress and in some of the State legislatures for extending
responsibility in Indian affairs to States should be encouraged. A
complete participation by the Indian in our economic life is the end to
be desired.
THE NEGRO
For 65 years now our negro Population has been under the peculiar care
and solicitude of the National Government. The progress which they have
made in education and the professions, in wealth and in the arts of
civilization, affords one of the most remarkable incidents in this
period of world history. They have demonstrated their ability to partake
of the advantages of our institutions and to benefit by a free and more
and more independent existence. Whatever doubt there may have been of
their capacity to assume, the status granted to them by the Constitution
of this Union is being rapidly dissipated. Their cooperation in the life
of the Nation is constantly enlarging.
Exploiting the Negro problem for political ends is being abandoned and
their protection is being increased by those States in which their
percentage of population is largest. Every encouragement should be
extended for the development of the race. The colored people have been
the victims of the crime of lynching, which has in late years somewhat
decreased. Some parts of the South already have wholesome laws for its
restraint and punishment. Their example might well be followed by other
States, and by such immediate remedial legislation as the Federal
Government can extend under the Constitution.
PHILIPPINE ISLANDS
Under the guidance of Governor General Stimson the economic and
political conditions of the Philippine Islands have been raised to a
standard never before surpassed. The cooperation between his
administration and the people of the islands is complete and harmonious.
It would be an advantage if relief from double taxation could be granted
by the Congress to our citizens doing business in the islands.
PORTO RICO
Due to the terrific storm that swept Porto Rico last September, the
people of that island suffered large losses. The Red Cross and the War
Department went to their rescue. The property loss is being, retrieved.
Sugar, tobacco, citrus fruit, and coffee, all suffered damage. The first
three can largely look after themselves. The coffee growers will need
some assistance, which should be extended strictly on a business basis,
and only after most careful investigation. The people of Porto Rico are
not asking for charity.
DEPARTMENT OF JUSTICE
It is desirable that all the legal activities of the Government be
consolidated under the supervision of the Attorney General. In 1870 it
was felt necessary to create the Department of Justice for this purpose.
During the intervening period, either through legislation creating law
officers or departmental action, additional legal positions not under
the supervision of the Attorney General have been provided until there
are now over 900. Such a condition is as harmful to the interest of the
Government now as it was in 1870, and should be corrected by appropriate
legislation.
SPECIAL GOVERNMENT COUNSEL
In order to prosecute the oil cases, I suggested and the Congress
enacted a law providing for the appointment of two special counsel. They
have pursued their work with signal ability, recovering all the leased
lands besides nearly $30,000,000 in money, and nearly $17,000,000 in
other property. They find themselves hampered by a statute, which the
Attorney General construes as applying to them, prohibiting their
appearing for private clients before any department. For this reason,
one has been compelled to resign. No good result is secured by the
application of this rule to these counsel, and as Mr. Roberts has
consented to take reappointment if the rule is abrogated I recommend the
passage of an amendment to the law creating their office exempting them
from the general rule against taking other cases involving the
Government.
PROHIBITION
The country has duly adopted the eighteenth amendment. Those who object
to it have the right to advocate its modification or repeal. Meantime,
it is binding upon the National and State Governments and all our
inhabitants. The Federal enforcement bureau is making every effort to
prevent violations, especially through smuggling, manufacture, and
transportation, and to prosecute generally all violations for which it
can secure evidence. It is bound to continue this policy. Under the
terms of the Constitution, however, the obligation is equally on the
States to exercise the power which they have through the executive,
legislative, judicial, and police branches of their governments in
behalf of enforcement. The Federal Government is doing and will continue
to do all it can in this direction and is entitled to the active
cooperation of the States.
CONCLUSION
The country is in the midst of an era of prosperity more extensive and
of peace more permanent than it has ever before experienced. But, having
reached this position, we should not fail to comprehend that it can
easily be lost. It needs more effort for its support than the less
exalted places of the world. We shall not be permitted to take our case,
but shall continue to be required to spend our days in unremitting toil.
The actions of the Government must command the confidence of the
country. Without this, our prosperity would be lost. We must extend to
other countries the largest measure of generosity, moderation, and
patience. In addition to dealing justly, we can well afford to walk
humbly.
The end of government is to keep open the opportunity for a more
abundant life. Peace and prosperity are not finalities; they are only
methods. It is too easy under their influence for a nation to become
selfish and degenerate. This test has come to the United States. Our
country has been provided with the resources with which it can enlarge
its intellectual, moral, and spiritual life. The issue is in the hands
of the people. Our faith in man and God is the justification for the
belief in our continuing success.
