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diff --git a/.gitattributes b/.gitattributes new file mode 100644 index 0000000..6833f05 --- /dev/null +++ b/.gitattributes @@ -0,0 +1,3 @@ +* text=auto +*.txt text +*.md text diff --git a/5037-h.zip b/5037-h.zip Binary files differnew file mode 100644 index 0000000..2ea9d52 --- /dev/null +++ b/5037-h.zip diff --git a/5037-h/5037-h.htm b/5037-h/5037-h.htm new file mode 100644 index 0000000..3bb5eba --- /dev/null +++ b/5037-h/5037-h.htm @@ -0,0 +1,3844 @@ +<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.1//EN" + "http://www.w3.org/TR/xhtml11/DTD/xhtml11.dtd"> + +<html xmlns="http://www.w3.org/1999/xhtml" xml:lang="en"> + +<head> + +<meta http-equiv="Content-Type" content="text/html; charset=ISO-8859-1" /> + +<title> +The Project Gutenberg E-text of State of the Union Addresses, by Herbert Hoover +</title> + +<style type="text/css"> +body { color: black; + background: white; + margin-right: 10%; + margin-left: 10%; + font-family: "Times New Roman", serif; + text-align: justify } + +p {text-indent: 4% } + +p.noindent {text-indent: 0% } + +p.t1 {text-indent: 0% ; + font-size: 200%; + text-align: center } + +p.t2 {text-indent: 0% ; + font-size: 150%; + text-align: center } + +p.t3 {text-indent: 0% ; + font-size: 100%; + text-align: center } + +p.t3b {text-indent: 0% ; + font-size: 100%; + font-weight: bold; + text-align: center } + +p.t4 {text-indent: 0% ; + font-size: 80%; + text-align: center } + +p.t4b {text-indent: 0% ; + font-size: 80%; + font-weight: bold; + text-align: center } + +p.t5 {text-indent: 0% ; + font-size: 60%; + text-align: center } + +h1 { text-align: center } +h2 { text-align: center } +h3 { text-align: center } +h4 { text-align: center } +h5 { text-align: center } + +p.poem {text-indent: 0%; + margin-left: 10%; } + +p.contents {text-indent: -3%; + margin-left: 5% } + +p.thought {text-indent: 0% ; + letter-spacing: 4em ; + text-align: center } + +p.letter {text-indent: 0%; + margin-left: 10% ; + margin-right: 10% } + +p.footnote {text-indent: 0% ; + font-size: 80%; + margin-left: 10% ; + margin-right: 10% } + +p.transnote {text-indent: 0% ; + margin-left: 0% ; + margin-right: 0% } + +p.intro {font-size: 90% ; + text-indent: -5% ; + margin-left: 5% ; + margin-right: 0% } + +p.quote {text-indent: 4% ; + margin-left: 0% ; + margin-right: 0% } + +p.finis { font-size: larger ; + text-align: center ; + text-indent: 0% ; + margin-left: 0% ; + margin-right: 0% } + +</style> + +</head> + +<body> + + +<pre> + +The Project Gutenberg EBook of State of the Union Addresses of Herbert +Hoover, by Herbert Hoover + +This eBook is for the use of anyone anywhere in the United States and most +other parts of the world at no cost and with almost no restrictions +whatsoever. You may copy it, give it away or re-use it under the terms of +the Project Gutenberg License included with this eBook or online at +www.gutenberg.org. If you are not located in the United States, you'll have +to check the laws of the country where you are located before using this ebook. + +Title: State of the Union Addresses of Herbert Hoover + +Author: Herbert Hoover + +Posting Date: December 3, 2014 [EBook #5037] +Release Date: February, 2004 +First Posted: April 11, 2002 +Last Updated: December 16, 2004 + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK STATE OF THE UNION ADDRESSES *** + + + + +Produced by James Linden. HTML version by Al Haines. + + + + + +</pre> + + +<h1> +<br /><br /><br /> +State of the Union Addresses of Herbert Hoover +</h1> + +<p class="noindent"> +<br /><br /> +The addresses are separated by three asterisks: *** +</p> + +<p class="noindent"> +Dates of addresses by Herbert Hoover in this eBook: +</p> + +<p class="noindent"> + <a href="#dec1929">December 3, 1929</a><br /> + <a href="#dec1930">December 2, 1930</a><br /> + <a href="#dec1931">December 8, 1931</a><br /> + <a href="#dec1932">December 6, 1932</a><br /> +</p> + +<p><br /><br /></p> + +<p class="t3"> +*** +</p> + +<p><a id="dec1929"></a></p> + +<p class="noindent"> +State of the Union Address<br /> +Herbert Hoover<br /> +December 3, 1929<br /> +</p> + +<p class="noindent"> +To the Senate and House of Representatives: +</p> + +<p> +The Constitution requires that the President "shall, from time to time, +give to the Congress information of the state of the Union, and recommend +to their consideration such measures as he shall judge necessary and +expedient." In complying with that requirement I wish to emphasize that +during the past year the Nation has continued to grow in strength; our +people have advanced in comfort; we have gained in knowledge; the education +of youth has been more widely spread; moral and spiritual forces have been +maintained; peace has become more assured. The problems with which we are +confronted are the problems of growth and of progress. In their solution we +have to determine the facts, to develop the relative importance to be +assigned to such facts, to formulate a common judgment upon them, and to +realize solutions in spirit of conciliation. +</p> + +<p> +FOREIGN RELATIONS +</p> + +<p> +We are not only at peace with all the world, but the foundations for future +peace are being substantially strengthened. To promote peace is our +long-established policy. Through the Kellogg-Briand pact a great moral +standard has been raised in the world. By it fifty-four nations have +covenanted to renounce war and to settle all disputes by pacific means. +Through it a new world outlook has been inaugurated which has profoundly +affected the foreign policies of nations. Since its inauguration we have +initiated new efforts not only in the organization of the machinery of +peace but also to eliminate dangerous forces which produce controversies +amongst nations. +</p> + +<p> +In January, 1926, the Senate gave its consent to adherence to the Court of +International Justice with certain reservations. In September of this year +the statute establishing the court has, by the action of the nations +signatory, been amended to meet the Senate's reservations and to go even +beyond those reservations to make clear that the court is a true +international court of justice. I believe it will be clear to everyone that +no controversy or question in which this country has or claims an interest +can be passed on by the court without our consent at the time the question +arises. The doubt about advisory opinions has been completely safeguarded. +Our adherence to the International Court is, as now constituted, not the +slightest step toward entry into the League of Nations. As I have before +indicated, I shall direct that our signature be affixed to the protocol of +adherence and shall submit it for the approval of the Senate with a special +message at some time when it is convenient to deal with it. +</p> + +<p> +In the hope of reducing friction in the world, and with the desire that we +may reduce the great economic burdens of naval armament, we have joined in +conference with Great Britain, France, Italy, and Japan to be held in +London in January to consider the further limitation and reduction of naval +arms. We hold high hopes that success may attend this effort. +</p> + +<p> +At the beginning of the present administration the neighboring State of +Mexico was best with domestic insurrection. We maintained the embargo upon +the shipment of arms to Mexico but permitted the duly constituted +Government to procure supplies from our surplus war stocks. Fortunately, +the Mexican Government by its own strength successfully withstood the +insurrection with but slight damage. Opportunity of further peaceful +development is given to that country. At the request of the Mexican +Government, we have since lifted the embargo on shipment of arms +altogether. The two governments have taken further steps to promote +friendly relationships and so solve our differences. Conventions prolonging +for a period of two years the life of the general and special claims +commissions have been concluded. +</p> + +<p> +In South America we are proud to have had part in the settlement of the +long-standing dispute between Chile and Peru in the disposal of the +question of Tacna-Arica. +</p> + +<p> +The work of the commission of inquiry and conciliation between Bolivia and +Paraguay, in which a representative of this Government participated, has +successfully terminated an incident which seemed to threaten war. The +proposed plan for final settlement as suggested by the neutral governments +is still under consideration. +</p> + +<p> +This Government has continued its efforts to act as a mediator in boundary +difficulties between Guatemala and Honduras. +</p> + +<p> +A further instance of profound importance in establishing good will was the +inauguration of regular air mail service between the United States and +Caribbean, Central American, and South American countries. +</p> + +<p> +We still have marines on foreign soil--in Nicaragua, Haiti, and China. In +the large sense we do not wish to be represented abroad in such manner. +About 1,600 marines remain in Nicaragua at the urgent request of that +government and the leaders of all parties pending the training of a +domestic constabulary capable of insuring tranquility. We have already +reduced these forces materially and we are anxious to withdraw them further +as the situation warrants. In Haiti we have about 700 marines, but it is a +much more difficult problem, the solution of which is still obscure. If +Congress approves, I shall dispatch a commission to Haiti to review and +study the matter in an endeavor to arrive at some more definite policy than +at present. Our forces in China constitute 2,605 men, which we hope also +further to reduce to the normal legation guard. +</p> + +<p> +It is my desire to establish more firmly our understanding and +relationships with the Latin American countries by strengthening the +diplomatic missions to those countries. It is my hope to secure men long +experienced in our Diplomatic Service, who speak the languages of the +peoples to whom they are accredited, as chiefs of our diplomatic missions +in these States. I shall send to the Senate at an early date the +nominations of several such men. +</p> + +<p> +The Congress has by numerous wise and foresighted acts in the past few +years greatly strengthened the character of our representation abroad. It +has made liberal provision for the establishment of suitable quarters for +our foreign staffs in the different countries. In order, however, that we +may further develop the most effective force in this, one of the most +responsible functions of our Government, I shall recommend to the Congress +more liberal appropriations for the work of the State Department. I know of +no expenditure of public money from which a greater economic and moral +return can come to us than by assuring the most effective conduct of our +foreign relations. +</p> + +<p> +NATIONAL DEFENSE +</p> + +<p> +To preserve internal order and freedom from encroachment is the first +purpose of government. Our Army and Navy are being maintained in a most +efficient state under officers of high intelligence and zeal. The extent +and expansion of their numbers and equipment as at present authorized are +ample for this purpose. +</p> + +<p> +We can well be deeply concerned, however, at the growing expense. From a +total expenditure for national defense purposes in 1914 of $267,000,000, it +naturally rose with the Great War, but receded again to $612,000,000 in +1924, when again it began to rise until during the current fiscal year the +expenditures will reach to over $730,000,000, excluding all civilian +services of those departments. Programs now authorized will carry it to +still larger figures in future years. While the remuneration paid to our +soldiers and sailors is justly at a higher rate than that of any other +country in the world, and while the cost of subsistence is higher, yet the +total of our expenditures is in excess of those of the most highly +militarized nations of the world. +</p> + +<p> +Upon the conference shortly to be held in London will depend such +moderation as we can make in naval expenditure. If we shall be compelled to +undertake the naval construction implied in the Washington arms treaty as +well as other construction which would appear to be necessary if no +international agreement can be completed, we shall be committed during the +next six years to a construction expenditure of upward of $1,200,000,000 +besides the necessary further increase in costs for annual upkeep. +</p> + +<p> +After 1914 the various Army contingents necessarily expanded to the end of +the Great War and then receded to the low point in 1924, when expansion +again began. In 1914 the officers and men in our regular forces, both Army +and Navy, were about 164,000, in 1924 there were about 256,000, and in 1929 +there were about 250,000. Our citizens' army, however, including the +National Guard and other forms of reserves, increase these totals up to +about 299,000 in 1914, about 672,000 in 1924, and about 728,000 in 1929. +</p> + +<p> +Under the Kellogg pact we have undertaken never to use war as an instrument +of national policy. We have, therefore, undertaken by covenant to use these +equipments solely for defensive purposes. From a defense point of view our +forces should be proportioned to national need and should, therefore, to +some extent be modified by the prospects of peace, which were never +brighter than to-day. +</p> + +<p> +It should be borne in mind that the improvement in the National Guard by +Federal support begun in 1920 has definitely strengthened our national +security by rendering them far more effective than ever heretofore. The +advance of aviation has also greatly increased our effectiveness in +defense. In addition to the very large program of air forces which we are +maintaining in the Army and Navy, there has been an enormous growth of +commercial aviation. This has provided unanticipated reserves in +manufacturing capacity and in industrial and air personnel, which again +adds to our security. +</p> + +<p> +I recommend that Congress give earnest consideration to the possibilities +of prudent action which will give relief from our continuously mounting +expenditures. +</p> + +<p> +FINANCES OF THE GOVERNMENT +</p> + +<p> +The finances of the Government are in sound condition. I shall submit the +detailed evidences and the usual recommendations in the special Budget +message. I may, however, summarize our position. The public debt on June 30 +this year stood at $16,931,000,000, compared to the maximum in August, +1919, of $26,596,000,000. Since June 30 it has been reduced by a further +$238,000,000. In the Budget to be submitted the total appropriations +recommended for the fiscal year 1931 are $3,830,445,231, as compared to +$3,976,141,651 for the present fiscal year. The present fiscal year, +however, includes $150,000,000 for the Federal Farm Board, as to which no +estimate can as yet be determined for 1931. +</p> + +<p> +Owing to the many necessary burdens assumed by Congress in previous years +which now require large outlays, it is with extreme difficulty that we +shall be able to keep the expenditures for the next fiscal year within the +bounds of the present year. Economies in many directions have permitted +some accommodation of pressing needs, the net result being an increase, as +shown above, of about one-tenth of 1 per cent above the present fiscal +year. We can not fail to recognize the obligations of the Government in +support of the public welfare but we must coincidentally bear in mind the +burden of taxes and strive to find relief through some tax reduction. Every +dollar so returned fertilizes the soil of prosperity. +</p> + +<p> +TAX REDUCTION +</p> + +<p> +The estimate submitted to me by the Secretary of the Treasury and the +Budget Director indicates that the Government will close the fiscal year +1930 with a surplus of about $225,000,000 and the fiscal year 1931 with a +surplus of about $123,000,000. Owing to unusual circumstances, it has been +extremely difficult to estimate future revenues with accuracy. +</p> + +<p> +I believe, however, that the Congress will be fully justified in giving the +benefits of the prospective surpluses to the taxpayers, particularly as +ample provision for debt reduction has been made in both years through the +form of debt retirement from ordinary revenues. In view of the uncertainty +in respect of future revenues and the comparatively small size of the +indicated surplus in 1931, relief should take the form of a provisional +revision of tax rates. +</p> + +<p> +I recommend that the normal income tax rates applicable to the incomes of +individuals for the calendar year 1929 be reduced from 5, 3, and 1 1/2; +per cent, to 4, 2, and 1/2; per cent, and that the tax on the income of +corporations for the calendar year 1929 be reduced from 12 to 11 per cent. +It is estimated that this will result in a reduction of $160,000,000 in +income taxes to be collected during the calendar year 1930. The loss in +revenue will be divided approximately equally between the fiscal years 1930 +and 1931. Such a program will give a measure of tax relief to the maximum +number of taxpayers, with relatively larger benefits to taxpayers with +small or moderate incomes. +</p> + +<p> +FOREIGN DEBTS +</p> + +<p> +The past year has brought us near to completion of settlements of the +indebtedness of foreign governments to the United States. +</p> + +<p> +The act of Congress approved February 4, 1929, authorized the settlement +with the Government of Austria along lines similar to the terms of +settlement offered by that Government to its other relief creditors. No +agreement has yet been concluded with that government, but the form of +agreement has been settled and its execution only awaits the Government of +Austria securing the assent by all the other relief creditors of the terms +offered. The act of Congress approved February 14, 1929, authorized the +settlement with the Government of Greece, and an agreement was concluded on +May 10, 1929. +</p> + +<p> +The Government of France ratified the agreement with us on July 27, 1929. +This agreement will shortly be before the Congress and I recommend its +approval. +</p> + +<p> +The only indebtedness of foreign governments to the United States now +unsettled is that of Russia and Armenia. +</p> + +<p> +During the past year a committee of distinguished experts under American +leadership submitted a plan looking to a revision of claims against Germany +by the various Governments. The United States denied itself any +participation in the war settlement of general reparations and our claims +are comparatively small in amount. They arise from costs of the army of +occupation and claims of our private citizens for losses under awards from +the Mixed Claims Commission established under agreement with the German +Government. In finding a basis for settlement it was necessary for the +committee of experts to request all the Governments concerned to make some +contribution to the adjustment and we have felt that we should share a +proportion of the concessions made. +</p> + +<p> +The State and Treasury Departments will be in a position shortly to submit +for your consideration a draft of an agreement to be executed between the +United States and Germany providing for the payments of these revised +amounts. A more extensive statement will be submitted at that time. +</p> + +<p> +The total amount of indebtedness of the various countries to the United +States now funded is $11,579,465,885. This sum was in effect provided by +the issue of United States Government bonds to our own people. The payments +of the various Governments to us on account of principal and interest for +1930 are estimated at a total of about $239,000,000, for 1931 at about +$236,000,000, for 1932 at about $246,000,000. The measure of American +compromise in these settlements may be appreciated from the fact that our +taxpayers are called upon to find annually about $475,000,000 in interest +and in addition to redeem the principal of sums borrowed by the United +States Government for these purposes. +</p> + +<p> +ALIEN ENEMY PROPERTY +</p> + +<p> +The wise determination that this property seized in war should be returned +to its owners has proceeded with considerable rapidity. Of the original +seized cash and property (valued at a total of about $625,000,000), all but +$111,566,700 has been returned. Most of the remainder should be disposed of +during the next year. +</p> + +<p> +GENERAL ECONOMIC SITUATION +</p> + +<p> +The country has enjoyed a large degree of prosperity and sound progress +during the past year with a steady improvement in methods of production and +distribution and consequent advancement in standards of living. Progress +has, of course, been unequal among industries, and some, such as coal, +lumber, leather, and textiles, still lag behind. The long upward trend of +fundamental progress, however, gave rise to over-optimism as to profits, +which translated itself into a wave of uncontrolled speculation in +securities, resulting in the diversion of capital from business to the +stock market and the inevitable crash. The natural consequences have been a +reduction in the consumption of luxuries and semi-necessities by those who +have met with losses, and a number of persons thrown temporarily out of +employment. Prices of agricultural products dealt in upon the great markets +have been affected in sympathy with the stock crash. +</p> + +<p> +Fortunately, the Federal reserve system had taken measures to strengthen +the position against the day when speculation would break, which together +with the strong position of the banks has carried the whole credit system +through the crisis without impairment. The capital which has been hitherto +absorbed in stock-market loans for speculative purposes is now returning to +the normal channels of business. There has been no inflation in the prices +of commodities; there has been no undue accumulation of goods, and foreign +trade has expanded to a magnitude which exerts a steadying influence upon +activity in industry and employment. +</p> + +<p> +The sudden threat of unemployment and especially the recollection of the +economic consequences of previous crashes under a much less secured +financial system created unwarranted pessimism and fear. It was recalled +that past storms of similar character had resulted in retrenchment of +construction, reduction of wages, and laying off of workers. The natural +result was the tendency of business agencies throughout the country to +pause in their plans and proposals for continuation and extension of their +businesses, and this hesitation unchecked could in itself intensify into a +depression with widespread unemployment and suffering. +</p> + +<p> +I have, therefore, instituted systematic, voluntary measures of cooperation +with the business institutions and with State and municipal authorities to +make certain that fundamental businesses of the country shall continue as +usual, that wages and therefore consuming power shall not be reduced, and +that a special effort shall be made to expand construction work in order to +assist in equalizing other deficits in employment. Due to the enlarged +sense of cooperation and responsibility which has grown in the business +world during the past few years the response has been remarkable and +satisfactory. We have canvassed the Federal Government and instituted +measures of prudent expansion in such work that should be helpful, and upon +which the different departments will make some early recommendations to +Congress. +</p> + +<p> +I am convinced that through these measures we have reestablished +confidence. Wages should remain stable. A very large degree of industrial +unemployment and suffering which would otherwise have occurred has been +prevented. Agricultural prices have reflected the returning confidence. The +measures taken must be vigorously pursued until normal conditions are +restored. +</p> + +<p> +AGRICULTURE +</p> + +<p> +The agricultural situation is improving. The gross farm income as estimated +by the Department of Agriculture for the crop season 1926-27 was +$12,100,000,000; for 1927-28 it was $12,300,000,000; for 1928-29 it was +$12,500,000,000; and estimated on the basis of prices since the last +harvest the value of the 1929-30 crop would be over $12,650,000,000. The +slight decline in general commodity prices during the past few years +naturally assists the farmers' buying power. +</p> + +<p> +The number of farmer bankruptcies is very materially decreased below +previous years. The decline in land values now seems to be arrested and +rate of movement from the farm to the city has been reduced. Not all +sections of agriculture, of course, have fared equally, and some areas have +suffered from drought. Responsible farm leaders have assured me that a +large measure of confidence is returning to agriculture and that a feeling +of optimism pervades that industry. +</p> + +<p> +The most extensive action for strengthening the agricultural industry ever +taken by any government was inaugurated through the farm marketing act of +June 15 last. Under its provisions the Federal Farm Board has been +established, comprised of men long and widely experienced in