Navy production of bombardment ammunition is hampered by manpower

shortages; so is production for its huge rocket program. Labor shortages

have also delayed its cruiser and carrier programs, and production of

certain types of aircraft.

There is critical need for more repair workers and repair parts; this

Jack delays the return of damaged fighting ships to their places in the

fleet, and prevents ships now in the fighting line from getting needed

overhauling.

The pool of young men under 26 classified as I-A is almost depleted.

Increased replacements for the armed forces will take men now deferred

who are at work in war industry. The armed forces must have an assurance

of a steady flow of young men for replacements. Meeting this paramount

need will be difficult, and will also make it progressively more

difficult to attain the 1945 production goals.

Last year, after much consideration, I recommended that the Congress

adopt a national service act as the most efficient and democratic way of

insuring full production for our war requirements. This recommendation

was not adopted.

I now again call upon the Congress to enact this measure for the total

mobilization of all our human resources for the prosecution of the war.

I urge that this be done at the earliest possible moment.

It is not too late in the war. In fact, bitter experience has shown that

in this kind of mechanized warfare where new weapons are constantly

being created by our enemies and by ourselves, the closer we come to the

end of the war, the more pressing becomes the need for sustained war

production with which to deliver the final blow to the enemy.

There are three basic arguments for a national service law:

First, it would assure that we have the right numbers of workers in the

right places at the right times.

Second, it would provide supreme proof to all our fighting men that we

are giving them what they are entitled to, which is nothing less than

our total effort.

And, third, it would be the final, unequivocal answer to the hopes of

the Nazis and the Japanese that we may become halfhearted about this war

and that they can get from us a negotiated peace.

National service legislation would make it possible to put ourselves in

a position to assure certain and speedy action in meeting our manpower

needs.

It would be used only to the extent absolutely required by military

necessities. In fact, experience in Great Britain and in other Nations

at war indicates that use of the compulsory powers of national service

is necessary only in rare instances.

This proposed legislation would provide against loss of retirement and

seniority rights and benefits. It would not mean reduction in wages.

In adopting such legislation, it is not necessary to discard the

voluntary and cooperative processes which have prevailed up to this

time. This cooperation has already produced great results. The

contribution of our workers to the war effort has been beyond measure.

We must build on the foundations that have already been laid and

supplement the measures now in operation, in order to guarantee the

production that may be necessary in the critical period that lies ahead.

At the present time we are using the inadequate tools at hand to do the

best we can by such expedients as manpower ceilings, and the use of

priority and other powers, to induce men and women to shift from

non-essential to essential war jobs.

I am in receipt of a joint letter from the Secretary of War and the

Secretary of the Navy, dated January 3, 1945, which says:

“With the experience of three years of war and after the most thorough

consideration, we are convinced that it is now necessary to carry out

the statement made by the Congress in the joint resolutions declaring

that a state of war existed with Japan and Germany: That ‘to bring the

conflict to a successful conclusion, all of the resources of the country

are hereby pledged by the Congress of the United States.’

“In our considered judgment, which is supported by General Marshall and

Admiral King, this requires total mobilization of our manpower by the

passage of a national war service law. The armed forces need this

legislation to hasten the day of final victory, and to keep to a minimum

the cost in lives.

“National war service, the recognition by law of the duty of every

citizen to do his or her part in winning the war, will give complete

assurance that the need for war equipment will be filled. In the coming

year we must increase the output of many weapons and supplies on short

notice. Otherwise we shall not keep our production abreast of the

swiftly changing needs of war. At the same time it will be necessary to

draw progressively many men now engaged in war production to serve with

the armed forces, and their places in war production must be filled

promptly. These developments will require the addition of hundreds of

thousands to those already working in war industry. We do not believe

that these needs can be met effectively under present methods.

“The record made by management and labor in war industry has been a

notable testimony to the resourcefulness and power of America. The needs

are so great, nevertheless, that in many instances we have been forced

to recall soldiers and sailors from military duty to do work of a

civilian character in war production, because of the urgency of the need

for equipment and because of inability to recruit civilian labor.”

Pending action by the Congress on the broader aspects of national

service, I recommend that the Congress immediately enact legislation

which will be effective in using the services of the 4,000,000 men now

classified as IV-F in whatever capacity is best for the war effort.

In the field of foreign policy, we propose to stand together with the

United Nations not for the war alone but for the victory for which the

war is fought.

It is not only a common danger which unites us but a common hope. Ours

is an association not of Governments but of peoples--and the peoples’

hope is peace. Here, as in England; in England, as in Russia; in Russia,

as in China; in France, and through the continent of Europe, and

throughout the world; wherever men love freedom, the hope and purpose of

the people are for peace--a peace that is durable and secure.

It will not be easy to create this peoples’ peace. We delude ourselves

if we believe that the surrender of the armies of our enemies will make

the peace we long for. The unconditional surrender of the armies of our

enemies is the first and necessary step--but the first step only.

We have seen already, in areas liberated from the Nazi and the Fascist

tyranny, what problems peace will bring. And we delude ourselves if we

attempt to believe wishfully that all these problems can be solved

overnight.

The firm foundation can be built--and it will be built. But the

continuance and assurance of a living peace must, in the long run, be

the work of the people themselves.

We ourselves, like all peoples who have gone through the difficult

processes of liberation and adjustment, know of our own experience how

great the difficulties can be. We know that they are not difficulties

peculiar to any continent or any Nation. Our own Revolutionary War left

behind it, in the words of one American historian, “an eddy of

lawlessness and disregard of human life.” There were separatist

movements of one kind or another in Vermont, Pennsylvania, Virginia,

Tennessee, Kentucky, and Maine. There were insurrections, open or

threatened, in Massachusetts and New Hampshire. These difficulties we

worked out for ourselves as the peoples of the liberated areas of

Europe, faced with complex problems of adjustment, will work out their

difficulties for themselves.

Peace can be made and kept only by the united determination of free and

peace-loving peoples who are willing to work together--willing to help

one another--willing to respect and tolerate and try to understand one

another’s opinions and feelings.

The nearer we come to vanquishing our enemies the more we inevitably

become conscious of differences among the victors.

We must not let those differences divide us and blind us to our more

important common and continuing interests in winning the war and

building the peace.

International cooperation on which enduring peace must be based is not a

one-way street.

Nations like individuals do not always see alike or think alike, and

international cooperation and progress are not helped by any Nation

assuming that it has a monopoly of wisdom or of virtue.

In the future world the misuse of power, as implied in the term “power

politics,” must not be a controlling factor in international relations.

That is the heart of the principles to which we have subscribed. We

cannot deny that power is a factor in world politics any more than we

can deny its existence as a factor in national politics. But in a

democratic world, as in a democratic Nation, power must be linked with

responsibility, and obliged to defend and justify itself within the

framework of the general good.

Perfectionism, no less than isolationism or imperialism or power

politics, may obstruct the paths to international peace. Let us not

forget that the retreat to isolationism a quarter of a century ago was

started not by a direct attack against international cooperation but

against the alleged imperfections of the peace.

In our disillusionment after the last war we preferred international

anarchy to international cooperation with Nations which did not see and

think exactly as we did. We gave up the hope of gradually achieving a

better peace because we had not the courage to fulfill our

responsibilities in an admittedly imperfect world.

We must not let that happen again, or we shall follow the same tragic

road again--the road to a third world war.

We can fulfill our responsibilities for maintaining the security of our

own country only by exercising our power and our influence to achieve

the principles in which we believe and for which we have fought.

In August, 1941, Prime Minister Churchill and I agreed to the principles

of the Atlantic Charter, these being later incorporated into the

Declaration by United Nations of January 1, 1942. At that time certain

isolationists protested vigorously against our right to proclaim the

principles--and against the very principles themselves. Today, many of

the same people are protesting against the possibility of violation of

the same principles.

It is true that the statement of principles in the Atlantic Charter does

not provide rules of easy application to each and every one of this

war-torn world’s tangled situations. But it is a good and a useful

thing-- it is an essential thing--to have principles toward which we can

aim.

And we shall not hesitate to use our influence--and to use it now--to

secure so far as is humanly possible the fulfillment of the principles

of the Atlantic Charter. We have not shrunk from the military

responsibilities brought on by this war. We cannot and will not shrink

from the political responsibilities which follow in the wake of battle.

I do not wish to give the impression that all mistakes can be avoided

and that many disappointments are not inevitable in the making of peace.

But we must not this time lose the hope of establishing an international

order which will be capable of maintaining peace and realizing through

the years more perfect justice between Nations.

To do this we must be on our guard not to exploit and exaggerate the

differences between us and our allies, particularly with reference to

the peoples who have been liberated from Fascist tyranny. That is not

the way to secure a better settlement of those differences or to secure

international machinery which can rectify mistakes which may be made.

I should not be frank if I did not admit concern about many

situations--the Greek and Polish for example. But those situations are

not as easy or as simple to deal with as some spokesmen, whose sincerity

I do not question, would have us believe. We have obligations, not

necessarily legal, to the exiled Governments, to the underground

leaders, and to our major allies who came much nearer the shadows than

we did.

We and our allies have declared that it is our purpose to respect the

right of all peoples to choose the form of government under which they

will live and to see sovereign rights and self-government restored to

those who have been forcibly deprived of them. But with internal

dissension, with many citizens of liberated countries still prisoners of

war or forced to labor in Germany, it is difficult to guess the kind of

self-government the people really want.

During the interim period, until conditions permit a genuine expression

of the people’s will, we and our allies have a duty, which we cannot

ignore, to use our influence to the end that no temporary or provisional

authorities in the liberated countries block the eventual exercise of

the peoples’ right freely to choose the government and institutions

under which, as freemen, they are to live.

It is only too easy for all of us to rationalize what we want to

believe, and to consider those leaders we like responsible and those we

dislike irresponsible. And our task is not helped by stubborn

partisanship, however understandable on the part of opposed internal

factions.

It is our purpose to help the peace-loving peoples of Europe to live

together as good neighbors, to recognize their common interests and not

to nurse their traditional grievances against one another.

But we must not permit the many specific and immediate problems of

adjustment connected with the liberation of Europe to delay the

establishment of permanent machinery for the maintenance of peace. Under

the threat of a common danger, the United Nations joined together in war

to preserve their independence and their freedom. They must now join

together to make secure the independence and freedom of all peace-loving

states, so that never again shall tyranny be able to divide and conquer.

International peace and well-being, like national peace and well-being,

require constant alertness, continuing cooperation, and organized

effort.

International peace and well-being, like national peace and well-being,

can be secured only through institutions capable of life and growth.

Many of the problems of the peace are upon us even now while the

conclusion of the war is still before us. The atmosphere of friendship

and mutual understanding and determination to find a common ground of

common understanding, which surrounded the conversations at Dumbarton

Oaks, gives us reason to hope that future discussions will succeed in

developing the democratic and fully integrated world security system

toward which these preparatory conversations were directed.