***
State of the Union Address
Herbert Hoover
December 3, 1929
To the Senate and House of Representatives:
The Constitution requires that the President “shall, from time to time,
give to the Congress information of the state of the Union, and
recommend to their consideration such measures as he shall judge
necessary and expedient.” In complying with that requirement I wish to
emphasize that during the past year the Nation has continued to grow in
strength; our people have advanced in comfort; we have gained in
knowledge; the education of youth has been more widely spread; moral and
spiritual forces have been maintained; peace has become more assured.
The problems with which we are confronted are the problems of growth and
of progress. In their solution we have to determine the facts, to
develop the relative importance to be assigned to such facts, to
formulate a common judgment upon them, and to realize solutions in
spirit of conciliation.
FOREIGN RELATIONS
We are not only at peace with all the world, but the foundations for
future peace are being substantially strengthened. To promote peace is
our long-established policy. Through the Kellogg-Briand pact a great
moral standard has been raised in the world. By it fifty-four nations
have covenanted to renounce war and to settle all disputes by pacific
means. Through it a new world outlook has been inaugurated which has
profoundly affected the foreign policies of nations. Since its
inauguration we have initiated new efforts not only in the organization
of the machinery of peace but also to eliminate dangerous forces which
produce controversies amongst nations.
In January, 1926, the Senate gave its consent to adherence to the Court
of International Justice with certain reservations. In September of this
year the statute establishing the court has, by the action of the
nations signatory, been amended to meet the Senate’s reservations and to
go even beyond those reservations to make clear that the court is a true
international court of justice. I believe it will be clear to everyone
that no controversy or question in which this country has or claims an
interest can be passed on by the court without our consent at the time
the question arises. The doubt about advisory opinions has been
completely safeguarded. Our adherence to the International Court is, as
now constituted, not the slightest step toward entry into the League of
Nations. As I have before indicated, I shall direct that our signature
be affixed to the protocol of adherence and shall submit it for the
approval of the Senate with a special message at some time when it is
convenient to deal with it.
In the hope of reducing friction in the world, and with the desire that
we may reduce the great economic burdens of naval armament, we have
joined in conference with Great Britain, France, Italy, and Japan to be
held in London in January to consider the further limitation and
reduction of naval arms. We hold high hopes that success may attend this
effort.
At the beginning of the present administration the neighboring State of
Mexico was best with domestic insurrection. We maintained the embargo
upon the shipment of arms to Mexico but permitted the duly constituted
Government to procure supplies from our surplus war stocks. Fortunately,
the Mexican Government by its own strength successfully withstood the
insurrection with but slight damage. Opportunity of further peaceful
development is given to that country. At the request of the Mexican
Government, we have since lifted the embargo on shipment of arms
altogether. The two governments have taken further steps to promote
friendly relationships and so solve our differences. Conventions
prolonging for a period of two years the life of the general and special
claims commissions have been concluded.
In South America we are proud to have had part in the settlement of the
long-standing dispute between Chile and Peru in the disposal of the
question of Tacna-Arica.
The work of the commission of inquiry and conciliation between Bolivia
and Paraguay, in which a representative of this Government participated,
has successfully terminated an incident which seemed to threaten war.
The proposed plan for final settlement as suggested by the neutral
governments is still under consideration.
This Government has continued its efforts to act as a mediator in
boundary difficulties between Guatemala and Honduras.
A further instance of profound importance in establishing good will was
the inauguration of regular air mail service between the United States
and Caribbean, Central American, and South American countries.
We still have marines on foreign soil--in Nicaragua, Haiti, and China.
In the large sense we do not wish to be represented abroad in such
manner. About 1,600 marines remain in Nicaragua at the urgent request of
that government and the leaders of all parties pending the training of a
domestic constabulary capable of insuring tranquility. We have already
reduced these forces materially and we are anxious to withdraw them
further as the situation warrants. In Haiti we have about 700 marines,
but it is a much more difficult problem, the solution of which is still
obscure. If Congress approves, I shall dispatch a commission to Haiti to
review and study the matter in an endeavor to arrive at some more
definite policy than at present. Our forces in China constitute 2,605
men, which we hope also further to reduce to the normal legation guard.