agriculture +and sponsored by the farm organizations of the country. During its short +period of existence the board has taken definite steps toward a more +efficient organization of agriculture, toward the elimination of waste in +marketing, and toward the upbuilding of farmers' marketing organizations on +sounder and more efficient lines. Substantial headway has been made in the +organization of four of the basic commodities--grain, cotton, livestock, +and wool. Support by the board to cooperative marketing organizations and +other board activities undoubtedly have served to steady the farmers' +market during the recent crisis and have operated also as a great stimulus +to the cooperative organization of agriculture. The problems of the +industry are most complex, and the need for sound organization is +imperative. Yet the board is moving rapidly along the lines laid out for it +in the act, facilitating the creation by farmers of farmer-owned and +farmer-controlled organizations and federating them into central +institutions, with a view to increasing the bargaining power of +agriculture, preventing and controlling surpluses, and mobilizing the +economic power of agriculture. +</p> + +<p> +THE TARIFF +</p> + +<p> +The special session of Congress was called to expedite the fulfillment of +party pledges of agricultural relief and the tariff. The pledge of farm +relief has been carried out. At that time I stated the principles upon +which I believed action should be taken in respect to the tariff: "An +effective tariff upon agricultural products, that will compensate the +farmer's higher costs and higher standards of living, has a dual purpose. +Such a tariff not only protects the farmer in our domestic market but it +also stimulates him to diversify his crops and to grow products that he +could not otherwise produce, and thus lessens his dependence upon exports +to foreign markets. The great expansion of production abroad under the +conditions I have mentioned renders foreign competition in our export +markets increasingly serious. It seems but natural, therefore, that the +American farmer, having been greatly handicapped in his foreign market by +such competition from the younger expanding countries, should ask that +foreign access to our domestic market should be regulated by taking into +account the differences in our costs of production. +</p> + +<p> +"In considering the tariff for other industries than agriculture, we find +that there have been economic shifts necessitating a readjustment of some +of the tariff schedules. Seven years of experience under the tariff bill +enacted in 1922 have demonstrated the wisdom of Congress in the enactment +of that measure. On the whole it has worked well. In the main our wages +have been maintained at high levels; our exports and imports have steadily +increased; with some exceptions our manufacturing industries have been +prosperous. Nevertheless, economic changes have taken place during that +time which have placed certain domestic products at a disadvantage and new +industries have come into being, all of which create the necessity for some +limited changes in the schedules and in the administrative clauses of the +laws as written in 1922. +</p> + +<p> +"It would seem to me that the test of necessity for revision is, in the +main, whether there has been a substantial slackening of activity in an +industry during the past few years, and a consequent decrease of employment +due to insurmountable competition in the products of that industry. It is +not as if we were setting up a new basis of protective duties. We did that +seven years ago. What we need to remedy now is whatever substantial loss of +employment may have resulted from shifts since that time. +</p> + +<p> +"In determining changes in our tariff we must not fail to take into account +the broad interests of the country as a whole, and such interests include +our trade relations with other countries." No condition has arisen in my +view to change these principles stated at the opening of the special +session. I am firmly of the opinion that their application to the pending +revision will give the country the kind of a tariff law it both needs and +wants. It would be most helpful if action should be taken at an early +moment, more especially at a time when business and agriculture are both +cooperating to minimize future uncertainties. It is just that they should +know what the rates are to be. +</p> + +<p> +Even a limited revision requires the consideration and readjustment of many +items. The exhaustive inquiries and valuable debate from men representative +of all parts of the country which is needed to determine the detailed rates +must necessarily be accomplished in the Congress. However perfectly this +rate structure may be framed at any given time, the shifting of economic +forces which inevitably occurs will render changes in some items desirable +between the necessarily long intervals of congressional revision. +Injustices are bound to develop, such as were experienced by the dairymen, +the flaxseed producers, the glass industry, and others, under the 1922 +rates. For this reason, I have been most anxious that the broad principle +of the flexible tariff as provided in the existing law should be preserved +and its delays in action avoided by more expeditious methods of determining +the costs of production at home and abroad, with executive authority to +promulgate such changes upon recommendation of the Tariff Commission after +exhaustive investigation. Changes by the Congress in the isolated items +such as those to which I have referred would have been most unlikely both +because of the concentrations of oppositions in the country, who could see +no advantage to their own industry or State, and because of the difficulty +of limiting consideration by the Congress to such isolated cases. +</p> + +<p> +There is no fundamental conflict between the interests of the farmer and +the worker. Lowering of the standards of living of either tends to destroy +the other. The prosperity of one rests upon the well-being of the other. +Nor is there any real conflict between the East and the West or the North +and the South in the United States. The complete interlocking of economic +dependence, the common striving for social and spiritual progress, our +common heritage as Americans, and the infinite web of national sentiment, +have created a solidarity in a great people unparalleled in all human +history. These invisible bonds should not and can not be shattered by +differences of opinion growing out of discussion of a tariff. +</p> + +<p> +PUBLIC BUILDINGS +</p> + +<p> +Under the provisions of various acts of Congress $300,000,000 has been +authorized for public buildings and the land upon which to construct them, +being $75,000,000 for the District of Columbia and $225,000,000 for the +country at large. Excluding $25,000,000 which is for the acquisition of +land in the so-called "triangle" in this city, this public building +legislation provides for a five-year program for the District of Columbia +and between an eight and nine year program for the country at large. Of +this sum approximately $27,400,000 was expended up to June 30 last, of +which $11,400,000 has been expended in the District and $16,000,000 +outside. +</p> + +<p> +Even this generous provision for both the District of Columbia and the +country is insufficient For most pressing governmental needs. Expensive +rents and inadequate facilities are extravagance and not economy. In the +District even after the completion of these projects we shall have fully +20,000 clerks housed in rented and temporary war buildings which can last +but a little longer. +</p> + +<p> +I therefore recommend that consideration should be given to the extension +of authorizations both for the country at large and for the District of +Columbia again distributed over a term of years. A survey of the need in +both categories has been made by the Secretary of the Treasury and the +Postmaster General. It would be helpful in the present economic situation +if such steps were taken as would enable early construction work. +</p> + +<p> +An expedition and enlargement of the program in the District would bring +about direct economies in construction by enabling the erection of +buildings in regular sequence. By maintaining a stable labor force in the +city, contracts can be made on more advantageous terms. +</p> + +<p> +The earlier completion of this program which is an acknowledged need would +add dignity to the celebration in 1932 of the two hundredth anniversary of +the birth of President Washington. +</p> + +<p> +In consideration of these projects which contribute so much to dignify the +National Capital I should like to renew the suggestion that the Fine Arts +Commission should be required to pass upon private buildings which are +proposed for sites facing upon public buildings and parks. Without such +control much of the effort of the Congress in beautification of the Capital +will be minimized. +</p> + +<p> +THE WATERWAYS AND FLOOD CONTROL +</p> + +<p> +The development of inland waterways has received new impulse from the +completion during this year of the canalization of the Ohio to a uniform +9-foot depth. The development of the other segments of the Mississippi +system should be expedited and with this in view I am recommending an +increase in appropriations for rivers and harbors from $50,000,000 to +$55,000,000 per annum which, together with about $4,000,000 per annum +released by completion of the Ohio, should make available after providing +for other river and harbor works a sum of from $25,000,000 to $30,000,000 +per annum for the Mississippi system and thus bring it to early +completion. +</p> + +<p> +Conflict of opinion which has arisen over the proposed floodway from the +Arkansas River to the Gulf of Mexico via the Atchafalaya River has led me +to withhold construction upon this portion of the Mississippi flood control +plan until it could be again reviewed by the engineers for any further +recommendation to Congress. The other portions of the project are being +vigorously prosecuted and I have recommended an increase in appropriations +for this from $30,000,000 of the present year to $35,000,000 during the +next fiscal year. +</p> + +<p> +Expansion of our intracoastal waterways to effective barge depths is well +warranted. We are awaiting the action of Canada upon the St. Lawrence +waterway project. +</p> + +<p> +HIGHWAYS +</p> + +<p> +There are over 3,000,000 miles of legally established highways in the +United States, of which about 10 per cent are included in the State highway +systems, the remainder being county and other local roads. About 626,000 +miles have been improved with some type of surfacing, comprising some 63 +per cent of the State highway systems and 16 per cent of the local roads. +Of the improved roads about 102,000 miles are hard surfaced, comprising +about 22 per cent of the State highway systems and about 8 per cent of the +local roads. +</p> + +<p> +While proper planning should materially reduce the listed mileage of public +roads, particularly in the agricultural districts, and turn these roads +back to useful purposes, it is evident that road construction must be a +long-continued program. Progress in improvement is about 50,000 miles of +all types per annum, of which some 12,000 miles are of the more durable +types. The total expenditures of Federal, State, and local governments last +year for construction and maintenance assumed the huge total of +$1,660,000,000. +</p> + +<p> +Federal aid in the construction of the highway systems in conjunction with +the States has proved to be beneficial and stimulating. We must ultimately +give consideration to the increase of our contribution to these systems, +particularly with a view to stimulating the improvement of farm-to-market +roads. +</p> + +<p> +POST OFFICE +</p> + +<p> +Our Post Office deficit has now increased to over $80,000,000 a year, of +which perhaps $14,000,000 is due to losses on ocean mail and air mail +contracts. The department is making an exhaustive study of the sources of +the deficit with view to later recommendation to Congress in respect to +it. +</p> + +<p> +The Post Office quarters are provided in part by the Federal construction, +in part by various forms of rent and lease arrangements. The practice has +grown up in recent years of contracting long term leases under which both +rent and amortization principal cost of buildings is included. I am advised +that fully 40 per cent could be saved from many such rent and lease +agreements even after allowing interest on the capital required at the +normal Government rate. There are also many objectionable features to some +of these practices. The provision of adequate quarters for the Post Office +should be put on a sound basis. +</p> + +<p> +A revision of air mail rates upon a more systematic and permanent footing +is necessary. The subject is under study, and if legislation should prove +necessary the subject will be presented to the Congress. In the meantime I +recommend that the Congress should consider the desirability of authorizing +further expansion of the South American services. +</p> + +<p> +COMMERCIAL AVIATION +</p> + +<p> +During the past year progress in civil aeronautics has been remarkable. +This is to a considerable degree due to the wise assistance of the Federal +Government through the establishment and maintenance of airways by the +Department of Commerce and the mail contracts from the Post Office +Department. The Government-improved airways now exceed 25,000 miles--more +than 14,000 miles of which will be lighted and equipped for night-flying +operations by the close of the current year. Airport construction through +all the States is extremely active. There are now 1,000 commercial and +municipal airports in operation with an additional 1,200 proposed for early +development. +</p> + +<p> +Through this assistance the Nation is building a sound aviation system, +operated by private enterprise. Over 6,400 planes are in commercial use, +and 9,400 pilots are licensed by the Government. Our manufacturing capacity +has risen to 7,500 planes per annum. The aviation companies have increased +regular air transportation until it now totals 90,000 miles per +day--one-fourth of which is flown by night. Mail and express services now +connect our principal cities, and extensive services for passenger +transportation have been inaugurated, and others of importance are +imminent. American air lines now reach into Canada and Mexico, to Cuba, +Porto Rico, Central America, and most of the important countries of South +America. +</p> + +<p> +RAILWAYS +</p> + +<p> +As a whole, the railroads never were in such good physical and financial +condition, and the country has never been so well served by them. The +greatest volume of freight traffic ever tendered is being carried at a +speed never before attained and with satisfaction to the shippers. +Efficiencies and new methods have resulted in reduction in the cost of +providing freight transportation, and freight rates show a continuous +descending line from the level enforced by the World War. +</p> + +<p> +We have, however, not yet assured for the future that adequate system of +transportation through consolidations which was the objective of the +Congress in the transportation act. The chief purpose of consolidation is +to secure well-balanced systems with more uniform and satisfactory rate +structure, a more stable financial structure, more equitable distribution +of traffic, greater efficiency, and single-line instead of multiple-line +hauls. In this way the country will have the assurance of better service +and ultimately at lower and more even rates than would otherwise be +attained. Legislation to simplify and expedite consolidation methods and +better to protect public interest should be enacted. +</p> + +<p> +Consideration should also be given to relief of the members of the +Commission from the necessity of detailed attention to comparatively +inconsequential matters which, under the existing law, must receive their +direct and personal consideration. It is in the public interest that the +members of the Commission should not be so pressed by minor matters that +they have inadequate time for investigation and consideration of the larger +questions committed to them for solution. As to many of these minor +matters, the function of the Commission might well be made revisory, and +the primary responsibility delegated to subordinate officials after the +practice long in vogue in the executive departments. +</p> + +<p> +MERCHANT MARINE +</p> + +<p> +Under the impulse of the merchant marine act of 1928 the transfer to +private enterprise of the Government-owned steamship lines is going forward +with increasing success. The Shipping Board now operates about 18 lines, +which is less than half the number originally established, and the estimate +of expenditures for the coming fiscal year is based upon reduction in +losses on Government lines by approximately one-half. Construction loans +have been made to the amount of approximately $75,000,000 out of the +revolving fund authorized by Congress and have furnished an additional aid +to American shipping and further stimulated the building of vessels in +American yards. +</p> + +<p> +Desirous of securing the full values to the Nation of the great effort to +develop our merchant marine by the merchant marine act soon after the +inauguration of the present administration, I appointed an +interdepartmental committee, consisting of the Secretary of Commerce, as +chairman, the Secretary of the Navy, the Postmaster General, and the +chairman of the Shipping Board, to make a survey of the policies being +pursued under the act of 1928 in respect of mail contracts; to inquire into +its workings and to advise the Postmaster General in the administration of +the act. +</p> + +<p> +In particular it seemed to me necessary to determine if the result of the +contracts already let would assure the purpose expressed in the act, "to +further develop an American merchant marine, to assure its permanence in +the transportation of the foreign trade of the United States, and for other +purposes," and to develop a coordinated policy by which these purposes may +be translated into actualities. +</p> + +<p> +In review of the mail contracts already awarded it was found that they +aggregated 25 separate awards imposing a governmental obligation of a +little over $12,000,000 per annum. Provision had been imposed in five of +the contracts for construction of new vessels with which to replace and +expand services. These requirements come to a total of 12 vessels in the +10-year period, aggregating 122,000 tons. Some other conditions in the +contracts had not worked out satisfactorily. +</p> + +<p> +That study has now been substantially completed and the committee has +advised the desirability and the necessity of securing much larger +undertakings as to service and new construction in future contracts. The +committee at this time is recommending the advertising of 14 additional +routes, making substantial requirements for the construction of new vessels +during the life of each contract recommended. A total of 40 new vessels +will be required under the contracts proposed, about half of which will be +required to be built during the next three years. The capital cost of this +new construction will be approximately $250,000,000, involving +approximately 460,000 gross tons. Should bidders be found who will make +these undertakings, it will be necessary to recommend to Congress an +increase in the authorized expenditure by the Post Office of about +$5,500,000 annually. It will be most advantageous to grant such an +authority. +</p> + +<p> +A conflict as to the administration of the act has arisen in the contention +of persons who have purchased Shipping Board vessels that they are entitled +to mail contracts irrespective of whether they are the lowest bidder, the +Post Office, on the other hand, being required by law to let contracts in +that manner. It is urgent that Congress should clarify this situation. +</p> + +<p> +THE BANKING SYSTEM +</p> + +<p> +It is desirable that Congress should consider the revision of some portions +of the banking law. +</p> + +<p> +The development of "group" and "chain" banking presents many new problems. +The question naturally arises as to whether if allowed to expand without +restraint these methods would dangerously concentrate control of credit, +and whether they would not in any event seriously threaten one of the +fundamentals of the American credit system--which is that credit which is +based upon banking deposits should be controlled by persons within those +areas which furnish these deposits and thus be subject to the restraints of +local interest and public opinion in those areas. To some degree, however, +this movement of chain or group banking is a groping for stronger support +to the banks and a more secure basis for these institutions. +</p> + +<p> +The growth in size and stability of the metropolitan banks is in marked +contrast to the trend in the country districts, with its many failures and +the losses these failures have imposed upon the agricultural community. +</p> + +<p> +The relinquishment of charters of national banks in great commercial +centers in favor of State charters indicates that some conditions surround +the national banks which render them unable to compete with State banks; +and their withdrawal results in weakening our national banking system. +</p> + +<p> +It has been proposed that permission should be granted to national banks to +engage in branch banking of a nature that would preserve within limited +regions the local responsibility and the control of such credit +institutions. +</p> + +<p> +All these subjects, however, require careful investigation, and it might be +found advantageous to create a joint commission embracing Members of the +Congress and other appropriate Federal officials for subsequent report. +</p> + +<p> +ELECTRICAL POWER REGULATION +</p> + +<p> +The Federal Power Commission is now comprised of three Cabinet officers, +and the duties involved in the competent conduct of the growing +responsibilities of this commission far exceed the time and attention which +these officials can properly afford from other important duties. I +recommended that authority be given for the appointment of full-time +commissioners to replace them. +</p> + +<p> +It is also desirable that the authority of the commission should be +extended to certain phases of power regulation. The nature of the electric +utilities industry is such that about 90 per cent of all power generation +and distribution is intrastate in character, and most of the States have +developed their own regulatory systems as to certificates of convenience, +rates, and profits of such utilities. To encroach upon their authorities +and responsibilities would be an encroachment upon the rights of the +States. There are cases, however, of interstate character beyond the +jurisdiction of the States. To meet these cases it would be most desirable +if a method could be worked out by which initial action may be taken +between the commissions of the States whose joint action should be made +effective by the Federal Power Commission with a reserve to act on its own +motion in case of disagreement or nonaction by the States. +</p> + +<p> +THE RADIO COMMISSION +</p> + +<p> +I recommend the reorganization of the Radio Commission into a permanent +body from its present temporary status. The requirement of the present law +that the commissioners shall be appointed from specified zones should be +abolished and a general provision made for their equitable selection from +different parts of the country. Despite the effort of the commissioners, +the present method develops a public insistence that the commissioners are +specially charged with supervision of radio affairs in the zone from which +each is appointed. As a result there is danger that the system will +degenerate from a national system into five regional agencies with varying +practices, varying policies, competitive tendencies, and consequent failure +to attain its utmost capacity for service to the people as a whole. +</p> + +<p> +MUSCLE SHOALS +</p> + +<p> +It is most desirable that this question should be disposed of. Under +present conditions the income from these plants is less than could +otherwise be secured for its use, and more especially the public is not +securing the full benefits which could be obtained from them. +</p> + +<p> +It is my belief that such parts of these plants as would be useful and the +revenues from the remainder should be dedicated for all time to the farmers +of the United States for investigation and experimentation on a commercial +scale in agricultural chemistry. By such means advancing discoveries of +science can be systematically applied to agricultural need, and development +of the chemical industry of the Tennessee Valley can be assured. +</p> + +<p> +I do not favor the operation by the Government of either power or +manufacturing business except as an unavoidable by-product of some other +major public purpose. +</p> + +<p> +Any form of settlement of this question will imply entering upon