We and the other United Nations are going forward, with vigor and

resolution, in our efforts to create such a system by providing for it

strong and flexible institutions of joint and cooperative action.

The aroused conscience of humanity will not permit failure in this

supreme endeavor.

We believe that the extraordinary advances in the means of

intercommunication between peoples over the past generation offer a

practical method of advancing the mutual understanding upon which peace

and the institutions of peace must rest, and it is our policy and

purpose to use these great technological achievements for the common

advantage of the world.

We support the greatest possible freedom of trade and commerce.

We Americans have always believed in freedom of opportunity, and

equality of opportunity remains one of the principal objectives of our

national life. What we believe in for individuals, we believe in also

for Nations. We are opposed to restrictions, whether by public act or

private arrangement, which distort and impair commerce, transit, and

trade.

We have house-cleaning of our own to do in this regard. But it is our

hope, not only in the interest of our own prosperity but in the interest

of the prosperity of the world, that trade and commerce and access to

materials and markets may be freer after this war than ever before in

the history of the world.

One of the most heartening events of the year in the international field

has been the renaissance of the French people and the return of the

French Nation to the ranks of the United Nations. Far from having been

crushed by the terror of Nazi domination, the French people have emerged

with stronger faith than ever in the destiny of their country and in the

soundness of the democratic ideals to which the French Nation has

traditionally contributed so greatly.

During her liberation, France has given proof of her unceasing

determination to fight the Germans, continuing the heroic efforts of the

resistance groups under the occupation and of all those Frenchmen

throughout the world who refused to surrender after the disaster of

1940.

Today, French armies are again on the German frontier, and are again

fighting shoulder to shoulder with our sons.

Since our landings in Africa, we have placed in French hands all the

arms and material of war which our resources and the military situation

permitted. And I am glad to say that we are now about to equip large new

French forces with the most modern weapons for combat duty.

In addition to the contribution which France can make to our common

victory, her liberation likewise means that her great influence will

again be available in meeting the problems of peace.

We fully recognize France’s vital interest in a lasting solution of the

German problem and the contribution which she can make in achieving

international security. Her formal adherence to the declaration by

United Nations a few days ago and the proposal at the Dumbarton Oaks

discussions, whereby France would receive one of the five permanent

seats in the proposed Security Council, demonstrate the extent to which

France has resumed her proper position of strength and leadership.

I am clear in my own mind that, as an essential factor in the

maintenance of peace in the future, we must have universal military

training after this war, and I shall send a special message to the

Congress on this subject.

An enduring peace cannot be achieved without a strong America--strong in

the social and economic sense as well as in the military sense.

In the State of the Union message last year I set forth what I

considered to be an American economic bill of rights.

I said then, and I say now, that these economic truths represent a

second bill of rights under which a new basis of security and prosperity

can be established for all--regardless of station, race, or creed.

Of these rights the most fundamental, and one on which the fulfillment

of the others in large degree depends, is the “right to a useful and

remunerative job in the industries or shops or farms or mines of the

Nation.” In turn, others of the economic rights of American citizenship,

such as the right to a decent home, to a good education, to good medical

care, to social security, to reasonable farm income, will, if fulfilled,

make major contributions to achieving adequate levels of employment.

The Federal Government must see to it that these rights become

realities--with the help of States, municipalities, business, labor, and

agriculture.

We have had full employment during the war. We have had it because the

Government has been ready to buy all the materials of war which the

country could produce--and this has amounted to approximately half our

present productive capacity.

After the war we must maintain full employment with Government

performing its peacetime functions. This means that we must achieve a

level of demand and purchasing power by private consumers--farmers,

businessmen, workers, professional men, housewives--which is

sufficiently high to replace wartime Government demands; and it means

also that we must greatly increase our export trade above the prewar

level.

Our policy is, of course, to rely as much as possible on private

enterprise to provide jobs. But the American people will not accept mass

unemployment or mere makeshift work. There will be need for the work of

everyone willing and able to work--and that means close to 60,000,000

jobs.

Full employment means not only jobs--but productive jobs. Americans do

not regard jobs that pay substandard wages as productive jobs.

We must make sure that private enterprise works as it is supposed to

work-- on the basis of initiative and vigorous competition, without the

stifling presence of monopolies and cartels.

During the war we have guaranteed investment in enterprise essential to

the war effort. We should also take appropriate measures in peacetime to

secure opportunities for new small enterprises and for productive

business expansion for which finance would otherwise be unavailable.

This necessary expansion of our peacetime productive capacity will

require new facilities, new plants, and new equipment.

It will require large outlays of money which should be raised through

normal investment channels. But while private capital should finance

this expansion program, the Government should recognize its

responsibility for sharing part of any special or abnormal risk of loss

attached to such financing.

Our full-employment program requires the extensive development of our

natural resources and other useful public works. The undeveloped

resources of this continent are still vast. Our river-watershed projects

will add new and fertile territories to the United States. The Tennessee

Valley Authority, which was constructed at a cost of $750,000,000--the

cost of waging this war for less than 4 days--was a bargain. We have

similar opportunities in our other great river basins. By harnessing the

resources of these river basins, as we have in the Tennessee Valley, we

shall provide the same kind of stimulus to enterprise as was provided by

the Louisiana Purchase and the new discoveries in the West during the

nineteenth century.

If we are to avail ourselves fully of the benefits of civil aviation,

and if we are to use the automobiles we can produce, it will be

necessary to construct thousands of airports and to overhaul our entire

national highway system.

The provision of a decent home for every family is a national necessity,

if this country is to be worthy of its greatness--and that task will

itself create great employment opportunities. Most of our cities need

extensive rebuilding. Much of our farm plant is in a state of disrepair.

To make a frontal attack on the problems of housing and urban

reconstruction will require thoroughgoing cooperation between industry

and labor, and the Federal, State, and local Governments.

An expanded social security program, and adequate health and education

programs, must play essential roles in a program designed to support

individual productivity and mass purchasing power. I shall communicate

further with the Congress on these subjects at a later date.

The millions of productive jobs that a program of this nature could

bring are jobs in private enterprise. They are jobs based on the

expanded demand for the output of our economy for consumption and

investment. Through a program of this character we can maintain a

national income high enough to provide for an orderly retirement of the

public debt along with reasonable tax reduction.

Our present tax system geared primarily to war requirements must be

revised for peacetime so as to encourage private demand.

While no general revision of the tax structure can be made until the war

ends on all fronts, the Congress should be prepared to provide tax

modifications at the end of the war in Europe, designed to encourage

capital to invest in new enterprises and to provide jobs. As an integral

part of this program to maintain high employment, we must, after the war

is over, reduce or eliminate taxes which bear too heavily on

consumption.

The war will leave deep disturbances in the world economy, in our

national economy, in many communities, in many families, and in many

individuals. It will require determined effort and responsible action of

all of us to find our way back to peacetime, and to help others to find

their way back to peacetime--a peacetime that holds the values of the

past and the promise of the future.

If we attack our problems with determination we shall succeed. And we

must succeed. For freedom and peace cannot exist without security.

During the past year the American people, in a national election,

reasserted their democratic faith.

In the course of that campaign various references were made to “strife”

between this Administration and the Congress, with the implication, if

not the direct assertion, that this Administration and the Congress

could never work together harmoniously in the service of the Nation.

It cannot be denied that there have been disagreements between the

legislative and executive branches--as there have been disagreements

during the past century and a half.

I think we all realize too that there are some people in this Capital

City whose task is in large part to stir up dissension, and to magnify

normal healthy disagreements so that they appear to be irreconcilable

conflicts.

But--I think that the over-all record in this respect is eloquent: The

Government of the United States of America--all branches of it--has a

good record of achievement in this war.

The Congress, the Executive, and the Judiciary have worked together for

the common good.

I myself want to tell you, the Members of the Senate and of the House of

Representatives, how happy I am in our relationships and friendships. I

have not yet had the pleasure of meeting some of the new Members in each

House, but I hope that opportunity will offer itself in the near future.

We have a great many problems ahead of us and we must approach them with

realism and courage.

This new year of 1945 can be the greatest year of achievement in human

history.

Nineteen forty-five can see the final ending of the Nazi-Fascist reign

of terror in Europe.

Nineteen forty-five can see the closing in of the forces of retribution

about the center of the malignant power of imperialistic Japan.

Most important of all--1945 can and must see the substantial beginning

of the organization of world peace. This organization must be the

fulfillment of the promise for which men have fought and died in this

war. It must be the justification of all the sacrifices that have been

made--of all the dreadful misery that this world has endured.

We Americans of today, together with our allies, are making history--and

I hope it will be better history than ever has been made before.

We pray that we may be worthy of the unlimited opportunities that God

has given us.

***

State of the Union Address

Harry S. Truman

January 21, 1946

To the Congress of the United States:

A quarter century ago the Congress decided that it could no longer

consider the financial programs of the various departments on a

piecemeal basis. Instead it has called on the President to present a

comprehensive Executive Budget. The Congress has shown its satisfaction

with that method by extending the budget system and tightening its

controls. The bigger and more complex the Federal Program, the more

necessary it is for the Chief Executive to submit a single budget for

action by the Congress.

At the same time, it is clear that the budgetary program and the general

program of the Government are actually inseparable. The president bears

the responsibility for recommending to the Congress a comprehensive set

of proposals on all Government activities and their financing. In

formulating policies, as in preparing budgetary estimates, the Nation

and the Congress have the right to expect the President to adjust and

coordinate the views of the various departments and agencies to form a

unified program. And that program requires consideration in connection

with the Budget, which is the annual work program of the Government.

Since our programs for this period which combines war liquidation with

reconversion to a peacetime economy are inevitably large and numerous it

is imperative that they be planned and executed with the utmost

efficiency and the utmost economy. We have cut the war program to the

maximum extent consistent with national security. We have held our

peacetime programs to the level necessary to our national well-being and

the attainment of our postwar objectives. Where increased programs have

been recommended, the increases have been held as low as is consistent

with these goals. I can assure the Congress of the necessity of these

programs. I can further assure the Congress that the program as a whole

is well within our capacity to finance it. All the programs I have

recommended for action are included in the Budget figures.

For these reasons I have chosen to combine the customary Message on the

State of the Union with the annual Budget Message, and to include in the

Budget not only estimates for functions authorized by the Congress, but

also for those which I recommend for its action.

I am also transmitting herewith the Fifth Quarterly Report of the

Director of War Mobilization and Reconversion.[1] It is a comprehensive

discussion of the present state of the reconversion program and of the

immediate and long-range needs and recommendations.

[Footnote 1: The report dated January 1, 1946, and entitled “Battle for

Production” is printed in House Document 398 (79th Cong., 2d sess.).]