It is my desire to establish more firmly our understanding and
relationships with the Latin American countries by strengthening the
diplomatic missions to those countries. It is my hope to secure men long
experienced in our Diplomatic Service, who speak the languages of the
peoples to whom they are accredited, as chiefs of our diplomatic
missions in these States. I shall send to the Senate at an early date
the nominations of several such men.
The Congress has by numerous wise and foresighted acts in the past few
years greatly strengthened the character of our representation abroad.
It has made liberal provision for the establishment of suitable quarters
for our foreign staffs in the different countries. In order, however,
that we may further develop the most effective force in this, one of the
most responsible functions of our Government, I shall recommend to the
Congress more liberal appropriations for the work of the State
Department. I know of no expenditure of public money from which a
greater economic and moral return can come to us than by assuring the
most effective conduct of our foreign relations.
NATIONAL DEFENSE
To preserve internal order and freedom from encroachment is the first
purpose of government. Our Army and Navy are being maintained in a most
efficient state under officers of high intelligence and zeal. The extent
and expansion of their numbers and equipment as at present authorized
are ample for this purpose.
We can well be deeply concerned, however, at the growing expense. From a
total expenditure for national defense purposes in 1914 of $267,000,000,
it naturally rose with the Great War, but receded again to $612,000,000
in 1924, when again it began to rise until during the current fiscal
year the expenditures will reach to over $730,000,000, excluding all
civilian services of those departments. Programs now authorized will
carry it to still larger figures in future years. While the remuneration
paid to our soldiers and sailors is justly at a higher rate than that of
any other country in the world, and while the cost of subsistence is
higher, yet the total of our expenditures is in excess of those of the
most highly militarized nations of the world.
Upon the conference shortly to be held in London will depend such
moderation as we can make in naval expenditure. If we shall be compelled
to undertake the naval construction implied in the Washington arms
treaty as well as other construction which would appear to be necessary
if no international agreement can be completed, we shall be committed
during the next six years to a construction expenditure of upward of
$1,200,000,000 besides the necessary further increase in costs for
annual upkeep.
After 1914 the various Army contingents necessarily expanded to the end
of the Great War and then receded to the low point in 1924, when
expansion again began. In 1914 the officers and men in our regular
forces, both Army and Navy, were about 164,000, in 1924 there were about
256,000, and in 1929 there were about 250,000. Our citizens’ army,
however, including the National Guard and other forms of reserves,
increase these totals up to about 299,000 in 1914, about 672,000 in
1924, and about 728,000 in 1929.
Under the Kellogg pact we have undertaken never to use war as an
instrument of national policy. We have, therefore, undertaken by
covenant to use these equipments solely for defensive purposes. From a
defense point of view our forces should be proportioned to national need
and should, therefore, to some extent be modified by the prospects of
peace, which were never brighter than to-day.
It should be borne in mind that the improvement in the National Guard by
Federal support begun in 1920 has definitely strengthened our national
security by rendering them far more effective than ever heretofore. The
advance of aviation has also greatly increased our effectiveness in
defense. In addition to the very large program of air forces which we
are maintaining in the Army and Navy, there has been an enormous growth
of commercial aviation. This has provided unanticipated reserves in
manufacturing capacity and in industrial and air personnel, which again
adds to our security.
I recommend that Congress give earnest consideration to the
possibilities of prudent action which will give relief from our
continuously mounting expenditures.
FINANCES OF THE GOVERNMENT
The finances of the Government are in sound condition. I shall submit
the detailed evidences and the usual recommendations in the special
Budget message. I may, however, summarize our position. The public debt
on June 30 this year stood at $16,931,000,000, compared to the maximum
in August, 1919, of $26,596,000,000. Since June 30 it has been reduced
by a further $238,000,000. In the Budget to be submitted the total
appropriations recommended for the fiscal year 1931 are $3,830,445,231,
as compared to $3,976,141,651 for the present fiscal year. The present
fiscal year, however, includes $150,000,000 for the Federal Farm Board,
as to which no estimate can as yet be determined for 1931.
Owing to the many necessary burdens assumed by Congress in previous
years which now require large outlays, it is with extreme difficulty
that we shall be able to keep the expenditures for the next fiscal year
within the bounds of the present year. Economies in many directions have
permitted some accommodation of pressing needs, the net result being an
increase, as shown above, of about one-tenth of 1 per cent above the
present fiscal year. We can not fail to recognize the obligations of the
Government in support of the public welfare but we must coincidentally
bear in mind the burden of taxes and strive to find relief through some
tax reduction. Every dollar so returned fertilizes the soil of
prosperity.