a contract +or contracts for the lease of the plants either as a whole or in parts and +the reservation of facilities, products, or income for agricultural +purposes. The extremely technical and involved nature of such contracts +dealing with chemical and electrical enterprises, added to the unusual +difficulties surrounding these special plants, and the rapid commercial +changes now in progress in power and synthetic nitrogen manufacture, lead +me to suggest that Congress create a special commission, not to investigate +and report as in the past, but with authority to negotiate and complete +some sort of contract or contracts on behalf of the Government, subject, of +course, to such general requirements as Congress may stipulate. +</p> + +<p> +BOULDER DAM +</p> + +<p> +The Secretary of the Interior is making satisfactory progress in +negotiation of the very complex contracts required for the sale of the +power to be generated at this project. These contracts must assure the +return of all Government outlays upon the project. I recommend that the +necessary funds be appropriated for the initiation of this work as soon as +the contracts are in the hands of Congress. +</p> + +<p> +CONSERVATION +</p> + +<p> +Conservation of national resources is a fixed policy of the Government. +Three important questions bearing upon conservation of the public lands +have become urgent. +</p> + +<p> +Conservation of our oil and gas resources against future need is a national +necessity. The working of the oil permit system in development of oil and +gas resources on the public domain has been subject to great abuse. I +considered it necessary to suspend the issuance of such permits and to +direct the review of all outstanding permits as to compliance of the +holders with the law. The purpose was not only to end such abuse but to +place the Government in position to review the entire subject. +</p> + +<p> +We are also confronted with a major problem in conservation due to the +overgrazing on public lands. The effect of overgrazing (which has now +become general) is not only to destroy the ranges but by impairing the +ground coverage seriously to menace the water supply in many parts of the +West through quick run-off, spring floods, and autumn drought. +</p> + +<p> +We have a third problem of major dimensions in the reconsideration of our +reclamation policy. The inclusion of most of the available lands of the +public domain in existing or planned reclamation projects largely completes +the original purpose of the Reclamation Service. There still remains the +necessity for extensive storage of water in the arid States which renders +it desirable that we should give a wider vision and purpose to this +service. +</p> + +<p> +To provide for careful consideration of these questions and also of better +division of responsibilities in them as between the State and Federal +Governments, including the possible transfer to the States for school +purposes of the lands unreserved for forests, parks, power, minerals, etc., +I have appointed a Commission on Conservation of the Public Domain, with a +membership representing the major public land States and at the same time +the public at large. I recommend that Congress should authorize a moderate +sum to defray their expenses. +</p> + +<p> +SOCIAL SERVICE +</p> + +<p> +The Federal Government provides for an extensive and valuable program of +constructive social service, in education, home building, protection to +women and children, employment, public health, recreation, and many other +directions. +</p> + +<p> +In a broad sense Federal activity in these directions has been confined to +research and dissemination of information and experience, and at most to +temporary subsidies to the States in order to secure uniform advancement in +practice and methods. Any other attitude by the Federal Government will +undermine one of the most precious possessions of the American people; that +is, local and individual responsibility. We should adhere to this policy. +</p> + +<p> +Federal officials can, however, make a further and most important +contribution by leadership in stimulation of the community and voluntary +agencies, and by extending Federal assistance in organization of these +forces and bringing about cooperation among them. +</p> + +<p> +As an instance of this character, I have recently, in cooperation with the +Secretaries of Interior and Labor, laid the foundations of an exhaustive +inquiry into the facts precedent to a nation-wide White House conference on +child health and protection. This cooperative movement among interested +agencies will impose no expense upon the Government. Similar nation-wide +conferences will be called in connection with better housing and recreation +at a later date. +</p> + +<p> +In view of the considerable difference of opinion as to the policies which +should be pursued by the Federal Government with respect to education, I +have appointed a committee representative of the important educational +associations and others to investigate and present recommendations. In +cooperation with the Secretary of the Interior, I have also appointed a +voluntary committee of distinguished membership to assist in a nation-wide +movement for abolition of illiteracy. +</p> + +<p> +I have recommended additional appropriations for the Federal employment +service in order that it may more fully cover its cooperative work with +State and local services. I have also recommended additional appropriations +for the Women's and Children's Bureaus for much needed research as to facts +which I feel will prove most helpful. +</p> + +<p> +PUBLIC HEALTH +</p> + +<p> +The advance in scientific discovery as to disease and health imposes new +considerations upon us. The Nation as a whole is vitally interested in the +health of all the people; in protection from spread of contagious disease; +in the relation of physical and mental disabilities to criminality; and in +the economic and moral advancement which is fundamentally associated with +sound body and mind. The organization of preventive measures and health +education in its personal application is the province of public health +service. Such organization should be as universal as public education. Its +support is a proper burden upon the taxpayer. It can not be organized with +success, either in its sanitary or educational phases, except under public +authority. It should be based upon local and State responsibility, but I +consider that the Federal Government has an obligation of contribution to +the establishment of such agencies. +</p> + +<p> +In the practical working out of organization, exhaustive experiment and +trial have demonstrated that the base should be competent organization of +the municipality, county, or other local unit. Most of our municipalities +and some 400 rural counties out of 3,000 now have some such unit +organization. Where highly developed, a health unit comprises at least a +physician, sanitary engineer, and community nurse with the addition, in +some cases, of another nurse devoted to the problems of maternity and +children. Such organization gives at once a fundamental control of +preventive measures and assists in community instruction. The Federal +Government, through its interest in control of contagion, acting through +the United States Public Health Service and the State agencies, has in the +past and should in the future concern itself with this development, +particularly in the many rural sections which are unfortunately far behind +in progress. Some parts of the funds contributed under the Sheppard-Towner +Act through the Children's Bureau of the Department of Labor have also +found their way into these channels. +</p> + +<p> +I recommend to the Congress that the purpose of the Sheppard-Towner Act +should be continued through the Children's Bureau for a limited period of +years; and that the Congress should consider the desirability of confining +the use of Federal funds by the States to the building up of such county or +other local units, and that such outlay should be positively coordinated +with the funds expended through the United States Public Health Service +directed to other phases of the same county or other local unit +organization. All funds appropriated should of course be applied through +the States, so that the public health program of the county or local unit +will be efficiently coordinated with that of the whole State. +</p> + +<p> +FEDERAL PRISONS +</p> + +<p> +Closely related to crime conditions is the administration of the Federal +prison system. Our Federal penal institutions are overcrowded, and this +condition is daily becoming worse. The parole and probation systems are +inadequate. These conditions make it impossible to perform the work of +personal reconstruction of prisoners so as to prepare them for return to +the duties of citizenship. In order to relieve the pressing evils I have +directed the temporary transfer of the Army Disciplinary Barracks at +Leavenworth to the Department of Justice for use as a Federal prison. Not +only is this temporary but it is inadequate for present needs. +</p> + +<p> +We need some new Federal prisons and a reorganization of our probation and +parole systems; and there should be established in the Department of +Justice a Bureau of Prisons with a sufficient force to deal adequately with +the growing activities of our prison institutions. Authorization for the +improvements should be given speedily, with initial appropriations to allow +the construction of the new institutions to be undertaken at once. +IMMIGRATION +</p> + +<p> +Restriction of immigration has from every aspect proved a sound national +policy. Our pressing problem is to formulate a method by which the limited +number of immigrants whom we do welcome shall be adapted to our national +setting and our national needs. +</p> + +<p> +I have been opposed to the basis of the quotas now in force and I have +hoped that we could find some practical method to secure what I believe +should be our real national objective; that is, fitness of the immigrant as +to physique, character, training, and our need of service. Perhaps some +system of priorities within the quotas could produce these results and at +the same time enable some hardships in the present system to be cleared up. +I recommend that the Congress should give the subject further study, in +which the executive departments will gladly cooperate with the hope of +discovering such method as will more fully secure our national necessities. +VETERANS +</p> + +<p> +It has been the policy of our Government almost from its inception to make +provision for the men who have been disabled in defense of our country. +This policy should be maintained. Originally it took the form of land +grants and pensions. This system continued until our entry into the World +War. The Congress at that time inaugurated a new plan of compensation, +rehabilitation, hospitalization, medical care and treatment, and insurance, +whereby benefits were awarded to those veterans and their immediate +dependents whose disabilities were attributable to their war service. The +basic principle in this legislation is sound. +</p> + +<p> +In a desire to eliminate all possibilities of injustice due to difficulties +in establishing service connection of disabilities, these principles have +been to some degree extended. Veterans whose diseases or injuries have +become apparent within a brief period after the war are now receiving +compensation; insurance benefits have been liberalized. Emergency officers +are now receiving additional benefits. The doors of the Government's +hospitals have been opened to all veterans, even though their diseases or +injuries were not the result of their war service. In addition adjusted +service certificates have been issued to 3,433,300 veterans. This in itself +will mean an expenditure of nearly $3,500,000,000 before 1945, in addition +to the $600,000,000 which we are now appropriating annually for our +veterans' relief. +</p> + +<p> +The administration of all laws concerning the veterans and their dependents +has been upon the basis of dealing generously, humanely, and justly. While +some inequalities have arisen, substantial and adequate care has been given +and justice administered. Further improvement in administration may require +some amendment from time to time to the law, but care should be taken to +see that such changes conform to the basic principles of the legislation. +</p> + +<p> +I am convinced that we will gain in efficiency, economy, and more uniform +administration and better definition of national policies if the Pension +Bureau, the National Home for Volunteer Soldiers, and the Veterans' Bureau +are brought together under a single agency. The total appropriations to +these agencies now exceed $800,000,000 per annum. +</p> + +<p> +CIVIL SERVICE +</p> + +<p> +Approximately four-fifths of all the employees in the executive civil +service now occupy positions subject to competitive examination under the +civil service law. +</p> + +<p> +There are, however, still commanding opportunities for extending the +system. These opportunities lie within the province of Congress and not the +President. I recommend that a further step be taken by authorization that +appointments of third-class postmasters be made under the civil service +law. +</p> + +<p> +DEPARTMENTAL REORGANIZATION +</p> + +<p> +This subject has been under consideration for over 20 years. It was +promised by both political parties in the recent campaign. It has been +repeatedly examined by committees and commissions--congressional, +executive, and voluntary. The conclusions of these investigations have been +unanimous that reorganization is a necessity of sound administration; of +economy; of more effective governmental policies and of relief to the +citizen from unnecessary harassment in his relations with a multitude of +scattered governmental agencies. But the presentation of any specific plan +at once enlivens opposition from every official whose authority may be +curtailed or who fears his position is imperiled by such a result; of +bureaus and departments which wish to maintain their authority and +activities; of citizens and their organizations who are selfishly +interested, or who are inspired by fear that their favorite bureau may, in +a new setting, be less subject to their influence or more subject to some +other influence. +</p> + +<p> +It seems to me that the essential principles of reorganization are two in +number. First, all administrative activities of the same major purpose +should be placed in groups under single-headed responsibility; second, all +executive and administrative functions should be separated from boards and +commissions and placed under individual responsibility, while +quasi-legislative and quasi-judicial and broadly advisory functions should +be removed from individual authority and assigned to boards and +commissions. Indeed, these are the fundamental principles upon which our +Government was founded, and they are the principles which have been adhered +to in the whole development of our business structure, and they are the +distillation of the common sense of generations. +</p> + +<p> +For instance, the conservation of national resources is spread among eight +agencies in five departments. They suffer from conflict and overlap. There +is no proper development and adherence to broad national policies and no +central point where the searchlight of public opinion may concentrate +itself. These functions should be grouped under the direction of some such +official as an assistant secretary of conservation. The particular +department or cabinet officer under which such a group should be placed is +of secondary importance to the need of concentration. The same may be said +of educational services, of merchant marine aids, of public works, of +public health, of veterans' services, and many others, the component parts +of which are widely scattered in the various departments and independent +agencies. It is desirable that we first have experience with these +different groups in action before we create new departments. These may be +necessary later on. +</p> + +<p> +With this background of all previous experience I can see no hope for the +development of a sound reorganization of the Government unless Congress be +willing to delegate its authority over the problem (subject to defined +principles) to the Executive, who should act upon approval of a joint +committee of Congress or with the reservation of power of revision by +Congress within some limited period adequate for its consideration. +PROHIBITION +</p> + +<p> +The first duty of the President under his oath of office is to secure the +enforcement of the laws. The enforcement of the laws enacted to give effect +to the eighteenth amendment is far from satisfactory and this is in part +due to the inadequate organization of the administrative agencies of the +Federal Government. With the hope of expediting such reorganization, I +requested on June 6 last that Congress should appoint a joint committee to +collaborate with executive agencies in preparation of legislation. It would +be helpful if it could be so appointed. The subject has been earnestly +considered by the Law Enforcement Commission and the administrative +officials of the Government. Our joint conclusions are that certain steps +should be taken at once. First, there should be an immediate concentration +of responsibility and strengthening of enforcement agencies of the Federal +Government by transfer to the Department of Justice of the Federal +functions of detection and to a considerable degree of prosecution, which +are now lodged in the Prohibition Bureau in the Treasury; and at the same +time the control of the distribution of industrial alcohol and legalized +beverages should remain in the Treasury. Second, provision should be made +for relief of congestion in the Federal courts by modifying and simplifying +the procedure for dealing with the large volume of petty prosecutions under +various Federal acts. Third, there should be a codification of the laws +relating to prohibition to avoid the necessity which now exists of +resorting to more than 25 statutes enacted at various times over 40 years. +Technical defects in these statutes that have been disclosed should be +cured. I would add to these recommendations the desirability of +reorganizing the various services engaged in the prevention of smuggling +into one border patrol under the Coast Guard. Further recommendations upon +the subject as a whole will be developed after further examination by the +Law Enforcement Commission, but it is not to be expected that any criminal +law will ever be fully enforced so long as criminals exist. +</p> + +<p> +The District of Columbia should be the model of city law enforcement in the +Nation. While conditions here are much better than in many other cities, +they are far from perfect, and this is due in part to the congestion of +criminal cases in the Supreme Court of the District, resulting in long +delays. Furthermore, there is need for legislation in the District +supplementing the national prohibition act, more sharply defining and +enlarging the duties and powers of the District Commissioners and the +police of the District, and opening the way for better cooperation in the +enforcement of prohibition between the District officials and the +prohibition officers of the Federal Government. It is urgent that these +conditions be remedied. +</p> + +<p> +LAW ENFORCEMENT AND OBSERVANCE +</p> + +<p> +No one will look with satisfaction upon the volume of crime of all kinds +and the growth of organized crime in our country. We have pressing need so +to organize our system of administering criminal justice as to establish +full vigor and effectiveness. We need to reestablish faith that the highest +interests of our country are served by insistence upon the swift and +even-handed administration of justice to all offenders, whether they be +rich or poor. That we shall effect improvement is vital to the preservation +of our institutions. It is the most serious issue before our people. +</p> + +<p> +Under the authority of Congress I have appointed a National Commission on +Law Observance and Enforcement, for an exhaustive study of the entire +problem of the enforcement of our laws and the improvement of our judicial +system, including the special problems and abuses growing out of the +prohibition laws. The commission has been invited to make the widest +inquiry into the shortcomings of the administration of justice and into the +causes and remedies for them. It has organized its work under subcommittees +dealing with the many contributory causes of our situation and has enlisted +the aid of investigators in fields requiring special consideration. I am +confident that as a result of its studies now being carried forward it will +make a notable contribution to the solution of our pressing problems. +</p> + +<p> +Pending further legislation, the Department of Justice has been striving to +weed out inefficiency wherever it exists, to stimulate activity on the part +of its prosecuting officers, and to use increasing care in examining into +the qualifications of those appointed to serve as prosecutors. The +department is seeking systematically to strengthen the law enforcement +agencies week by week and month by month, not by dramatic displays but by +steady pressure; by removal of negligent officials and by encouragement and +assistance to the vigilant. During the course of these efforts it has been +revealed that in some districts causes contributing to the congestion of +criminal dockets, and to delays and inefficiency in prosecutions, have been +lack of sufficient forces in the offices of United States attorneys, clerks +of courts, and marshals. These conditions tend to clog the machinery of +justice. The last conference of senior circuit judges has taken note of +them and indorsed the department's proposals for improvement. Increases in +appropriations are necessary and will be asked for in order to reenforce +these offices. +</p> + +<p> +The orderly administration of the law involves more than the mere machinery +of law enforcement. The efficient use of that machinery and a spirit in our +people in support of law are alike essential. We have need for improvement +in both. However much we may perfect the mechanism, still if the citizen +who is himself dependent upon some laws for the protection of all that he +has and all that he holds dear, shall insist on selecting the particular +laws which he will obey, he undermines his own safety and that of his +country. His attitude may obscure, but it can not conceal, the ugly truth +that the lawbreaker, whoever he may be, is the enemy of society. We can no +longer gloss over the unpleasant reality which should be made vital in the +consciousness of every citizen, that he who condones or traffics with +crime, who is indifferent to it and to the punishment of the criminal, or +to the lax performance of official duty, is himself the most effective +agency for the breakdown of society. +</p> + +<p> +Law can not rise above its source in good citizenship--in what right-minded +men most earnestly believe and desire. If the law is upheld only by +Government officials, then all law is at an end. Our laws are made by the +people themselves; theirs is the right to work for their repeal; but until +repeal it is an equal duty to observe them and demand their enforcement. +</p> + +<p> +I have been gratified at the awakening sense of this responsibility in our +citizens during the past few months, and gratified that many instances have +occurred which refuted the cynicism which has asserted that our system +could not convict those who had defied the law and possessed the means to +resist its execution. These things reveal a moral awakening both in the +people and in officials which lies at the very foundation of the rule of +law. +</p> + +<p> +CONCLUSION +</p> + +<p> +The test of the rightfulness of our decisions must be whether we have +sustained and advanced the ideals of the American people; self-government +in its foundations of local government; justice whether to the individual +or to the group; ordered liberty; freedom from domination; open opportunity +and equality of opportunity; the initiative and individuality of our +people; prosperity and the lessening of poverty; freedom of public opinion; +education; advancement of knowledge; the growth of religious spirit; the +tolerance of all faiths; the foundations of the home and the advancement of +peace. +</p> + +<p class="noindent"> +The White House, +<br /> +December 3, 1929 +</p> + +<p><br /><br /><br /></p> + +<p class="t3"> +*** +</p> + +<p><a id="dec1930"></a></p> + +<p class="noindent"> +State of the Union Address<br /> +Herbert Hoover<br /> +December 2, 1930<br /> +</p> + +<p class="noindent"> +To the Senate and House of Representatives: +</p> + +<p> +I have the honor to comply with the requirement of the Constitution that I +should lay before the Congress information as to the state of the Union, +and recommend consideration of such measures as are necessary and +expedient. +</p> + +<p> +Substantial progress has been made during the year in national peace and +security; the