This constitutes, then, as complete a report as I find it possible to

prepare now. It constitutes a program of government in relation to the

Nation’s needs.

With the growing responsibility of modern government to foster economic

expansion and to promote conditions that assure full and steady

employment opportunities, it has become necessary to formulate and

determine the Government program in the light of national economic

conditions as a whole. In both the executive and the legislative

branches we must make arrangements which will permit us to formulate the

Government program in that light. Such an approach has become imperative

if the American political and economic system is to succeed under the

conditions of economic instability and uncertainty which we have to

face. The Government needs to assure business, labor, and agriculture

that Government policies will take due account of the requirements of a

full employment economy. The lack of that assurance would, I believe,

aggravate the economic instability.

With the passage of a full employment bill which I confidently

anticipate for the very near future, the executive and legislative

branches of government will be empowered to devote their best talents

and resources in subsequent years to preparing and acting on such a

program.

I. FROM WAR TO PEACE--THE YEAR

OF DECISION

In his last Message on the State of the Union, delivered one year ago,

President Roosevelt said:

“This new year of 1945 can be the greatest year of achievement in human

history.

“1945 can see the final ending of the Nazi-Fascist reign of terror in

Europe.

“1945 can see the closing in of the forces of retribution about the

center of the malignant power of imperialistic Japan.

“Most important of all--1945 can and must see the substantial beginning

of the organization of world peace.”

All those hopes, and more, were fulfilled in the year 1945. It was the

greatest year of achievement in human history. It saw the end of the

Nazi-Fascist terror in Europe, and also the end of the malignant power

of Japan. And it saw the substantial beginning of world organization for

peace. These momentous events became realities because of the steadfast

purpose of the United Nations and of the forces that fought for freedom

under their flags. The plain fact is that civilization was saved in 1945

by the United Nations.

Our own part in this accomplishment was not the product of any single

service. Those who fought on land, those who fought on the sea, and

those who fought in the air deserve equal credit. They were supported by

other millions in the armed forces who through no fault of their own

could not go overseas and who rendered indispensable service in this

country. They were supported by millions in all levels of government,

including many volunteers, whose devoted public service furnished basic

organization and leadership. They were also supported by the millions of

Americans in private life--men and women in industry, in commerce, on

the farms, and in all manner of activity on the home front--who

contributed their brains and their brawn in arming, equipping, and

feeding them. The country was brought through four years of peril by an

effort that was truly national in character.

Everlasting tribute and gratitude will be paid by all Americans to those

brave men who did not come back, who will never come back--the 330,000

who died that the Nation might live and progress. All Americans will

also remain deeply conscious of the obligation owed to that larger

number of soldiers, sailors, and marines who suffered wounds and

sickness in their service. They may be certain that their sacrifice will

never be forgotten or their needs neglected.

The beginning of the year 1946 finds the United States strong and

deservedly confident. We have a record of enormous achievements as a

democratic society in solving problems and meeting opportunities as they

developed. We find ourselves possessed of immeasurable advantages--vast

and varied natural resources; great plants, institutions, and other

facilities; unsurpassed technological and managerial skills; an alert,

resourceful, and able citizenry. We have in the United States Government

rich resources in information, perspective, and facilities for doing

whatever may be found necessary to do in giving support and form to the

widespread and diversified efforts of all our people.

And for the immediate future the business prospects are generally so

favorable that there is danger of such feverish and opportunistic

activity that our grave postwar problems may be neglected. We need to

act now with full regard for pitfalls; we need to act with foresight and

balance. We should not be lulled by the immediate alluring prospects

into forgetting the fundamental complexity of modern affairs, the

catastrophe that can come in this complexity, or the values that can be

wrested from it.

But the long-range difficulties we face should no more lead to despair

than our immediate business prospects should lead to the optimism which

comes from the present short-range prospect. On the foundation of our

victory we can build a lasting peace, with greater freedom and security

for mankind in our country and throughout the world. We will more

certainly do this if we are constantly aware of the fact that we face

crucial issues and prepare now to meet them.

To achieve success will require both boldness in setting our sights and

caution in steering our way on an uncharted course. But we have no

luxury of choice. We must move ahead. No return to the past is possible.

Our Nation has always been a land of great opportunities for those

people of the world who sought to become part of us. Now we have become

a land of great responsibilities to all the people of all the world. We

must squarely recognize and face the fact of those responsibilities.

Advances in science, in communication, in transportation, have

compressed the world into a community. The economic and political health

of each member of the world community bears directly on the economic and

political health of each other member.

The evolution of centuries has brought us to a new era in world history

in which manifold relationships between nations must be formalized and

developed in new and intricate ways.

The United Nations Organization now being established represents a

minimum essential beginning. It must be developed rapidly and steadily.

Its work must be amplified to fill in the whole pattern that has been

outlined. Economic collaboration, for example, already charted, now must

be carried on as carefully and as comprehensively as the political and

security measures.

It is important that the nations come together as States in the Assembly

and in the Security Council and in the other specialized assemblies and

councils that have been and will be arranged. But this is not enough.

Our ultimate security requires more than a process of consultation and

compromise.

It requires that we begin now to develop the United Nations Organization

as the representative of the world as one society. The United Nations

Organization, if we have the will adequately to staff it and to make it

work as it should, will provide a great voice to speak constantly and

responsibly in terms of world collaboration and world well-being.

There are many new responsibilities for us as we enter into this new

international era. The whole power and will and wisdom of our Government

and of our people should be focused to contribute to and to influence

international action. It is intricate, continuing business. Many

concessions and adjustments will be required.

The spectacular progress of science in recent years makes these

necessities more vivid and urgent. That progress has speeded internal

development and has changed world relationships so fast that we must

realize the fact of a new era. It is an era in which affairs have become

complex and rich in promise. Delicate and intricate relationships,

involving us all in countless ways, must be carefully considered.

On the domestic scene, as well as on the international scene, we must

lay a new and better foundation for cooperation. We face a great

peacetime venture; the challenging venture of a free enterprise economy

making full and effective use of its rich resources and technical

advances. This is a venture in which business, agriculture, and labor

have vastly greater opportunities than heretofore. But they all also

have vastly greater responsibilities. We will not measure up to those

responsibilities by the simple return to “normalcy” that was tried after

the last war.

The general objective, on the contrary, is to move forward to find the

way in time of peace to the full utilization and development of our

physical and human resources that were demonstrated so effectively in

the war.

To accomplish this, it is not intended that the Federal Government

should do things that can be done as well for the Nation by private

enterprise, or by State and local governments. On the contrary, the war

has demonstrated how effectively we can organize our productive system

and develop the potential abilities of our people by aiding the efforts

of private enterprise.

As we move toward one common objective there will be many and urgent

problems to meet.

Industrial peace between management and labor will have to be

achieved--through the process of collective bargaining--with Government

assistance but not Government compulsion. This is a problem which is the

concern not only of management, labor, and the Government, but also the

concern of every one of us.

Private capital and private management are entitled to adequate reward

for efficiency, but business must recognize that its reward results from

the employment of the resources of the Nation. Business is a public

trust and must adhere to national standards in the conduct of its

affairs. These standards include as a minimum the establishment of fair

wages and fair employment practices.

Labor also has its own new peacetime responsibilities. Under our

collective bargaining system, which must become progressively more

secure, labor attains increasing political as well as economic power,

and this, as with all power, means increased responsibility.

The lives of millions of veterans and war workers will be greatly

affected by the success or failure of our program of war liquidation and

reconversion. Their transition to peacetime pursuits will be determined

by our efforts to break the bottlenecks in key items of production, to

make surplus property immediately available where it is needed, to

maintain an effective national employment service, and many other

reconversion policies. Our obligations to the people who won the war

will not be paid if we fail to prevent inflation and to maintain

employment opportunities.

While our peacetime prosperity will be based on the private enterprise

the government can and must assist in many ways. It is the Government’s

responsibility to see that our economic system remains competitive, that

new businesses have adequate opportunities, and that our national

resources are restored and improved. Government must realize the effect

of its operations on the whole economy. It is the responsibility of

Government to gear its total program to the achievement of full

production and full employment.

Our basic objective--toward which all others lead--is to improve the

welfare of the American people. In addition to economic prosperity, this

means that we use social security in the fullest sense of the word. And

people must be protected from excessive want during old age, sickness,

and unemployment. Opportunities for a good economy and adequate medical

care must be readily available. Every family should build a decent home.

The new economic rights to which I have referred on previous occasions

is a charter of economic freedom which seeks to assure that all who will

may work toward their own security and the general advancement; that we

become a well-housed people, a well-nourished people, an educated

people, a people socially and economically secure, an alert and

responsible people.

These and other problems which may face us can be met by the cooperation

of all of us in furthering a positive and well-balanced Government

program--a program which will further national and international

well-being.

II. THE FEDERAL PROGRAM

INTERNATIONAL AFFAIRS

I. FOREIGN POLICY

The year 1945 brought with it the final defeat of our enemies. There

lies before us now the work of building a just and enduring peace.

Our most immediate task toward that end is to deprive our enemies

completely and forever of their power to start another war. Of even

greater importance to the preservation of international peace is the

need to preserve the wartime agreement of the United Nations and to

direct it into the ways of peace.

Long before our enemies surrendered, the foundations had been laid on

which to continue this unity in the peace to come. The Atlantic meeting

in 1941 and the conferences at Casablanca, Quebec, Moscow, Cairo,

Tehran, and Dumbarton Oaks each added a stone to the structure.

Early in 1945, at Yalta, the three major powers broadened and solidified

this base of understanding. There fundamental decisions were reached

concerning the occupation and control of Germany. There also a formula

was arrived at for the interim government of the areas in Europe which

were rapidly being wrested from Nazi control. This formula was based on

the policy of the United States that people be permitted to choose their

own form of government by their own freely expressed choice without

interference from any foreign source.

At Potsdam, in July 1945, Marshal Stalin, Prime Ministers Churchill and

Attlee, and I met to exchange views primarily with respect to Germany.

As a result, agreements were reached which outlined broadly the policy

to be executed by the Allied Control Council. At Potsdam there was also

established a Council of Foreign Ministers which convened for the first

time in London in September. The Council is about to resume its primary

assignment of drawing up treaties of peace with Italy, Rumania,

Bulgaria, Hungary, and Finland.

In addition to these meetings, and, in accordance with the agreement at

Yalta, the Foreign Ministers of Great Britain, the Soviet Union, and the

United States conferred together in San Francisco last spring, in

Potsdam in July, in London in September, and in Moscow in December.

These meetings have been useful in promoting understanding and agreement

among the three governments.

Simply to name all the international meetings and conferences is to

suggest the size and complexity of the undertaking to prevent

international war in which the United States has now enlisted for the

duration of history.

It is encouraging to know that the common effort of the United Nations

to learn to live together did not cease with the surrender of our

enemies.

