problems. The question naturally arises as to whether if allowed to
expand without restraint these methods would dangerously concentrate
control of credit, and whether they would not in any event seriously
threaten one of the fundamentals of the American credit system--which is
that credit which is based upon banking deposits should be controlled by
persons within those areas which furnish these deposits and thus be
subject to the restraints of local interest and public opinion in those
areas. To some degree, however, this movement of chain or group banking
is a groping for stronger support to the banks and a more secure basis
for these institutions.
The growth in size and stability of the metropolitan banks is in marked
contrast to the trend in the country districts, with its many failures
and the losses these failures have imposed upon the agricultural
community.
The relinquishment of charters of national banks in great commercial
centers in favor of State charters indicates that some conditions
surround the national banks which render them unable to compete with
State banks; and their withdrawal results in weakening our national
banking system.
It has been proposed that permission should be granted to national banks
to engage in branch banking of a nature that would preserve within
limited regions the local responsibility and the control of such credit
institutions.
All these subjects, however, require careful investigation, and it might
be found advantageous to create a joint commission embracing Members of
the Congress and other appropriate Federal officials for subsequent
report.
ELECTRICAL POWER REGULATION
The Federal Power Commission is now comprised of three Cabinet officers,
and the duties involved in the competent conduct of the growing
responsibilities of this commission far exceed the time and attention
which these officials can properly afford from other important duties. I
recommended that authority be given for the appointment of full-time
commissioners to replace them.
It is also desirable that the authority of the commission should be
extended to certain phases of power regulation. The nature of the
electric utilities industry is such that about 90 per cent of all power
generation and distribution is intrastate in character, and most of the
States have developed their own regulatory systems as to certificates of
convenience, rates, and profits of such utilities. To encroach upon
their authorities and responsibilities would be an encroachment upon the
rights of the States. There are cases, however, of interstate character
beyond the jurisdiction of the States. To meet these cases it would be
most desirable if a method could be worked out by which initial action
may be taken between the commissions of the States whose joint action
should be made effective by the Federal Power Commission with a reserve
to act on its own motion in case of disagreement or nonaction by the
States.
THE RADIO COMMISSION
I recommend the reorganization of the Radio Commission into a permanent
body from its present temporary status. The requirement of the present
law that the commissioners shall be appointed from specified zones
should be abolished and a general provision made for their equitable
selection from different parts of the country. Despite the effort of the
commissioners, the present method develops a public insistence that the
commissioners are specially charged with supervision of radio affairs in
the zone from which each is appointed. As a result there is danger that
the system will degenerate from a national system into five regional
agencies with varying practices, varying policies, competitive
tendencies, and consequent failure to attain its utmost capacity for
service to the people as a whole.
MUSCLE SHOALS
It is most desirable that this question should be disposed of. Under
present conditions the income from these plants is less than could
otherwise be secured for its use, and more especially the public is not
securing the full benefits which could be obtained from them.
It is my belief that such parts of these plants as would be useful and
the revenues from the remainder should be dedicated for all time to the
farmers of the United States for investigation and experimentation on a
commercial scale in agricultural chemistry. By such means advancing
discoveries of science can be systematically applied to agricultural
need, and development of the chemical industry of the Tennessee Valley
can be assured.
I do not favor the operation by the Government of either power or
manufacturing business except as an unavoidable by-product of some other
major public purpose.
Any form of settlement of this question will imply entering upon a
contract or contracts for the lease of the plants either as a whole or
in parts and the reservation of facilities, products, or income for
agricultural purposes. The extremely technical and involved nature of
such contracts dealing with chemical and electrical enterprises, added
to the unusual difficulties surrounding these special plants, and the
rapid commercial changes now in progress in power and synthetic nitrogen
manufacture, lead me to suggest that Congress create a special
commission, not to investigate and report as in the past, but with
authority to negotiate and complete some sort of contract or contracts
on behalf of the Government, subject, of course, to such general
requirements as Congress may stipulate.
BOULDER DAM
The Secretary of the Interior is making satisfactory progress in
negotiation of the very complex contracts required for the sale of the
power to be generated at this project. These contracts must assure the
return of all Government outlays upon the project. I recommend that the
necessary funds be appropriated for the initiation of this work as soon
as the contracts are in the hands of Congress.
CONSERVATION
Conservation of national resources is a fixed policy of the Government.
Three important questions bearing upon conservation of the public lands
have become urgent.
Conservation of our oil and gas resources against future need is a
national necessity. The working of the oil permit system in development
of oil and gas resources on the public domain has been subject to great
abuse. I considered it necessary to suspend the issuance of such permits
and to direct the review of all outstanding permits as to compliance of
the holders with the law. The purpose was not only to end such abuse but
to place the Government in position to review the entire subject.
We are also confronted with a major problem in conservation due to the
overgrazing on public lands. The effect of overgrazing (which has now
become general) is not only to destroy the ranges but by impairing the
ground coverage seriously to menace the water supply in many parts of
the West through quick run-off, spring floods, and autumn drought.
We have a third problem of major dimensions in the reconsideration of
our reclamation policy. The inclusion of most of the available lands of
the public domain in existing or planned reclamation projects largely
completes the original purpose of the Reclamation Service. There still
remains the necessity for extensive storage of water in the arid States
which renders it desirable that we should give a wider vision and
purpose to this service.
To provide for careful consideration of these questions and also of
better division of responsibilities in them as between the State and
Federal Governments, including the possible transfer to the States for
school purposes of the lands unreserved for forests, parks, power,
minerals, etc., I have appointed a Commission on Conservation of the
Public Domain, with a membership representing the major public land
States and at the same time the public at large. I recommend that
Congress should authorize a moderate sum to defray their expenses.
SOCIAL SERVICE
The Federal Government provides for an extensive and valuable program of
constructive social service, in education, home building, protection to
women and children, employment, public health, recreation, and many
other directions.
In a broad sense Federal activity in these directions has been confined
to research and dissemination of information and experience, and at most
to temporary subsidies to the States in order to secure uniform
advancement in practice and methods. Any other attitude by the Federal
Government will undermine one of the most precious possessions of the
American people; that is, local and individual responsibility. We should
adhere to this policy.
Federal officials can, however, make a further and most important
contribution by leadership in stimulation of the community and voluntary
agencies, and by extending Federal assistance in organization of these
forces and bringing about cooperation among them.
As an instance of this character, I have recently, in cooperation with
the Secretaries of Interior and Labor, laid the foundations of an
exhaustive inquiry into the facts precedent to a nation-wide White House
conference on child health and protection. This cooperative movement
among interested agencies will impose no expense upon the Government.
Similar nation-wide conferences will be called in connection with better
housing and recreation at a later date.
In view of the considerable difference of opinion as to the policies
which should be pursued by the Federal Government with respect to
education, I have appointed a committee representative of the important
educational associations and others to investigate and present
recommendations. In cooperation with the Secretary of the Interior, I
have also appointed a voluntary committee of distinguished membership to
assist in a nation-wide movement for abolition of illiteracy.
I have recommended additional appropriations for the Federal employment
service in order that it may more fully cover its cooperative work with
State and local services. I have also recommended additional
appropriations for the Women’s and Children’s Bureaus for much needed
research as to facts which I feel will prove most helpful.
PUBLIC HEALTH
The advance in scientific discovery as to disease and health imposes new
considerations upon us. The Nation as a whole is vitally interested in
the health of all the people; in protection from spread of contagious
disease; in the relation of physical and mental disabilities to
criminality; and in the economic and moral advancement which is
fundamentally associated with sound body and mind. The organization of
preventive measures and health education in its personal application is
the province of public health service. Such organization should be as
universal as public education. Its support is a proper burden upon the
taxpayer. It can not be organized with success, either in its sanitary
or educational phases, except under public authority. It should be based
upon local and State responsibility, but I consider that the Federal
Government has an obligation of contribution to the establishment of
such agencies.
In the practical working out of organization, exhaustive experiment and
trial have demonstrated that the base should be competent organization
of the municipality, county, or other local unit. Most of our
municipalities and some 400 rural counties out of 3,000 now have some
such unit organization. Where highly developed, a health unit comprises
at least a physician, sanitary engineer, and community nurse with the
addition, in some cases, of another nurse devoted to the problems of
maternity and children. Such organization gives at once a fundamental
control of preventive measures and assists in community instruction. The
Federal Government, through its interest in control of contagion, acting
through the United States Public Health Service and the State agencies,
has in the past and should in the future concern itself with this
development, particularly in the many rural sections which are
unfortunately far behind in progress. Some parts of the funds
contributed under the Sheppard-Towner Act through the Children’s Bureau
of the Department of Labor have also found their way into these
channels.
I recommend to the Congress that the purpose of the Sheppard-Towner Act
should be continued through the Children’s Bureau for a limited period
of years; and that the Congress should consider the desirability of
confining the use of Federal funds by the States to the building up of
such county or other local units, and that such outlay should be
positively coordinated with the funds expended through the United States
Public Health Service directed to other phases of the same county or
other local unit organization. All funds appropriated should of course
be applied through the States, so that the public health program of the
county or local unit will be efficiently coordinated with that of the
whole State.
FEDERAL PRISONS
Closely related to crime conditions is the administration of the Federal
prison system. Our Federal penal institutions are overcrowded, and this
condition is daily becoming worse. The parole and probation systems are
inadequate. These conditions make it impossible to perform the work of
personal reconstruction of prisoners so as to prepare them for return to
the duties of citizenship. In order to relieve the pressing evils I have
directed the temporary transfer of the Army Disciplinary Barracks at
Leavenworth to the Department of Justice for use as a Federal prison.
Not only is this temporary but it is inadequate for present needs.
We need some new Federal prisons and a reorganization of our probation
and parole systems; and there should be established in the Department of
Justice a Bureau of Prisons with a sufficient force to deal adequately
with the growing activities of our prison institutions. Authorization
for the improvements should be given speedily, with initial
appropriations to allow the construction of the new institutions to be
undertaken at once. IMMIGRATION
Restriction of immigration has from every aspect proved a sound national
policy. Our pressing problem is to formulate a method by which the
limited number of immigrants whom we do welcome shall be adapted to our
national setting and our national needs.
I have been opposed to the basis of the quotas now in force and I have
hoped that we could find some practical method to secure what I believe
should be our real national objective; that is, fitness of the immigrant
as to physique, character, training, and our need of service. Perhaps
some system of priorities within the quotas could produce these results
and at the same time enable some hardships in the present system to be
cleared up. I recommend that the Congress should give the subject
further study, in which the executive departments will gladly cooperate
with the hope of discovering such method as will more fully secure our
national necessities. VETERANS
It has been the policy of our Government almost from its inception to
make provision for the men who have been disabled in defense of our
country. This policy should be maintained. Originally it took the form
of land grants and pensions. This system continued until our entry into
the World War. The Congress at that time inaugurated a new plan of
compensation, rehabilitation, hospitalization, medical care and
treatment, and insurance, whereby benefits were awarded to those
veterans and their immediate dependents whose disabilities were
attributable to their war service. The basic principle in this
legislation is sound.
In a desire to eliminate all possibilities of injustice due to
difficulties in establishing service connection of disabilities, these
principles have been to some degree extended. Veterans whose diseases or
injuries have become apparent within a brief period after the war are
now receiving compensation; insurance benefits have been liberalized.