TAX REDUCTION
The estimate submitted to me by the Secretary of the Treasury and the
Budget Director indicates that the Government will close the fiscal year
1930 with a surplus of about $225,000,000 and the fiscal year 1931 with
a surplus of about $123,000,000. Owing to unusual circumstances, it has
been extremely difficult to estimate future revenues with accuracy.
I believe, however, that the Congress will be fully justified in giving
the benefits of the prospective surpluses to the taxpayers, particularly
as ample provision for debt reduction has been made in both years
through the form of debt retirement from ordinary revenues. In view of
the uncertainty in respect of future revenues and the comparatively
small size of the indicated surplus in 1931, relief should take the form
of a provisional revision of tax rates.
I recommend that the normal income tax rates applicable to the incomes
of individuals for the calendar year 1929 be reduced from 5, 3, and 1
1/2; per cent, to 4, 2, and 1/2; per cent, and that the tax on the
income of corporations for the calendar year 1929 be reduced from 12 to
11 per cent. It is estimated that this will result in a reduction of
$160,000,000 in income taxes to be collected during the calendar year
1930. The loss in revenue will be divided approximately equally between
the fiscal years 1930 and 1931. Such a program will give a measure of
tax relief to the maximum number of taxpayers, with relatively larger
benefits to taxpayers with small or moderate incomes.
FOREIGN DEBTS
The past year has brought us near to completion of settlements of the
indebtedness of foreign governments to the United States.
The act of Congress approved February 4, 1929, authorized the settlement
with the Government of Austria along lines similar to the terms of
settlement offered by that Government to its other relief creditors. No
agreement has yet been concluded with that government, but the form of
agreement has been settled and its execution only awaits the Government
of Austria securing the assent by all the other relief creditors of the
terms offered. The act of Congress approved February 14, 1929,
authorized the settlement with the Government of Greece, and an
agreement was concluded on May 10, 1929.
The Government of France ratified the agreement with us on July 27,
1929. This agreement will shortly be before the Congress and I recommend
its approval.
The only indebtedness of foreign governments to the United States now
unsettled is that of Russia and Armenia.
During the past year a committee of distinguished experts under American
leadership submitted a plan looking to a revision of claims against
Germany by the various Governments. The United States denied itself any
participation in the war settlement of general reparations and our
claims are comparatively small in amount. They arise from costs of the
army of occupation and claims of our private citizens for losses under
awards from the Mixed Claims Commission established under agreement with
the German Government. In finding a basis for settlement it was
necessary for the committee of experts to request all the Governments
concerned to make some contribution to the adjustment and we have felt
that we should share a proportion of the concessions made.
The State and Treasury Departments will be in a position shortly to
submit for your consideration a draft of an agreement to be executed
between the United States and Germany providing for the payments of
these revised amounts. A more extensive statement will be submitted at
that time.
The total amount of indebtedness of the various countries to the United
States now funded is $11,579,465,885. This sum was in effect provided by
the issue of United States Government bonds to our own people. The
payments of the various Governments to us on account of principal and
interest for 1930 are estimated at a total of about $239,000,000, for
1931 at about $236,000,000, for 1932 at about $246,000,000. The measure
of American compromise in these settlements may be appreciated from the
fact that our taxpayers are called upon to find annually about
$475,000,000 in interest and in addition to redeem the principal of sums
borrowed by the United States Government for these purposes.
ALIEN ENEMY PROPERTY
The wise determination that this property seized in war should be
returned to its owners has proceeded with considerable rapidity. Of the
original seized cash and property (valued at a total of about
$625,000,000), all but $111,566,700 has been returned. Most of the
remainder should be disposed of during the next year.
GENERAL ECONOMIC SITUATION
The country has enjoyed a large degree of prosperity and sound progress
during the past year with a steady improvement in methods of production
and distribution and consequent advancement in standards of living.
Progress has, of course, been unequal among industries, and some, such
as coal, lumber, leather, and textiles, still lag behind. The long
upward trend of fundamental progress, however, gave rise to
over-optimism as to profits, which translated itself into a wave of
uncontrolled speculation in securities, resulting in the diversion of
capital from business to the stock market and the inevitable crash. The
natural consequences have been a reduction in the consumption of
luxuries and semi-necessities by those who have met with losses, and a
number of persons thrown temporarily out of employment. Prices of
agricultural products dealt in upon the great markets have been affected
in sympathy with the stock crash.