When difficulties arise among us, the United States does not propose to

remove them by sacrificing its ideals or its vital interests. Neither do

we propose, however, to ignore the ideals and vital interests of our

friends.

Last February and March an Inter-American Conference on Problems of War

and Peace was held in Mexico City. Among the many significant

accomplishments of that Conference was an understanding that an attack

by any country against any one of the sovereign American republics would

be considered an act of aggression against all of them; and that if such

an attack were made or threatened, the American republics would decide

jointly, through consultations in which each republic has equal

representation, what measures they would take for their mutual

protection. This agreement stipulates that its execution shall be in

full accord with the Charter of the United Nations Organization.

The first meeting of the General Assembly of the United Nations now in

progress in London marks the real beginning of our bold adventure toward

the preservation of world peace, to which is bound the dearest hope of

men.

We have solemnly dedicated ourselves and all our will to the success of

the United Nations Organization. For this reason we have sought to

insure that in the peacemaking the smaller nations shall have a voice as

well as the larger states. The agreement reached at Moscow last month

preserves this opportunity in the making of peace with Italy, Rumania,

Bulgaria, Hungary, and Finland. The United States intends to preserve it

when the treaties with Germany and Japan are drawn.

It will be the continuing policy of the United States to use all its

influence to foster, support, and develop the United Nations

Organization in its purpose of preventing international war. If peace is

to endure it must rest upon justice no less than upon power. The

question is how justice among nations is best achieved. We know from

day-to-day experience that the chance for a just solution is

immeasurably increased when everyone directly interested is given a

voice. That does not mean that each must enjoy an equal voice, but it

does mean that each must be heard.

Last November, Prime Minister Attlee, Prime Minister MacKenzie King, and

I announced our proposal that a commission be established within the

framework of the United Nations to explore the problems of effective

international control of atomic energy.

The Soviet Union, France, and China have joined us in the purpose of

introducing in the General Assembly a resolution for the establishment

of such a commission. Our earnest wish is that the work of this

commission go forward carefully and thoroughly, but with the greatest

dispatch. I have great hope for the development of mutually effective

safeguards which will permit the fullest international control of this

new atomic force.

I believe it possible that effective means can be developed through the

United Nations Organization to prohibit, outlaw, and prevent the use of

atomic energy for destructive purposes.

The power which the United States demonstrated during the war is the

fact that underlies every phase of our relations with other countries.

We cannot escape the responsibility which it thrusts upon us. What we

think, plan, say, and do is of profound significance to the future of

every corner of the world.

The great and dominant objective of United States foreign policy is to

build and preserve a just peace. The peace we seek is not peace for

twenty years. It is permanent peace. At a time when massive changes are

occurring with lightning speed throughout the world, it is often

difficult to perceive how this central objective is best served in one

isolated complex situation or another. Despite this very real

difficulty, there are certain basic propositions to which the United

States adheres and to which we shall continue to adhere.

One proposition is that lasting peace requires genuine understanding and

active cooperation among the most powerful nations. Another is that even

the support of the strongest nations cannot guarantee a peace unless it

is infused with the quality of justice for all nations.

On October 27, 1945, I made, in New York City, the following public

statement of my understanding of the fundamental foreign policy of the

United States. I believe that policy to be in accord with the opinion of

the Congress and of the people of the United States. I believe that that

policy carries out our fundamental objectives.

1. We seek no territorial expansion or selfish advantage. We have no

plans for aggression against any other state, large or small. We have no

objective which need clash with the peaceful aims of any other nation.

2. We believe in the eventual return of sovereign rights and

self-government to all peoples who have been deprived of them by force.

3. We shall approve no territorial changes in any friendly part of the

world unless they accord with the freely expressed wishes of the people

concerned.

4. We believe that all peoples who are prepared for self-government

should be permitted to choose their own form of government by their own

freely expressed choice, without interference from any foreign source.

That is true in Europe, in Asia, in Africa, as well as in the Western

Hemisphere.

5. By the combined and cooperative action of our war allies, we shall

help the defeated enemy states establish peaceful democratic governments

of their own free choice. And we shall try to attain a world in which

nazism, fascism, and military aggression cannot exist.

6. We shall refuse to recognize any government imposed upon any nation

by the force of any foreign power. In some cases it may be impossible to

prevent forceful imposition of such a government. But the United States

will not recognize any such government.

7. We believe that all nations should have the freedom of the seas and

equal rights to the navigation of boundary rivers and waterways and of

rivers and waterways which pass through more than one country.

8. We believe that all states which are accepted in the society of

nations should have access on equal terms to the trade and the raw

materials of the world.

9. We believe that the sovereign states of the Western Hemisphere,

without interference from outside the Western Hemisphere, must work

together as good neighbors in the solution of their common problems.

10. We believe that full economic collaboration between all nations,

great and small, is essential to the improvement of living conditions

all over the world, and to the establishment of freedom from fear and

freedom from want.

11. We shall continue to strive to promote freedom of expression and

freedom of religion throughout the peace-loving areas of the world.

12. We are convinced that the preservation of peace between nations

requires a United Nations Organization composed of all the peace-loving

nations of the world who are willing jointly to use force, if necessary,

to insure peace.

That is our foreign policy.

We may not always fully succeed in our objectives. There may be

instances where the attainment of those objectives is delayed. But we

will not give our full sanction and approval to actions which fly in the

face of these ideals.

The world has a great stake in the political and economic future of

Germany. The Allied Control Council has now been in operation there for

a substantial period of time. It has not met with unqualified success.

The accommodation of varying views of four governments in the day-to-day

civil administration of occupied territory is a challenging task. In my

judgment, however, the Council has made encouraging progress in the face

of most serious difficulties. It is my purpose at the earliest

practicable date to transfer from military to civilian personnel the

execution of United States participation in the government of occupied

territory in Europe. We are determined that effective control shall be

maintained in Germany until we are satisfied that the German people have

regained the right to a place of honor and respect.

On the other side of the world, a method of international cooperation

has recently been agreed upon for the treatment of Japan. In this

pattern of control, the United States, with the full approval of its

partners, has retained primary authority and primary responsibility. It

will continue to do so until the Japanese people, by their own freely

expressed choice, choose their own form of government.

Our basic policy in the Far East is to encourage the development of a

strong, independent, united, and democratic China. That has been the

traditional policy of the United States.

At Moscow the United States, the Union of Soviet Socialist Republics,

and Great Britain agreed to further this development by supporting the

efforts of the national government and nongovernmental Chinese political

elements in bringing about cessation of civil strife and in broadening

the basis of representation in the Government. That is the policy which

General Marshall is so ably executing today.

It is the purpose of the Government of the United States to proceed as

rapidly as is practicable toward the restoration of the sovereignty of

Korea and the establishment of a democratic government by the free

choice of the people of Korea.

At the threshold of every problem which confronts us today in

international affairs is the appalling devastation, hunger, sickness,

and pervasive human misery that mark so many areas of the world.

By joining and participating in the work of the United Nations Relief

and Rehabilitation Administration the United States has directly

recognized and assumed an obligation to give such relief assistance as

is practicable to millions of innocent and helpless victims of the war.

The Congress has earned the gratitude of the world by generous financial

contributions to the United Nations Relief and Rehabilitation

Administration.

We have taken the lead, modest though it is, in facilitating under our

existing immigration quotas the admission to the United States of

refugees and displaced persons from Europe.

We have joined with Great Britain in the organization of a commission to

study the problem of Palestine. The Commission is already at work and

its recommendations will be made at an early date.

The members of the United Nations have paid us the high compliment of

choosing the United States as the site of the United Nations

headquarters. We shall be host in spirit as well as in fact, for nowhere

does there abide a fiercer determination that this peace shall live than

in the hearts of the American people.

It is the hope of all Americans that in time future historians will

speak not of World War I and World War II, but of the first and last

world wars.

2. FOREIGN ECONOMIC POLICY

The foreign economic policy of the United States is designed to promote

our own prosperity, and at the same time to aid in the restoration and

expansion of world markets and to contribute thereby to world peace and

world security. We shall continue our efforts to provide relief from the

devastation of war, to alleviate the sufferings of displaced persons, to

assist in reconstruction and development, and to promote the expansion

of world trade.

We have already joined the International Monetary Fund and the

International Bank for Reconstruction and Development. We have expanded

the Export-Import Bank and provided it with additional capital. The

Congress has renewed the Trade Agreements Act which provides the

necessary framework within which to negotiate a reduction of trade

barriers on a reciprocal basis. It has given our support to the United

Nations Relief and Rehabilitation Administration.

In accordance with the intentions of the Congress, lend-lease, except as

to continuing military lend-lease in China, was terminated upon the

surrender of Japan. The first of the lend-lease settlement agreements

has been completed with the United Kingdom. Negotiations with other

lend-lease countries are in progress. In negotiating these agreements,

we intend to seek settlements which will not encumber world trade

through war debts of a character that proved to be so detrimental to the

stability of the world economy after the last war.

We have taken steps to dispose of the goods which on VJ-day were in the

lend-lease pipe line to the various lend-lease countries and to allow

them long-term credit for the purpose where necessary. We are also

making arrangements under which those countries may use the lend-lease

inventories in their possession and acquire surplus property abroad to

assist in their economic rehabilitation and reconstruction. These goods

will be accounted for at fair values.

The proposed loan to the United Kingdom, which I shall recommend to the

Congress in a separate message, will contribute to easing the transition

problem of one of our major partners in the war. It will enable the

whole sterling area and other countries affiliated with it to resume

trade on a multilateral basis. Extension of this credit will enable the

United Kingdom to avoid discriminatory trade arrangements of the type

which destroyed freedom of trade during the 1930’s. I consider the

progress toward multilateral trade which will be achieved by this

agreement to be in itself sufficient warrant for the credit.

The view of this Government is that, in the longer run, our economic

prosperity and the prosperity of the whole world are best served by the

elimination of artificial barriers to international trade, whether in

the form of unreasonable tariffs or tariff preferences or commercial

quotas or embargoes or the restrictive practices of cartels.

The United States Government has issued proposals for the expansion of

world trade and employment to which the Government of the United Kingdom

has given its support on every important issue. These proposals are

intended to form the basis for a trade and employment conference to be

held in the middle of this year. If that conference is a success, I feel

confident that the way will have been adequately prepared for an

expanded and prosperous world trade.

We shall also continue negotiations looking to the full and equitable

development of facilities for transportation and communications among

nations.

The vast majority of the nations of the world have chosen to work

together to achieve, on a cooperative basis, world security and world

prosperity. The effort cannot succeed without full cooperation of the

United States. To play our part, we must not only resolutely carry out

the foreign policies we have adopted but also follow a domestic policy

which will maintain full production and employment in the United States.

A serious depression here can disrupt the whole fabric of the world

economy.