Emergency officers are now receiving additional benefits. The doors of
the Government’s hospitals have been opened to all veterans, even though
their diseases or injuries were not the result of their war service. In
addition adjusted service certificates have been issued to 3,433,300
veterans. This in itself will mean an expenditure of nearly
$3,500,000,000 before 1945, in addition to the $600,000,000 which we are
now appropriating annually for our veterans’ relief.
The administration of all laws concerning the veterans and their
dependents has been upon the basis of dealing generously, humanely, and
justly. While some inequalities have arisen, substantial and adequate
care has been given and justice administered. Further improvement in
administration may require some amendment from time to time to the law,
but care should be taken to see that such changes conform to the basic
principles of the legislation.
I am convinced that we will gain in efficiency, economy, and more
uniform administration and better definition of national policies if the
Pension Bureau, the National Home for Volunteer Soldiers, and the
Veterans’ Bureau are brought together under a single agency. The total
appropriations to these agencies now exceed $800,000,000 per annum.
CIVIL SERVICE
Approximately four-fifths of all the employees in the executive civil
service now occupy positions subject to competitive examination under
the civil service law.
There are, however, still commanding opportunities for extending the
system. These opportunities lie within the province of Congress and not
the President. I recommend that a further step be taken by authorization
that appointments of third-class postmasters be made under the civil
service law.
DEPARTMENTAL REORGANIZATION
This subject has been under consideration for over 20 years. It was
promised by both political parties in the recent campaign. It has been
repeatedly examined by committees and commissions--congressional,
executive, and voluntary. The conclusions of these investigations have
been unanimous that reorganization is a necessity of sound
administration; of economy; of more effective governmental policies and
of relief to the citizen from unnecessary harassment in his relations
with a multitude of scattered governmental agencies. But the
presentation of any specific plan at once enlivens opposition from every
official whose authority may be curtailed or who fears his position is
imperiled by such a result; of bureaus and departments which wish to
maintain their authority and activities; of citizens and their
organizations who are selfishly interested, or who are inspired by fear
that their favorite bureau may, in a new setting, be less subject to
their influence or more subject to some other influence.
It seems to me that the essential principles of reorganization are two
in number. First, all administrative activities of the same major
purpose should be placed in groups under single-headed responsibility;
second, all executive and administrative functions should be separated
from boards and commissions and placed under individual responsibility,
while quasi-legislative and quasi-judicial and broadly advisory
functions should be removed from individual authority and assigned to
boards and commissions. Indeed, these are the fundamental principles
upon which our Government was founded, and they are the principles which
have been adhered to in the whole development of our business structure,
and they are the distillation of the common sense of generations.
For instance, the conservation of national resources is spread among
eight agencies in five departments. They suffer from conflict and
overlap. There is no proper development and adherence to broad national
policies and no central point where the searchlight of public opinion
may concentrate itself. These functions should be grouped under the
direction of some such official as an assistant secretary of
conservation. The particular department or cabinet officer under which
such a group should be placed is of secondary importance to the need of
concentration. The same may be said of educational services, of merchant
marine aids, of public works, of public health, of veterans’ services,
and many others, the component parts of which are widely scattered in
the various departments and independent agencies. It is desirable that
we first have experience with these different groups in action before we
create new departments. These may be necessary later on.
With this background of all previous experience I can see no hope for
the development of a sound reorganization of the Government unless
Congress be willing to delegate its authority over the problem (subject
to defined principles) to the Executive, who should act upon approval of
a joint committee of Congress or with the reservation of power of
revision by Congress within some limited period adequate for its
consideration. PROHIBITION
The first duty of the President under his oath of office is to secure
the enforcement of the laws. The enforcement of the laws enacted to give
effect to the eighteenth amendment is far from satisfactory and this is
in part due to the inadequate organization of the administrative
agencies of the Federal Government. With the hope of expediting such
reorganization, I requested on June 6 last that Congress should appoint
a joint committee to collaborate with executive agencies in preparation
of legislation. It would be helpful if it could be so appointed. The
subject has been earnestly considered by the Law Enforcement Commission
and the administrative officials of the Government. Our joint
conclusions are that certain steps should be taken at once. First, there
should be an immediate concentration of responsibility and strengthening
of enforcement agencies of the Federal Government by transfer to the
Department of Justice of the Federal functions of detection and to a
considerable degree of prosecution, which are now lodged in the
Prohibition Bureau in the Treasury; and at the same time the control of
the distribution of industrial alcohol and legalized beverages should
remain in the Treasury. Second, provision should be made for relief of
congestion in the Federal courts by modifying and simplifying the
procedure for dealing with the large volume of petty prosecutions under
various Federal acts. Third, there should be a codification of the laws
relating to prohibition to avoid the necessity which now exists of
resorting to more than 25 statutes enacted at various times over 40
years. Technical defects in these statutes that have been disclosed
should be cured. I would add to these recommendations the desirability
of reorganizing the various services engaged in the prevention of
smuggling into one border patrol under the Coast Guard. Further
recommendations upon the subject as a whole will be developed after
further examination by the Law Enforcement Commission, but it is not to
be expected that any criminal law will ever be fully enforced so long as
criminals exist.
The District of Columbia should be the model of city law enforcement in
the Nation. While conditions here are much better than in many other
cities, they are far from perfect, and this is due in part to the
congestion of criminal cases in the Supreme Court of the District,
resulting in long delays. Furthermore, there is need for legislation in
the District supplementing the national prohibition act, more sharply
defining and enlarging the duties and powers of the District
Commissioners and the police of the District, and opening the way for
better cooperation in the enforcement of prohibition between the
District officials and the prohibition officers of the Federal
Government. It is urgent that these conditions be remedied.
LAW ENFORCEMENT AND OBSERVANCE
No one will look with satisfaction upon the volume of crime of all kinds
and the growth of organized crime in our country. We have pressing need
so to organize our system of administering criminal justice as to
establish full vigor and effectiveness. We need to reestablish faith
that the highest interests of our country are served by insistence upon
the swift and even-handed administration of justice to all offenders,
whether they be rich or poor. That we shall effect improvement is vital
to the preservation of our institutions. It is the most serious issue
before our people.
Under the authority of Congress I have appointed a National Commission
on Law Observance and Enforcement, for an exhaustive study of the entire
problem of the enforcement of our laws and the improvement of our
judicial system, including the special problems and abuses growing out
of the prohibition laws. The commission has been invited to make the
widest inquiry into the shortcomings of the administration of justice
and into the causes and remedies for them. It has organized its work
under subcommittees dealing with the many contributory causes of our
situation and has enlisted the aid of investigators in fields requiring
special consideration. I am confident that as a result of its studies
now being carried forward it will make a notable contribution to the
solution of our pressing problems.
Pending further legislation, the Department of Justice has been striving
to weed out inefficiency wherever it exists, to stimulate activity on
the part of its prosecuting officers, and to use increasing care in
examining into the qualifications of those appointed to serve as
prosecutors. The department is seeking systematically to strengthen the
law enforcement agencies week by week and month by month, not by
dramatic displays but by steady pressure; by removal of negligent
officials and by encouragement and assistance to the vigilant. During
the course of these efforts it has been revealed that in some districts
causes contributing to the congestion of criminal dockets, and to delays
and inefficiency in prosecutions, have been lack of sufficient forces in
the offices of United States attorneys, clerks of courts, and marshals.
These conditions tend to clog the machinery of justice. The last
conference of senior circuit judges has taken note of them and indorsed
the department’s proposals for improvement. Increases in appropriations
are necessary and will be asked for in order to reenforce these offices.
The orderly administration of the law involves more than the mere
machinery of law enforcement. The efficient use of that machinery and a
spirit in our people in support of law are alike essential. We have need
for improvement in both. However much we may perfect the mechanism,
still if the citizen who is himself dependent upon some laws for the
protection of all that he has and all that he holds dear, shall insist
on selecting the particular laws which he will obey, he undermines his
own safety and that of his country. His attitude may obscure, but it can
not conceal, the ugly truth that the lawbreaker, whoever he may be, is
the enemy of society. We can no longer gloss over the unpleasant reality
which should be made vital in the consciousness of every citizen, that
he who condones or traffics with crime, who is indifferent to it and to
the punishment of the criminal, or to the lax performance of official
duty, is himself the most effective agency for the breakdown of society.
Law can not rise above its source in good citizenship--in what
right-minded men most earnestly believe and desire. If the law is upheld
only by Government officials, then all law is at an end. Our laws are
made by the people themselves; theirs is the right to work for their
repeal; but until repeal it is an equal duty to observe them and demand
their enforcement.
I have been gratified at the awakening sense of this responsibility in
our citizens during the past few months, and gratified that many
instances have occurred which refuted the cynicism which has asserted
that our system could not convict those who had defied the law and
possessed the means to resist its execution. These things reveal a moral
awakening both in the people and in officials which lies at the very
foundation of the rule of law.
CONCLUSION
The test of the rightfulness of our decisions must be whether we have
sustained and advanced the ideals of the American people;
self-government in its foundations of local government; justice whether
to the individual or to the group; ordered liberty; freedom from
domination; open opportunity and equality of opportunity; the initiative
and individuality of our people; prosperity and the lessening of
poverty; freedom of public opinion; education; advancement of knowledge;
the growth of religious spirit; the tolerance of all faiths; the
foundations of the home and the advancement of peace.
The White House,
December 3, 1929
***
State of the Union Address
Herbert Hoover
December 2, 1930
To the Senate and House of Representatives:
I have the honor to comply with the requirement of the Constitution that
I should lay before the Congress information as to the state of the
Union, and recommend consideration of such measures as are necessary and
expedient.
Substantial progress has been made during the year in national peace and
security; the fundamental strength of the Nation’s economic life is
unimpaired; education and scientific discovery have made advances; our
country is more alive to its problems of moral and spiritual welfare.
ECONOMIC SITUATION
During the past 12 months we have suffered with other Nations from
economic depression.
The origins of this depression lie to some extent within our own borders
through a speculative period which diverted capital and energy into
speculation rather than constructive enterprise. Had overspeculation in
securities been the only force operating, we should have seen recovery
many months ago, as these particular dislocations have generally
readjusted themselves.
Other deep-seated causes have been in action, however, chiefly the
world-wide overproduction beyond even the demand of prosperous times for
such important basic commodities as wheat, rubber, coffee, sugar,
copper, silver, zinc, to some extent cotton, and other raw materials.
The cumulative effects of demoralizing price falls of these important
commodities in the process of adjustment of production to world
consumption have produced financial crises in many countries and have
diminished the buying power of these countries for imported goods to a
degree which extended the difficulties farther afield by creating
unemployment in all the industrial nations. The political agitation in
Asia; revolutions in South America and political unrest in some European
States; the methods of sale by Russia of her increasing agricultural
exports to European markets; and our own drought--have all contributed
to prolong and deepen the depression.
In the larger view the major forces of the depression now lie outside of
the United States, and our recuperation has been retarded by the
unwarranted degree of fear and apprehension created by these outside
forces.