Fortunately, the Federal reserve system had taken measures to strengthen
the position against the day when speculation would break, which
together with the strong position of the banks has carried the whole
credit system through the crisis without impairment. The capital which
has been hitherto absorbed in stock-market loans for speculative
purposes is now returning to the normal channels of business. There has
been no inflation in the prices of commodities; there has been no undue
accumulation of goods, and foreign trade has expanded to a magnitude
which exerts a steadying influence upon activity in industry and
employment.
The sudden threat of unemployment and especially the recollection of the
economic consequences of previous crashes under a much less secured
financial system created unwarranted pessimism and fear. It was recalled
that past storms of similar character had resulted in retrenchment of
construction, reduction of wages, and laying off of workers. The natural
result was the tendency of business agencies throughout the country to
pause in their plans and proposals for continuation and extension of
their businesses, and this hesitation unchecked could in itself
intensify into a depression with widespread unemployment and suffering.
I have, therefore, instituted systematic, voluntary measures of
cooperation with the business institutions and with State and municipal
authorities to make certain that fundamental businesses of the country
shall continue as usual, that wages and therefore consuming power shall
not be reduced, and that a special effort shall be made to expand
construction work in order to assist in equalizing other deficits in
employment. Due to the enlarged sense of cooperation and responsibility
which has grown in the business world during the past few years the
response has been remarkable and satisfactory. We have canvassed the
Federal Government and instituted measures of prudent expansion in such
work that should be helpful, and upon which the different departments
will make some early recommendations to Congress.
I am convinced that through these measures we have reestablished
confidence. Wages should remain stable. A very large degree of
industrial unemployment and suffering which would otherwise have
occurred has been prevented. Agricultural prices have reflected the
returning confidence. The measures taken must be vigorously pursued
until normal conditions are restored.
AGRICULTURE
The agricultural situation is improving. The gross farm income as
estimated by the Department of Agriculture for the crop season 1926-27
was $12,100,000,000; for 1927-28 it was $12,300,000,000; for 1928-29 it
was $12,500,000,000; and estimated on the basis of prices since the last
harvest the value of the 1929-30 crop would be over $12,650,000,000. The
slight decline in general commodity prices during the past few years
naturally assists the farmers’ buying power.
The number of farmer bankruptcies is very materially decreased below
previous years. The decline in land values now seems to be arrested and
rate of movement from the farm to the city has been reduced. Not all
sections of agriculture, of course, have fared equally, and some areas
have suffered from drought. Responsible farm leaders have assured me
that a large measure of confidence is returning to agriculture and that
a feeling of optimism pervades that industry.
The most extensive action for strengthening the agricultural industry
ever taken by any government was inaugurated through the farm marketing
act of June 15 last. Under its provisions the Federal Farm Board has
been established, comprised of men long and widely experienced in
agriculture and sponsored by the farm organizations of the country.
During its short period of existence the board has taken definite steps
toward a more efficient organization of agriculture, toward the
elimination of waste in marketing, and toward the upbuilding of farmers’
marketing organizations on sounder and more efficient lines. Substantial
headway has been made in the organization of four of the basic
commodities--grain, cotton, livestock, and wool. Support by the board to
cooperative marketing organizations and other board activities
undoubtedly have served to steady the farmers’ market during the recent
crisis and have operated also as a great stimulus to the cooperative
organization of agriculture. The problems of the industry are most
complex, and the need for sound organization is imperative. Yet the
board is moving rapidly along the lines laid out for it in the act,
facilitating the creation by farmers of farmer-owned and
farmer-controlled organizations and federating them into central
institutions, with a view to increasing the bargaining power of
agriculture, preventing and controlling surpluses, and mobilizing the
economic power of agriculture.
THE TARIFF
The special session of Congress was called to expedite the fulfillment
of party pledges of agricultural relief and the tariff. The pledge of
farm relief has been carried out. At that time I stated the principles
upon which I believed action should be taken in respect to the tariff:
“An effective tariff upon agricultural products, that will compensate
the farmer’s higher costs and higher standards of living, has a dual
purpose. Such a tariff not only protects the farmer in our domestic
market but it also stimulates him to diversify his crops and to grow
products that he could not otherwise produce, and thus lessens his
dependence upon exports to foreign markets. The great expansion of
production abroad under the conditions I have mentioned renders foreign
competition in our export markets increasingly serious. It seems but
natural, therefore, that the American farmer, having been greatly
handicapped in his foreign market by such competition from the younger
expanding countries, should ask that foreign access to our domestic
market should be regulated by taking into account the differences in our
costs of production.