3. OCCUPIED COUNTRIES

The major tasks of our Military Establishment in Europe following

VE-day, and in the Pacific since the surrender of Japan, have been those

of occupation and military government. In addition we have given much

needed aid to the peoples of the liberated countries.

The end of the war in Europe found Germany in a chaotic condition.

Organized government had ceased to exist, transportation systems had

been wrecked, cities and industrial facilities had been bombed into

ruins. In addition to the tasks of occupation we had to assume all of

the functions of government. Great progress has been made in the

repatriation of displaced persons and of prisoners of war. Of the total

of 3,500,000 displaced persons found in the United States zone only

460,000 now remain.

The extensive complications involved by the requirement of dealing with

three other governments engaged in occupation and with the governments

of liberated countries require intensive work and energetic cooperation.

The influx of some 2 million German refugees into our zone of occupation

is a pressing problem, making exacting demands upon an already

overstrained internal economy.

Improvements in the European economy during 1945 have made it possible

for our military authorities to relinquish to the governments of all

liberated areas, or to the United Nations Relief and Rehabilitation

Administration, the responsibility for the provision of food and other

civilian relief supplies. The Army’s responsibilities in Europe extend

now only to our zones of occupation in Germany and Austria and to two

small areas in northern Italy.

By contrast with Germany, in Japan we have occupied a country still

possessing an organized and operating governmental system. Although

severely damaged, the Japanese industrial and transportation systems

have been able to insure at least a survival existence for the

population. The repatriation of Japanese military and civilian personnel

from overseas is proceeding as rapidly as shipping and other means

permit.

In order to insure that neither Germany nor Japan will again be in a

position to wage aggressive warfare, the armament making potential of

these countries is being dismantled and fundamental changes in their

social and political structures are being effected. Democratic systems

are being fostered to the end that the voice of the common man may be

heard in the councils of his government.

For the first time in history the legal culpability of war makers is

being determined. The trials now in progress in Nurnberg-and those soon

to begin in Tokyo--bring before the bar of international justice those

individuals who are charged with the responsibility for the sufferings

of the past six years. We have high hope that this public portrayal of

the guilt of these evildoers will bring wholesale and permanent

revulsion on the part of the masses of our former enemies against war,

militarism, aggression, and notions of race superiority.

4. DEMOBILIZATION OF OUR ARMED FORCES

The cessation of active campaigning does not mean that we can completely

disband our fighting forces. For their sake and for the sake of their

loved ones at home, I wish that we could. But we still have the task of

clinching the victories we have won--of making certain that Germany and

Japan can never again wage aggressive warfare, that they will not again

have the means to bring on another world war. The performance of that

task requires that, together with our allies, we occupy the hostile

areas, complete the disarmament of our enemies, and take the necessary

measures to see to it that they do not rearm.

As quickly as possible, we are bringing about the reduction of our armed

services to the size required for these tasks of occupation and

disarmament. The Army and the Navy are following both length-of-service

and point systems as far as possible in releasing men and women from the

service. The points are based chiefly on length and character of

service, and on the existence of dependents.

Over 5 million from the Army have already passed through the separation

centers.

The Navy, including the Marine Corps and the Coast Guard, has discharged

over one and a half million.

Of the 12 million men and women serving in the Army and Navy at the time

of the surrender of Germany, one-half have already been released. The

greater part of these had to be brought back to this country from

distant parts of the world.

Of course there are cases of individual hardship in retention of

personnel in the service. There will be in the future. No system of such

size can operate to perfection. But the systems are rounded on fairness

and justice, and they are working at full speed. We shall try to avoid

mistakes, injustices, and hardship--as far as humanly possible.

We have already reached the point where shipping is no longer the

bottleneck in the return of troops from the European theater. The

governing factor now has become the requirement for troops in sufficient

strength to carry out their missions.

In a few months the same situation will exist in the Pacific. By the end

of June, 9 out of 10 who were serving in the armed forces on VE-day will

have been released. Demobilization will continue thereafter, but at a

slower rate, determined by our military responsibilities.

Our national safety and the security of the world will require

substantial armed forces, particularly in overseas service. At the same

time it is imperative that we relieve those who have already done their

duty, and that we relieve them as fast as we can. To do that, the Army

and the Navy are conducting recruiting drives with considerable success.

The Army has obtained nearly 400,000 volunteers in the past four months,

and the Navy has obtained 80,000. Eighty percent of these volunteers for

the regular service have come from those already with the colors. The

Congress has made it possible to offer valuable inducements to those who

are eligible for enlistment. Every effort will be made to enlist the

required number of young men.

The War and Navy Departments now estimate that by a year from now we

still will need a strength of about 2 million including officers, for

the armed forces--Army, Navy, and Air. I have reviewed their estimates

and believe that the safety of the Nation will require the maintenance

of an armed strength of this size for the calendar year that is before

us.

In case the campaign for volunteers does not produce that number, it

will be necessary by additional legislation to extend the Selective

Service Act beyond May 16, the date of expiration under existing law.

That is the only way we can get the men and bring back our veterans.

There is no other way. Action along this line should not be postponed

beyond March, in order to avoid uncertainty and disruption.

DOMESTIC AFFAIRS

I. THE ECONOMIC OUTLOOK

Prophets of doom predicted that the United States could not escape a

runaway inflation during the war and an economic collapse after the war.

These predictions have not been borne out. On the contrary, the record

of economic stabilization during the war and during the period of

reconversion has been an outstanding accomplishment.

We know, however, that nothing is as dangerous as overconfidence, in war

or in peace. We have had to fight hard to hold the line. We have made

strenuous efforts to speed reconversion. But neither the danger of a

postwar inflation nor of a subsequent collapse in production and

employment is yet overcome. We must base our policies not on unreasoning

optimism or pessimism but upon a candid recognition of our objectives

and upon a careful analysis of foreseeable trends.

Any precise appraisal of the economic outlook at this time is

particularly difficult. The period of demobilization and reconversion is

fraught with uncertainties. There are also serious gaps in our

statistical information. Certain tendencies are, however, fairly clear

and recognition of them should serve as background for the consideration

of next year’s Federal Program. In general, the outlook for business is

good, and it is likely to continue to be good--provided we control

inflation and achieve peace in management labor relations.

Civilian production and employment can be expected to increase

throughout the next year. This does not mean, however, that continuing

full employment is assured. It is probable that demobilization of the

armed forces will proceed faster than the increase in civilian

employment opportunities. Even if substantial further withdrawals from

the labor market occur, unemployment will increase temporarily. The

extent to which this unemployment will persist depends largely on the

speed of industrial expansion and the effectiveness of the policies of

the Federal Government.

Along with extraordinary demand there are still at this time many

critical shortages resulting from the war. These extraordinary demands

and shortages may lead to a speculative boom, especially in the price of

securities, real estate, and inventories.

Therefore, our chief worry still is inflation. While we control this

inflationary pressure we must look forward to the time when this

extraordinary demand will subside. It will be years before we catch up

with the demand for housing. The extraordinary demand for other durable

goods, for the replenishment of inventories, and for exports may be

satisfied earlier. No backlog of demand can exist very long in the face

of our tremendous productive capacity. We must expect again to face the

problem of shrinking demand and consequent slackening in sales,

production, and employment. This possibility of a deflationary spiral in

the future will exist unless we now plan and adopt an effective full

employment program.

2. GENERAL POLICIES--IMMEDIATE AND LONG-RANGE

During the war, production for civilian use was limited by war needs and

available manpower. Economic stabilization required measures, to spread

limited supplies equitably by rationing, price controls, increased

taxes, savings bond campaigns, and credit controls. Now, with the

surrender of our enemies, economic stabilization requires that policies

be directed toward promoting an increase in supplies at low unit prices.

We must encourage the development of resources and enterprises in all

parts of the country, particularly in underdeveloped areas. For example,

the establishment of new peacetime industries in the Western States and

in the South would, in my judgment, add to existing production and

markets rather than merely bring about a shifting of production. I am

asking the Secretaries of Agriculture, Commerce, and Labor to explore

jointly methods for stimulating new industries, particularly in areas

with surplus agricultural labor.

We must also aid small businessmen and particularly veterans who are

competent to start their own businesses. The establishment and

development of efficient small business ventures, I believe, will not

take away from, but rather will add to, the total business of all

enterprises.

Even with maximum encouragement of Production, we cannot hope to remove

scarcities within a short time. The most serious deficiencies will

persist in the fields of residential housing, building materials, and

consumers’ durable goods. The critical situation makes continued rent

control, price control, and priorities, allocations, and inventory

controls absolutely essential. Continued control of consumer credit will

help to reduce the pressure on prices of durable goods and will also

prolong the period during which the backlog demand will be effective.

While we are meeting these immediate needs we must look forward to a

long-range program of security and increased standard of living.

The best protection of purchasing power is a policy of full production

and full employment opportunities. Obviously, an employed worker is a

better customer than an unemployed worker. There always will be,

however, some frictional unemployment. In the present period of

transition we must deal with such temporary unemployment as results from

the fact that demobilization will proceed faster than reconversion or

industrial expansion. Such temporary unemployment is probably

unavoidable in a period of rapid change. The unemployed worker is a

victim of conditions beyond his control. He should be enabled to

maintain a reasonable standard of living for himself and his family.

The most serious difficulty in the path of reconversion and expansion is

the establishment of a fair wage structure.

The ability of labor and management to work together, and the wage and

price policies which they develop, are social and economic issues of

first importance.

Both labor and management have a special interest. Labor’s interest is

very direct and personal because working conditions, wages, and prices

affect the very life and happiness of the worker and his family.

Management has a no less direct interest because on management rests the

responsibility for conducting a growing and prosperous business.

But management and labor have identical interests in the long run. Good

wages mean good markets. Good business means more jobs and better wages.

In this age of cooperation and in our highly organized economy the

problems of one very soon become the problems of all.

Better human relationships are an urgent need to which organized labor

and management should address themselves. No government policy can make

men understand each other, agree, and get along unless they conduct

themselves in a way to foster mutual respect and good will.

The Government can, however, help to develop machinery which, with the

backing of public opinion, will assist labor and management to resolve

their disagreements in a peaceful manner and reduce the number and

duration of strikes.

All of us realize that productivity--increased output per man--is in the

long run the basis of our standard of living. Management especially must

realize that if labor is to work wholeheartedly for an increase in

production, workers must be given a just share of increased output in

higher wages.

Most industries and most companies have adequate leeway within which to

grant substantial wage increases. These increases will have a direct

effect in increasing consumer demand to the high levels needed.

Substantial wage increases are good business for business because they

assure a large market for their products; substantial wage increases are

good business for labor because they increase labor’s standard of

living; substantial wage increases are good business for the country as

a whole because capacity production means an active, healthy, friendly

citizenry enjoying the benefits of democracy under our free enterprise

system.