The extent of the depression is indicated by the following approximate
percentages of activity during the past three months as compared with
the highly prosperous year of 1928:
Value of department-store sales - 93% of 1928
Volume of manufacturing production - 80% of 1928
Volume of mineral production - 90% of 1928
Volume of factory employment - 84% of 1928
Total of bank deposits - 105% of 1928
Wholesale prices--all commodities - 83% of 1928
Cost of living - 94% of 1928
Various other indexes indicate total decrease of activity from 1928 of
from 15 to 20 per cent.
There are many factors which give encouragement for the future. The fact
that we are holding from 80 to 85 per cent of our normal activities and
incomes; that our major financial and industrial institutions have come
through the storm unimpaired; that price levels of major commodities
have remained approximately stable for some time; that a number of
industries are showing signs of increasing demand; that the world at
large is readjusting itself to the situation; all reflect grounds for
confidence. We should remember that these occasions have been met many
times before, that they are but temporary, that our country is to-day
stronger and richer in resources, in equipment, in skill, than ever in
its history. We are in an extraordinary degree self-sustaining, we will
overcome world influences and will lead the march of prosperity as we
have always done hitherto.
Economic depression can not be cured by legislative action or executive
pronouncement. Economic wounds must be healed by the action of the cells
of the economic body--the producers and consumers themselves. Recovery
can be expedited and its effects mitigated by cooperative action. That
cooperation requires that every individual should sustain faith and
courage; that each should maintain his self-reliance; that each and
every one should search for methods of improving his business or
service; that the vast majority whose income is unimpaired should not
hoard out of fear but should pursue their normal living and recreations;
that each should seek to assist his neighbors who may be less fortunate;
that each industry should assist its own employees; that each community
and each State should assume its full responsibilities for organization
of employment and relief of distress with that sturdiness and
independence which built a great Nation.
Our people are responding to these impulses in remarkable degree. The
best contribution of government lies in encouragement of this voluntary
cooperation in the community. The Government, National, State, and
local, can join with the community in such programs and do its part. A
year ago I, together with other officers of the Government, initiated
extensive cooperative measures throughout the country.
The first of these measures was an agreement of leading employers to
maintain the standards of wages and of labor leaders to use their
influence against strife. In a large sense these undertakings have been
adhered to and we have not witnessed the usual reductions of wages which
have always heretofore marked depressions. The index of union wage
scales shows them to be today fully up to the level of any of the
previous three years. In consequence the buying power of the country has
been much larger than would otherwise have been the case. Of equal
importance the Nation has had unusual peace in industry and freedom from
the public disorder which has characterized previous depressions.
The second direction of cooperation has been that our governments,
National, State, and local, the industries and business so distribute
employment as to give work to the maximum number of employees.
The third direction of cooperation has been to maintain and even extend
construction work and betterments in anticipation of the future. It has
been the universal experience in previous depressions that public works
and private construction have fallen off rapidly with the general tide
of depression. On this occasion, however, the increased authorization
and generous appropriations by the Congress and the action of States and
municipalities have resulted in the expansion of public construction to
an amount even above that in the most prosperous years. In addition the
cooperation of public utilities, railways, and other large organizations
has been generously given in construction and betterment work in
anticipation of future need. The Department of Commerce advises me that
as a result, the volume of this type of construction work, which
amounted to roughly $6,300,000,000 in 1929, instead of decreasing will
show a total of about $7,000,000,000 for 1930. There has, of course,
been a substantial decrease in the types of construction which could not
be undertaken in advance of need.
The fourth direction of cooperation was the organization in such States
and municipalities, as was deemed necessary, of committees to organize
local employment, to provide for employment agencies, and to effect
relief of distress.
The result of magnificent cooperation throughout the country has been
that actual suffering has been kept to a minimum during the past 12
months, and our unemployment has been far less in proportion than in
other large industrial countries. Some time ago it became evident that
unemployment would continue over the winter and would necessarily be
added to from seasonal causes and that the savings of workpeople would
be more largely depleted. We have as a Nation a definite duty to see
that no deserving person in our country suffers from hunger or cold. I
therefore set up a more extensive organization to stimulate more
intensive cooperation throughout the country. There has been a most
gratifying degree of response, from governors, mayors, and other public
officials, from welfare organizations, and from employers in concerns
both large and small. The local communities through their voluntary
agencies have assumed the duty of relieving individual distress and are
being generously supported by the public.
The number of those wholly out of employment seeking for work was
accurately determined by the census last April as about 2,500,000. The
Department of Labor index of employment in the larger trades shows some
decrease in employment since that time. The problem from a relief point
of view is somewhat less than the published estimates of the number of
unemployed would indicate. The intensive community and individual
efforts in providing special employment outside the listed industries
are not reflected in the statistical indexes and tend to reduce such
published figures. Moreover, there is estimated to be a constant figure
at all times of nearly 1,000,000 unemployed who are not without annual
income but temporarily idle in the shift from one job to another. We
have an average of about three breadwinners to each two families, so
that every person unemployed does not represent a family without income.
The view that the relief problems are less than the gross numbers would
indicate is confirmed by the experience of several cities, which shows
that the number of families in distress represents from 10 to 20 per
cent of the number of the calculated unemployed. This is not said to
minimize the very real problem which exists but to weigh its actual
proportions.
As a contribution to the situation the Federal Government is engaged
upon the greatest program of waterway, harbor, flood control, public
building, highway, and airway improvement in all our history. This,
together with loans to merchant shipbuilders, improvement of the Navy
and in military aviation, and other construction work of the Government
will exceed $520,000,000 for this fiscal year. This compares with
$253,000,000 in the fiscal year 1928. The construction works already
authorized and the continuation of policies in Government aid will
require a continual expenditure upwards of half a billion dollars
annually.
I favor still further temporary expansion of these activities in aid to
unemployment during this winter. The Congress will, however, have
presented to it numbers of projects, some of them under the guise of,
rather than the reality of, their usefulness in the increase of
employment during the depression. There are certain commonsense
limitations upon any expansions of construction work. The Government
must not undertake works that are not of sound economic purpose and that
have not been subject to searching technical investigation, and which
have not been given adequate consideration by the Congress. The volume
of construction work in the Government is already at the maximum limit
warranted by financial prudence as a continuing policy. To increase
taxation for purposes of construction work defeats its own purpose, as
such taxes directly diminish employment in private industry. Again any
kind of construction requires, after its authorization, a considerable
time before labor can be employed in which to make engineering,
architectural, and legal preparations. Our immediate problem is the
increase of employment for the next six months, and new plans which do
not produce such immediate result or which extend commitments beyond
this period are not warranted.
The enlarged rivers and harbors, public building, and highway plans
authorized by the Congress last session, however, offer an opportunity
for assistance by the temporary acceleration of construction of these
programs even faster than originally planned, especially if the
technical requirements of the laws which entail great delays could be
amended in such fashion as to speed up acquirements of land and the
letting of contracts.
With view, however, to the possible need for acceleration, we,
immediately upon receiving those authorities from the Congress five
months ago, began the necessary technical work in preparation for such
possible eventuality. I have canvassed the departments of the Government
as to the maximum amount that can be properly added to our present
expenditure to accelerate all construction during the next six months,
and I feel warranted in asking the Congress for an appropriation of from
$100,000,000 to $150,000,000 to provide such further employment in this
emergency. In connection therewith we need some authority to make
enlarged temporary advances of Federal-highway aid to the States.
I recommend that this appropriation be made distributable to the
different departments upon recommendation of a committee of the Cabinet
and approval by the President. Its application to works already
authorized by the Congress assures its use in directions of economic
importance and to public welfare. Such action will imply an expenditure
upon construction of all kinds of over $650,000,000 during the next
twelve months.
AGRICULTURE
The world-wide depression has affected agriculture in common with all
other industries. The average price of farm produce has fallen to about
80 per cent of the levels of 1928. This average is, however, greatly
affected by wheat and cotton, which have participated in world-wide
overproduction and have fallen to about 60 per cent of the average price
of the year 1928. Excluding these commodities, the prices of all other
agricultural products are about 84 per cent of those of 1928. The
average wholesale prices of other primary goods, such as nonferrous
metals, have fallen to 76 per cent of 1928.
The price levels of our major agricultural commodities are, in fact,
higher than those in other principal producing countries, due to the
combined result of the tariff and the operations of the Farm Board. For
instance, wheat prices at Minneapolis are about 30 per cent higher than
at Winnipeg, and at Chicago they are about 20 per cent higher than at
Buenos Aires. Corn prices at Chicago are over twice as high as at Buenos
Aires. Wool prices average more than 80 per cent higher in this country
than abroad, and butter is 30 per cent higher in New York City than in
Copenhagen.
Aside from the misfortune to agriculture of the world-wide depression we
have had the most severe drought. It has affected particularly the
States bordering on the Potomac, Ohio, and Lower Mississippi Rivers,
with some areas in Montana, Kansas, Oklahoma, and Texas. It has found
its major expression in the shortage of pasturage and a shrinkage in the
corn crop from an average of about 2,800,000,000 bushels to about
2,090,000,000 bushels.
On August 14 I called a conference of the governors of the most acutely
affected States, and as a result of its conclusions I appointed a
national committee comprising the heads of the important Federal
agencies under the chairmanship of the Secretary of Agriculture. The
governors in turn have appointed State committees representative of the
farmers, bankers, business men, and the Red Cross, and subsidiary
committees have been established in most of the acutely affected
counties. Railway rates were reduced on feed and livestock in and out of
the drought areas, and over 50,000 cars of such products have been
transported under these reduced rates. The Red Cross established a
preliminary fund of $5,000,000 for distress relief purposes and
established agencies for its administration in each county. Of this fund
less than $500,000 has been called for up to this time as the need will
appear more largely during the winter. The Federal Farm Loan Board has
extended its credit facilities, and the Federal Farm Board has given
financial assistance to all affected cooperatives.
In order that the Government may meet its full obligation toward our
countrymen in distress through no fault of their own, I recommend that
an appropriation should be made to the Department of Agriculture to be
loaned for the purpose of seed and feed for animals. Its application
should as hitherto in such loans be limited to a gross amount to any one
individual, and secured upon the crop.
The Red Cross can relieve the cases of individual distress by the
sympathetic assistance of our people.
FINANCES OF THE GOVERNMENT
I shall submit the detailed financial position of the Government with
recommendations in the usual Budget message. I will at this time,
however, mention that the Budget estimates of receipts and expenditures
for the current year were formulated by the Treasury and the Budget
Bureau at a time when it was impossible to forecast the severity of the
business depression and have been most seriously affected by it. At that
time a surplus of about $123,000,000 was estimated for this fiscal year
and tax reduction which affected the fiscal year to the extent of
$75,000,000 was authorized by the Congress, thus reducing the estimated
surplus to about $48,000,000. Closely revised estimates now made by the
Treasury and the Bureau of the Budget of the tax, postal, and other
receipts for the current fiscal year indicate a decrease of about
$430,000,000 from the estimate of a year ago, of which about $75,000,000
is due to tax reduction, leaving about $355,000,000 due to the
depression. Moreover, legislation enacted by Congress subsequent to the
submission of the Budget enlarging Federal construction work to expand
employment and for increase in veterans’ services and other items, have
increased expenditures during the current fiscal year by about
$225,000,000.