fundamental strength of the Nation's economic life is +unimpaired; education and scientific discovery have made advances; our +country is more alive to its problems of moral and spiritual welfare. +</p> + +<p> +ECONOMIC SITUATION +</p> + +<p> +During the past 12 months we have suffered with other Nations from economic +depression. +</p> + +<p> +The origins of this depression lie to some extent within our own borders +through a speculative period which diverted capital and energy into +speculation rather than constructive enterprise. Had overspeculation in +securities been the only force operating, we should have seen recovery many +months ago, as these particular dislocations have generally readjusted +themselves. +</p> + +<p> +Other deep-seated causes have been in action, however, chiefly the +world-wide overproduction beyond even the demand of prosperous times for +such important basic commodities as wheat, rubber, coffee, sugar, copper, +silver, zinc, to some extent cotton, and other raw materials. The +cumulative effects of demoralizing price falls of these important +commodities in the process of adjustment of production to world consumption +have produced financial crises in many countries and have diminished the +buying power of these countries for imported goods to a degree which +extended the difficulties farther afield by creating unemployment in all +the industrial nations. The political agitation in Asia; revolutions in +South America and political unrest in some European States; the methods of +sale by Russia of her increasing agricultural exports to European markets; +and our own drought--have all contributed to prolong and deepen the +depression. +</p> + +<p> +In the larger view the major forces of the depression now lie outside of +the United States, and our recuperation has been retarded by the +unwarranted degree of fear and apprehension created by these outside +forces. +</p> + +<p> +The extent of the depression is indicated by the following approximate +percentages of activity during the past three months as compared with the +highly prosperous year of 1928: +</p> + +<p> +Value of department-store sales - 93% of 1928 +</p> + +<p> +Volume of manufacturing production - 80% of 1928 +</p> + +<p> +Volume of mineral production - 90% of 1928 +</p> + +<p> +Volume of factory employment - 84% of 1928 +</p> + +<p> +Total of bank deposits - 105% of 1928 +</p> + +<p> +Wholesale prices--all commodities - 83% of 1928 +</p> + +<p> +Cost of living - 94% of 1928 +</p> + +<p> +Various other indexes indicate total decrease of activity from 1928 of from +15 to 20 per cent. +</p> + +<p> +There are many factors which give encouragement for the future. The fact +that we are holding from 80 to 85 per cent of our normal activities and +incomes; that our major financial and industrial institutions have come +through the storm unimpaired; that price levels of major commodities have +remained approximately stable for some time; that a number of industries +are showing signs of increasing demand; that the world at large is +readjusting itself to the situation; all reflect grounds for confidence. We +should remember that these occasions have been met many times before, that +they are but temporary, that our country is to-day stronger and richer in +resources, in equipment, in skill, than ever in its history. We are in an +extraordinary degree self-sustaining, we will overcome world influences and +will lead the march of prosperity as we have always done hitherto. +</p> + +<p> +Economic depression can not be cured by legislative action or executive +pronouncement. Economic wounds must be healed by the action of the cells of +the economic body--the producers and consumers themselves. Recovery can be +expedited and its effects mitigated by cooperative action. That cooperation +requires that every individual should sustain faith and courage; that each +should maintain his self-reliance; that each and every one should search +for methods of improving his business or service; that the vast majority +whose income is unimpaired should not hoard out of fear but should pursue +their normal living and recreations; that each should seek to assist his +neighbors who may be less fortunate; that each industry should assist its +own employees; that each community and each State should assume its full +responsibilities for organization of employment and relief of distress with +that sturdiness and independence which built a great Nation. +</p> + +<p> +Our people are responding to these impulses in remarkable degree. The best +contribution of government lies in encouragement of this voluntary +cooperation in the community. The Government, National, State, and local, +can join with the community in such programs and do its part. A year ago I, +together with other officers of the Government, initiated extensive +cooperative measures throughout the country. +</p> + +<p> +The first of these measures was an agreement of leading employers to +maintain the standards of wages and of labor leaders to use their influence +against strife. In a large sense these undertakings have been adhered to +and we have not witnessed the usual reductions of wages which have always +heretofore marked depressions. The index of union wage scales shows them to +be today fully up to the level of any of the previous three years. In +consequence the buying power of the country has been much larger than would +otherwise have been the case. Of equal importance the Nation has had +unusual peace in industry and freedom from the public disorder which has +characterized previous depressions. +</p> + +<p> +The second direction of cooperation has been that our governments, +National, State, and local, the industries and business so distribute +employment as to give work to the maximum number of employees. +</p> + +<p> +The third direction of cooperation has been to maintain and even extend +construction work and betterments in anticipation of the future. It has +been the universal experience in previous depressions that public works and +private construction have fallen off rapidly with the general tide of +depression. On this occasion, however, the increased authorization and +generous appropriations by the Congress and the action of States and +municipalities have resulted in the expansion of public construction to an +amount even above that in the most prosperous years. In addition the +cooperation of public utilities, railways, and other large organizations +has been generously given in construction and betterment work in +anticipation of future need. The Department of Commerce advises me that as +a result, the volume of this type of construction work, which amounted to +roughly $6,300,000,000 in 1929, instead of decreasing will show a total of +about $7,000,000,000 for 1930. There has, of course, been a substantial +decrease in the types of construction which could not be undertaken in +advance of need. +</p> + +<p> +The fourth direction of cooperation was the organization in such States and +municipalities, as was deemed necessary, of committees to organize local +employment, to provide for employment agencies, and to effect relief of +distress. +</p> + +<p> +The result of magnificent cooperation throughout the country has been that +actual suffering has been kept to a minimum during the past 12 months, and +our unemployment has been far less in proportion than in other large +industrial countries. Some time ago it became evident that unemployment +would continue over the winter and would necessarily be added to from +seasonal causes and that the savings of workpeople would be more largely +depleted. We have as a Nation a definite duty to see that no deserving +person in our country suffers from hunger or cold. I therefore set up a +more extensive organization to stimulate more intensive cooperation +throughout the country. There has been a most gratifying degree of +response, from governors, mayors, and other public officials, from welfare +organizations, and from employers in concerns both large and small. The +local communities through their voluntary agencies have assumed the duty of +relieving individual distress and are being generously supported by the +public. +</p> + +<p> +The number of those wholly out of employment seeking for work was +accurately determined by the census last April as about 2,500,000. The +Department of Labor index of employment in the larger trades shows some +decrease in employment since that time. The problem from a relief point of +view is somewhat less than the published estimates of the number of +unemployed would indicate. The intensive community and individual efforts +in providing special employment outside the listed industries are not +reflected in the statistical indexes and tend to reduce such published +figures. Moreover, there is estimated to be a constant figure at all times +of nearly 1,000,000 unemployed who are not without annual income but +temporarily idle in the shift from one job to another. We have an average +of about three breadwinners to each two families, so that every person +unemployed does not represent a family without income. The view that the +relief problems are less than the gross numbers would indicate is confirmed +by the experience of several cities, which shows that the number of +families in distress represents from 10 to 20 per cent of the number of the +calculated unemployed. This is not said to minimize the very real problem +which exists but to weigh its actual proportions. +</p> + +<p> +As a contribution to the situation the Federal Government is engaged upon +the greatest program of waterway, harbor, flood control, public building, +highway, and airway improvement in all our history. This, together with +loans to merchant shipbuilders, improvement of the Navy and in military +aviation, and other construction work of the Government will exceed +$520,000,000 for this fiscal year. This compares with $253,000,000 in the +fiscal year 1928. The construction works already authorized and the +continuation of policies in Government aid will require a continual +expenditure upwards of half a billion dollars annually. +</p> + +<p> +I favor still further temporary expansion of these activities in aid to +unemployment during this winter. The Congress will, however, have presented +to it numbers of projects, some of them under the guise of, rather than the +reality of, their usefulness in the increase of employment during the +depression. There are certain commonsense limitations upon any expansions +of construction work. The Government must not undertake works that are not +of sound economic purpose and that have not been subject to searching +technical investigation, and which have not been given adequate +consideration by the Congress. The volume of construction work in the +Government is already at the maximum limit warranted by financial prudence +as a continuing policy. To increase taxation for purposes of construction +work defeats its own purpose, as such taxes directly diminish employment in +private industry. Again any kind of construction requires, after its +authorization, a considerable time before labor can be employed in which to +make engineering, architectural, and legal preparations. Our immediate +problem is the increase of employment for the next six months, and new +plans which do not produce such immediate result or which extend +commitments beyond this period are not warranted. +</p> + +<p> +The enlarged rivers and harbors, public building, and highway plans +authorized by the Congress last session, however, offer an opportunity for +assistance by the temporary acceleration of construction of these programs +even faster than originally planned, especially if the technical +requirements of the laws which entail great delays could be amended in such +fashion as to speed up acquirements of land and the letting of contracts. +</p> + +<p> +With view, however, to the possible need for acceleration, we, immediately +upon receiving those authorities from the Congress five months ago, began +the necessary technical work in preparation for such possible eventuality. +I have canvassed the departments of the Government as to the maximum amount +that can be properly added to our present expenditure to accelerate all +construction during the next six months, and I feel warranted in asking the +Congress for an appropriation of from $100,000,000 to $150,000,000 to +provide such further employment in this emergency. In connection therewith +we need some authority to make enlarged temporary advances of +Federal-highway aid to the States. +</p> + +<p> +I recommend that this appropriation be made distributable to the different +departments upon recommendation of a committee of the Cabinet and approval +by the President. Its application to works already authorized by the +Congress assures its use in directions of economic importance and to public +welfare. Such action will imply an expenditure upon construction of all +kinds of over $650,000,000 during the next twelve months. +</p> + +<p> +AGRICULTURE +</p> + +<p> +The world-wide depression has affected agriculture in common with all other +industries. The average price of farm produce has fallen to about 80 per +cent of the levels of 1928. This average is, however, greatly affected by +wheat and cotton, which have participated in world-wide overproduction and +have fallen to about 60 per cent of the average price of the year 1928. +Excluding these commodities, the prices of all other agricultural products +are about 84 per cent of those of 1928. The average wholesale prices of +other primary goods, such as nonferrous metals, have fallen to 76 per cent +of 1928. +</p> + +<p> +The price levels of our major agricultural commodities are, in fact, higher +than those in other principal producing countries, due to the combined +result of the tariff and the operations of the Farm Board. For instance, +wheat prices at Minneapolis are about 30 per cent higher than at Winnipeg, +and at Chicago they are about 20 per cent higher than at Buenos Aires. Corn +prices at Chicago are over twice as high as at Buenos Aires. Wool prices +average more than 80 per cent higher in this country than abroad, and +butter is 30 per cent higher in New York City than in Copenhagen. +</p> + +<p> +Aside from the misfortune to agriculture of the world-wide depression we +have had the most severe drought. It has affected particularly the States +bordering on the Potomac, Ohio, and Lower Mississippi Rivers, with some +areas in Montana, Kansas, Oklahoma, and Texas. It has found its major +expression in the shortage of pasturage and a shrinkage in the corn crop +from an average of about 2,800,000,000 bushels to about 2,090,000,000 +bushels. +</p> + +<p> +On August 14 I called a conference of the governors of the most acutely +affected States, and as a result of its conclusions I appointed a national +committee comprising the heads of the important Federal agencies under the +chairmanship of the Secretary of Agriculture. The governors in turn have +appointed State committees representative of the farmers, bankers, business +men, and the Red Cross, and subsidiary committees have been established in +most of the acutely affected counties. Railway rates were reduced on feed +and livestock in and out of the drought areas, and over 50,000 cars of such +products have been transported under these reduced rates. The Red Cross +established a preliminary fund of $5,000,000 for distress relief purposes +and established agencies for its administration in each county. Of this +fund less than $500,000 has been called for up to this time as the need +will appear more largely during the winter. The Federal Farm Loan Board has +extended its credit facilities, and the Federal Farm Board has given +financial assistance to all affected cooperatives. +</p> + +<p> +In order that the Government may meet its full obligation toward our +countrymen in distress through no fault of their own, I recommend that an +appropriation should be made to the Department of Agriculture to be loaned +for the purpose of seed and feed for animals. Its application should as +hitherto in such loans be limited to a gross amount to any one individual, +and secured upon the crop. +</p> + +<p> +The Red Cross can relieve the cases of individual distress by the +sympathetic assistance of our people. +</p> + +<p> +FINANCES OF THE GOVERNMENT +</p> + +<p> +I shall submit the detailed financial position of the Government with +recommendations in the usual Budget message. I will at this time, however, +mention that the Budget estimates of receipts and expenditures for the +current year were formulated by the Treasury and the Budget Bureau at a +time when it was impossible to forecast the severity of the business +depression and have been most seriously affected by it. At that time a +surplus of about $123,000,000 was estimated for this fiscal year and tax +reduction which affected the fiscal year to the extent of $75,000,000 was +authorized by the Congress, thus reducing the estimated surplus to about +$48,000,000. Closely revised estimates now made by the Treasury and the +Bureau of the Budget of the tax, postal, and other receipts for the current +fiscal year indicate a decrease of about $430,000,000 from the estimate of +a year ago, of which about $75,000,000 is due to tax reduction, leaving +about $355,000,000 due to the depression. Moreover, legislation enacted by +Congress subsequent to the submission of the Budget enlarging Federal +construction work to expand employment and for increase in veterans' +services and other items, have increased expenditures during the current +fiscal year by about $225,000,000. +</p> + +<p> +Thus the decrease of $430,000,000 in revenue and the increase of +$225,000,000 in expenditure adversely change the original Budget situation +by about $655,000,000. This large sum is offset by the original estimated +surplus a year ago of about $123,000,000, by the application of +$185,000,000 of interest payments upon the foreign debt to current +expenditures, by arrangements of the Farm Board through repayments, etc., +in consequence of which they reduced their net cash demands upon the +Treasury by $100,000,000 in this period, and by about $67,000,000 economies +and deferments brought about in the Government, thus reducing the practical +effect of the change in the situation to an estimated deficit of about +$180,000,000 for the present fiscal year. I shall make suggestions for +handling the present-year deficit in the Budget message, but I do not favor +encroachment upon the statutory reduction of the public debt. +</p> + +<p> +While it will be necessary in public interest to further increase +expenditures during the current fiscal year in aid to unemployment by +speeding up construction work and aid to the farmers affected by the +drought, I can not emphasize too strongly the absolute necessity to defer +any other plans for increase of Government expenditures. The Budget for +1932 fiscal year indicates estimated expenditure of about $4,054,000,000, +including postal deficit. The receipts are estimated at about +$4,085,000,000 if the temporary tax reduction of last year be discontinued, +leaving a surplus of only about $30,000,000. Most rigid economy is +therefore necessary to avoid increase in taxes. +</p> + +<p> +NATIONAL DEFENSE +</p> + +<p> +Our Army and Navy are being maintained at a high state of efficiency, under +officers of high training and intelligence, supported by a devoted +personnel of the rank and file. The London naval treaty has brought +important economies in the conduct of the Navy. The Navy Department will +lay before the committees of the Congress recommendations for a program of +authorization of new construction which should be initiated in the fiscal +year of 1932. +</p> + +<p> +LEGISLATION +</p> + +<p> +This is the last session of the Seventy-first Congress. During its previous +sittings it has completed a very large amount of important legislation, +notably: The establishment of the Federal Farm Board; fixing congressional +reapportionment; revision of the tariff, including the flexible provisions +and a reorganization of the Tariff Commission; reorganization of the Radio +Commission; reorganization of the Federal Power Commission; expansion of +Federal prisons; reorganization of parole and probation system in Federal +prisons; expansion of veterans' hospitals; establishment of disability +allowances to veterans; consolidation of veteran activities; consolidation +and strengthening of prohibition enforcement activities in the Department +of Justice; organization of a Narcotics Bureau; large expansion of rivers +and harbors improvements; substantial increase in Federal highways; +enlargement of public buildings construction program; and the ratification +of the London naval treaty. +</p> + +<p> +The Congress has before it legislation partially completed in the last +sitting in respect to Muscle Shoals, bus regulation, relief of congestion +in the courts, reorganization of border patrol in prevention of smuggling, +law enforcement in the District of Columbia, and other subjects. +</p> + +<p> +It is desirable that these measures should be completed. +</p> + +<p> +The short session does not permit of extensive legislative programs, but +there are a number of questions which, if time does not permit action, I +recommend should be placed in consideration by the Congress, perhaps +through committees cooperating in some instances with the Federal +departments, with view to preparation for subsequent action. Among them are +the following subjects: +</p> + +<p> +ELECTRICAL POWER +</p> + +<p> +I have in a previous message recommended effective regulation of interstate +electrical power. Such regulation should preserve the independence and +responsibility of the States. +</p> + +<p> +RAILWAYS +</p> + +<p> +We have determined upon a national policy of consolidation of the railways +as a necessity of more stable and more economically operated +transportation. Further legislation is necessary to facilitate such +consolidation. In the public interest we should strengthen the railways +that they may meet our future needs. +</p> + +<p> +ANTITRUST LAWS +</p> + +<p> +I recommend that the Congress institute an inquiry into some aspects of the +economic working of these laws. I do not favor repeal of the Sherman Act. +The prevention of monopolies is of most vital public importance. +Competition is not only the basis of protection to the consumer but is the +incentive to progress. However, the interpretation of these laws by the +courts, the changes in business, especially in the economic effects upon +those enterprises closely related to the use of the natural resources of +the country, make such an inquiry advisable. The producers of these +materials assert that certain unfortunate results of wasteful and +destructive use of these natural resources together with a destructive +competition which impoverishes both operator and worker can not be remedied +because of the prohibitive interpretation of the antitrust laws. The +well-known condition of the bituminous coal industry is an illustration. +The people have a vital interest in the conservation of their natural +resources; in the prevention of wasteful practices; in conditions of +destructive competition which may impoverish the producer and the wage +earner; and they have an equal interest in maintaining adequate +competition. I therefore suggest that an inquiry be directed especially to +the effect of the workings of the antitrust laws in these particular fields +to determine if these evils can be remedied without sacrifice of the +fundamental purpose of these laws. +</p> + +<p> +CAPITAL-GAINS TAX +</p> + +<p> +It is urged by many thoughtful citizens that the peculiar economic effect +of the income tax on so-called capital gains at the present rate is to +enhance speculative inflation and likewise impede business recovery. I +believe this to be the case and I recommend that a study be made of the +economic effects of this tax and of its relation to the general structure +of our income tax law. +</p> + +<p> +IMMIGRATION +</p> + +<p> +There is need for revision of our immigration laws upon a more limited and +more selective basis, flexible to the needs of the country. +</p> + +<p> +Under conditions of current unemployment it is obvious that persons coming +to the United States seeking work would likely become either a direct or +indirect public charge. As a temporary measure the officers issuing visas +to immigrants have been, in pursuance of the law, instructed to refuse +visas to applicants likely to fall into this class. As a result the visas +issued have decreased from an average of about 24,000 per month prior to +restrictions to a rate of about 7,000 during the last month. These are +largely preferred persons under the law. Visas from Mexico are about 250 +per month compared to about 4,000 previous to restrictions. The whole +subject requires exhaustive reconsideration. +</p> + +<p> +DEPORTATION OF ALIEN CRIMINALS +</p> + +<p> +I urge the strengthening of our deportation laws so as to more fully rid +ourselves of criminal aliens. Furthermore, thousands of persons have +entered the country in violation of the immigration laws. The very method +of their entry indicates their objectionable