Labor and management in many industries have been operating successfully

under the Government’s wage-price policy. Upward revisions of wage

scales have been made in thousands of establishments throughout the

Nation since VJ-day. It is estimated that about 6 million workers, or

more than 20 percent of all employees in nonagricultural and

nongovernmental establishments, have received wage increases since

August 18, 1945. The amounts of increases given by individual employers

concentrate between 10 and 15 percent, but range from less than 5

percent to over 30 percent.

The United States Conciliation Service since VJ-day has settled over

3,000 disputes affecting over 1,300,000 workers without a strike threat

and has assisted in settling about 1,300 disputes where strikes were

threatened which involved about 500,000 workers. Only workers directly

involved, and not those in related industries who might have been

indirectly affected, are included in these estimates.

Many of these adjustments have occurred in key industries and would have

seemed to us major crises if they had not been settled peaceably.

Within the framework of the wage-price policy there has been definite

success, and it is to be expected that this success will continue in a

vast majority of the cases arising in the months ahead.

However, everyone who realizes the extreme need for a swift and orderly

reconversion must feel a deep concern about the number of major strikes

now in progress. If long continued, these strikes could put a heavy

brake on our program.

I have already made recommendations to the Congress as to the procedure

best adapted to meeting the threat of work stoppages in Nation-wide

industries without sacrificing the fundamental rights of labor to

bargain collectively and ultimately to strike in support of their

position.

If we manage our economy properly, the future will see us on a level of

production half again as high as anything we have ever accomplished in

peacetime. Business can in the future pay higher wages and sell for

lower prices than ever before. This is not true now for all companies,

nor will it ever be true for all, but for business generally it is true.

We are relying on all concerned to develop, through collective

bargaining, wage structures that are fair to labor, allow for necessary

business incentives, and conform with a policy designed to “hold the

line” on prices.

Production and more production was the byword during the war and still

is during the transition from war to peace. However, when deferred

demand slackens, we shall once again face the deflationary dangers which

beset this and other countries during the 1930’s. Prosperity can be

assured only by a high level of demand supported by high current income;

it cannot be sustained by deferred needs and use of accumulated savings.

If we take the right steps in time we can certainly avoid the disastrous

excesses of runaway booms and headlong depressions. We must not let a

year or two of prosperity lull us into a false feeling of security and a

repetition of the mistakes of the 1920’s that culminated in the crash of

1929.

During the year ahead the Government will be called upon to act in many

important fields of economic policy from taxation and foreign trade to

social security and housing. In every case there will be alternatives.

We must choose the alternatives which will best measure up to our need

for maintaining production and employment in the future. We must never

lose sight of our long-term objectives: the broadening of markets--the

maintenance of steadily rising demand. This demand can come from only

three sources: consumers, businesses, or government.

In this country the job of production and distribution is in the hands

of businessmen, farmers, workers, and professional people-in the hands

of our citizens. We want to keep it that way. However, it is the

Government’s responsibility to help business, labor, and farmers do

their jobs.

There is no question in my mind that the Government, acting on behalf of

all the people, must assume the ultimate responsibility for the economic

health of the Nation. There is no other agency that can. No other

organization has the scope or the authority, nor is any other agency

accountable, to all the people. This does not mean that the Government

has the sole responsibility, nor that it can do the job alone, nor that

it can do the job directly.

All of the policies of the Federal Government must be geared to the

objective of sustained full production and full employment-to raise

consumer purchasing power and to encourage business investment. The

programs we adopt this year and from now on will determine our ability

to achieve our objectives. We must continue to pay particular attention

to our fiscal, monetary, and tax policy, programs to aid

business--especially small business--and transportation,

labor-management relations and wage-price policy, social security and

health, education, the farm program, public works, housing and resource

development, and economic foreign policy.

For example, the kinds of tax measures we have at different

times--whether we raise our revenue in a way to encourage consumer

spending and business investment or to discourage it--have a vital

bearing on this question. It is affected also by regulations on consumer

credit and by the money market, which is strongly influenced by the rate

of interest on Government securities. It is affected by almost every

step we take.

In short, the way we handle the proper functions of government, the way

we time the exercise of our traditional and legitimate governmental

functions, has a vital bearing on the economic health of the Nation.

These policies are discussed in greater detail in the accompanying Fifth

Quarterly Report of the Director of War Mobilization and Reconversion.

3. LEGISLATION HERETOFORE RECOMMENDED

AND STILL PENDING

To attain some of these objectives and to meet the other needs of the

United States in the reconversion and postwar period, I have from time

to time made various recommendations to the Congress.

In making these recommendations I have indicated the reasons why I

deemed them essential for progress at home and abroad. A few--a very

few--of these recommendations have been enacted into law by the

Congress. Most of them have not. I here reiterate some of them, and

discuss others later in this Message. I urge upon the Congress early

consideration of them. Some are more urgent than others, but all are

necessary.

(1) Legislation to authorize the President to create fact-finding boards

for the prevention of stoppages of work in Nationwide industries after

collective bargaining and conciliation and voluntary arbitration have

failed--as recommended by me on December 3, 1945.

(2) Enactment of a satisfactory full employment bill such as the Senate

bill now in conference between the Senate and the House--as recommended

by me on September 6, 1945.

(3) Legislation to supplement the unemployment insurance benefits for

unemployed workers now provided by the different States--as recommended

by me on May 1945.

(4) Adoption of a permanent Fair Employment Practice Act--as recommended

by me on September 6, 1945.

(5) Legislation substantially raising the amount of minimum wages now

provided by law--as recommended by me on September 6, 1945.

(6) Legislation providing for a comprehensive program for scientific

research--as recommended by me on September 6, 1945.

(7) Legislation enacting a health and medical care program--as

recommended by me on November 19, 1945.

(8) Legislation adopting the program of universal training--as

recommended by me on October 23, 1945.

(9) Legislation providing an adequate salary scale for all Government

employees in all branches of the Government--as recommended by me on

September 6, 1945.

(10) Legislation making provision for succession to the Presidency in

the event of the death or incapacity or disqualification of the

President and Vice President--as recommended by me on June 19, 1945.

(11) Legislation for the unification of the armed services--as

recommended by me on December 19, 1945.

(12) Legislation for the domestic use and control of atomic energy--as

recommended by me on October 3, 1945.

(13) Retention of the United States Employment Service in the Federal

Government for a period at least up to June 30, 1947--as recommended by

me on September 6, 1945.

(14) Legislation to increase unemployment allowances for veterans in

line with increases for civilians--as recommended by me on September 6,

1945.

(15) Social security coverage for veterans for their period of military

service--as recommended by me on September 6, 1945.

(16) Extension of crop insurance--as recommended by me on September 6,

1945.

(17) Legislation permitting the sale of ships by the Maritime Commission

at home and abroad--as recommended by me on September 6, 1945. I further

recommend that this legislation include adequate authority for

chartering vessels both here and abroad.

(18) Legislation to take care of the stock piling of materials in which

the United States is naturally deficient--as recommended by me on

September 6, 1945.

(19) Enactment of Federal airport legislation-as recommended by me on

September 6, 1945.

(20) Legislation repealing the Johnson Act on foreign loans--as

recommended by me on September 6, 1945.

(21) Legislation for the development of the Great Lakes-St. Lawrence

River Basin-as recommended by me on October 3, 1945.

4. POLICIES IN SPECIFIC FIELDS

(a) Extension of Price Control Act.

Today inflation is our greatest immediate domestic problem. So far the

fight against inflation has been waged successfully. Since May 1943,

following President Roosevelt’s “hold the line” order and in the face of

the greatest pressures which this country has ever seen, the cost of

living index has risen only three percent. Wholesale prices in this same

period have been held to an increase of two and one-half percent.

This record has been made possible by the vigorous efforts of the

agencies responsible for this program. But their efforts would have been

fruitless if they had not had the solid support of the great masses of

our people. The Congress is to be congratulated for its role in

providing the legislation under which this work has been carried out.

On VJ-day it was clear to all thinking people that the danger of

inflation was by no means over. Many of us can remember vividly our

disastrous experience following World War I. Then the very restricted

wartime controls were lifted too quickly, and as a result prices and

rents moved more rapidly upward. In the year and a half following the

armistice, rents, food, and clothing shot to higher and still higher

levels.

When the inevitable crash occurred less than two years after the end of

the war, business bankruptcies were widespread. Profits were wiped out.

Inventory losses amounted to billions of dollars. Farm income dropped by

one-half. Factory pay rolls dropped 40 percent, and nearly one-fifth of

all our industrial workers were walking the streets in search of jobs.

This was a grim greeting, indeed, to offer our veterans who had just

returned from overseas.

When I addressed the Congress in September, I emphasized that we must

continue to hold the price line until the production of goods caught up

with the tremendous demands. Since then we have seen demonstrated the

strength of the inflationary pressures which we have to face.

Retail sales in the closing months of 1945 ran 12 percent above the

previous peak for that season, which came in 1944. Prices throughout the

entire economy have been pressing hard against the price ceilings. The

prices of real estate, which cannot now be controlled under the law, are

rising rapidly. Commercial rents are not included in the present price

control law and, where they are not controlled by State law, have been

increasing, causing difficulties to many businessmen.

It will be impossible to maintain a high purchasing power or an

expanding production unless we can keep prices at levels which can be

met by the vast majority of our people. Full production is the greatest

weapon against inflation, but until we can produce enough goods to meet

the threat of inflation the Government will have to exercise its wartime

control over prices.

I am sure that the people of the United States are disturbed by the

demands made by several business groups with regard to price and rent

control.

I am particularly disturbed at the effect such thinking may have on

production and employment. If manufacturers continue to hold back goods

and decline to submit bids when invited--as I am informed some are

doing--in anticipation of higher prices which would follow the end of

price controls, we shall inevitably slow down production and create

needless unemployment. On the other hand, there are the vast majority of

American businessmen who are not holding back goods, but who need

certainty about the Government pricing policy in order to fix their own

long-range pricing policies.

Businessmen are entitled therefore to a dear statement of the policy of

the Government on the subject. Tenants and housewives, farmers and

workers--consumers in general--have an equal right.

We are all anxious to eliminate unnecessary controls just as rapidly as

we can do so. The steps that we have already taken in many directions

toward that end are a clear indication of our policy.

The present Price Control Act expires on June 30, 1946. If we expect to

maintain a steady economy we shall have to maintain price and rent

control for many months to come. The inflationary pressures on prices

and rents, with relatively few exceptions, are now at an all-time peak.

Unless the Price Control Act is renewed there will be no limit to which

our price levels would soar. Our country would face a national disaster.

We cannot wait to renew the act until immediately before it expires.

Inflation results from psychological as well as economic conditions. The

country has a clear right to know where the Congress stands on this

all-important problem. Any uncertainty now as to whether the act will be

extended gives rise to price speculation, to withholding of goods from

the market in anticipation of rising prices, and to delays in achieving

maximum production.