Thus the decrease of $430,000,000 in revenue and the increase of
$225,000,000 in expenditure adversely change the original Budget
situation by about $655,000,000. This large sum is offset by the
original estimated surplus a year ago of about $123,000,000, by the
application of $185,000,000 of interest payments upon the foreign debt
to current expenditures, by arrangements of the Farm Board through
repayments, etc., in consequence of which they reduced their net cash
demands upon the Treasury by $100,000,000 in this period, and by about
$67,000,000 economies and deferments brought about in the Government,
thus reducing the practical effect of the change in the situation to an
estimated deficit of about $180,000,000 for the present fiscal year. I
shall make suggestions for handling the present-year deficit in the
Budget message, but I do not favor encroachment upon the statutory
reduction of the public debt.
While it will be necessary in public interest to further increase
expenditures during the current fiscal year in aid to unemployment by
speeding up construction work and aid to the farmers affected by the
drought, I can not emphasize too strongly the absolute necessity to
defer any other plans for increase of Government expenditures. The
Budget for 1932 fiscal year indicates estimated expenditure of about
$4,054,000,000, including postal deficit. The receipts are estimated at
about $4,085,000,000 if the temporary tax reduction of last year be
discontinued, leaving a surplus of only about $30,000,000. Most rigid
economy is therefore necessary to avoid increase in taxes.
NATIONAL DEFENSE
Our Army and Navy are being maintained at a high state of efficiency,
under officers of high training and intelligence, supported by a devoted
personnel of the rank and file. The London naval treaty has brought
important economies in the conduct of the Navy. The Navy Department will
lay before the committees of the Congress recommendations for a program
of authorization of new construction which should be initiated in the
fiscal year of 1932.
LEGISLATION
This is the last session of the Seventy-first Congress. During its
previous sittings it has completed a very large amount of important
legislation, notably: The establishment of the Federal Farm Board;
fixing congressional reapportionment; revision of the tariff, including
the flexible provisions and a reorganization of the Tariff Commission;
reorganization of the Radio Commission; reorganization of the Federal
Power Commission; expansion of Federal prisons; reorganization of parole
and probation system in Federal prisons; expansion of veterans’
hospitals; establishment of disability allowances to veterans;
consolidation of veteran activities; consolidation and strengthening of
prohibition enforcement activities in the Department of Justice;
organization of a Narcotics Bureau; large expansion of rivers and
harbors improvements; substantial increase in Federal highways;
enlargement of public buildings construction program; and the
ratification of the London naval treaty.
The Congress has before it legislation partially completed in the last
sitting in respect to Muscle Shoals, bus regulation, relief of
congestion in the courts, reorganization of border patrol in prevention
of smuggling, law enforcement in the District of Columbia, and other
subjects.
It is desirable that these measures should be completed.
The short session does not permit of extensive legislative programs, but
there are a number of questions which, if time does not permit action, I
recommend should be placed in consideration by the Congress, perhaps
through committees cooperating in some instances with the Federal
departments, with view to preparation for subsequent action. Among them
are the following subjects:
ELECTRICAL POWER
I have in a previous message recommended effective regulation of
interstate electrical power. Such regulation should preserve the
independence and responsibility of the States.
RAILWAYS
We have determined upon a national policy of consolidation of the
railways as a necessity of more stable and more economically operated
transportation. Further legislation is necessary to facilitate such
consolidation. In the public interest we should strengthen the railways
that they may meet our future needs.
ANTITRUST LAWS
I recommend that the Congress institute an inquiry into some aspects of
the economic working of these laws. I do not favor repeal of the Sherman
Act. The prevention of monopolies is of most vital public importance.
Competition is not only the basis of protection to the consumer but is
the incentive to progress. However, the interpretation of these laws by
the courts, the changes in business, especially in the economic effects
upon those enterprises closely related to the use of the natural
resources of the country, make such an inquiry advisable. The producers
of these materials assert that certain unfortunate results of wasteful
and destructive use of these natural resources together with a
destructive competition which impoverishes both operator and worker can
not be remedied because of the prohibitive interpretation of the
antitrust laws. The well-known condition of the bituminous coal industry
is an illustration. The people have a vital interest in the conservation
of their natural resources; in the prevention of wasteful practices; in
conditions of destructive competition which may impoverish the producer
and the wage earner; and they have an equal interest in maintaining
adequate competition. I therefore suggest that an inquiry be directed
especially to the effect of the workings of the antitrust laws in these
particular fields to determine if these evils can be remedied without
sacrifice of the fundamental purpose of these laws.
CAPITAL-GAINS TAX
It is urged by many thoughtful citizens that the peculiar economic
effect of the income tax on so-called capital gains at the present rate
is to enhance speculative inflation and likewise impede business
recovery. I believe this to be the case and I recommend that a study be
made of the economic effects of this tax and of its relation to the
general structure of our income tax law.
IMMIGRATION
There is need for revision of our immigration laws upon a more limited
and more selective basis, flexible to the needs of the country.
Under conditions of current unemployment it is obvious that persons
coming to the United States seeking work would likely become either a
direct or indirect public charge. As a temporary measure the officers
issuing visas to immigrants have been, in pursuance of the law,
instructed to refuse visas to applicants likely to fall into this class.
As a result the visas issued have decreased from an average of about
24,000 per month prior to restrictions to a rate of about 7,000 during
the last month. These are largely preferred persons under the law. Visas
from Mexico are about 250 per month compared to about 4,000 previous to
restrictions. The whole subject requires exhaustive reconsideration.
DEPORTATION OF ALIEN CRIMINALS
I urge the strengthening of our deportation laws so as to more fully rid
ourselves of criminal aliens. Furthermore, thousands of persons have
entered the country in violation of the immigration laws. The very
method of their entry indicates their objectionable character, and our
law-abiding foreign-born residents suffer in consequence. I recommend
that the Congress provide methods of strengthening the Government to
correct this abuse.
POST OFFICE
Due to deferment of Government building over many years, previous
administrations had been compelled to enter upon types of leases for
secondary facilities in large cities, some of which were objectionable
as representing too high a return upon the value of the property. To
prevent the occasion for further uneconomic leasing I recommend that the
Congress authorize the building by the Government of its own facilities.
VETERANS
The Nation has generously expanded its care for veterans. The
consolidation of all veterans’ activities into the Veterans’
Administration has produced substantial administrative economies. The
consolidation also brings emphasis to the inequalities in service and
allowances. The whole subject is under study by the administrator, and I
recommend it should also be examined by the committees of the Congress.
SOCIAL SERVICE
I urge further consideration by the Congress of the recommendations I
made a year ago looking to the development through temporary Federal aid
of adequate State and local services for the health of children and the
further stamping out of communicable disease, particularly in the rural
sections. The advance of scientific discovery, methods, and social
thought imposes a new vision in these matters. The drain upon the
Federal Treasury is comparatively small. The results both economic and
moral are of the utmost importance.
GENERAL
It is my belief that after the passing of this depression, when we can
examine it in retrospect, we shall need to consider a number of other
questions as to what action may be taken by the Government to remove
Possible governmental influences which make for instability and to
better organize mitigation of the effect of depression. It is as yet too
soon to constructively formulate such measures.
There are many administrative subjects, such as departmental
reorganization, extension of the civil service, readjustment of the
postal rates, etc., which at some appropriate time require the attention
of the Congress.
FOREIGN RELATIONS
Our relations with foreign countries have been maintained upon a high
basis of cordiality and good will.
During the past year the London naval pact was completed, approved by
the Senate, and ratified by the governments concerned. By this treaty we
have abolished competition in the building of warships, have established
the basis of parity of the United States with the strongest of foreign
powers, and have accomplished a substantial reduction in war vessels.
During the year there has been an extended political unrest in the
world. Asia continues in disturbed condition, and revolutions have taken
place in Brazil, Argentina, Peru, and Bolivia. Despite the jeopardy to
our citizens and their property which naturally arises in such
circumstances, we have, with the cooperation of the governments
concerned, been able to meet all such instances without friction.
We have resumed normal relations with the new Governments of Brazil,
Argentina, Peru, and Bolivia immediately upon evidence that they were
able to give protection to our citizens and their property, and that
they recognized their international obligations.
A commission which was supported by the Congress has completed its
investigation and reported upon our future policies in respect to Haiti
and proved of high value in securing the acceptance of these policies.
An election has been held and a new government established. We have
replaced our high commissioner by a minister and have begun the gradual
withdrawal of our activities with view to complete retirement at the
expiration of the present treaty in 1935.
A number of arbitration and conciliation treaties have been completed or
negotiated during the year, and will be presented for approval by the
Senate.
I shall, in a special message, lay before the Senate the protocols
covering the statutes of the World Court which have been revised to
accord with the sense of previous Senate reservations.
The White House,
December 2, 1930
***
State of the Union Address
Herbert Hoover
December 8, 1931
To the Senate and House of Representatives:
It is my duty under the Constitution to transmit to the Congress
information on the state of the Union and to recommend for its
consideration necessary and expedient measures.
The chief influence affecting the state of the Union during the past
year has been the continued world-wide economic disturbance. Our
national concern has been to meet the emergencies it has created for us
and to lay the foundations for recovery.
If we lift our vision beyond these immediate emergencies we find
fundamental national gains even amid depression. In meeting the problems
of this difficult period, we have witnessed a remarkable development of
the sense of cooperation in the community. For the first time in the
history of our major economic depressions there has been a notable
absence of public disorders and industrial conflict. Above all there is
an enlargement of social and spiritual responsibility among the people.
The strains and stresses upon business have resulted in closer
application, in saner policies, and in better methods. Public
improvements have been carried out on a larger scale than even in normal
times. The country is richer in physical property, in newly discovered
resources, and in productive capacity than ever before. There has been
constant gain in knowledge and education; there has been continuous
advance in science and invention; there has been distinct gain in public
health. Business depressions have been recurrent in the life of our
country and are but transitory. The Nation has emerged from each of them
with increased strength and virility because of the enlightenment they
have brought, the readjustments and the larger understanding of the
realities and obligations of life and work which come from them.
NATIONAL DEFENSE
Both our Army and Navy have been maintained in a high state of
efficiency. The ability and devotion of both officers and men sustain
the highest traditions of the service. Reductions and postponements in
expenditure of these departments to meet the present emergency are being
made without reducing existing personnel or impairing the morale of
either establishment.
The agreement between the leading naval powers for limitation of naval
armaments and establishment of their relative strength and thus
elimination of competitive building also implies for ourselves the
gradual expansion of the deficient categories in our Navy to the
parities provided in those treaties. However, none of the other nations,
parties to these agreements, is to-day maintaining the full rate of
construction which the treaty size of fleets would imply.
Although these agreements secured the maximum reduction of fleets which
it was at that time possible to attain, I am hopeful that the naval
powers, party to these agreements, will realize that establishment of
relative strength in itself offers opportunity for further reduction
without injury to any of them. This would be the more possible if
pending negotiations are successful between France and Italy. If the
world is to regain its standards of life, it must further decrease both
naval and other arms. The subject will come before the General
Disarmament Conference which meets in Geneva on February 2.
FOREIGN AFFAIRS
We are at peace with the world. We have cooperated with other nations to
preserve peace. The rights of our citizens abroad have been protected.