“In considering the tariff for other industries than agriculture, we
find that there have been economic shifts necessitating a readjustment
of some of the tariff schedules. Seven years of experience under the
tariff bill enacted in 1922 have demonstrated the wisdom of Congress in
the enactment of that measure. On the whole it has worked well. In the
main our wages have been maintained at high levels; our exports and
imports have steadily increased; with some exceptions our manufacturing
industries have been prosperous. Nevertheless, economic changes have
taken place during that time which have placed certain domestic products
at a disadvantage and new industries have come into being, all of which
create the necessity for some limited changes in the schedules and in
the administrative clauses of the laws as written in 1922.
“It would seem to me that the test of necessity for revision is, in the
main, whether there has been a substantial slackening of activity in an
industry during the past few years, and a consequent decrease of
employment due to insurmountable competition in the products of that
industry. It is not as if we were setting up a new basis of protective
duties. We did that seven years ago. What we need to remedy now is
whatever substantial loss of employment may have resulted from shifts
since that time.
“In determining changes in our tariff we must not fail to take into
account the broad interests of the country as a whole, and such
interests include our trade relations with other countries.” No
condition has arisen in my view to change these principles stated at the
opening of the special session. I am firmly of the opinion that their
application to the pending revision will give the country the kind of a
tariff law it both needs and wants. It would be most helpful if action
should be taken at an early moment, more especially at a time when
business and agriculture are both cooperating to minimize future
uncertainties. It is just that they should know what the rates are to
be.
Even a limited revision requires the consideration and readjustment of
many items. The exhaustive inquiries and valuable debate from men
representative of all parts of the country which is needed to determine
the detailed rates must necessarily be accomplished in the Congress.
However perfectly this rate structure may be framed at any given time,
the shifting of economic forces which inevitably occurs will render
changes in some items desirable between the necessarily long intervals
of congressional revision. Injustices are bound to develop, such as were
experienced by the dairymen, the flaxseed producers, the glass industry,
and others, under the 1922 rates. For this reason, I have been most
anxious that the broad principle of the flexible tariff as provided in
the existing law should be preserved and its delays in action avoided by
more expeditious methods of determining the costs of production at home
and abroad, with executive authority to promulgate such changes upon
recommendation of the Tariff Commission after exhaustive investigation.
Changes by the Congress in the isolated items such as those to which I
have referred would have been most unlikely both because of the
concentrations of oppositions in the country, who could see no advantage
to their own industry or State, and because of the difficulty of
limiting consideration by the Congress to such isolated cases.
There is no fundamental conflict between the interests of the farmer and
the worker. Lowering of the standards of living of either tends to
destroy the other. The prosperity of one rests upon the well-being of
the other. Nor is there any real conflict between the East and the West
or the North and the South in the United States. The complete
interlocking of economic dependence, the common striving for social and
spiritual progress, our common heritage as Americans, and the infinite
web of national sentiment, have created a solidarity in a great people
unparalleled in all human history. These invisible bonds should not and
can not be shattered by differences of opinion growing out of discussion
of a tariff.
PUBLIC BUILDINGS
Under the provisions of various acts of Congress $300,000,000 has been
authorized for public buildings and the land upon which to construct
them, being $75,000,000 for the District of Columbia and $225,000,000
for the country at large. Excluding $25,000,000 which is for the
acquisition of land in the so-called “triangle” in this city, this
public building legislation provides for a five-year program for the
District of Columbia and between an eight and nine year program for the
country at large. Of this sum approximately $27,400,000 was expended up
to June 30 last, of which $11,400,000 has been expended in the District
and $16,000,000 outside.
Even this generous provision for both the District of Columbia and the
country is insufficient For most pressing governmental needs. Expensive
rents and inadequate facilities are extravagance and not economy. In the
District even after the completion of these projects we shall have fully
20,000 clerks housed in rented and temporary war buildings which can
last but a little longer.
I therefore recommend that consideration should be given to the
extension of authorizations both for the country at large and for the
District of Columbia again distributed over a term of years. A survey of
the need in both categories has been made by the Secretary of the
Treasury and the Postmaster General. It would be helpful in the present
economic situation if such steps were taken as would enable early
construction work.
An expedition and enlargement of the program in the District would bring
about direct economies in construction by enabling the erection of
buildings in regular sequence. By maintaining a stable labor force in
the city, contracts can be made on more advantageous terms.