I do not doubt that the Congress will be beset by many groups who will

urge that the legislation that I have proposed should either be

eliminated or modified to the point where it is nearly useless. The

Congress has a clear responsibility to meet this challenge with courage

and determination. I have every confidence that it will do so.

I strongly urge that the Congress now resolve all doubts and as soon as

possible adopt legislation continuing rent and price control in effect

for a full year from June 30, 1946.

(b) Food subsidies.

If the price line is to be held, if our people are to be protected

against the inflationary dangers which confront us, we must do more than

extend the Price Control Act. In September we were hopeful that the

inflationary pressures would by this time have begun to diminish. We

were particularly hopeful on food. Indeed, it was estimated that food

prices at retail would drop from 3 to 5 percent in the first six months

following the end of the war.

In anticipation of this decline in food prices, it was our belief that

food subsidies could be removed gradually during the winter and spring

months, and eliminated almost completely by June 30 of this year. It was

our feeling that the food subsidies could be dropped without an increase

to the consumer in the present level of food prices or in the over-all

cost of living.

As matters stand today, however, food prices are pressing hard against

the ceilings. The expected decline in food prices has not occurred, nor

is it likely to occur for many months to come. This brings me to the

reluctant conclusion that food subsidies must be continued beyond June

30, 1946.

If we fail to take this necessary step, meat prices on July 1 will be

from 3 to 5 cents higher than their average present levels; butter will

be at least 12 cents a pound higher, in addition to the 5 cents a pound

increase of last fall; milk will increase from 1 to 2 cents a quart;

bread will increase about 1 cent a loaf; sugar will increase over 1 cent

a pound; cheese, in addition to the increase of 4 cents now planned for

the latter part of this month, will go up an additional 8 cents. In

terms of percentages we may find the cost-of-living index for food

increased by more than 8 percent, which in turn would result in more

than a 3-percent increase in the cost of living.

If prices of food were allowed to increase by these amounts, I must make

it clear to the Congress that, in my opinion, it would become extremely

difficult for us to control the forces of inflation.

None of us likes subsidies. Our farmers, in particular, have always been

opposed to them.

But I believe our farmers are as deeply conscious as any group in the

land of the havoc which inflation can create. Certainly in the past

eighteen months there has been no group which has fought any harder in

support of the Government’s price control program. I am confident that,

if the facts are placed before them and if they see clearly the evils

between which we are forced to choose, they will understand the reasons

why subsidies must be continued.

The legislation continuing the use of food subsidies into the new fiscal

year should be tied down specifically to certain standards. A very

proper requirement, in my opinion, would be that subsidies be removed as

soon as it is indicated that the cost of living will decline below the

present levels.

(c) Extension of War Powers Act.

The Second War Powers Act has recently been extended by the Congress for

six months instead of for a year. It will now expire, unless further

extended, on June 30, 1946. This act is the basis for priority and

inventory controls governing the use of scarce materials, as well as for

other powers essential to orderly reconversion.

I think that this Administration has given adequate proof of the fact

that it desires to eliminate wartime controls as quickly and as

expeditiously as possible. However, we know that there will continue to

be shortages of certain materials caused by the war even after June 30,

1946. It is important that businessmen know now that materials in short

supply are going to be controlled and distributed fairly as long as

these war-born shortages continue.

I, therefore, urge the Congress soon to extend the Second War Powers

Act. We cannot afford to wait until just before the act expires next

June. To wait would cause the controls to break down in a short time,

and would hamper our production and employment program.

(d) Small business and competition.

A rising birth rate for small business, and a favorable environment for

its growth, are not only economic necessities but also important

practical demonstrations of opportunity in a democratic free society. A

great many veterans and workers with new skills and experience will want

to start in for themselves. The opportunity must be afforded them to do

so. They are the small businessmen of the future.

Actually when we talk about small business we are talking about almost

all of the Nation’s individual businesses. Nine out of every ten

concerns fall into this category, and 45 percent of all workers are

employed by them. Between 30 and 40 percent of the total value of all

business transactions are handled by small business.

It is obvious national policy to foster the sound development of small

business. It helps to maintain high levels of employment and national

income and consumption of the goods and services that the Nation can

produce. It encourages the competition that keeps our free enterprise

economy vigorous and expanding. Small business, because of its

flexibility, assists in the rapid exploitation of scientific and

technological discoveries. Investment in small business can absorb a

large volume of savings that might otherwise not be tapped.

The Government should encourage and is encouraging small-business

initiative and originality to stimulate progress through competition.

During the war, the Smaller War Plants Corporation assisted small

concerns to make a maximum contribution to victory. The work of the

Smaller War Plants Corporation is being carried on in peacetime by the

Federal Loan Agency and the Department of Commerce. The fundamental

approach to the job of encouraging small concerns must be based on:

1. Arrangements for making private and public financial resources

available on reasonable terms.

2. Provision of technical advice and assistance to business as a whole

on production, research, and management problems. This will help

equalize competitive relationships between large and small companies,

for many of the small companies cannot afford expensive technical

research, accounting, and tax advice.

3. Elimination of trade practices and agreements which reduce

competition and discriminate against new or small enterprises.

We speak a great deal about the free enterprise economy of our country.

It is competition that keeps it free. It is competition that keeps it

growing and developing. The truth is that we need far more competition

in the future than we have had in the immediate past.

By strangling competition, monopolistic activity prevents or deters

investment in new or expanded production facilities. This lessens the

opportunity for employment and chokes off new outlets for idle savings.

Monopoly maintains prices at artificially high levels and reduces

consumption which, with lower prices, would rise and support larger

production and higher employment. Monopoly, not being subject to

competitive pressure, is slow to take advantage of technical advances

which would lower prices or improve quality. All three of these

monopolistic activities very directly lower the standard of

living--through higher prices and lower quality of product--which free

competition would improve.

The Federal Government must protect legitimate business and consumers

from predatory and monopolistic practices by the vigilant enforcement of

regulatory legislation. The program will be designed to have a maximum

impact upon monopolistic bottlenecks and unfair competitive practices

hindering expansion in employment.

During the war, enforcement of antimonopoly laws was suspended in a

number of fields. The Government must now take major steps not only to

maintain enforcement of antitrust laws but to encourage new and

competing enterprises in every way. The deferred demand of the war years

and the large accumulations of liquid assets provide ample incentive for

expansion. Equalizing of business opportunity, under full and free

competition, must be a prime responsibility in the reconversion period

and in the years that follow. Many leading businessmen have recognized

the importance of such action both to themselves and to the economy as a

whole.

But we must do more than break up trusts and monopolies after they have

begun to strangle competition. We must take positive action to foster

new, expanding enterprises. By legislation and by administration we must

take specific steps to discourage the formation or the strengthening of

competition-restricting business. We must have an over-all antimonopoly

policy which can be applied by all agencies of the Government in

exercising the functions assigned to them--a policy designed to

encourage the formation and growth of new and freely competitive

enterprises.

Among the many departments and agencies which have parts in the program

affecting business and competition, the Department of Commerce has a

particularly important role. That is why I have recommended a

substantial increase in appropriations for the next fiscal year for this

Department.

In its assistance to industry, the Department of Commerce will

concentrate its efforts on these primary objectives: Promotion of a

large and well-balanced foreign trade; provision of improved technical

assistance and management aids, especially for small enterprises; and

strengthening of basic statistics on business operations, both by

industries and by regions. To make new inventions and discoveries

available more promptly to all businesses, small and large, the

Department proposes to expand its own research activities, promote

research by universities, improve Patent Office procedures, and develop

a greatly expanded system of field offices readily accessible to the

businesses they serve.

Many gaps exist in the private financial mechanism, especially in the

provision of long-term funds for small- and medium sized enterprises. In

the peacetime economy the Reconstruction Finance Corporation will take

the leadership in assuring adequate financing for small enterprises

which cannot secure funds from other sources. Most of the funds should

and will be provided by private lenders; but the Reconstruction Finance

Corporation will share any unusual risks through guarantees of private

loans, with direct loans only when private capital is unwilling to

participate on a reasonable basis.

(e) Minimum wage.

Full employment and full production may be achieved only by maintaining

a level of consumer income far higher than that of the prewar period. A

high level of consumer income will maintain the market for the output of

our mills, farms, and factories, which we have demonstrated during the

war years that we can produce. One of the basic steps which the Congress

can take to establish a high level of consumer income is to amend the

Fair Labor Standards Act to raise substandard wages to a decent minimum

and to extend similar protection to additional workers who are not

covered by the present act.

Substandard wages are bad for business and for the farmer. Substandard

wages provide only a substandard market for the goods and services

produced by American industry and agriculture.

At the present time the Fair Labor Standards Act prescribes a minimum

wage of 40 cents an hour for those workers who are covered by the act.

The present minimum wage represents an annual income of about $800 to

those continuously employed for 50 weeks--clearly a wholly inadequate

budget for an American family. I am in full accord with the proposal now

pending in the Congress that the statutory minimum be raised immediately

to 65 cents an hour, with further increases to 70 cents after one year

and to 75 cents after two years. I also favor the proposal that the

industry committee procedure be used to set rates higher than 65 cents

per hour during the two-year interval before the 75-cent basic wage

would otherwise become applicable.

The proposed minimum wage of 65 cents an hour would assure the worker an

annual income of about $1,300 a year in steady employment. This amount

is clearly a modest goal. After considering cost-of-living increases in

recent years, it is little more than a 10-cent increase over the present

legal minimum. In fact, if any large number of workers earn less than

this amount, we will find it impossible to maintain the levels of

purchasing power needed to sustain the stable prosperity which we

desire. Raising the minimum to 75 cents an hour will provide the wage

earner with an annual income of $1,500 if he is fully employed.

The proposed higher minimum wage levels are feasible without involving

serious price adjustments or serious geographic dislocations.

Today about 20 percent of our manufacturing wage earners--or about 2

million-earn less than 65 cents an hour. Because wages in most

industries have risen during the war, this is about the same as the

proportion-17 percent--who were earning less than 40 cents an hour in

1941.

I also recommend that minimum wage protection be extended to several

groups of workers not now covered. The need for a decent standard of

living is by no means limited to those workers who happen to be covered

by the act as it now stands. It is particularly vital at this period of

readjustment in the national economy and readjustment in employment of

labor to extend minimum wage protection as far as possible.

Lifting the basic minimum wage is necessary, it is justified as a matter

of simple equity to workers, and it will prove not only feasible but

also directly beneficial to the Nation’s employers.

(f) Agricultural programs.

The farmers of America generally are entering the crop year of 1946 in

better financial condition than ever before. Farm mortgage debt is the

lowest in 30 years. Farmers’ savings are the largest in history. Our

agricultural plant is in much better condition than after World War I.