The economic depression has continued and deepened in every part of the
world during the past year. In many countries political instability,
excessive armaments, debts, governmental expenditures, and taxes have
resulted in revolutions, in unbalanced budgets and monetary collapse and
financial panics, in dumping of goods upon world markets, and in
diminished consumption of commodities.
Within two years there have been revolutions or acute social disorders
in 19 countries, embracing more than half the population of the world.
Ten countries have been unable to meet their external obligations. In 14
countries, embracing a quarter of the world’s population, former
monetary standards have been temporarily abandoned. In a number of
countries there have been acute financial panics or compulsory
restraints upon banking. These disturbances have many roots in the
dislocations from the World War. Every one of them has reacted upon us.
They have sharply affected the markets and prices of our agricultural
and industrial products. They have increased unemployment and greatly
embarrassed our financial and credit system.
As our difficulties during the past year have plainly originated in
large degree from these sources, any effort to bring about our own
recuperation has dictated the necessity of cooperation by us with other
nations in reasonable effort to restore world confidence and economic
stability.
Cooperation of our Federal reserve system and our banks with the central
banks in foreign countries has contributed to localize and ameliorate a
number of serious financial crises or moderate the pressures upon us and
thus avert disasters which would have affected us.
The economic crisis in Germany and Central Europe last June rose to the
dimensions of a general panic from which it was apparent that without
assistance these nations must collapse. Apprehensions of such collapse
had demoralized our agricultural and security markets and so threatened
other nations as to impose further dangers upon us. But of highest
importance was the necessity of cooperation on our part to relieve the
people of Germany from imminent disasters and to maintain their
important relations to progress and stability in the world. Upon the
initiative of this Government a year’s postponement of reparations and
other intergovernmental debts was brought about. Upon our further
initiative an agreement was made by Germany’s private creditors
providing for an extension of such credits until the German people can
develop more permanent and definite forms of relief.
We have continued our policy of withdrawing our marines from Haiti and
Nicaragua.
The difficulties between China and Japan have given us great concern,
not alone for the maintenance of the spirit of the Kellogg-Briand Pact,
but for the maintenance of the treaties to which we are a party assuring
the territorial integrity of China. It is our purpose to assist in
finding solutions sustaining the full spirit of those treaties.
I shall deal at greater length with our foreign relations in a later
message.
THE DOMESTIC SITUATION
Many undertakings have been organized and forwarded during the past year
to meet the new and changing emergencies which have constantly
confronted us.
Broadly the community has cooperated to meet the needs of honest
distress, and to take such emergency measures as would sustain
confidence in our financial system and would cushion the violence of
liquidation in industry and commerce, thus giving time for orderly
readjustment of costs, inventories, and credits without panic and
widespread bankruptcy. These measures have served those purposes and
will promote recovery.
In these measures we have striven to mobilize and stimulate private
initiative and local and community responsibility. There has been the
least possible Government entry into the economic field, and that only
in temporary and emergency form. Our citizens and our local governments
have given a magnificent display of unity and action, initiative and
patriotism in solving a multitude of difficulties and in cooperating
with the Federal Government.
For a proper understanding of my recommendations to the Congress it is
desirable very briefly to review such activities during the past year.
The emergencies of unemployment have been met by action in many
directions. The appropriations for the continued speeding up of the
great Federal construction program have provided direct and indirect aid
to employment upon a large scale. By organized unity of action, the
States and municipalities have also maintained large programs of public
improvement. Many industries have been prevailed upon to anticipate and
intensify construction. Industrial concerns and other employers have
been organized to spread available work amongst all their employees,
instead of discharging a portion of them. A large majority have
maintained wages at as high levels as the safe conduct of their business
would permit. This course has saved us from industrial conflict and
disorder which have characterized all previous depressions. Immigration
has been curtailed by administrative action. Upon the basis of normal
immigration the decrease amounts to about 300,000 individuals who
otherwise would have been added to our unemployment. The expansion of
Federal employment agencies under appropriations by the Congress has
proved most effective. Through the President’s organization for
unemployment relief, public and private agencies were successfully
mobilized last winter to provide employment and other measures against
distress. Similar organization gives assurance against suffering during
the coming winter. Committees of leading citizens are now active at
practically every point of unemployment. In the large majority they have
been assured the funds necessary which, together with local government
aids, will meet the situation. A few exceptional localities will be
further organized. The evidence of the Public Health Service shows an
actual decrease of sickness and infant and general mortality below
normal years. No greater proof could be adduced that our people have
been protected from hunger and cold and that the sense of social
responsibility in the Nation has responded to the need of the
unfortunate.
To meet the emergencies in agriculture the loans authorized by Congress
for rehabilitation in the drought areas have enabled farmers to produce
abundant crops in those districts. The Red Cross undertook and
magnificently administered relief for over 2,500,000 drought sufferers
last winter. It has undertaken this year to administer relief to 100,000
sufferers in the new drought area of certain Northwest States. The
action of the Federal Farm Board in granting credits to farm
cooperatives saved many of them from bankruptcy and increased their
purpose and strength. By enabling farm cooperatives to cushion the fall
in prices of farm products in 1930 and 1931 the Board secured higher
prices to the farmer than would have been obtained otherwise, although
the benefits of this action were partially defeated by continued world
overproduction. Incident to this action the failure of a large number of
farmers and of country banks was averted which could quite possibly have
spread into a major disaster. The banks in the South have cooperated
with the Farm Board in creation of a pool for the better marketing of
accumulated cotton. Growers have been materially assisted by this
action. Constant effort has been made to reduce overproduction in relief
of agriculture and to promote the foreign buying of agricultural
products by sustaining economic stability abroad.
To meet our domestic emergencies in credit and banking arising from the
reaction to acute crisis abroad the National Credit Association was set
up by the banks with resources of $500,000,000 to support sound banks
against the frightened withdrawals and hoarding. It is giving aid to
reopen solvent banks which have been closed. Federal officials have
brought about many beneficial unions of banks and have employed other
means which have prevented many bank closings. As a result of these
measures the hoarding withdrawals which had risen to over $250,000,000
per week after the British crisis have substantially ceased.
FURTHER MEASURES
The major economic forces and weaknesses at home and abroad have now
been exposed and can be appraised, and the time is ripe for forward
action to expedite our recovery.
Although some of the causes of our depression are due to speculation,
inflation of securities and real estate, unsound foreign investments,
and mismanagement of financial institutions, yet our self-contained
national economy, with its matchless strength and resources, would have
enabled us to recover long since but for the continued dislocations,
shocks, and setbacks from abroad.
Whatever the causes may be, the vast liquidation and readjustments which
have taken place have left us with a large degree of credit paralysis,
which together with the situation in our railways and the conditions
abroad, are now the outstanding obstacles to recuperation. If we can put
our financial resources to work and can ameliorate the financial
situation in the railways, I am confident we can make a large measure of
recovery independent of the rest of the world. A strong America is the
highest contribution to world stability.
One phase of the credit situation is indicated in the banks. During the
past year banks, representing 3 per cent of our total deposits have been
closed. A large part of these failures have been caused by withdrawals
for hoarding, as distinguished from the failures early in the depression
where weakness due to mismanagement was the larger cause of failure.
Despite their closing, many of them will pay in full. Although such
withdrawals have practically ceased, yet $1,100,000,000 of currency was
previously withdrawn which has still to return to circulation. This
represents a large reduction of the ability of our banks to extend
credit which would otherwise fertilize industry and agriculture.
Furthermore, many of our bankers, in order to prepare themselves to meet
possible withdrawals, have felt compelled to call in loans, to refuse
new credits, and to realize upon securities, which in turn has
demoralized the markets. The paralysis has been further augmented by the
steady increase in recent years of the proportion of bank assets
invested in long-term securities, such as mortgages and bonds. These
securities tend to lose their liquidity in depression or temporarily to
fall in value so that the ability of the banks to meet the shock of
sudden withdrawal is greatly lessened and the restriction of all kinds
of credit is thereby increased. The continuing credit paralysis has
operated to accentuate the deflation and liquidation of commodities,
real estate, and securities below any reasonable basis of values.
All of this tends to stifle business, especially the smaller units, and
finally expresses itself in further depression of prices and values, in
restriction on new enterprise, and in increased unemployment.
The situation largely arises from an unjustified lack of confidence. We
have enormous volumes of idle money in the banks and in hoarding. We do
not require more money or working capital--we need to put what we have
to work.
The fundamental difficulties which have brought about financial strains
in foreign countries do not exist in the United States. No external
drain on our resources can threaten our position, because the balance of
international payments is in our favor; we owe less to foreign countries
than they owe to us; our industries are efficiently organized; our
currency and bank deposits are protected by the greatest gold reserve in
history.
Our first step toward recovery is to reestablish confidence and thus
restore the flow of credit which is the very basis of our economic life.
We must put some steel beams in the foundations of our credit structure.
It is our duty to apply the full strength of our Government not only to
the immediate phases, but to provide security against shocks and the
repetition of the weaknesses which have been proven.
The recommendations which I here lay before the Congress are designed to
meet these needs by strengthening financial, industrial, and
agricultural life through the medium of our existing institutions, and
thus to avoid the entry of the Government into competition with private
business.
FEDERAL GOVERNMENT FINANCE
The first requirement of confidence and of economic recovery is
financial stability of the United States Government. I shall deal with
fiscal questions at greater length in the Budget message. But I must at
this time call attention to the magnitude of the deficits which have
developed and the resulting necessity for determined and courageous
policies. These deficits arise in the main from the heavy decrease in
tax receipts due to the depression and to the increase in expenditure on
construction in aid to unemployment, aids to agriculture, and upon
services to veterans.
During the fiscal year ending June 30 last we incurred a deficit of
about $903,000,000, which included the statutory reduction of the debt
and represented an increase of the national debt by $616,000,000. Of
this, however, $153,000,000 is offset by increased cash balances.
In comparison with the fiscal year 1928 there is indicated a fall in
Federal receipts for the present fiscal year amounting to
$1,683,000,000, of which $1,034,000,000 is in individual and corporate
income taxes alone. During this fiscal year there will be an increased
expenditure, as compared to 1928, on veterans of $255,000,000, and an
increased expenditure on construction work which may reach $520,000,000.
Despite large economies in other directions, we have an indicated
deficit, including the statutory retirement of the debt, of
$2,123,000,000, and an indicated net debt increase of about
$1,711,000,000.
The Budget for the fiscal year beginning July 1 next, after allowing for
some increase of taxes under the present laws and after allowing for
drastic reduction in expenditures, still indicates a deficit of
$1,417,000,000. After offsetting the statutory debt retirements this
would indicate an increase in the national debt for the fiscal year 1933
of about $921,000,000.
Several conclusions are inevitable. We must have insistent and
determined reduction in Government expenses. We must face a temporary
increase in taxes. Such increase should not cover the whole of these
deficits or it will retard recovery. We must partially finance the
deficit by borrowing. It is my view that the amount of taxation should
be fixed so as to balance the Budget for 1933 except for the statutory
debt retirement. Such Government receipts would assure the balance of
the following year’s budget including debt retirement. It is my further
view that the additional taxation should be imposed solely as an
emergency measure terminating definitely two years from July 1 next.