The earlier completion of this program which is an acknowledged need
would add dignity to the celebration in 1932 of the two hundredth
anniversary of the birth of President Washington.
In consideration of these projects which contribute so much to dignify
the National Capital I should like to renew the suggestion that the Fine
Arts Commission should be required to pass upon private buildings which
are proposed for sites facing upon public buildings and parks. Without
such control much of the effort of the Congress in beautification of the
Capital will be minimized.
THE WATERWAYS AND FLOOD CONTROL
The development of inland waterways has received new impulse from the
completion during this year of the canalization of the Ohio to a uniform
9-foot depth. The development of the other segments of the Mississippi
system should be expedited and with this in view I am recommending an
increase in appropriations for rivers and harbors from $50,000,000 to
$55,000,000 per annum which, together with about $4,000,000 per annum
released by completion of the Ohio, should make available after
providing for other river and harbor works a sum of from $25,000,000 to
$30,000,000 per annum for the Mississippi system and thus bring it to
early completion.
Conflict of opinion which has arisen over the proposed floodway from the
Arkansas River to the Gulf of Mexico via the Atchafalaya River has led
me to withhold construction upon this portion of the Mississippi flood
control plan until it could be again reviewed by the engineers for any
further recommendation to Congress. The other portions of the project
are being vigorously prosecuted and I have recommended an increase in
appropriations for this from $30,000,000 of the present year to
$35,000,000 during the next fiscal year.
Expansion of our intracoastal waterways to effective barge depths is
well warranted. We are awaiting the action of Canada upon the St.
Lawrence waterway project.
HIGHWAYS
There are over 3,000,000 miles of legally established highways in the
United States, of which about 10 per cent are included in the State
highway systems, the remainder being county and other local roads. About
626,000 miles have been improved with some type of surfacing, comprising
some 63 per cent of the State highway systems and 16 per cent of the
local roads. Of the improved roads about 102,000 miles are hard
surfaced, comprising about 22 per cent of the State highway systems and
about 8 per cent of the local roads.
While proper planning should materially reduce the listed mileage of
public roads, particularly in the agricultural districts, and turn these
roads back to useful purposes, it is evident that road construction must
be a long-continued program. Progress in improvement is about 50,000
miles of all types per annum, of which some 12,000 miles are of the more
durable types. The total expenditures of Federal, State, and local
governments last year for construction and maintenance assumed the huge
total of $1,660,000,000.
Federal aid in the construction of the highway systems in conjunction
with the States has proved to be beneficial and stimulating. We must
ultimately give consideration to the increase of our contribution to
these systems, particularly with a view to stimulating the improvement
of farm-to-market roads.
POST OFFICE
Our Post Office deficit has now increased to over $80,000,000 a year, of
which perhaps $14,000,000 is due to losses on ocean mail and air mail
contracts. The department is making an exhaustive study of the sources
of the deficit with view to later recommendation to Congress in respect
to it.
The Post Office quarters are provided in part by the Federal
construction, in part by various forms of rent and lease arrangements.
The practice has grown up in recent years of contracting long term
leases under which both rent and amortization principal cost of
buildings is included. I am advised that fully 40 per cent could be
saved from many such rent and lease agreements even after allowing
interest on the capital required at the normal Government rate. There
are also many objectionable features to some of these practices. The
provision of adequate quarters for the Post Office should be put on a
sound basis.
A revision of air mail rates upon a more systematic and permanent
footing is necessary. The subject is under study, and if legislation
should prove necessary the subject will be presented to the Congress. In
the meantime I recommend that the Congress should consider the
desirability of authorizing further expansion of the South American
services.
COMMERCIAL AVIATION
During the past year progress in civil aeronautics has been remarkable.
This is to a considerable degree due to the wise assistance of the
Federal Government through the establishment and maintenance of airways
by the Department of Commerce and the mail contracts from the Post
Office Department. The Government-improved airways now exceed 25,000
miles--more than 14,000 miles of which will be lighted and equipped for
night-flying operations by the close of the current year. Airport
construction through all the States is extremely active. There are now
1,000 commercial and municipal airports in operation with an additional
1,200 proposed for early development.