character, and our law-abiding +foreign-born residents suffer in consequence. I recommend that the Congress +provide methods of strengthening the Government to correct this abuse. +</p> + +<p> +POST OFFICE +</p> + +<p> +Due to deferment of Government building over many years, previous +administrations had been compelled to enter upon types of leases for +secondary facilities in large cities, some of which were objectionable as +representing too high a return upon the value of the property. To prevent +the occasion for further uneconomic leasing I recommend that the Congress +authorize the building by the Government of its own facilities. +</p> + +<p> +VETERANS +</p> + +<p> +The Nation has generously expanded its care for veterans. The consolidation +of all veterans' activities into the Veterans' Administration has produced +substantial administrative economies. The consolidation also brings +emphasis to the inequalities in service and allowances. The whole subject +is under study by the administrator, and I recommend it should also be +examined by the committees of the Congress. +</p> + +<p> +SOCIAL SERVICE +</p> + +<p> +I urge further consideration by the Congress of the recommendations I made +a year ago looking to the development through temporary Federal aid of +adequate State and local services for the health of children and the +further stamping out of communicable disease, particularly in the rural +sections. The advance of scientific discovery, methods, and social thought +imposes a new vision in these matters. The drain upon the Federal Treasury +is comparatively small. The results both economic and moral are of the +utmost importance. +</p> + +<p> +GENERAL +</p> + +<p> +It is my belief that after the passing of this depression, when we can +examine it in retrospect, we shall need to consider a number of other +questions as to what action may be taken by the Government to remove +Possible governmental influences which make for instability and to better +organize mitigation of the effect of depression. It is as yet too soon to +constructively formulate such measures. +</p> + +<p> +There are many administrative subjects, such as departmental +reorganization, extension of the civil service, readjustment of the postal +rates, etc., which at some appropriate time require the attention of the +Congress. +</p> + +<p> +FOREIGN RELATIONS +</p> + +<p> +Our relations with foreign countries have been maintained upon a high basis +of cordiality and good will. +</p> + +<p> +During the past year the London naval pact was completed, approved by the +Senate, and ratified by the governments concerned. By this treaty we have +abolished competition in the building of warships, have established the +basis of parity of the United States with the strongest of foreign powers, +and have accomplished a substantial reduction in war vessels. +</p> + +<p> +During the year there has been an extended political unrest in the world. +Asia continues in disturbed condition, and revolutions have taken place in +Brazil, Argentina, Peru, and Bolivia. Despite the jeopardy to our citizens +and their property which naturally arises in such circumstances, we have, +with the cooperation of the governments concerned, been able to meet all +such instances without friction. +</p> + +<p> +We have resumed normal relations with the new Governments of Brazil, +Argentina, Peru, and Bolivia immediately upon evidence that they were able +to give protection to our citizens and their property, and that they +recognized their international obligations. +</p> + +<p> +A commission which was supported by the Congress has completed its +investigation and reported upon our future policies in respect to Haiti and +proved of high value in securing the acceptance of these policies. An +election has been held and a new government established. We have replaced +our high commissioner by a minister and have begun the gradual withdrawal +of our activities with view to complete retirement at the expiration of the +present treaty in 1935. +</p> + +<p> +A number of arbitration and conciliation treaties have been completed or +negotiated during the year, and will be presented for approval by the +Senate. +</p> + +<p> +I shall, in a special message, lay before the Senate the protocols covering +the statutes of the World Court which have been revised to accord with the +sense of previous Senate reservations. +</p> + +<p class="noindent"> +The White House, +<br /> +December 2, 1930 +</p> + +<p><br /><br /><br /></p> + +<p class="t3"> +*** +</p> + +<p><a id="dec1931"></a></p> + +<p class="noindent"> +State of the Union Address<br /> +Herbert Hoover<br /> +December 8, 1931<br /> +</p> + +<p class="noindent"> +To the Senate and House of Representatives: +</p> + +<p> +It is my duty under the Constitution to transmit to the Congress +information on the state of the Union and to recommend for its +consideration necessary and expedient measures. +</p> + +<p> +The chief influence affecting the state of the Union during the past year +has been the continued world-wide economic disturbance. Our national +concern has been to meet the emergencies it has created for us and to lay +the foundations for recovery. +</p> + +<p> +If we lift our vision beyond these immediate emergencies we find +fundamental national gains even amid depression. In meeting the problems of +this difficult period, we have witnessed a remarkable development of the +sense of cooperation in the community. For the first time in the history of +our major economic depressions there has been a notable absence of public +disorders and industrial conflict. Above all there is an enlargement of +social and spiritual responsibility among the people. The strains and +stresses upon business have resulted in closer application, in saner +policies, and in better methods. Public improvements have been carried out +on a larger scale than even in normal times. The country is richer in +physical property, in newly discovered resources, and in productive +capacity than ever before. There has been constant gain in knowledge and +education; there has been continuous advance in science and invention; +there has been distinct gain in public health. Business depressions have +been recurrent in the life of our country and are but transitory. The +Nation has emerged from each of them with increased strength and virility +because of the enlightenment they have brought, the readjustments and the +larger understanding of the realities and obligations of life and work +which come from them. +</p> + +<p> +NATIONAL DEFENSE +</p> + +<p> +Both our Army and Navy have been maintained in a high state of efficiency. +The ability and devotion of both officers and men sustain the highest +traditions of the service. Reductions and postponements in expenditure of +these departments to meet the present emergency are being made without +reducing existing personnel or impairing the morale of either +establishment. +</p> + +<p> +The agreement between the leading naval powers for limitation of naval +armaments and establishment of their relative strength and thus elimination +of competitive building also implies for ourselves the gradual expansion of +the deficient categories in our Navy to the parities provided in those +treaties. However, none of the other nations, parties to these agreements, +is to-day maintaining the full rate of construction which the treaty size +of fleets would imply. +</p> + +<p> +Although these agreements secured the maximum reduction of fleets which it +was at that time possible to attain, I am hopeful that the naval powers, +party to these agreements, will realize that establishment of relative +strength in itself offers opportunity for further reduction without injury +to any of them. This would be the more possible if pending negotiations are +successful between France and Italy. If the world is to regain its +standards of life, it must further decrease both naval and other arms. The +subject will come before the General Disarmament Conference which meets in +Geneva on February 2. +</p> + +<p> +FOREIGN AFFAIRS +</p> + +<p> +We are at peace with the world. We have cooperated with other nations to +preserve peace. The rights of our citizens abroad have been protected. +</p> + +<p> +The economic depression has continued and deepened in every part of the +world during the past year. In many countries political instability, +excessive armaments, debts, governmental expenditures, and taxes have +resulted in revolutions, in unbalanced budgets and monetary collapse and +financial panics, in dumping of goods upon world markets, and in diminished +consumption of commodities. +</p> + +<p> +Within two years there have been revolutions or acute social disorders in +19 countries, embracing more than half the population of the world. Ten +countries have been unable to meet their external obligations. In 14 +countries, embracing a quarter of the world's population, former monetary +standards have been temporarily abandoned. In a number of countries there +have been acute financial panics or compulsory restraints upon banking. +These disturbances have many roots in the dislocations from the World War. +Every one of them has reacted upon us. They have sharply affected the +markets and prices of our agricultural and industrial products. They have +increased unemployment and greatly embarrassed our financial and credit +system. +</p> + +<p> +As our difficulties during the past year have plainly originated in large +degree from these sources, any effort to bring about our own recuperation +has dictated the necessity of cooperation by us with other nations in +reasonable effort to restore world confidence and economic stability. +</p> + +<p> +Cooperation of our Federal reserve system and our banks with the central +banks in foreign countries has contributed to localize and ameliorate a +number of serious financial crises or moderate the pressures upon us and +thus avert disasters which would have affected us. +</p> + +<p> +The economic crisis in Germany and Central Europe last June rose to the +dimensions of a general panic from which it was apparent that without +assistance these nations must collapse. Apprehensions of such collapse had +demoralized our agricultural and security markets and so threatened other +nations as to impose further dangers upon us. But of highest importance was +the necessity of cooperation on our part to relieve the people of Germany +from imminent disasters and to maintain their important relations to +progress and stability in the world. Upon the initiative of this Government +a year's postponement of reparations and other intergovernmental debts was +brought about. Upon our further initiative an agreement was made by +Germany's private creditors providing for an extension of such credits +until the German people can develop more permanent and definite forms of +relief. +</p> + +<p> +We have continued our policy of withdrawing our marines from Haiti and +Nicaragua. +</p> + +<p> +The difficulties between China and Japan have given us great concern, not +alone for the maintenance of the spirit of the Kellogg-Briand Pact, but for +the maintenance of the treaties to which we are a party assuring the +territorial integrity of China. It is our purpose to assist in finding +solutions sustaining the full spirit of those treaties. +</p> + +<p> +I shall deal at greater length with our foreign relations in a later +message. +</p> + +<p> +THE DOMESTIC SITUATION +</p> + +<p> +Many undertakings have been organized and forwarded during the past year to +meet the new and changing emergencies which have constantly confronted us. +</p> + +<p> +Broadly the community has cooperated to meet the needs of honest distress, +and to take such emergency measures as would sustain confidence in our +financial system and would cushion the violence of liquidation in industry +and commerce, thus giving time for orderly readjustment of costs, +inventories, and credits without panic and widespread bankruptcy. These +measures have served those purposes and will promote recovery. +</p> + +<p> +In these measures we have striven to mobilize and stimulate private +initiative and local and community responsibility. There has been the least +possible Government entry into the economic field, and that only in +temporary and emergency form. Our citizens and our local governments have +given a magnificent display of unity and action, initiative and patriotism +in solving a multitude of difficulties and in cooperating with the Federal +Government. +</p> + +<p> +For a proper understanding of my recommendations to the Congress it is +desirable very briefly to review such activities during the past year. +</p> + +<p> +The emergencies of unemployment have been met by action in many directions. +The appropriations for the continued speeding up of the great Federal +construction program have provided direct and indirect aid to employment +upon a large scale. By organized unity of action, the States and +municipalities have also maintained large programs of public improvement. +Many industries have been prevailed upon to anticipate and intensify +construction. Industrial concerns and other employers have been organized +to spread available work amongst all their employees, instead of +discharging a portion of them. A large majority have maintained wages at as +high levels as the safe conduct of their business would permit. This course +has saved us from industrial conflict and disorder which have characterized +all previous depressions. Immigration has been curtailed by administrative +action. Upon the basis of normal immigration the decrease amounts to about +300,000 individuals who otherwise would have been added to our +unemployment. The expansion of Federal employment agencies under +appropriations by the Congress has proved most effective. Through the +President's organization for unemployment relief, public and private +agencies were successfully mobilized last winter to provide employment and +other measures against distress. Similar organization gives assurance +against suffering during the coming winter. Committees of leading citizens +are now active at practically every point of unemployment. In the large +majority they have been assured the funds necessary which, together with +local government aids, will meet the situation. A few exceptional +localities will be further organized. The evidence of the Public Health +Service shows an actual decrease of sickness and infant and general +mortality below normal years. No greater proof could be adduced that our +people have been protected from hunger and cold and that the sense of +social responsibility in the Nation has responded to the need of the +unfortunate. +</p> + +<p> +To meet the emergencies in agriculture the loans authorized by Congress for +rehabilitation in the drought areas have enabled farmers to produce +abundant crops in those districts. The Red Cross undertook and +magnificently administered relief for over 2,500,000 drought sufferers last +winter. It has undertaken this year to administer relief to 100,000 +sufferers in the new drought area of certain Northwest States. The action +of the Federal Farm Board in granting credits to farm cooperatives saved +many of them from bankruptcy and increased their purpose and strength. By +enabling farm cooperatives to cushion the fall in prices of farm products +in 1930 and 1931 the Board secured higher prices to the farmer than would +have been obtained otherwise, although the benefits of this action were +partially defeated by continued world overproduction. Incident to this +action the failure of a large number of farmers and of country banks was +averted which could quite possibly have spread into a major disaster. The +banks in the South have cooperated with the Farm Board in creation of a +pool for the better marketing of accumulated cotton. Growers have been +materially assisted by this action. Constant effort has been made to reduce +overproduction in relief of agriculture and to promote the foreign buying +of agricultural products by sustaining economic stability abroad. +</p> + +<p> +To meet our domestic emergencies in credit and banking arising from the +reaction to acute crisis abroad the National Credit Association was set up +by the banks with resources of $500,000,000 to support sound banks against +the frightened withdrawals and hoarding. It is giving aid to reopen solvent +banks which have been closed. Federal officials have brought about many +beneficial unions of banks and have employed other means which have +prevented many bank closings. As a result of these measures the hoarding +withdrawals which had risen to over $250,000,000 per week after the British +crisis have substantially ceased. +</p> + +<p> +FURTHER MEASURES +</p> + +<p> +The major economic forces and weaknesses at home and abroad have now been +exposed and can be appraised, and the time is ripe for forward action to +expedite our recovery. +</p> + +<p> +Although some of the causes of our depression are due to speculation, +inflation of securities and real estate, unsound foreign investments, and +mismanagement of financial institutions, yet our self-contained national +economy, with its matchless strength and resources, would have enabled us +to recover long since but for the continued dislocations, shocks, and +setbacks from abroad. +</p> + +<p> +Whatever the causes may be, the vast liquidation and readjustments which +have taken place have left us with a large degree of credit paralysis, +which together with the situation in our railways and the conditions +abroad, are now the outstanding obstacles to recuperation. If we can put +our financial resources to work and can ameliorate the financial situation +in the railways, I am confident we can make a large measure of recovery +independent of the rest of the world. A strong America is the highest +contribution to world stability. +</p> + +<p> +One phase of the credit situation is indicated in the banks. During the +past year banks, representing 3 per cent of our total deposits have been +closed. A large part of these failures have been caused by withdrawals for +hoarding, as distinguished from the failures early in the depression where +weakness due to mismanagement was the larger cause of failure. Despite +their closing, many of them will pay in full. Although such withdrawals +have practically ceased, yet $1,100,000,000 of currency was previously +withdrawn which has still to return to circulation. This represents a large +reduction of the ability of our banks to extend credit which would +otherwise fertilize industry and agriculture. Furthermore, many of our +bankers, in order to prepare themselves to meet possible withdrawals, have +felt compelled to call in loans, to refuse new credits, and to realize upon +securities, which in turn has demoralized the markets. The paralysis has +been further augmented by the steady increase in recent years of the +proportion of bank assets invested in long-term securities, such as +mortgages and bonds. These securities tend to lose their liquidity in +depression or temporarily to fall in value so that the ability of the banks +to meet the shock of sudden withdrawal is greatly lessened and the +restriction of all kinds of credit is thereby increased. The continuing +credit paralysis has operated to accentuate the deflation and liquidation +of commodities, real estate, and securities below any reasonable basis of +values. +</p> + +<p> +All of this tends to stifle business, especially the smaller units, and +finally expresses itself in further depression of prices and values, in +restriction on new enterprise, and in increased unemployment. +</p> + +<p> +The situation largely arises from an unjustified lack of confidence. We +have enormous volumes of idle money in the banks and in hoarding. We do not +require more money or working capital--we need to put what we have to +work. +</p> + +<p> +The fundamental difficulties which have brought about financial strains in +foreign countries do not exist in the United States. No external drain on +our resources can threaten our position, because the balance of +international payments is in our favor; we owe less to foreign countries +than they owe to us; our industries are efficiently organized; our currency +and bank deposits are protected by the greatest gold reserve in history. +</p> + +<p> +Our first step toward recovery is to reestablish confidence and thus +restore the flow of credit which is the very basis of our economic life. We +must put some steel beams in the foundations of our credit structure. It is +our duty to apply the full strength of our Government not only to the +immediate phases, but to provide security against shocks and the repetition +of the weaknesses which have been proven. +</p> + +<p> +The recommendations which I here lay before the Congress are designed to +meet these needs by strengthening financial, industrial, and agricultural +life through the medium of our existing institutions, and thus to avoid the +entry of the Government into competition with private business. +</p> + +<p> +FEDERAL GOVERNMENT FINANCE +</p> + +<p> +The first requirement of confidence and of economic recovery is financial +stability of the United States Government. I shall deal with fiscal +questions at greater length in the Budget message. But I must at this time +call attention to the magnitude of the deficits which have developed and +the resulting necessity for determined and courageous policies. These +deficits arise in the main from the heavy decrease in tax receipts due to +the depression and to the increase in expenditure on construction in aid to +unemployment, aids to agriculture, and upon services to veterans. +</p> + +<p> +During the fiscal year ending June 30 last we incurred a deficit of about +$903,000,000, which included the statutory reduction of the debt and +represented an increase of the national debt by $616,000,000. Of this, +however, $153,000,000 is offset by increased cash balances. +</p> + +<p> +In comparison with the fiscal year 1928 there is indicated a fall in +Federal receipts for the present fiscal year amounting to $1,683,000,000, +of which $1,034,000,000 is in individual and corporate income taxes alone. +During this fiscal year there will be an increased expenditure, as compared +to 1928, on veterans of $255,000,000, and an increased expenditure on +construction work which may reach $520,000,000. Despite large economies in +other directions, we have an indicated deficit, including the statutory +retirement of the debt, of $2,123,000,000, and an indicated net debt +increase of about $1,711,000,000. +</p> + +<p> +The Budget for the fiscal year beginning July 1 next, after allowing for +some increase of taxes under the present laws and after allowing for +drastic reduction in expenditures, still indicates a deficit of +$1,417,000,000. After offsetting the statutory debt retirements this would +indicate an increase in the national debt for the fiscal year 1933 of about +$921,000,000. +</p> + +<p> +Several conclusions are inevitable. We must have insistent and determined +reduction in Government expenses. We must face a temporary increase in +taxes. Such increase should not cover the whole of these deficits or it +will retard recovery. We must partially finance the deficit by borrowing. +It is my view that the amount of taxation should be fixed so as to balance +the Budget for 1933 except for the statutory debt retirement. Such +Government receipts would assure the balance of the following year's budget +including debt retirement. It is my further view that the additional +taxation should be imposed solely as an emergency measure terminating +definitely two years from July 1 next. Such a basis will give confidence in +the determination of the Government to stabilize its finance and will +assure taxpayers of its temporary character. Even with increased taxation, +the Government will reach the utmost safe limit of its borrowing capacity +by the expenditures for which we are already obligated and the +recommendations here proposed. To go further than these limits in either +expenditures, taxes, or borrowing will destroy confidence, denude commerce +and industry of its resources, jeopardize the financial system, and +actually extend unemployment and demoralize agriculture rather than relieve +it. +</p> + +<p> +FEDERAL LAND BANKS +</p> + +<p> +I recommend that the Congress authorize the subscription by the Treasury of +further capital to the Federal land banks to be retired as provided in the +original act, or when funds are available, and that repayments of such +capital be treated as a fund available for further subscriptions in the +same manner. It is urgent that the banks be supported so as to stabilize +the market values of their bonds and thus secure capital for the farmers at +low rates, that they may continue their services to agriculture and that +they may meet the present situation with consideration to the farmers. +</p> + +<p> +DEPOSITS IN CLOSED BANKS +</p> + +<p> +A method should be devised to make available quickly to depositors some +portion of their deposits in closed banks as the assets of such banks may +warrant. Such provision would go far to relieve distress in a multitude of +families, would stabilize values in many communities, and would