Such a basis will give confidence in the determination of the Government
to stabilize its finance and will assure taxpayers of its temporary
character. Even with increased taxation, the Government will reach the
utmost safe limit of its borrowing capacity by the expenditures for
which we are already obligated and the recommendations here proposed. To
go further than these limits in either expenditures, taxes, or borrowing
will destroy confidence, denude commerce and industry of its resources,
jeopardize the financial system, and actually extend unemployment and
demoralize agriculture rather than relieve it.
FEDERAL LAND BANKS
I recommend that the Congress authorize the subscription by the Treasury
of further capital to the Federal land banks to be retired as provided
in the original act, or when funds are available, and that repayments of
such capital be treated as a fund available for further subscriptions in
the same manner. It is urgent that the banks be supported so as to
stabilize the market values of their bonds and thus secure capital for
the farmers at low rates, that they may continue their services to
agriculture and that they may meet the present situation with
consideration to the farmers.
DEPOSITS IN CLOSED BANKS
A method should be devised to make available quickly to depositors some
portion of their deposits in closed banks as the assets of such banks
may warrant. Such provision would go far to relieve distress in a
multitude of families, would stabilize values in many communities, and
would liberate working capital to thousands of concerns. I recommend
that measures be enacted promptly to accomplish these results and I
suggest that the Congress should consider the development of such a plan
through the Federal Reserve Banks.
HOME-LOAN DISCOUNT BANKS
I recommend the establishment of a system of home-loan discount banks as
the necessary companion in our financial structure of the Federal
Reserve Banks and our Federal Land Banks. Such action will relieve
present distressing pressures against home and farm property owners. It
will relieve pressures upon and give added strength to building and loan
associations, savings banks, and deposit banks, engaged in extending
such credits. Such action would further decentralize our credit
structure. It would revive residential construction and employment. It
would enable such loaning institutions more effectually to promote home
ownership. I discussed this plan at some length in a statement made
public November 14, last. This plan has been warmly indorsed by the
recent National Conference upon Home Ownership and Housing, whose
members were designated by the governors of the States and the groups
interested.
RECONSTRUCTION FINANCE CORPORATION
In order that the public may be absolutely assured and that the
Government may be in position to meet any public necessity, I recommend
that an emergency Reconstruction Corporation of the nature of the former
War Finance Corporation should be established. It may not be necessary
to use such an instrumentality very extensively. The very existence of
such a bulwark will strengthen confidence. The Treasury should be
authorized to subscribe a reasonable capital to it, and it should be
given authority to issue its own debentures. It should be placed in
liquidation at the end of two years. Its purpose is that by
strengthening the weak spots to thus liberate the full strength of the
Nation’s resources. It should be in position to facilitate exports by
American agencies; make advances to agricultural credit agencies where
necessary to protect and aid the agricultural industry; to make
temporary advances upon proper securities to established industries,
railways, and financial institutions which can not otherwise secure
credit, and where such advances will protect the credit structure and
stimulate employment. Its functions would not overlap those of the
National Credit Corporation.
FEDERAL RESERVE ELIGIBILITY
On October 6th I issued a statement that I should recommend to the
Congress an extension during emergencies of the eligibility provisions
in the Federal reserve act. This statement was approved by a
representative gathering of the Members of both Houses of the Congress,
including members of the appropriate committees. It was approved by the
officials of the Treasury Department, and I understand such an extension
has been approved by a majority of the governors of the Federal reserve
banks. Nothing should be done which would lower the safeguards of the
system.
The establishment of the mortgage-discount banks herein referred to will
also contribute to further reserve strength in the banks without
inflation.
BANKING LAWS
Our people have a right to a banking system in which their deposits
shall be safeguarded and the flow of credit less subject to storms. The
need of a sounder system is plainly shown by the extent of bank
failures. I recommend the prompt improvement of the banking laws.
Changed financial conditions and commercial practices must be met. The
Congress should investigate the need for separation between different
kinds of banking; an enlargement of branch banking under proper
restrictions; and the methods by which enlarged membership in the
Federal reserve system may be brought about.
POSTAL SAVINGS BANKS
The Postal Savings deposits have increased from about $200,000,000 to
about $550,000,000 during the past year. This experience has raised
important practical questions in relation to deposits and investments
which should receive the attention of the Congress.
RAILWAYS
The railways present one of our immediate and pressing problems. They
are and must remain the backbone of our transportation system. Their
prosperity is interrelated with the prosperity of all industries. Their
fundamental service in transportation, the volume of their employment,
their buying power for supplies from other industries, the enormous
investment in their securities, particularly their bonds, by insurance
companies, savings banks, benevolent and other trusts, all reflect their
partnership in the whole economic fabric. Through these institutions the
railway bonds are in a large sense the investment of every family. The
well-maintained and successful operation and the stability of railway
finances are of primary importance to economic recovery. They should
have more effective opportunity to reduce operating costs by proper
consolidation. As their rates must be regulated in public interest, so
also approximate regulation should be applied to competing services by
some authority. The methods of their regulation should be revised. The
Interstate Commerce Commission has made important and far-reaching
recommendations upon the whole subject, which I commend to the early
consideration of the Congress.
ANTITRUST LAWS
In my message of a year ago I commented on the necessity of
congressional inquiry into the economic action of the antitrust laws.
There is wide conviction that some change should be made especially in
the procedure under these laws. I do not favor their repeal. Such action
would open wide the door to price fixing, monopoly, and destruction of
healthy competition. Particular attention should be given to the
industries rounded upon natural resources, especially where destructive
competition produces great wastes of these resources and brings great
hardships upon operators, employees, and the public. In recent years
there has been continued demoralization in the bituminous coal, oil, and
lumber industries. I again commend the matter to the consideration of
the Congress.
UNEMPLOYMENT
As an aid to unemployment the Federal Government is engaged in the
greatest program of public-building, harbor, flood-control, highway,
waterway, aviation, merchant and naval ship construction in all history.
Our expenditures on these works during this calendar year will reach
about $780,000,000 compared with $260,000,000 in 1928. Through this
increased construction, through the maintenance of a full complement of
Federal employees, and through services to veterans it is estimated that
the Federal taxpayer is now directly contributing to the livelihood of
10,000,000 of our citizens.
We must avoid burdens upon the Government which will create more
unemployment in private industry than can be gained by further expansion
of employment by the Federal Government. We can now stimulate employment
and agriculture more effectually and speedily through the voluntary
measures in progress, through the thawing out of credit, through the
building up of stability abroad, through the home loan discount banks,
through an emergency finance corporation and the rehabilitation of the
railways and other such directions.
I am opposed to any direct or indirect Government dole. The breakdown
and increased unemployment in Europe is due in part to such practices.
Our people are providing against distress from unemployment in true
American fashion by a magnificent response to public appeal and by
action of the local governments.
GENERAL LEGISLATION
There are many other subjects requiring legislative action at this
session of the Congress. I may list the following among them:
VETERANS’ SERVICES
The law enacted last March authorizing loans of 50 per cent upon
adjusted-service certificates has, together with the loans made under
previous laws, resulted in payments of about $1,260,000,000.
Appropriations have been exhausted. The Administrator of Veterans’
Affairs advises that a further appropriation of $200,000,000 is required
at once to meet the obligations made necessary by existing legislation.
There will be demands for further veterans’ legislation; there are
inequalities in our system of veterans’ relief; it is our national duty
to meet our obligations to those who have served the Nation. But our
present expenditure upon these services now exceeds $1,000,000,000 per
annum. I am opposed to any extension of these expenditures until the
country has recovered from the present situation.
ELECTRICAL-POWER REGULATION
I have recommended in previous messages the effective regulation of
interstate electrical power as the essential function of the reorganized
Federal Power Commission. I renew the recommendation. It is urgently
needed in public protection.
MUSCLE SHOALS
At my suggestion, the Governors and Legislatures of Alabama and
Tennessee selected three members each for service on a committee to
which I appointed a representative of the farm organizations and two
representatives of the War Department for the purpose of recommending a
plan for the disposal of these properties which would be in the interest
of the people of those States and the agricultural industry throughout
the country. I shall transmit the recommendations to the Congress.
REORGANIZATION OF FEDERAL DEPARTMENTS
I have referred in previous messages to the profound need of further
reorganization and consolidation of Federal administrative functions to
eliminate overlap and waste, and to enable coordination and definition
of Government policies now wholly impossible in scattered and
conflicting agencies which deal with parts of the same major function. I
shall lay before the Congress further recommendations upon this subject,
particularly in relation to the Department of the Interior. There are
two directions of such reorganization, however, which have an important
bearing upon the emergency problems with which we are confronted.
SHIPPING BOARD
At present the Shipping Board exercises large administrative functions
independent of the Executive. These administrative functions should be
transferred to the Department of Commerce, in keeping with that single
responsibility which has been the basis of our governmental structure
since its foundation. There should be created in that department a
position of Assistant Secretary for Merchant Marine, under whom this
work and the several bureaus having to do with merchant marine may be
grouped.
The Shipping Board should be made a regulatory body acting also in
advisory capacity on loans and policies, in keeping with its original
conception. Its regulatory powers should be amended to include
regulation of coastwise shipping so as to assure stability and better
service. It is also worthy of consideration that the regulation of rates
and services upon the inland waterways should be assigned to such a
reorganized board.
REORGANIZATION OF PUBLIC WORKS ADMINISTRATION
I recommend that all building and construction activities of the
Government now carried on by many departments be consolidated into an
independent establishment under the President to be known as the “Public
Works Administration” directed by a Public Works Administrator. This
agency should undertake all construction work in service to the
different departments of the Government (except naval and military
work). The services of the Corps of Army Engineers should be delegated
in rotation for military duty to this administration in continuation of
their supervision of river and harbor work. Great economies, sounder
policies, more effective coordination to employment, and expedition in
all construction work would result from this consolidation.
LAW ENFORCEMENT
I shall present some recommendations in a special message looking to the
strengthening of criminal-law enforcement and improvement in judicial
procedure connected therewith.
INLAND WATERWAY AND HARBOR IMPROVEMENT
These improvements are now proceeding upon an unprecedented scale. Some
indication of the volume of work in progress is conveyed by the fact
that during the current year over 380,000,000 cubic yards of material
have been moved--an amount equal to the entire removal in the
construction of the Panama Canal. The Mississippi waterway system,
connecting Chicago, Kansas City, Pittsburgh, and New Orleans, will be in
full operation during 1933. Substantial progress is being made upon the
projects of the upper Missouri, upper Mississippi, etc.
Negotiations are now in progress with Canada for the construction of the
St. Lawrence Waterway.
THE TARIFF
Wages and standards of living abroad have been materially lowered during
the past year. The temporary abandonment of the gold standard by certain
countries has also reduced their production costs compared to ours.
Fortunately any increases in the tariff which may be necessary to
protect agriculture and industry from these lowered foreign costs, or
decreases in items which may prove to be excessive, may be undertaken at
any time by the Tariff Commission under authority which it possesses by
virtue of the tariff act of 1930. The commission during the past year
has reviewed the rates upon over 254 items subject to tariff. As a
result of vigorous and industrious action, it is up to date in the
consideration of pending references and is prepared to give prompt
attention to any further applications. This procedure presents an
orderly method for correcting inequalities. I am opposed to any general
congressional revision of the tariff. Such action would disturb
industry, business, and agriculture. It would prolong the depression.