Through this assistance the Nation is building a sound aviation system,
operated by private enterprise. Over 6,400 planes are in commercial use,
and 9,400 pilots are licensed by the Government. Our manufacturing
capacity has risen to 7,500 planes per annum. The aviation companies
have increased regular air transportation until it now totals 90,000
miles per day--one-fourth of which is flown by night. Mail and express
services now connect our principal cities, and extensive services for
passenger transportation have been inaugurated, and others of importance
are imminent. American air lines now reach into Canada and Mexico, to
Cuba, Porto Rico, Central America, and most of the important countries
of South America.
RAILWAYS
As a whole, the railroads never were in such good physical and financial
condition, and the country has never been so well served by them. The
greatest volume of freight traffic ever tendered is being carried at a
speed never before attained and with satisfaction to the shippers.
Efficiencies and new methods have resulted in reduction in the cost of
providing freight transportation, and freight rates show a continuous
descending line from the level enforced by the World War.
We have, however, not yet assured for the future that adequate system of
transportation through consolidations which was the objective of the
Congress in the transportation act. The chief purpose of consolidation
is to secure well-balanced systems with more uniform and satisfactory
rate structure, a more stable financial structure, more equitable
distribution of traffic, greater efficiency, and single-line instead of
multiple-line hauls. In this way the country will have the assurance of
better service and ultimately at lower and more even rates than would
otherwise be attained. Legislation to simplify and expedite
consolidation methods and better to protect public interest should be
enacted.
Consideration should also be given to relief of the members of the
Commission from the necessity of detailed attention to comparatively
inconsequential matters which, under the existing law, must receive
their direct and personal consideration. It is in the public interest
that the members of the Commission should not be so pressed by minor
matters that they have inadequate time for investigation and
consideration of the larger questions committed to them for solution. As
to many of these minor matters, the function of the Commission might
well be made revisory, and the primary responsibility delegated to
subordinate officials after the practice long in vogue in the executive
departments.
MERCHANT MARINE
Under the impulse of the merchant marine act of 1928 the transfer to
private enterprise of the Government-owned steamship lines is going
forward with increasing success. The Shipping Board now operates about
18 lines, which is less than half the number originally established, and
the estimate of expenditures for the coming fiscal year is based upon
reduction in losses on Government lines by approximately one-half.
Construction loans have been made to the amount of approximately
$75,000,000 out of the revolving fund authorized by Congress and have
furnished an additional aid to American shipping and further stimulated
the building of vessels in American yards.
Desirous of securing the full values to the Nation of the great effort
to develop our merchant marine by the merchant marine act soon after the
inauguration of the present administration, I appointed an
interdepartmental committee, consisting of the Secretary of Commerce, as
chairman, the Secretary of the Navy, the Postmaster General, and the
chairman of the Shipping Board, to make a survey of the policies being
pursued under the act of 1928 in respect of mail contracts; to inquire
into its workings and to advise the Postmaster General in the
administration of the act.
In particular it seemed to me necessary to determine if the result of
the contracts already let would assure the purpose expressed in the act,
“to further develop an American merchant marine, to assure its
permanence in the transportation of the foreign trade of the United
States, and for other purposes,” and to develop a coordinated policy by
which these purposes may be translated into actualities.
In review of the mail contracts already awarded it was found that they
aggregated 25 separate awards imposing a governmental obligation of a
little over $12,000,000 per annum. Provision had been imposed in five of
the contracts for construction of new vessels with which to replace and
expand services. These requirements come to a total of 12 vessels in the
10-year period, aggregating 122,000 tons. Some other conditions in the
contracts had not worked out satisfactorily.
That study has now been substantially completed and the committee has
advised the desirability and the necessity of securing much larger
undertakings as to service and new construction in future contracts. The
committee at this time is recommending the advertising of 14 additional
routes, making substantial requirements for the construction of new
vessels during the life of each contract recommended. A total of 40 new
vessels will be required under the contracts proposed, about half of
which will be required to be built during the next three years. The
capital cost of this new construction will be approximately
$250,000,000, involving approximately 460,000 gross tons. Should bidders
be found who will make these undertakings, it will be necessary to
recommend to Congress an increase in the authorized expenditure by the
Post Office of about $5,500,000 annually. It will be most advantageous
to grant such an authority.
A conflict as to the administration of the act has arisen in the
contention of persons who have purchased Shipping Board vessels that
they are entitled to mail contracts irrespective of whether they are the
lowest bidder, the Post Office, on the other hand, being required by law
to let contracts in that manner. It is urgent that Congress should
clarify this situation.
THE BANKING SYSTEM
It is desirable that Congress should consider the revision of some
portions of the banking law.