Farm machinery and supplies are expected to be available in larger

volume, and farm labor problems will be less acute.

The demand for farm products will continue strong during the next year

or two because domestic purchases will be supplemented by a high level

of exports and foreign relief shipments. It is currently estimated that

from 7 to 10 percent of the total United States food supply may be

exported in the calendar year 1946.

Farm prices are expected to remain at least at their present levels in

the immediate future, and for at least the next 12 months they are

expected to yield a net farm income double the 1935-39 average and

higher than in any year prior to 1943.

We can look to the future of agriculture with greater confidence than in

many a year in the past. Agriculture itself is moving confidently ahead,

planning for another year of big production, taking definite and

positive steps to lead the way toward an economy of abundance.

Agricultural production goals for 1946 call for somewhat greater acreage

than actually was planted in 1945. Agriculture is prepared to

demonstrate that it can make a peacetime contribution as great as its

contribution toward the winning of the war.

In spite of supplying our armed forces and our allies during the war

with a fifth to a fourth of our total food output, farmers were still

able to provide our civilians with 8 percent more food per capita than

the average for the five years preceding the war. Since the surrender of

Japan, civilian food consumption has risen still further. By the end of

1945 the amount of the increase in food consumption was estimated to be

as high as 15 percent over the prewar average. The record shows that the

people of this country want and need more food and that they will buy

more food if only they have the jobs and the purchasing power. The first

essential therefore in providing fully for the welfare of agriculture is

to maintain full employment and a high level of purchasing power

throughout the Nation.

For the period immediately ahead we shall still have the problem of

supplying enough food. If we are to do our part in aiding the

war-stricken and starving countries some of the food desires of our own

people will not be completely satisfied, at least until these nations

have had an opportunity to harvest another crop. During the next few

months the need for food in the world will be more serious than at any

time during the war. And, despite the large shipments we have already

made, and despite what we shall send, there remain great needs abroad.

Beyond the relief feeding period, there will still be substantial

foreign outlets for our farm commodities. The chief dependence of the

farmer, however, as always, must be upon the buying power of our own

people.

The first obligation of the Government to agriculture for the

reconversion period is to make good on its price-support commitments.

This we intend to do, with realistic consideration for the sound

patterns of production that will contribute most to the long-time

welfare of agriculture and the whole Nation. The period during which

prices are supported will provide an opportunity for farmers

individually to strengthen their position in changing over from a

wartime to a peacetime basis of production. It will provide an

opportunity for the Congress to review the needs of agriculture and make

changes in national legislation where experience has shown changes to be

needed. In this connection, the Congress will wish to consider

legislation to take the place of the 1937 Sugar Act which expires at the

end of this year. During this period we must do a thorough job of basic

planning to the end that agriculture shall be able to contribute its

full share toward a healthy national economy.

Our long-range agricultural policies should have two main objectives:

First, to assure the people on the farms a fair share of the national

income; and, second, to encourage an agricultural production pattern

that is best fitted to the Nation’s needs. To accomplish this second

objective we shall have to take into consideration changes that have

taken place and will continue to take place in the production of farm

commodities--changes that affect costs and efficiency and volume.

What we seek ultimately is a high level of food production and

consumption that will provide good nutrition for everyone. This cannot

be accomplished by agriculture alone. We can be certain of our capacity

to produce food, but we have often failed to distribute it as well as we

should and to see that our people can afford to buy it. The way to get

good nutrition for the whole Nation is to provide employment

opportunities and purchasing power for all groups that will enable them

to buy full diets at market prices.

Wherever purchasing power fails to reach this level we should see that

they have some means of getting adequate food at prices in line with

their ability to buy. Therefore, we should have available supplementary

programs that will enable all our people to have enough of the right

kind of food.

For example, one of the best possible contributions toward building a

stronger, healthier Nation would be a permanent school-lunch program on

a scale adequate to assure every school child a good lunch at noon. The

Congress, of course, has recognized this need for a continuing

school-lunch program and legislation to that effect has been introduced

and hearings held. The plan contemplates the attainment of this

objective with a minimum of Federal expenditures. I hope that the

legislation will be enacted in time for a permanent program to start

with the beginning of the school year next fall.

We have the technical knowledge and the productive capacity to provide

plenty of good food for every man, woman, and child in the United

States. It is time we made that possibility a reality.

(g) Resource development.

The strength of our Nation and the welfare of the people rest upon the

natural resources of the country. We have learned that proper

conservation of our lands, including our forests and minerals, and wise

management of our waters will add immensely to our national wealth.

The first step in the Government’s conservation program must be to find

out just what are our basic resources, and how they should be used. We

need to take, as soon as possible, an inventory of the lands, the

minerals, and the forests of the Nation.

During the war it was necessary to curtail some of our long-range plans

for development of our natural resources, and to emphasize programs

vital to the prosecution of the war. Work was suspended on a number of

flood control and reclamation projects and on the development of our

national forests and parks. This work must now be resumed, and new

projects must be undertaken to provide essential services and to assist

in the process of economic development.

The rivers of America offer a great opportunity to our generation in the

management of the national wealth. By a wise use of Federal funds, most

of which will be repaid into the Treasury, the scourge of floods and

drought can be curbed, water can be brought to arid lands, navigation

can be extended, and cheap power can be brought alike to the farms and

to the industries of our land.

Through the use of the waters of the Columbia River, for example, we are

creating a rich agricultural area as large as the State of Delaware. At

the same time, we are producing power at Grand Coulee and at Bonneville

which played a mighty part in winning the war and which will found a

great peacetime industry in the Northwest. The Tennessee Valley

Authority will resume its peacetime program of promoting full use of the

resources of the Valley. We shall continue our plans for the development

of the Missouri Valley, the Arkansas Valley, and the Central Valley of

California.

The Congress has shown itself alive to the practical requirements for a

beneficial use of our water resources by providing that preference in

the sale of power be given to farmers’ cooperatives and public agencies.

The public power program thus authorized must continue to be made

effective by building the necessary generating and transmission

facilities to furnish the maximum of firm power needed at the wholesale

markets, which are often distant from the dam sites.

These great developmental projects will open the frontiers of

agriculture, industry, and commerce. The employment opportunities thus

offered will also go far to ease the transition from war to peace.

(h) Public works.

During the war even urgently needed Federal, State, and local

construction projects were deferred in order to release sources for war

production. In resuming public works construction, it is desirable to

proceed only at a moderate rate, since demand for private construction

will be abnormally high for some time. Our public works program should

be timed to reach its peak after demand for private construction has

begun to taper off. Meanwhile, however, plans should be prepared if we

are to act promptly when the present extraordinary private demand begins

to run out.

The Congress made money available to Federal agencies for their public

works planning in the fiscal year 1946. I strongly recommend that this

policy be continued and extended in the fiscal year 1947.

State and local governments also have an essential role to play in a

national public works program. In my message of September 6, 1945, I

recommended that the Congress vote such grants to State and local

governments as will insure that each level of government makes its

proper contribution to a balanced public construction program.

Specifically, the Federal Government should aid State and local

governments in planning their own public works programs, in undertaking

projects related to Federal programs of regional development, and in

constructing such public works as are necessary to carry out the various

policies of the Federal Government.

Early in 1945 the Congress made available advances to State and local

governments for planning public works projects, and recently made

additional provision to continue these advances through the fiscal year

1946. I believe that further appropriations will be needed for the same

purpose for the fiscal year 1947.

The Congress has already made provision for highway programs. It is now

considering legislation which would expand Federal grants and loans in

several other fields, including construction of airports, hospital and

health centers, housing, water pollution control facilities, and

educational plant facilities. I hope that early action will be taken to

authorize these Federal programs.

With respect to public works of strictly local importance, State and

local governments should proceed without Federal assistance except in

planning. This rule should be subject to review when and if the prospect

of highly adverse general economic developments warrants it.

All loans and grants for public works should be planned and administered

in such a way that they are brought into accord with the other elements

of the Federal Program.

Our long-run objective is to achieve a program of direct Federal and

Federally assisted public works which is planned in advance and

synchronized with business conditions. In this way it can make its

greatest contribution to general economic stability.

(1) National housing program.

Last September I stated in my message to the Congress that housing was

high on the list of matters calling for decisive action.

Since then the housing shortage in countless communities, affecting

millions of families, has magnified this call to action.

Today we face both an immediate emergency and a major postwar problem.

Since VJ-day the wartime housing shortage has been growing steadily

worse and pressure on real estate values has increased. Returning

veterans often cannot find a satisfactory place for their families to

live, and many who buy have to pay exorbitant prices. Rapid

demobilization inevitably means further overcrowding.

A realistic and practical attack on the emergency will require

aggressive action by local governments, with Federal aid, to exploit all

opportunities and to give the veterans as far as possible first chance

at vacancies. It will require continuation of rent control in shortage

areas as well as legislation to permit control of sales prices. It will

require maximum conversion of temporary war units for veterans’ housing

and their transportation to communities with the most pressing needs;

the Congress has already appropriated funds for this purpose.

The inflation in the price of housing is growing daily.

As a result of the housing shortage, it is inevitable that the present

dangers of inflation in home values will continue unless the Congress

takes action in the immediate future.

Legislation is now pending in the Congress which would provide for

ceiling prices for old and new houses. The authority to fix such

ceilings is essential. With such authority, our veterans and other

prospective home owners would be protected against a skyrocketing of

home prices. The country would be protected from the extension of the

present inflation in home values which, if allowed to continue, will

threaten not only the stabilization program but our opportunities for

attaining a sustained high level of home construction.

Such measures are necessary stopgaps-but only stopgaps. This emergency

action, taken alone, is good--but not enough. The housing shortage did

not start with the war or with demobilization; it began years before

that and has steadily accumulated. The speed with which the Congress

establishes the foundation for a permanent, long-range housing program

will determine how effectively we grasp the immense opportunity to

achieve our goal of decent housing and to make housing a major

instrument of continuing prosperity and full employment in the years

ahead. It will determine whether we move forward to a stable and healthy

housing enterprise and toward providing a decent home for every American

family.

Production is the only fully effective answer. To get the wheels

turning, I have appointed an emergency housing expediter. I have

approved establishment of priorities designed to assure an ample share

of scarce materials to builders of houses for which veterans will have

preference. Additional price and wage adjustments will be made where

necessary, and other steps will be taken to stimulate greater production

of bottleneck items. I recommend consideration of every sound method for

expansion in facilities for insurance of privately financed housing by

the Federal Housing Administration and resumption of previously

authorized low-rent public housing projects suspended during the war.

In order to meet as many demands of the emergency situation as possible,

a program of emergency measures is now being formulated for action.

These will include steps in addition to those already taken. As quickly

as this program can be formulated, announcement will be made.

Last September I also outlined to the Congress the basic principles for

the kind of decisive, permanent legislation necessary for a long-range

housing program.