liberate +working capital to thousands of concerns. I recommend that measures be +enacted promptly to accomplish these results and I suggest that the +Congress should consider the development of such a plan through the Federal +Reserve Banks. +</p> + +<p> +HOME-LOAN DISCOUNT BANKS +</p> + +<p> +I recommend the establishment of a system of home-loan discount banks as +the necessary companion in our financial structure of the Federal Reserve +Banks and our Federal Land Banks. Such action will relieve present +distressing pressures against home and farm property owners. It will +relieve pressures upon and give added strength to building and loan +associations, savings banks, and deposit banks, engaged in extending such +credits. Such action would further decentralize our credit structure. It +would revive residential construction and employment. It would enable such +loaning institutions more effectually to promote home ownership. I +discussed this plan at some length in a statement made public November 14, +last. This plan has been warmly indorsed by the recent National Conference +upon Home Ownership and Housing, whose members were designated by the +governors of the States and the groups interested. +</p> + +<p> +RECONSTRUCTION FINANCE CORPORATION +</p> + +<p> +In order that the public may be absolutely assured and that the Government +may be in position to meet any public necessity, I recommend that an +emergency Reconstruction Corporation of the nature of the former War +Finance Corporation should be established. It may not be necessary to use +such an instrumentality very extensively. The very existence of such a +bulwark will strengthen confidence. The Treasury should be authorized to +subscribe a reasonable capital to it, and it should be given authority to +issue its own debentures. It should be placed in liquidation at the end of +two years. Its purpose is that by strengthening the weak spots to thus +liberate the full strength of the Nation's resources. It should be in +position to facilitate exports by American agencies; make advances to +agricultural credit agencies where necessary to protect and aid the +agricultural industry; to make temporary advances upon proper securities to +established industries, railways, and financial institutions which can not +otherwise secure credit, and where such advances will protect the credit +structure and stimulate employment. Its functions would not overlap those +of the National Credit Corporation. +</p> + +<p> +FEDERAL RESERVE ELIGIBILITY +</p> + +<p> +On October 6th I issued a statement that I should recommend to the Congress +an extension during emergencies of the eligibility provisions in the +Federal reserve act. This statement was approved by a representative +gathering of the Members of both Houses of the Congress, including members +of the appropriate committees. It was approved by the officials of the +Treasury Department, and I understand such an extension has been approved +by a majority of the governors of the Federal reserve banks. Nothing should +be done which would lower the safeguards of the system. +</p> + +<p> +The establishment of the mortgage-discount banks herein referred to will +also contribute to further reserve strength in the banks without +inflation. +</p> + +<p> +BANKING LAWS +</p> + +<p> +Our people have a right to a banking system in which their deposits shall +be safeguarded and the flow of credit less subject to storms. The need of a +sounder system is plainly shown by the extent of bank failures. I recommend +the prompt improvement of the banking laws. Changed financial conditions +and commercial practices must be met. The Congress should investigate the +need for separation between different kinds of banking; an enlargement of +branch banking under proper restrictions; and the methods by which enlarged +membership in the Federal reserve system may be brought about. +</p> + +<p> +POSTAL SAVINGS BANKS +</p> + +<p> +The Postal Savings deposits have increased from about $200,000,000 to about +$550,000,000 during the past year. This experience has raised important +practical questions in relation to deposits and investments which should +receive the attention of the Congress. +</p> + +<p> +RAILWAYS +</p> + +<p> +The railways present one of our immediate and pressing problems. They are +and must remain the backbone of our transportation system. Their prosperity +is interrelated with the prosperity of all industries. Their fundamental +service in transportation, the volume of their employment, their buying +power for supplies from other industries, the enormous investment in their +securities, particularly their bonds, by insurance companies, savings +banks, benevolent and other trusts, all reflect their partnership in the +whole economic fabric. Through these institutions the railway bonds are in +a large sense the investment of every family. The well-maintained and +successful operation and the stability of railway finances are of primary +importance to economic recovery. They should have more effective +opportunity to reduce operating costs by proper consolidation. As their +rates must be regulated in public interest, so also approximate regulation +should be applied to competing services by some authority. The methods of +their regulation should be revised. The Interstate Commerce Commission has +made important and far-reaching recommendations upon the whole subject, +which I commend to the early consideration of the Congress. +</p> + +<p> +ANTITRUST LAWS +</p> + +<p> +In my message of a year ago I commented on the necessity of congressional +inquiry into the economic action of the antitrust laws. There is wide +conviction that some change should be made especially in the procedure +under these laws. I do not favor their repeal. Such action would open wide +the door to price fixing, monopoly, and destruction of healthy competition. +Particular attention should be given to the industries rounded upon natural +resources, especially where destructive competition produces great wastes +of these resources and brings great hardships upon operators, employees, +and the public. In recent years there has been continued demoralization in +the bituminous coal, oil, and lumber industries. I again commend the matter +to the consideration of the Congress. +</p> + +<p> +UNEMPLOYMENT +</p> + +<p> +As an aid to unemployment the Federal Government is engaged in the greatest +program of public-building, harbor, flood-control, highway, waterway, +aviation, merchant and naval ship construction in all history. Our +expenditures on these works during this calendar year will reach about +$780,000,000 compared with $260,000,000 in 1928. Through this increased +construction, through the maintenance of a full complement of Federal +employees, and through services to veterans it is estimated that the +Federal taxpayer is now directly contributing to the livelihood of +10,000,000 of our citizens. +</p> + +<p> +We must avoid burdens upon the Government which will create more +unemployment in private industry than can be gained by further expansion of +employment by the Federal Government. We can now stimulate employment and +agriculture more effectually and speedily through the voluntary measures in +progress, through the thawing out of credit, through the building up of +stability abroad, through the home loan discount banks, through an +emergency finance corporation and the rehabilitation of the railways and +other such directions. +</p> + +<p> +I am opposed to any direct or indirect Government dole. The breakdown and +increased unemployment in Europe is due in part to such practices. Our +people are providing against distress from unemployment in true American +fashion by a magnificent response to public appeal and by action of the +local governments. +</p> + +<p> +GENERAL LEGISLATION +</p> + +<p> +There are many other subjects requiring legislative action at this session +of the Congress. I may list the following among them: +</p> + +<p> +VETERANS' SERVICES +</p> + +<p> +The law enacted last March authorizing loans of 50 per cent upon +adjusted-service certificates has, together with the loans made under +previous laws, resulted in payments of about $1,260,000,000. Appropriations +have been exhausted. The Administrator of Veterans' Affairs advises that a +further appropriation of $200,000,000 is required at once to meet the +obligations made necessary by existing legislation. +</p> + +<p> +There will be demands for further veterans' legislation; there are +inequalities in our system of veterans' relief; it is our national duty to +meet our obligations to those who have served the Nation. But our present +expenditure upon these services now exceeds $1,000,000,000 per annum. I am +opposed to any extension of these expenditures until the country has +recovered from the present situation. +</p> + +<p> +ELECTRICAL-POWER REGULATION +</p> + +<p> +I have recommended in previous messages the effective regulation of +interstate electrical power as the essential function of the reorganized +Federal Power Commission. I renew the recommendation. It is urgently needed +in public protection. +</p> + +<p> +MUSCLE SHOALS +</p> + +<p> +At my suggestion, the Governors and Legislatures of Alabama and Tennessee +selected three members each for service on a committee to which I appointed +a representative of the farm organizations and two representatives of the +War Department for the purpose of recommending a plan for the disposal of +these properties which would be in the interest of the people of those +States and the agricultural industry throughout the country. I shall +transmit the recommendations to the Congress. +</p> + +<p> +REORGANIZATION OF FEDERAL DEPARTMENTS +</p> + +<p> +I have referred in previous messages to the profound need of further +reorganization and consolidation of Federal administrative functions to +eliminate overlap and waste, and to enable coordination and definition of +Government policies now wholly impossible in scattered and conflicting +agencies which deal with parts of the same major function. I shall lay +before the Congress further recommendations upon this subject, particularly +in relation to the Department of the Interior. There are two directions of +such reorganization, however, which have an important bearing upon the +emergency problems with which we are confronted. +</p> + +<p> +SHIPPING BOARD +</p> + +<p> +At present the Shipping Board exercises large administrative functions +independent of the Executive. These administrative functions should be +transferred to the Department of Commerce, in keeping with that single +responsibility which has been the basis of our governmental structure since +its foundation. There should be created in that department a position of +Assistant Secretary for Merchant Marine, under whom this work and the +several bureaus having to do with merchant marine may be grouped. +</p> + +<p> +The Shipping Board should be made a regulatory body acting also in advisory +capacity on loans and policies, in keeping with its original conception. +Its regulatory powers should be amended to include regulation of coastwise +shipping so as to assure stability and better service. It is also worthy of +consideration that the regulation of rates and services upon the inland +waterways should be assigned to such a reorganized board. +</p> + +<p> +REORGANIZATION OF PUBLIC WORKS ADMINISTRATION +</p> + +<p> +I recommend that all building and construction activities of the Government +now carried on by many departments be consolidated into an independent +establishment under the President to be known as the "Public Works +Administration" directed by a Public Works Administrator. This agency +should undertake all construction work in service to the different +departments of the Government (except naval and military work). The +services of the Corps of Army Engineers should be delegated in rotation for +military duty to this administration in continuation of their supervision +of river and harbor work. Great economies, sounder policies, more effective +coordination to employment, and expedition in all construction work would +result from this consolidation. +</p> + +<p> +LAW ENFORCEMENT +</p> + +<p> +I shall present some recommendations in a special message looking to the +strengthening of criminal-law enforcement and improvement in judicial +procedure connected therewith. +</p> + +<p> +INLAND WATERWAY AND HARBOR IMPROVEMENT +</p> + +<p> +These improvements are now proceeding upon an unprecedented scale. Some +indication of the volume of work in progress is conveyed by the fact that +during the current year over 380,000,000 cubic yards of material have been +moved--an amount equal to the entire removal in the construction of the +Panama Canal. The Mississippi waterway system, connecting Chicago, Kansas +City, Pittsburgh, and New Orleans, will be in full operation during 1933. +Substantial progress is being made upon the projects of the upper Missouri, +upper Mississippi, etc. +</p> + +<p> +Negotiations are now in progress with Canada for the construction of the +St. Lawrence Waterway. +</p> + +<p> +THE TARIFF +</p> + +<p> +Wages and standards of living abroad have been materially lowered during +the past year. The temporary abandonment of the gold standard by certain +countries has also reduced their production costs compared to ours. +Fortunately any increases in the tariff which may be necessary to protect +agriculture and industry from these lowered foreign costs, or decreases in +items which may prove to be excessive, may be undertaken at any time by the +Tariff Commission under authority which it possesses by virtue of the +tariff act of 1930. The commission during the past year has reviewed the +rates upon over 254 items subject to tariff. As a result of vigorous and +industrious action, it is up to date in the consideration of pending +references and is prepared to give prompt attention to any further +applications. This procedure presents an orderly method for correcting +inequalities. I am opposed to any general congressional revision of the +tariff. Such action would disturb industry, business, and agriculture. It +would prolong the depression. +</p> + +<p> +IMMIGRATION AND DEPORTATION +</p> + +<p> +I recommend that immigration restriction now in force under administrative +action be placed upon a more definite basis by law. The deportation laws +should be strengthened. Aliens lawfully in the country should be protected +by the issuance of a certificate of residence. +</p> + +<p> +PUBLIC HEALTH +</p> + +<p> +I again call attention to my previous recommendations upon this subject, +particularly in its relation to children. The moral results are of the +utmost importance. +</p> + +<p> +CONCLUSION +</p> + +<p> +It is inevitable that in these times much of the legislation proposed to +the Congress and many of the recommendations of the Executive must be +designed to meet emergencies. In reaching solutions we must not jeopardize +those principles which we have found to be the basis of the growth of the +Nation. The Federal Government must not encroach upon nor permit local +communities to abandon that precious possession of local initiative and +responsibility. Again, just as the largest measure of responsibility in the +government of the Nation rests upon local self-government, so does the +largest measure of social responsibility in our country rest upon the +individual. If the individual surrenders his own initiative and +responsibilities, he is surrendering his own freedom and his own liberty. +It is the duty of the National Government to insist that both the local +governments and the individual shall assume and bear these responsibilities +as a fundamental of preserving the very basis of our freedom. +</p> + +<p> +Many vital changes and movements of vast proportions are taking place in +the economic world. The effect of these changes upon the future can not be +seen clearly as yet. Of this, however, we are sure: Our system, based upon +the ideals of individual initiative and of equality of opportunity, is not +an artificial thing. Rather it is the outgrowth of the experience of +America, and expresses the faith and spirit of our people. It has carried +us in a century and a half to leadership of the economic world. If our +economic system does not match our highest expectations at all times, it +does not require revolutionary action to bring it into accord with any +necessity that experience may prove. It has successfully adjusted itself to +changing conditions in the past. It will do so again. The mobility of our +institutions, the richness of our resources, and the abilities of our +people enable us to meet them unafraid. It is a distressful time for many +of our people, but they have shown qualities as high in fortitude, courage, +and resourcefulness as ever in our history. With that spirit, I have faith +that out of it will come a sounder life, a truer standard of values, a +greater recognition of the results of honest effort, and a healthier +atmosphere in which to rear our children. Ours must be a country of such +stability and security as can not fail to carry forward and enlarge among +all the people that abundant life of material and spiritual opportunity +which it has represented among all nations since its beginning. +</p> + +<p class="noindent"> +The White House, +<br /> +December 8, 1931 +</p> + +<p><br /><br /><br /></p> + +<p class="t3"> +*** +</p> + +<p><a id="dec1932"></a></p> + +<p class="noindent"> +State of the Union Address<br /> +Herbert Hoover<br /> +December 6, 1932<br /> +</p> + +<p class="noindent"> +To the Senate and House of Representatives: +</p> + +<p> +In accord with my constitutional duty, I transmit herewith to the Congress +information upon the state of the Union together with recommendation of +measures for its consideration. +</p> + +<p> +Our country is at peace. Our national defense has been maintained at a high +state of effectiveness. All of the executive departments of the Government +have been conducted during the year with a high devotion to public +interest. There has been a far larger degree of freedom from industrial +conflict than hitherto known. Education and science have made further +advances. The public health is to-day at its highest known level. While we +have recently engaged in the aggressive contest of a national election, its +very tranquillity and the acceptance of its results furnish abundant proof +of the strength of our institutions. +</p> + +<p> +In the face of widespread hardship our people have demonstrated daily a +magnificent sense of humanity, of individual and community responsibility +for the welfare of the less fortunate. They have grown in their conceptions +and organization for cooperative action for the common welfare. +</p> + +<p> +In the provision against distress during this winter, the great private +agencies of the country have been mobilized again; the generosity of our +people has again come into evidence to a degree in which all America may +take great pride. Likewise the local authorities and the States are engaged +everywhere in supplemental measures of relief. The provisions made for +loans from the Reconstruction Finance Corporation, to States that have +exhausted their own resources, guarantee that there should be no hunger or +suffering from cold in the country. The large majority of States are +showing a sturdy cooperation in the spirit of the Federal aid. +</p> + +<p> +The Surgeon General, in charge of the Public Health Service, furnishes me +with the following information upon the state of public health: +</p> + +<p> +MORTALITY RATE PER 1,000 OF POPULATION ON AN ANNUAL BASIS FROM +REPRESENTATIVE STATES - General - Infant +</p> + +<p> +First 9 months of-- - - +</p> + +<p> +1928 - 11.9 - 67.8 +</p> + +<p> +1929 - 12.0 - 65.8 +</p> + +<p> +1930 - 11.4 - 62.0 +</p> + +<p> +1931 - 11.2 - 60.0 +</p> + +<p> +1932 - 10.6 - 55.0 +</p> + +<p> +The sickness rates from data available show the same trends. These facts +indicate the fine endeavor of the agencies which have been mobilized for +care of those in distress. +</p> + +<p> +ECONOMIC SITUATION +</p> + +<p> +The unparalleled world-wide economic depression has continued through the +year. Due to the European collapse, the situation developed during last +fall and winter into a series of most acute crises. The unprecedented +emergency measures enacted and policies adopted undoubtedly saved the +country from economic disaster. After serving to defend the national +security, these measures began in July to show their weight and influence +toward improvement of conditions in many parts of the country. The +following tables of current business indicators show the general economic +movement during the past eleven months. +</p> + +<p> +MONTHLY BUSINESS INDICES WITH SEASONAL VARIATIONS ELIMINATED +</p> + +<p> +Year and Month - Industrial Production - Factory Employment - Freight-car +loadings - Department Store sales, value - Exports, value - Imports, value +- Building Contracts, all types - Industrial Electric power consumption +</p> + +<p> +1931 - - - - - - - - +</p> + +<p> +December - 74 - 69.4 - 69 - 81 - 46 - 48 - 38 - 89.1 +</p> + +<p> +1932 - - - - - - - - +</p> + +<p> +January - 72 - 68.1 - 64 - 78 - 39 - 42 - 31 - 93.9 +</p> + +<p> +February - 69 - 67.8 - 62 - 78 - 45 - 41 - 27 - 98.8 +</p> + +<p> +March - 67 - 66.4 - 61 - 72 - 41 - 37 - 26 - 88.0 +</p> + +<p> +April - 63 - 64.3 - 59 - 80 - 38 - 36 - 27 - 82.2 +</p> + +<p> +May - 60 - 62.1 - 54 - 73 - 37 - 34 - 26 - 82.0 +</p> + +<p> +June - 59 - 60.0 - 52 - 71 - 34 - 36 - 27 - 78.1 +</p> + +<p> +July - 58 - 58.3 - 51 - 67 - 32 - 27 - 27 - 79.2 +</p> + +<p> +August - 60 - 58.8 - 51 - 66 - 31 - 29 - 30 - 73.5 +</p> + +<p> +September - 66 - 60.3 - 54 - 70 - 33 - 32 - 30 - 84.0 +</p> + +<p> +October - 66 - 61.1 - 57 - 70 - 33 - 32 - 29 - 84.4 +</p> + +<p> +The measures and policies which have procured this turn toward recovery +should be continued until the depression is passed, and then the emergency +agencies should be promptly liquidated. The expansion of credit facilities +by the Federal Reserve System and the Reconstruction Finance Corporation +has been of incalculable value. The loans of the latter for reproductive +works, and to railways for the creation of employment; its support of the +credit structure through loans to banks, insurance companies, railways, +building and loan associations, and to agriculture has protected the +savings and insurance policies of millions of our citizens and has relieved +millions of borrowers from duress; they have enabled industry and business +to function and expand. The assistance given to Farm Loan Banks, the +establishment of the Home Loan Banks and Agricultural Credit +Associations--all in their various ramifications have placed large sums of +money at the disposal of the people in protection and aid. Beyond this, the +extensive organization of the country in voluntary action has produced +profound results. +</p> + +<p> +The following table indicates direct expenditures of the Federal Government +in aid to unemployment, agriculture, and financial relief over the past +four years. The sums applied to financial relief multiply themselves many +fold, being in considerable measure the initial capital supplied to the +Reconstruction Finance Corporation, Farm Loan Banks, etc., which will be +recovered to the Treasury. +</p> + +<p> +- Public works (1) - Agricultural relief and financial loans +</p> + +<p> +Fiscal year ending June 30 - - +</p> + +<p> +1930 - $410,420,000 - $156,100,000 +</p> + +<p> +1931 - 574,870,000 - 196,700,000 +</p> + +<p> +1932 - 655,880,000 - 772,700,000 +</p> + +<p> +1933 - 717,260,000 - 52,000,000 - +</p> + +<p><br /><br /><br /><br /></p> + + + + + + + + +<pre> + + + + + +End of the Project Gutenberg EBook of State of the Union Addresses of +Herbert Hoover, by Herbert Hoover + +*** END OF THIS PROJECT GUTENBERG EBOOK STATE OF THE UNION ADDRESSES *** + +***** This file should be named 5037-h.htm or 5037-h.zip ***** +This and all associated files of various formats will be found in: + http://www.gutenberg.org/5/0/3/5037/ + +Produced by James Linden. 