IMMIGRATION AND DEPORTATION
I recommend that immigration restriction now in force under
administrative action be placed upon a more definite basis by law. The
deportation laws should be strengthened. Aliens lawfully in the country
should be protected by the issuance of a certificate of residence.
PUBLIC HEALTH
I again call attention to my previous recommendations upon this subject,
particularly in its relation to children. The moral results are of the
utmost importance.
CONCLUSION
It is inevitable that in these times much of the legislation proposed to
the Congress and many of the recommendations of the Executive must be
designed to meet emergencies. In reaching solutions we must not
jeopardize those principles which we have found to be the basis of the
growth of the Nation. The Federal Government must not encroach upon nor
permit local communities to abandon that precious possession of local
initiative and responsibility. Again, just as the largest measure of
responsibility in the government of the Nation rests upon local
self-government, so does the largest measure of social responsibility in
our country rest upon the individual. If the individual surrenders his
own initiative and responsibilities, he is surrendering his own freedom
and his own liberty. It is the duty of the National Government to insist
that both the local governments and the individual shall assume and bear
these responsibilities as a fundamental of preserving the very basis of
our freedom.
Many vital changes and movements of vast proportions are taking place in
the economic world. The effect of these changes upon the future can not
be seen clearly as yet. Of this, however, we are sure: Our system, based
upon the ideals of individual initiative and of equality of opportunity,
is not an artificial thing. Rather it is the outgrowth of the experience
of America, and expresses the faith and spirit of our people. It has
carried us in a century and a half to leadership of the economic world.
If our economic system does not match our highest expectations at all
times, it does not require revolutionary action to bring it into accord
with any necessity that experience may prove. It has successfully
adjusted itself to changing conditions in the past. It will do so again.
The mobility of our institutions, the richness of our resources, and the
abilities of our people enable us to meet them unafraid. It is a
distressful time for many of our people, but they have shown qualities
as high in fortitude, courage, and resourcefulness as ever in our
history. With that spirit, I have faith that out of it will come a
sounder life, a truer standard of values, a greater recognition of the
results of honest effort, and a healthier atmosphere in which to rear
our children. Ours must be a country of such stability and security as
can not fail to carry forward and enlarge among all the people that
abundant life of material and spiritual opportunity which it has
represented among all nations since its beginning.
The White House,
December 8, 1931
***
State of the Union Address
Herbert Hoover
December 6, 1932
To the Senate and House of Representatives:
In accord with my constitutional duty, I transmit herewith to the
Congress information upon the state of the Union together with
recommendation of measures for its consideration.
Our country is at peace. Our national defense has been maintained at a
high state of effectiveness. All of the executive departments of the
Government have been conducted during the year with a high devotion to
public interest. There has been a far larger degree of freedom from
industrial conflict than hitherto known. Education and science have made
further advances. The public health is to-day at its highest known
level. While we have recently engaged in the aggressive contest of a
national election, its very tranquillity and the acceptance of its
results furnish abundant proof of the strength of our institutions.
In the face of widespread hardship our people have demonstrated daily a
magnificent sense of humanity, of individual and community
responsibility for the welfare of the less fortunate. They have grown in
their conceptions and organization for cooperative action for the common
welfare.
In the provision against distress during this winter, the great private
agencies of the country have been mobilized again; the generosity of our
people has again come into evidence to a degree in which all America may
take great pride. Likewise the local authorities and the States are
engaged everywhere in supplemental measures of relief. The provisions
made for loans from the Reconstruction Finance Corporation, to States
that have exhausted their own resources, guarantee that there should be
no hunger or suffering from cold in the country. The large majority of
States are showing a sturdy cooperation in the spirit of the Federal
aid.
The Surgeon General, in charge of the Public Health Service, furnishes
me with the following information upon the state of public health:
MORTALITY RATE PER 1,000 OF POPULATION ON AN ANNUAL BASIS FROM
REPRESENTATIVE STATES - General - Infant
First 9 months of-- - -
1928 - 11.9 - 67.8
1929 - 12.0 - 65.8
1930 - 11.4 - 62.0
1931 - 11.2 - 60.0
1932 - 10.6 - 55.0
The sickness rates from data available show the same trends. These facts
indicate the fine endeavor of the agencies which have been mobilized for
care of those in distress.
ECONOMIC SITUATION
The unparalleled world-wide economic depression has continued through
the year. Due to the European collapse, the situation developed during
last fall and winter into a series of most acute crises. The
unprecedented emergency measures enacted and policies adopted
undoubtedly saved the country from economic disaster. After serving to
defend the national security, these measures began in July to show their
weight and influence toward improvement of conditions in many parts of
the country. The following tables of current business indicators show
the general economic movement during the past eleven months.
MONTHLY BUSINESS INDICES WITH SEASONAL VARIATIONS ELIMINATED
Year and Month - Industrial Production - Factory Employment -
Freight-car loadings - Department Store sales, value - Exports, value -
Imports, value - Building Contracts, all types - Industrial Electric
power consumption
1931 - - - - - - - -
December - 74 - 69.4 - 69 - 81 - 46 - 48 - 38 - 89.1
1932 - - - - - - - -
January - 72 - 68.1 - 64 - 78 - 39 - 42 - 31 - 93.9
February - 69 - 67.8 - 62 - 78 - 45 - 41 - 27 - 98.8
March - 67 - 66.4 - 61 - 72 - 41 - 37 - 26 - 88.0
April - 63 - 64.3 - 59 - 80 - 38 - 36 - 27 - 82.2
May - 60 - 62.1 - 54 - 73 - 37 - 34 - 26 - 82.0
June - 59 - 60.0 - 52 - 71 - 34 - 36 - 27 - 78.1
July - 58 - 58.3 - 51 - 67 - 32 - 27 - 27 - 79.2
August - 60 - 58.8 - 51 - 66 - 31 - 29 - 30 - 73.5
September - 66 - 60.3 - 54 - 70 - 33 - 32 - 30 - 84.0
October - 66 - 61.1 - 57 - 70 - 33 - 32 - 29 - 84.4
The measures and policies which have procured this turn toward recovery
should be continued until the depression is passed, and then the
emergency agencies should be promptly liquidated. The expansion of
credit facilities by the Federal Reserve System and the Reconstruction
Finance Corporation has been of incalculable value. The loans of the
latter for reproductive works, and to railways for the creation of
employment; its support of the credit structure through loans to banks,
insurance companies, railways, building and loan associations, and to
agriculture has protected the savings and insurance policies of millions
of our citizens and has relieved millions of borrowers from duress; they
have enabled industry and business to function and expand. The
assistance given to Farm Loan Banks, the establishment of the Home Loan
Banks and Agricultural Credit Associations--all in their various
ramifications have placed large sums of money at the disposal of the
people in protection and aid. Beyond this, the extensive organization of
the country in voluntary action has produced profound results.
The following table indicates direct expenditures of the Federal
Government in aid to unemployment, agriculture, and financial relief
over the past four years. The sums applied to financial relief multiply
themselves many fold, being in considerable measure the initial capital
supplied to the Reconstruction Finance Corporation, Farm Loan Banks,
etc., which will be recovered to the Treasury.
- Public works (1) - Agricultural relief and financial loans
Fiscal year ending June 30 - -
1930 - $410,420,000 - $156,100,000
1931 - 574,870,000 - 196,700,000
1932 - 655,880,000 - 772,700,000
1933 - 717,260,000 - 52,000,000 -
***
State of the Union Address
Franklin D. Roosevelt
January 3, 1934
Mr. President, Mr. Speaker, Senators and Representatives in Congress:
I come before you at the opening of the Regular Session of the 73d
Congress, not to make requests for special or detailed items of
legislation; I come, rather, to counsel with you, who, like myself, have
been selected to carry out a mandate of the whole people, in order that
without partisanship you and I may cooperate to continue the restoration
of our national wellbeing and, equally important, to build on the ruins
of the past a new structure designed better to meet the present problems
of modern civilization.
Such a structure includes not only the relations of industry and
agriculture and finance to each other but also the effect which all of
these three have on our individual citizens and on the whole people as a
Nation.
Now that we are definitely in the process of recovery, lines have been
rightly drawn between those to whom this recovery means a return to old
methods--and the number of these people is small--and those for whom
recovery means a reform of many old methods, a permanent readjustment of
many of our ways of thinking and therefore of many of our social and
economic arrangements. . . . .
Civilization cannot go back; civilization must not stand still. We have
undertaken new methods. It is our task to perfect, to improve, to alter
when necessary, but in all cases to go forward. To consolidate what we
are doing, to make our economic and social structure capable of dealing
with modern life is the joint task of the legislative, the judicial, and
the executive branches of the national Government.
Without regard to party, the overwhelming majority of our people seek a
greater opportunity for humanity to prosper and find happiness. They
recognize that human welfare has not increased and does not increase
through mere materialism and luxury, but that it does progress through
integrity, unselfishness, responsibility and justice.
In the past few months, as a result of our action, we have demanded of
many citizens that they surrender certain licenses to do as they please
in their business relationships; but we have asked this in exchange for
the protection which the State can give against exploitation by their
fellow men or by combinations of their fellow men.
I congratulate this Congress upon the courage, the earnestness and the
efficiency with which you met the crisis at the Special Session. It was
your fine understanding of the national problem that furnished the
example which the country has so splendidly followed. I venture to say
that the task confronting the First Congress of 1789 was no greater than
your own.
I shall not attempt to set forth either the many phases of the crisis
which we experienced last March, or the many measures which you and I
undertook during the Special Session that we might initiate recovery and
reform.
It is sufficient that I should speak in broad terms of the results of
our common counsel. The credit of the Government has been fortified by
drastic reduction in the cost of its permanent agencies through the
Economy Act.
With the twofold purpose of strengthening the whole financial structure
and of arriving eventually at a medium of exchange which over the years
will have less variable purchasing and debt paying power for our people
than that of the past, I have used the authority granted me to purchase
all American-produced gold and silver and to buy additional gold in the
world markets. Careful investigation and constant study prove that in
the matter of foreign exchange rates certain of our sister Nations find
themselves so handicapped by internal and other conditions that they
feel unable at this time to enter into stabilization discussion based on
permanent and world-wide objectives.
The overwhelming majority of the banks, both national and State, which
reopened last spring, are in sound condition and have been brought
within the protection of Federal insurance. In the case of those banks
which were not permitted to reopen, nearly six hundred million dollars
of frozen deposits are being restored to the depositors through the
assistance of the national Government.
We have made great strides toward the objectives of the National
Industrial Recovery Act, for not only have several millions of our
unemployed been restored to work, but industry is organizing itself with
a greater understanding that reasonable profits can be earned while at
the same time protection can be assured to guarantee to labor adequate
pay and proper conditions of work. Child labor is abolished. Uniform
standards of hours and wages apply today to 95 percent of industrial
employment within the field of the National Industrial Recovery Act. We
seek the definite end of preventing combinations in furtherance of
monopoly and in restraint of trade, while at the same time we seek to
prevent ruinous rivalries within industrial groups which in many cases
resemble the gang wars of the underworld and in which the real victim in
every case is the public itself.