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Thus, we do not +necessarily keep eBooks in compliance with any particular paper +edition. + +Most people start at our Web site which has the main PG search +facility: www.gutenberg.org + +This Web site includes information about Project Gutenberg-tm, +including how to make donations to the Project Gutenberg Literary +Archive Foundation, how to help produce our new eBooks, and how to +subscribe to our email newsletter to hear about new eBooks. + + + +</pre> + +</body> + +</html> + diff --git a/5037.txt b/5037.txt new file mode 100644 index 0000000..44231a4 --- /dev/null +++ b/5037.txt @@ -0,0 +1,2945 @@ +The Project Gutenberg EBook of State of the Union Addresses of Herbert +Hoover, by Herbert Hoover + +This eBook is for the use of anyone anywhere in the United States and most +other parts of the world at no cost and with almost no restrictions +whatsoever. You may copy it, give it away or re-use it under the terms of +the Project Gutenberg License included with this eBook or online at +www.gutenberg.org. If you are not located in the United States, you'll have +to check the laws of the country where you are located before using this ebook. + +Title: State of the Union Addresses of Herbert Hoover + +Author: Herbert Hoover + +Posting Date: December 3, 2014 [EBook #5037] +Release Date: February, 2004 +First Posted: April 11, 2002 +Last Updated: December 16, 2004 + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK STATE OF THE UNION ADDRESSES *** + + + + +Produced by James Linden. HTML version by Al Haines. + + + + + + + + +State of the Union Addresses of Herbert Hoover + + + +The addresses are separated by three asterisks: *** + +Dates of addresses by Herbert Hoover in this eBook: + + December 3, 1929 + December 2, 1930 + December 8, 1931 + December 6, 1932 + + + +*** + +State of the Union Address +Herbert Hoover +December 3, 1929 + +To the Senate and House of Representatives: + +The Constitution requires that the President "shall, from time to time, +give to the Congress information of the state of the Union, and recommend +to their consideration such measures as he shall judge necessary and +expedient." In complying with that requirement I wish to emphasize that +during the past year the Nation has continued to grow in strength; our +people have advanced in comfort; we have gained in knowledge; the education +of youth has been more widely spread; moral and spiritual forces have been +maintained; peace has become more assured. The problems with which we are +confronted are the problems of growth and of progress. In their solution we +have to determine the facts, to develop the relative importance to be +assigned to such facts, to formulate a common judgment upon them, and to +realize solutions in spirit of conciliation. + +FOREIGN RELATIONS + +We are not only at peace with all the world, but the foundations for future +peace are being substantially strengthened. To promote peace is our +long-established policy. Through the Kellogg-Briand pact a great moral +standard has been raised in the world. By it fifty-four nations have +covenanted to renounce war and to settle all disputes by pacific means. +Through it a new world outlook has been inaugurated which has profoundly +affected the foreign policies of nations. Since its inauguration we have +initiated new efforts not only in the organization of the machinery of +peace but also to eliminate dangerous forces which produce controversies +amongst nations. + +In January, 1926, the Senate gave its consent to adherence to the Court of +International Justice with certain reservations. In September of this year +the statute establishing the court has, by the action of the nations +signatory, been amended to meet the Senate's reservations and to go even +beyond those reservations to make clear that the court is a true +international court of justice. I believe it will be clear to everyone that +no controversy or question in which this country has or claims an interest +can be passed on by the court without our consent at the time the question +arises. The doubt about advisory opinions has been completely safeguarded. +Our adherence to the International Court is, as now constituted, not the +slightest step toward entry into the League of Nations. As I have before +indicated, I shall direct that our signature be affixed to the protocol of +adherence and shall submit it for the approval of the Senate with a special +message at some time when it is convenient to deal with it. + +In the hope of reducing friction in the world, and with the desire that we +may reduce the great economic burdens of naval armament, we have joined in +conference with Great Britain, France, Italy, and Japan to be held in +London in January to consider the further limitation and reduction of naval +arms. We hold high hopes that success may attend this effort. + +At the beginning of the present administration the neighboring State of +Mexico was best with domestic insurrection. We maintained the embargo upon +the shipment of arms to Mexico but permitted the duly constituted +Government to procure supplies from our surplus war stocks. Fortunately, +the Mexican Government by its own strength successfully withstood the +insurrection with but slight damage. Opportunity of further peaceful +development is given to that country. At the request of the Mexican +Government, we have since lifted the embargo on shipment of arms +altogether. The two governments have taken further steps to promote +friendly relationships and so solve our differences. Conventions prolonging +for a period of two years the life of the general and special claims +commissions have been concluded. + +In South America we are proud to have had part in the settlement of the +long-standing dispute between Chile and Peru in the disposal of the +question of Tacna-Arica. + +The work of the commission of inquiry and conciliation between Bolivia and +Paraguay, in which a representative of this Government participated, has +successfully terminated an incident which seemed to threaten war. The +proposed plan for final settlement as suggested by the neutral governments +is still under consideration. + +This Government has continued its efforts to act as a mediator in boundary +difficulties between Guatemala and Honduras. + +A further instance of profound importance in establishing good will was the +inauguration of regular air mail service between the United States and +Caribbean, Central American, and South American countries. + +We still have marines on foreign soil--in Nicaragua, Haiti, and China. In +the large sense we do not wish to be represented abroad in such manner. +About 1,600 marines remain in Nicaragua at the urgent request of that +government and the leaders of all parties pending the training of a +domestic constabulary capable of insuring tranquility. We have already +reduced these forces materially and we are anxious to withdraw them further +as the situation warrants. In Haiti we have about 700 marines, but it is a +much more difficult problem, the solution of which is still obscure. If +Congress approves, I shall dispatch a commission to Haiti to review and +study the matter in an endeavor to arrive at some more definite policy than +at present. Our forces in China constitute 2,605 men, which we hope also +further to reduce to the normal legation guard. + +It is my desire to establish more firmly our understanding and +relationships with the Latin American countries by strengthening the +diplomatic missions to those countries. It is my hope to secure men long +experienced in our Diplomatic Service, who speak the languages of the +peoples to whom they are accredited, as chiefs of our diplomatic missions +in these States. I shall send to the Senate at an early date the +nominations of several such men. + +The Congress has by numerous wise and foresighted acts in the past few +years greatly strengthened the character of our representation abroad. It +has made liberal provision for the establishment of suitable quarters for +our foreign staffs in the different countries. In order, however, that we +may further develop the most effective force in this, one of the most +responsible functions of our Government, I shall recommend to the Congress +more liberal appropriations for the work of the State Department. I know of +no expenditure of public money from which a greater economic and moral +return can come to us than by assuring the most effective conduct of our +foreign relations. + +NATIONAL DEFENSE + +To preserve internal order and freedom from encroachment is the first +purpose of government. Our Army and Navy are being maintained in a most +efficient state under officers of high intelligence and zeal. The extent +and expansion of their numbers and equipment as at present authorized are +ample for this purpose. + +We can well be deeply concerned, however, at the growing expense. From a +total expenditure for national defense purposes in 1914 of $267,000,000, it +naturally rose with the Great War, but receded again to $612,000,000 in +1924, when again it began to rise until during the current fiscal year the +expenditures will reach to over $730,000,000, excluding all civilian +services of those departments. Programs now authorized will carry it to +still larger figures in future years. While the remuneration paid to our +soldiers and sailors is justly at a higher rate than that of any other +country in the world, and while the cost of subsistence is higher, yet the +total of our expenditures is in excess of those of the most highly +militarized nations of the world. + +Upon the conference shortly to be held in London will depend such +moderation as we can make in naval expenditure. If we shall be compelled to +undertake the naval construction implied in the Washington arms treaty as +well as other construction which would appear to be necessary if no +international agreement can be completed, we shall be committed during the +next six years to a construction expenditure of upward of $1,200,000,000 +besides the necessary further increase in costs for annual upkeep. + +After 1914 the various Army contingents necessarily expanded to the end of +the Great War and then receded to the low point in 1924, when expansion +again began. In 1914 the officers and men in our regular forces, both Army +and Navy, were about 164,000, in 1924 there were about 256,000, and in 1929 +there were about 250,000. Our citizens' army, however, including the +National Guard and other forms of reserves, increase these totals up to +about 299,000 in 1914, about 672,000 in 1924, and about 728,000 in 1929. + +Under the Kellogg pact we have undertaken never to use war as an instrument +of national policy. We have, therefore, undertaken by covenant to use these +equipments solely for defensive purposes. From a defense point of view our +forces should be proportioned to national need and should, therefore, to +some extent be modified by the prospects of peace, which were never +brighter than to-day. + +It should be borne in mind that the improvement in the National Guard by +Federal support begun in 1920 has definitely strengthened our national +security by rendering them far more effective than ever heretofore. The +advance of aviation has also greatly increased our effectiveness in +defense. In addition to the very large program of air forces which we are +maintaining in the Army and Navy, there has been an enormous growth of +commercial aviation. This has provided unanticipated reserves in +manufacturing capacity and in industrial and air personnel, which again +adds to our security. + +I recommend that Congress give earnest consideration to the possibilities +of prudent action which will give relief from our continuously mounting +expenditures. + +FINANCES OF THE GOVERNMENT + +The finances of the Government are in sound condition. I shall submit the +detailed evidences and the usual recommendations in the special Budget +message. I may, however, summarize our position. The public debt on June 30 +this year stood at $16,931,000,000, compared to the maximum in August, +1919, of $26,596,000,000. Since June 30 it has been reduced by a further +$238,000,000. In the Budget to be submitted the total appropriations +recommended for the fiscal year 1931 are $3,830,445,231, as compared to +$3,976,141,651 for the present fiscal year. The present fiscal year, +however, includes $150,000,000 for the Federal Farm Board, as to which no +estimate can as yet be determined for 1931. + +Owing to the many necessary burdens assumed by Congress in previous years +which now require large outlays, it is with extreme difficulty that we +shall be able to keep the expenditures for the next fiscal year within the +bounds of the present year. Economies in many directions have permitted +some accommodation of pressing needs, the net result being an increase, as +shown above, of about one-tenth of 1 per cent above the present fiscal +year. We can not fail to recognize the obligations of the Government in +support of the public welfare but we must coincidentally bear in mind the +burden of taxes and strive to find relief through some tax reduction. Every +dollar so returned fertilizes the soil of prosperity. + +TAX REDUCTION + +The estimate submitted to me by the Secretary of the Treasury and the +Budget Director indicates that the Government will close the fiscal year +1930 with a surplus of about $225,000,000 and the fiscal year 1931 with a +surplus of about $123,000,000. Owing to unusual circumstances, it has been +extremely difficult to estimate future revenues with accuracy. + +I believe, however, that the Congress will be fully justified in giving the +benefits of the prospective surpluses to the taxpayers, particularly as +ample provision for debt reduction has been made in both years through the +form of debt retirement from ordinary revenues. In view of the uncertainty +in respect of future revenues and the comparatively small size of the +indicated surplus in 1931, relief should take the form of a provisional +revision of tax rates. + +I recommend that the normal income tax rates applicable to the incomes of +individuals for the calendar year 1929 be reduced from 5, 3, and 1 1/2; +per cent, to 4, 2, and 1/2; per cent, and that the tax on the income of +corporations for the calendar year 1929 be reduced from 12 to 11 per cent. +It is estimated that this will result in a reduction of $160,000,000 in +income taxes to be collected during the calendar year 1930. The loss in +revenue will be divided approximately equally between the fiscal years 1930 +and 1931. Such a program will give a measure of tax relief to the maximum +number of taxpayers, with relatively larger benefits to taxpayers with +small or moderate incomes. + +FOREIGN DEBTS + +The past year has brought us near to completion of settlements of the +indebtedness of foreign governments to the United States. + +The act of Congress approved February 4, 1929, authorized the settlement +with the Government of Austria along lines similar to the terms of +settlement offered by that Government to its other relief creditors. No +agreement has yet been concluded with that government, but the form of +agreement has been settled and its execution only awaits the Government of +Austria securing the assent by all the other relief creditors of the terms +offered. The act of Congress approved February 14, 1929, authorized the +settlement with the Government of Greece, and an agreement was concluded on +May 10, 1929. + +The Government of France ratified the agreement with us on July 27, 1929. +This agreement will shortly be before the Congress and I recommend its +approval. + +The only indebtedness of foreign governments to the United States now +unsettled is that of Russia and Armenia. + +During the past year a committee of distinguished experts under American +leadership submitted a plan looking to a revision of claims against Germany +by the various Governments. The United States denied itself any +participation in the war settlement of general reparations and our claims +are comparatively small in amount. They arise from costs of the army of +occupation and claims of our private citizens for losses under awards from +the Mixed Claims Commission established under agreement with the German +Government. In finding a basis for settlement it was necessary for the +committee of experts to request all the Governments concerned to make some +contribution to the adjustment and we have felt that we should share a +proportion of the concessions made. + +The State and Treasury Departments will be in a position shortly to submit +for your consideration a draft of an agreement to be executed between the +United States and Germany providing for the payments of these revised +amounts. A more extensive statement will be submitted at that time. + +The total amount of indebtedness of the various countries to the United +States now funded is $11,579,465,885. This sum was in effect provided by +the issue of United States Government bonds to our own people. The payments +of the various Governments to us on account of principal and interest for +1930 are estimated at a total of about $239,000,000, for 1931 at about +$236,000,000, for 1932 at about $246,000,000. The measure of American +compromise in these settlements may be appreciated from the fact that our +taxpayers are called upon to find annually about $475,000,000 in interest +and in addition to redeem the principal of sums borrowed by the United +States Government for these purposes. + +ALIEN ENEMY PROPERTY + +The wise determination that this property seized in war should be returned +to its owners has proceeded with considerable rapidity. Of the original +seized cash and property (valued at a total of about $625,000,000), all but +$111,566,700 has been returned. Most of the remainder should be disposed of +during the next year. + +GENERAL ECONOMIC SITUATION + +The country has enjoyed a large degree of prosperity and sound progress +during the past year with a steady improvement in methods of production and +distribution and consequent advancement in standards of living. Progress +has, of course, been unequal among industries, and some, such as coal, +lumber, leather, and textiles, still lag behind. The long upward trend of +fundamental progress, however, gave rise to over-optimism as to profits, +which translated itself into a wave of uncontrolled speculation in +securities, resulting in the diversion of capital from business to the +stock market and the inevitable crash. The natural consequences have been a +reduction in the consumption of luxuries and semi-necessities by those who +have met with losses, and a number of persons thrown temporarily out of +employment. Prices of agricultural products dealt in upon the great markets +have been affected in sympathy with the stock crash. + +Fortunately, the Federal reserve system had taken measures to strengthen +the position against the day when speculation would break, which together +with the strong position of the banks has carried the whole credit system +through the crisis without impairment. The capital which has been hitherto +absorbed in stock-market loans for speculative purposes is now returning to +the normal channels of business. There has been no inflation in the prices +of commodities; there has been no undue accumulation of goods, and foreign +trade has expanded to a magnitude which exerts a steadying influence upon +activity in industry and employment. + +The sudden threat of unemployment and especially the recollection of the +economic consequences of previous crashes under a much less secured +financial system created unwarranted pessimism and fear. It was recalled +that past storms of similar character had resulted in retrenchment of +construction, reduction of wages, and laying off of workers. The natural +result was the tendency of business agencies throughout the country to +pause in their plans and proposals for continuation and extension of their +businesses, and this hesitation unchecked could in itself intensify into a +depression with widespread unemployment and suffering. + +I have, therefore, instituted systematic, voluntary measures of cooperation +with the business institutions and with State and municipal authorities to +make certain that fundamental businesses of the country shall continue as +usual, that wages and therefore consuming power shall not be reduced, and +that a special effort shall be made to expand construction work in order to +assist in equalizing other deficits in employment. Due to the enlarged +sense of cooperation and responsibility which has grown in the business +world during the past few years the response has been remarkable and +satisfactory. We have canvassed the Federal Government and instituted +measures of prudent expansion in such work that should be helpful, and upon +which the different departments will make some early recommendations to +Congress. + +I am convinced that through these measures we have reestablished +confidence. Wages should remain stable. A very large degree of industrial +unemployment and suffering which would otherwise have occurred has been +prevented. Agricultural prices have reflected the returning confidence. The +measures taken must be vigorously pursued until normal conditions are +restored. + +AGRICULTURE + +The agricultural situation is improving. The gross farm income as estimated +by the Department of Agriculture for the crop season 1926-27 was +$12,100,000,000; for 1927-28 it was $12,300,000,000; for 1928-29 it was +$12,500,000,000; and estimated on the basis of prices since the last +harvest the value of the 1929-30 crop would be over $12,650,000,000. The +slight decline in general commodity prices during the past few years +naturally assists the farmers' buying power. + +The number of farmer bankruptcies is very materially decreased below +previous years. The decline in land values now seems to be arrested and +rate of movement from the farm to the city has been reduced. Not all +sections of agriculture, of course, have fared equally, and some areas have +suffered from drought. Responsible farm leaders have assured me that a +large measure of confidence is returning to agriculture and that a feeling +of optimism pervades that industry. + +The most extensive action for strengthening the agricultural industry ever +taken by any government was inaugurated through the farm marketing act of +June 15 last. Under its provisions the Federal Farm Board has been +established, comprised of men long and widely experienced in agriculture +and sponsored by the farm organizations of the country. During its short +period of existence the board has taken definite steps toward a more +efficient organization of agriculture, toward the elimination of waste in +marketing, and toward the upbuilding of farmers' marketing organizations on +sounder and more efficient lines. Substantial headway has been made in the +organization of four of the basic commodities--grain, cotton, livestock, +and wool. Support by the board to cooperative marketing organizations and +other board activities undoubtedly have served to steady the farmers' +market during the recent crisis and have operated also as a great stimulus +to the cooperative organization of agriculture. The problems of the +industry are most complex, and the need for sound organization is +imperative. Yet the board is moving rapidly along the lines laid out for it +in the act, facilitating the creation by farmers of farmer-owned and +farmer-controlled organizations and federating them into central +institutions, with a view to increasing the bargaining power of +agriculture, preventing and controlling surpluses, and mobilizing the +economic power of agriculture. + +THE TARIFF + +The special session of Congress was called to expedite the fulfillment of +party pledges of agricultural relief and the tariff. The pledge of farm +relief has been carried out. At that time I stated the principles upon +which I believed action should be taken in respect to the tariff: "An +effective tariff upon agricultural products, that will compensate the +farmer's higher costs and higher standards of living, has a dual purpose. +Such a tariff not only protects the farmer in our domestic market but it +also stimulates him to diversify his crops and to grow products that he +could not otherwise produce, and thus lessens his dependence upon exports +to foreign markets. The great expansion of production abroad under the +conditions I have mentioned renders foreign competition in our export +markets increasingly serious. It seems but natural, therefore, that the +American farmer, having been greatly handicapped in his foreign market by +such competition from the younger expanding countries, should ask that +foreign access to our domestic market should be regulated by taking into +account the differences in our costs of production. + +"In considering the tariff for other industries than agriculture, we find +that there have been economic shifts necessitating a readjustment of some +of the tariff schedules. Seven years of experience under the tariff bill +enacted in 1922 have demonstrated the wisdom of Congress in the enactment +of that measure. On the whole it has worked well. In the main our wages +have been maintained at high levels; our exports and imports have steadily +increased; with some exceptions our manufacturing industries have been +prosperous. Nevertheless, economic changes have taken place during that +time which have placed certain domestic products at a disadvantage and new +industries have come into being, all of which create the necessity for some +limited changes in the schedules and in the administrative clauses of the +laws as written in 1922. + +"It would seem to me that the test of necessity for revision is, in the +main, whether there has been a substantial slackening of activity in an +industry during the past few years, and a consequent decrease of employment +due to insurmountable competition in the products of that industry. It is +not as if we were setting up a new basis of protective duties. We did that +seven years ago. What we need to remedy now is whatever substantial loss of +employment may have resulted from shifts since that time. + +"In determining changes in our tariff we must not fail to take into account +the broad interests of the country as a whole, and such interests include +our trade relations with other countries." No condition has arisen in my +view to