Under the authority of this Congress, we have brought the component
parts of each industry together around a common table, just as we have
brought problems affecting labor to a common meeting ground. Though the
machinery, hurriedly devised, may need readjustment from time to time,
nevertheless I think you will agree with me that we have created a
permanent feature of our modernized industrial structure and that it
will continue under the supervision but not the arbitrary dictation of
Government itself.
You recognized last spring that the most serious part of the debt burden
affected those who stood in danger of losing their farms and their
homes. I am glad to tell you that refinancing in both of these cases is
proceeding with good success and in all probability within the financial
limits set by the Congress.
But agriculture had suffered from more than its debts. Actual experience
with the operation of the Agricultural Adjustment Act leads to my belief
that thus far the experiment of seeking a balance between production and
consumption is succeeding and has made progress entirely in line with
reasonable expectations toward the restoration of farm prices to parity.
I continue in my conviction that industrial progress and prosperity can
only be attained by bringing the purchasing power of that portion of our
population which in one form or another is dependent upon agriculture up
to a level which will restore a proper balance between every section of
the country and between every form of work.
In this field, through carefully planned flood control, power
development and land-use policies in the Tennessee Valley and in other,
great watersheds, we are seeking the elimination of waste, the removal
of poor lands from agriculture and the encouragement of small local
industries, thus furthering this principle of a better balanced national
life. We recognize the great ultimate cost of the application of this
rounded policy to every part off the Union. Today we are creating heavy
obligations to start the work because of the great unemployment needs of
the moment. I look forward, however, to the time in the not distant
future, when annual appropriations, wholly covered by current revenue,
will enable the work to proceed under a national plan. Such a national
plan will, in a generation or two, return many times the money spent on
it; more important, it will eliminate the use of inefficient tools,
conserve and increase natural resources, prevent waste, and enable
millions of our people to take better advantage of the opportunities
which God has given our country.
I cannot, unfortunately, present to you a picture of complete optimism
regarding world affairs.
The delegation representing the United States has worked in close
cooperation with the other American Republics assembled at Montevideo to
make that conference an outstanding success. We have, I hope, made it
clear to our neighbors that we seek with them future avoidance of
territorial expansion and of interference by one Nation in the internal
affairs of another. Furthermore, all of us are seeking the restoration
of commerce in ways which will preclude the building up of large
favorable trade balances by any one Nation at the expense of trade
debits on the part of other Nations.
In other parts of the world, however, fear of immediate or future
aggression and with it the spending of vast sums on armament and the
continued building up of defensive trade barriers prevent any great
progress in peace or trade agreements. I have made it clear that the
United States cannot take part in political arrangements in Europe but
that we stand ready to cooperate at any time in practicable measures on
a world basis looking to immediate reduction of armaments and the
lowering of the barriers against commerce.
I expect to report to you later in regard to debts owed the Government
and people of this country by the Governments and peoples of other
countries. Several Nations, acknowledging the debt, have paid in small
part; other Nations have failed to pay. One Nation--Finland--has paid
the installments due this country in full.
Returning to home problems, we have been shocked by many notorious
examples of injuries done our citizens by persons or groups who have
been living off their neighbors by the use of methods either unethical
or criminal.
In the first category--a field which does not involve violations of the
letter of our laws--practices have been brought to light which have
shocked those who believed that we were in the past generation raising
the ethical standards of business. They call for stringent preventive or
regulatory measures. I am speaking of those individuals who have evaded
the spirit and purpose of our tax laws, of those high officials of banks
or corporations who have grown rich at the expense of their stockholders
or the public, of those reckless speculators with their own or other
people’s money whose operations have injured the values of the farmers’
crops and the savings of the poor.
In the other category, crimes of organized banditry, coldblooded
shooting, lynching and kidnapping have threatened our security.
These violations of ethics and these violations of law call on the
strong arm of Government for their immediate suppression; they call also
on the country for an aroused public opinion.
The adoption of the Twenty-first Amendment should give material aid to
the elimination of those new forms of crime which came from the illegal
traffic in liquor.
I shall continue to regard it as my duty to use whatever means may be
necessary to supplement State, local and private agencies for the relief
of suffering caused by unemployment. With respect to this question, I
have recognized the dangers inherent in the direct giving of relief and
have sought the means to provide not mere relief, but the opportunity
for useful and remunerative work. We shall, in the process of recovery,
seek to move as rapidly as possible from direct relief to publicly
supported work and from that to the rapid restoration of private
employment.
It is to the eternal credit of the American people that this tremendous
readjustment of our national life is being accomplished peacefully,
without serious dislocation, with only a minimum of injustice and with a
great, willing spirit of cooperation throughout the country.
Disorder is not an American habit. Self-help and self-control are the
essence of the American tradition--not of necessity the form of that
tradition, but its spirit. The program itself comes from the American
people.
It is an integrated program, national in scope. Viewed in the large, it
is designed to save from destruction and to keep for the future the
genuinely important values created by modern society. The vicious and
wasteful parts of that society we could not save if we wished; they have
chosen the way of self-destruction. We would save useful mechanical
invention, machine production, industrial efficiency, modern means of
communication, broad education. We would save and encourage the slowly
growing impulse among consumers to enter the industrial market place
equipped with sufficient organization to insist upon fair prices and
honest sales.
But the unnecessary expansion of industrial plants, the waste of natural
resources, the exploitation of the consumers of natural monopolies, the
accumulation of stagnant surpluses, child labor, and the ruthless
exploitation of all labor, the encouragement of speculation with other
people’s money, these were consumed in the fires that they themselves
kindled; we must make sure that as we reconstruct our life there be no
soil in which such weeds can grow again.
We have plowed the furrow and planted the good seed; the hard beginning
is over. If we would reap the full harvest, we must cultivate the soil
where this good seed is sprouting and the plant is reaching up to mature
growth.
A final personal word. I know that each of you will appreciate that. I
am speaking no mere politeness when I assure you how much I value the
fine relationship that we have shared during these months of hard and
incessant work. Out of these friendly contacts we are, fortunately,
building a strong and permanent tie between the legislative and
executive branches of the Government. The letter of the Constitution
wisely declared a separation, but the impulse of common purpose declares
a union. In this spirit we join once more in serving the American
people.
***
State of the Union Address
Franklin D. Roosevelt
January 4, 1935
Mr. President, Mr. Speaker, Members of the Senate and of the House of
Representatives:
The Constitution wisely provides that the Chief Executive shall report
to the Congress on the state of the Union, for through you, the chosen
legislative representatives, our citizens everywhere may fairly judge
the progress of our governing. I am confident that today, in the light
of the events of the past two years, you do not consider it merely a
trite phrase when I tell you that I am truly glad to greet you and that
I look forward to common counsel, to useful cooperation, and to genuine
friendships between us.
We have undertaken a new order of things; yet we progress to it under
the framework and in the spirit and intent of the American Constitution.
We have proceeded throughout the Nation a measurable distance on the
road toward this new order. Materially, I can report to you substantial
benefits to our agricultural population, increased industrial activity,
and profits to our merchants. Of equal moment, there is evident a
restoration of that spirit of confidence and faith which marks the
American character. Let him, who, for speculative profit or partisan
purpose, without just warrant would seek to disturb or dispel this
assurance, take heed before he assumes responsibility for any act which
slows our onward steps.
Throughout the world, change is the order of the day. In every Nation
economic problems, long in the making, have brought crises of many kinds
for which the masters of old practice and theory were unprepared. In
most Nations social justice, no longer a distant ideal, has become a
definite goal, and ancient Governments are beginning to heed the call.
Thus, the American people do not stand alone in the world in their
desire for change. We seek it through tested liberal traditions, through
processes which retain all of the deep essentials of that republican
form of representative government first given to a troubled world by the
United States.
As the various parts in the program begun in the Extraordinary Session
of the 73rd Congress shape themselves in practical administration, the
unity of our program reveals itself to the Nation. The outlines of the
new economic order, rising from the disintegration of the old, are
apparent. We test what we have done as our measures take root in the
living texture of life. We see where we have built wisely and where we
can do still better.
The attempt to make a distinction between recovery and reform is a
narrowly conceived effort to substitute the appearance of reality for
reality itself. When a man is convalescing from illness, wisdom dictates
not only cure of the symptoms, but also removal of their cause.
It is important to recognize that while we seek to outlaw specific
abuses, the American objective of today has an infinitely deeper, finer
and more lasting purpose than mere repression. Thinking people in almost
every country of the world have come to realize certain fundamental
difficulties with which civilization must reckon. Rapid changes--the
machine age, the advent of universal and rapid communication and many
other new factors--have brought new problems. Succeeding generations
have attempted to keep pace by reforming in piecemeal fashion this or
that attendant abuse. As a result, evils overlap and reform becomes
confused and frustrated. We lose sight, from time to time, of our
ultimate human objectives.
Let us, for a moment, strip from our simple purpose the confusion that
results from a multiplicity of detail and from millions of written and
spoken words.
We find our population suffering from old inequalities, little changed
by vast sporadic remedies. In spite of our efforts and in spite of our
talk, we have not weeded out the over privileged and we have not
effectively lifted up the underprivileged. Both of these manifestations
of injustice have retarded happiness. No wise man has any intention of
destroying what is known as the profit motive; because by the profit
motive we mean the right by work to earn a decent livelihood for
ourselves and for our families.
We have, however, a clear mandate from the people, that Americans must
forswear that conception of the acquisition of wealth which, through
excessive profits, creates undue private power over private affairs and,
to our misfortune, over public affairs as well. In building toward this
end we do not destroy ambition, nor do we seek to divide our wealth into
equal shares on stated occasions. We continue to recognize the greater
ability of some to earn more than others. But we do assert that the
ambition of the individual to obtain for him and his a proper security,
a reasonable leisure, and a decent living throughout life, is an
ambition to be preferred to the appetite for great wealth and great
power.
I recall to your attention my message to the Congress last June in which
I said: “among our objectives I place the security of the men, women and
children of the Nation first.” That remains our first and continuing
task; and in a very real sense every major legislative enactment of this
Congress should be a component part of it.
In defining immediate factors which enter into our quest, I have spoken
to the Congress and the people of three great divisions:
1. The security of a livelihood through the better use of the national
resources of the land in which we live.
2. The security against the major hazards and vicissitudes of life.
3. The security of decent homes.
I am now ready to submit to the Congress a broad program designed
ultimately to establish all three of these factors of security--a
program which because of many lost years will take many future years to
fulfill.
A study of our national resources, more comprehensive than any
previously made, shows the vast amount of necessary and practicable work
which needs to be done for the development and preservation of our
natural wealth for the enjoyment and advantage of our people in
generations to come. The sound use of land and water is far more
comprehensive than the mere planting of trees, building of dams,
distributing of electricity or retirement of sub-marginal land. It
recognizes that stranded populations, either in the country or the city,
cannot have security under the conditions that now surround them.
To this end we are ready to begin to meet this problem--the intelligent
care of population throughout our Nation, in accordance with an
intelligent distribution of the means of livelihood for that population.
A definite program for putting people to work, of which I shall speak in
a moment, is a component part of this greater program of security of
livelihood through the better use of our national resources.