change these principles stated at the opening of the special +session. I am firmly of the opinion that their application to the pending +revision will give the country the kind of a tariff law it both needs and +wants. It would be most helpful if action should be taken at an early +moment, more especially at a time when business and agriculture are both +cooperating to minimize future uncertainties. It is just that they should +know what the rates are to be. + +Even a limited revision requires the consideration and readjustment of many +items. The exhaustive inquiries and valuable debate from men representative +of all parts of the country which is needed to determine the detailed rates +must necessarily be accomplished in the Congress. However perfectly this +rate structure may be framed at any given time, the shifting of economic +forces which inevitably occurs will render changes in some items desirable +between the necessarily long intervals of congressional revision. +Injustices are bound to develop, such as were experienced by the dairymen, +the flaxseed producers, the glass industry, and others, under the 1922 +rates. For this reason, I have been most anxious that the broad principle +of the flexible tariff as provided in the existing law should be preserved +and its delays in action avoided by more expeditious methods of determining +the costs of production at home and abroad, with executive authority to +promulgate such changes upon recommendation of the Tariff Commission after +exhaustive investigation. Changes by the Congress in the isolated items +such as those to which I have referred would have been most unlikely both +because of the concentrations of oppositions in the country, who could see +no advantage to their own industry or State, and because of the difficulty +of limiting consideration by the Congress to such isolated cases. + +There is no fundamental conflict between the interests of the farmer and +the worker. Lowering of the standards of living of either tends to destroy +the other. The prosperity of one rests upon the well-being of the other. +Nor is there any real conflict between the East and the West or the North +and the South in the United States. The complete interlocking of economic +dependence, the common striving for social and spiritual progress, our +common heritage as Americans, and the infinite web of national sentiment, +have created a solidarity in a great people unparalleled in all human +history. These invisible bonds should not and can not be shattered by +differences of opinion growing out of discussion of a tariff. + +PUBLIC BUILDINGS + +Under the provisions of various acts of Congress $300,000,000 has been +authorized for public buildings and the land upon which to construct them, +being $75,000,000 for the District of Columbia and $225,000,000 for the +country at large. Excluding $25,000,000 which is for the acquisition of +land in the so-called "triangle" in this city, this public building +legislation provides for a five-year program for the District of Columbia +and between an eight and nine year program for the country at large. Of +this sum approximately $27,400,000 was expended up to June 30 last, of +which $11,400,000 has been expended in the District and $16,000,000 +outside. + +Even this generous provision for both the District of Columbia and the +country is insufficient For most pressing governmental needs. Expensive +rents and inadequate facilities are extravagance and not economy. In the +District even after the completion of these projects we shall have fully +20,000 clerks housed in rented and temporary war buildings which can last +but a little longer. + +I therefore recommend that consideration should be given to the extension +of authorizations both for the country at large and for the District of +Columbia again distributed over a term of years. A survey of the need in +both categories has been made by the Secretary of the Treasury and the +Postmaster General. It would be helpful in the present economic situation +if such steps were taken as would enable early construction work. + +An expedition and enlargement of the program in the District would bring +about direct economies in construction by enabling the erection of +buildings in regular sequence. By maintaining a stable labor force in the +city, contracts can be made on more advantageous terms. + +The earlier completion of this program which is an acknowledged need would +add dignity to the celebration in 1932 of the two hundredth anniversary of +the birth of President Washington. + +In consideration of these projects which contribute so much to dignify the +National Capital I should like to renew the suggestion that the Fine Arts +Commission should be required to pass upon private buildings which are +proposed for sites facing upon public buildings and parks. Without such +control much of the effort of the Congress in beautification of the Capital +will be minimized. + +THE WATERWAYS AND FLOOD CONTROL + +The development of inland waterways has received new impulse from the +completion during this year of the canalization of the Ohio to a uniform +9-foot depth. The development of the other segments of the Mississippi +system should be expedited and with this in view I am recommending an +increase in appropriations for rivers and harbors from $50,000,000 to +$55,000,000 per annum which, together with about $4,000,000 per annum +released by completion of the Ohio, should make available after providing +for other river and harbor works a sum of from $25,000,000 to $30,000,000 +per annum for the Mississippi system and thus bring it to early +completion. + +Conflict of opinion which has arisen over the proposed floodway from the +Arkansas River to the Gulf of Mexico via the Atchafalaya River has led me +to withhold construction upon this portion of the Mississippi flood control +plan until it could be again reviewed by the engineers for any further +recommendation to Congress. The other portions of the project are being +vigorously prosecuted and I have recommended an increase in appropriations +for this from $30,000,000 of the present year to $35,000,000 during the +next fiscal year. + +Expansion of our intracoastal waterways to effective barge depths is well +warranted. We are awaiting the action of Canada upon the St. Lawrence +waterway project. + +HIGHWAYS + +There are over 3,000,000 miles of legally established highways in the +United States, of which about 10 per cent are included in the State highway +systems, the remainder being county and other local roads. About 626,000 +miles have been improved with some type of surfacing, comprising some 63 +per cent of the State highway systems and 16 per cent of the local roads. +Of the improved roads about 102,000 miles are hard surfaced, comprising +about 22 per cent of the State highway systems and about 8 per cent of the +local roads. + +While proper planning should materially reduce the listed mileage of public +roads, particularly in the agricultural districts, and turn these roads +back to useful purposes, it is evident that road construction must be a +long-continued program. Progress in improvement is about 50,000 miles of +all types per annum, of which some 12,000 miles are of the more durable +types. The total expenditures of Federal, State, and local governments last +year for construction and maintenance assumed the huge total of +$1,660,000,000. + +Federal aid in the construction of the highway systems in conjunction with +the States has proved to be beneficial and stimulating. We must ultimately +give consideration to the increase of our contribution to these systems, +particularly with a view to stimulating the improvement of farm-to-market +roads. + +POST OFFICE + +Our Post Office deficit has now increased to over $80,000,000 a year, of +which perhaps $14,000,000 is due to losses on ocean mail and air mail +contracts. The department is making an exhaustive study of the sources of +the deficit with view to later recommendation to Congress in respect to +it. + +The Post Office quarters are provided in part by the Federal construction, +in part by various forms of rent and lease arrangements. The practice has +grown up in recent years of contracting long term leases under which both +rent and amortization principal cost of buildings is included. I am advised +that fully 40 per cent could be saved from many such rent and lease +agreements even after allowing interest on the capital required at the +normal Government rate. There are also many objectionable features to some +of these practices. The provision of adequate quarters for the Post Office +should be put on a sound basis. + +A revision of air mail rates upon a more systematic and permanent footing +is necessary. The subject is under study, and if legislation should prove +necessary the subject will be presented to the Congress. In the meantime I +recommend that the Congress should consider the desirability of authorizing +further expansion of the South American services. + +COMMERCIAL AVIATION + +During the past year progress in civil aeronautics has been remarkable. +This is to a considerable degree due to the wise assistance of the Federal +Government through the establishment and maintenance of airways by the +Department of Commerce and the mail contracts from the Post Office +Department. The Government-improved airways now exceed 25,000 miles--more +than 14,000 miles of which will be lighted and equipped for night-flying +operations by the close of the current year. Airport construction through +all the States is extremely active. There are now 1,000 commercial and +municipal airports in operation with an additional 1,200 proposed for early +development. + +Through this assistance the Nation is building a sound aviation system, +operated by private enterprise. Over 6,400 planes are in commercial use, +and 9,400 pilots are licensed by the Government. Our manufacturing capacity +has risen to 7,500 planes per annum. The aviation companies have increased +regular air transportation until it now totals 90,000 miles per +day--one-fourth of which is flown by night. Mail and express services now +connect our principal cities, and extensive services for passenger +transportation have been inaugurated, and others of importance are +imminent. American air lines now reach into Canada and Mexico, to Cuba, +Porto Rico, Central America, and most of the important countries of South +America. + +RAILWAYS + +As a whole, the railroads never were in such good physical and financial +condition, and the country has never been so well served by them. The +greatest volume of freight traffic ever tendered is being carried at a +speed never before attained and with satisfaction to the shippers. +Efficiencies and new methods have resulted in reduction in the cost of +providing freight transportation, and freight rates show a continuous +descending line from the level enforced by the World War. + +We have, however, not yet assured for the future that adequate system of +transportation through consolidations which was the objective of the +Congress in the transportation act. The chief purpose of consolidation is +to secure well-balanced systems with more uniform and satisfactory rate +structure, a more stable financial structure, more equitable distribution +of traffic, greater efficiency, and single-line instead of multiple-line +hauls. In this way the country will have the assurance of better service +and ultimately at lower and more even rates than would otherwise be +attained. Legislation to simplify and expedite consolidation methods and +better to protect public interest should be enacted. + +Consideration should also be given to relief of the members of the +Commission from the necessity of detailed attention to comparatively +inconsequential matters which, under the existing law, must receive their +direct and personal consideration. It is in the public interest that the +members of the Commission should not be so pressed by minor matters that +they have inadequate time for investigation and consideration of the larger +questions committed to them for solution. As to many of these minor +matters, the function of the Commission might well be made revisory, and +the primary responsibility delegated to subordinate officials after the +practice long in vogue in the executive departments. + +MERCHANT MARINE + +Under the impulse of the merchant marine act of 1928 the transfer to +private enterprise of the Government-owned steamship lines is going forward +with increasing success. The Shipping Board now operates about 18 lines, +which is less than half the number originally established, and the estimate +of expenditures for the coming fiscal year is based upon reduction in +losses on Government lines by approximately one-half. Construction loans +have been made to the amount of approximately $75,000,000 out of the +revolving fund authorized by Congress and have furnished an additional aid +to American shipping and further stimulated the building of vessels in +American yards. + +Desirous of securing the full values to the Nation of the great effort to +develop our merchant marine by the merchant marine act soon after the +inauguration of the present administration, I appointed an +interdepartmental committee, consisting of the Secretary of Commerce, as +chairman, the Secretary of the Navy, the Postmaster General, and the +chairman of the Shipping Board, to make a survey of the policies being +pursued under the act of 1928 in respect of mail contracts; to inquire into +its workings and to advise the Postmaster General in the administration of +the act. + +In particular it seemed to me necessary to determine if the result of the +contracts already let would assure the purpose expressed in the act, "to +further develop an American merchant marine, to assure its permanence in +the transportation of the foreign trade of the United States, and for other +purposes," and to develop a coordinated policy by which these purposes may +be translated into actualities. + +In review of the mail contracts already awarded it was found that they +aggregated 25 separate awards imposing a governmental obligation of a +little over $12,000,000 per annum. Provision had been imposed in five of +the contracts for construction of new vessels with which to replace and +expand services. These requirements come to a total of 12 vessels in the +10-year period, aggregating 122,000 tons. Some other conditions in the +contracts had not worked out satisfactorily. + +That study has now been substantially completed and the committee has +advised the desirability and the necessity of securing much larger +undertakings as to service and new construction in future contracts. The +committee at this time is recommending the advertising of 14 additional +routes, making substantial requirements for the construction of new vessels +during the life of each contract recommended. A total of 40 new vessels +will be required under the contracts proposed, about half of which will be +required to be built during the next three years. The capital cost of this +new construction will be approximately $250,000,000, involving +approximately 460,000 gross tons. Should bidders be found who will make +these undertakings, it will be necessary to recommend to Congress an +increase in the authorized expenditure by the Post Office of about +$5,500,000 annually. It will be most advantageous to grant such an +authority. + +A conflict as to the administration of the act has arisen in the contention +of persons who have purchased Shipping Board vessels that they are entitled +to mail contracts irrespective of whether they are the lowest bidder, the +Post Office, on the other hand, being required by law to let contracts in +that manner. It is urgent that Congress should clarify this situation. + +THE BANKING SYSTEM + +It is desirable that Congress should consider the revision of some portions +of the banking law. + +The development of "group" and "chain" banking presents many new problems. +The question naturally arises as to whether if allowed to expand without +restraint these methods would dangerously concentrate control of credit, +and whether they would not in any event seriously threaten one of the +fundamentals of the American credit system--which is that credit which is +based upon banking deposits should be controlled by persons within those +areas which furnish these deposits and thus be subject to the restraints of +local interest and public opinion in those areas. To some degree, however, +this movement of chain or group banking is a groping for stronger support +to the banks and a more secure basis for these institutions. + +The growth in size and stability of the metropolitan banks is in marked +contrast to the trend in the country districts, with its many failures and +the losses these failures have imposed upon the agricultural community. + +The relinquishment of charters of national banks in great commercial +centers in favor of State charters indicates that some conditions surround +the national banks which render them unable to compete with State banks; +and their withdrawal results in weakening our national banking system. + +It has been proposed that permission should be granted to national banks to +engage in branch banking of a nature that would preserve within limited +regions the local responsibility and the control of such credit +institutions. + +All these subjects, however, require careful investigation, and it might be +found advantageous to create a joint commission embracing Members of the +Congress and other appropriate Federal officials for subsequent report. + +ELECTRICAL POWER REGULATION + +The Federal Power Commission is now comprised of three Cabinet officers, +and the duties involved in the competent conduct of the growing +responsibilities of this commission far exceed the time and attention which +these officials can properly afford from other important duties. I +recommended that authority be given for the appointment of full-time +commissioners to replace them. + +It is also desirable that the authority of the commission should be +extended to certain phases of power regulation. The nature of the electric +utilities industry is such that about 90 per cent of all power generation +and distribution is intrastate in character, and most of the States have +developed their own regulatory systems as to certificates of convenience, +rates, and profits of such utilities. To encroach upon their authorities +and responsibilities would be an encroachment upon the rights of the +States. There are cases, however, of interstate character beyond the +jurisdiction of the States. To meet these cases it would be most desirable +if a method could be worked out by which initial action may be taken +between the commissions of the States whose joint action should be made +effective by the Federal Power Commission with a reserve to act on its own +motion in case of disagreement or nonaction by the States. + +THE RADIO COMMISSION + +I recommend the reorganization of the Radio Commission into a permanent +body from its present temporary status. The requirement of the present law +that the commissioners shall be appointed from specified zones should be +abolished and a general provision made for their equitable selection from +different parts of the country. Despite the effort of the commissioners, +the present method develops a public insistence that the commissioners are +specially charged with supervision of radio affairs in the zone from which +each is appointed. As a result there is danger that the system will +degenerate from a national system into five regional agencies with varying +practices, varying policies, competitive tendencies, and consequent failure +to attain its utmost capacity for service to the people as a whole. + +MUSCLE SHOALS + +It is most desirable that this question should be disposed of. Under +present conditions the income from these plants is less than could +otherwise be secured for its use, and more especially the public is not +securing the full benefits which could be obtained from them. + +It is my belief that such parts of these plants as would be useful and the +revenues from the remainder should be dedicated for all time to the farmers +of the United States for investigation and experimentation on a commercial +scale in agricultural chemistry. By such means advancing discoveries of +science can be systematically applied to agricultural need, and development +of the chemical industry of the Tennessee Valley can be assured. + +I do not favor the operation by the Government of either power or +manufacturing business except as an unavoidable by-product of some other +major public purpose. + +Any form of settlement of this question will imply entering upon a contract +or contracts for the lease of the plants either as a whole or in parts and +the reservation of facilities, products, or income for agricultural +purposes. The extremely technical and involved nature of such contracts +dealing with chemical and electrical enterprises, added to the unusual +difficulties surrounding these special plants, and the rapid commercial +changes now in progress in power and synthetic nitrogen manufacture, lead +me to suggest that Congress create a special commission, not to investigate +and report as in the past, but with authority to negotiate and complete +some sort of contract or contracts on behalf of the Government, subject, of +course, to such general requirements as Congress may stipulate. + +BOULDER DAM + +The Secretary of the Interior is making satisfactory progress in +negotiation of the very complex contracts required for the sale of the +power to be generated at this project. These contracts must assure the +return of all Government outlays upon the project. I recommend that the +necessary funds be appropriated for the initiation of this work as soon as +the contracts are in the hands of Congress. + +CONSERVATION + +Conservation of national resources is a fixed policy of the Government. +Three important questions bearing upon conservation of the public lands +have become urgent. + +Conservation of our oil and gas resources against future need is a national +necessity. The working of the oil permit system in development of oil and +gas resources on the public domain has been subject to great abuse. I +considered it necessary to suspend the issuance of such permits and to +direct the review of all outstanding permits as to compliance of the +holders with the law. The purpose was not only to end such abuse but to +place the Government in position to review the entire subject. + +We are also confronted with a major problem in conservation due to the +overgrazing on public lands. The effect of overgrazing (which has now +become general) is not only to destroy the ranges but by impairing the +ground coverage seriously to menace the water supply in many parts of the +West through quick run-off, spring floods, and autumn drought. + +We have a third problem of major dimensions in the reconsideration of our +reclamation policy. The inclusion of most of the available lands of the +public domain in existing or planned reclamation projects largely completes +the original purpose of the Reclamation Service. There still remains the +necessity for extensive storage of water in the arid States which renders +it desirable that we should give a wider vision and purpose to this +service. + +To provide for careful consideration of these questions and also of better +division of responsibilities in them as between the State and Federal +Governments, including the possible transfer to the States for school +purposes of the lands unreserved for forests, parks, power, minerals, etc., +I have appointed a Commission on Conservation of the Public Domain, with a +membership representing the major public land States and at the same time +the public at large. I recommend that Congress should authorize a moderate +sum to defray their expenses. + +SOCIAL SERVICE + +The Federal Government provides for an extensive and valuable program of +constructive social service, in education, home building, protection to +women and children, employment, public health, recreation, and many other +directions. + +In a broad sense Federal activity in these directions has been confined to +research and dissemination of information and experience, and at most to +temporary subsidies to the States in order to secure uniform advancement in +practice and methods. Any other attitude by the Federal Government will +undermine one of the most precious possessions of the American people; that +is, local and individual responsibility. We should adhere to this policy. + +Federal officials can, however, make a further and most important +contribution by leadership in stimulation of the community and voluntary +agencies, and by extending Federal assistance in organization of these +forces and bringing about cooperation among them. + +As an instance of this character, I have recently, in cooperation with the +Secretaries of Interior and Labor, laid the foundations of an exhaustive +inquiry into the facts precedent to a nation-wide White House conference on +child health and protection. This cooperative movement among interested +agencies will impose no expense upon the Government. Similar nation-wide +conferences will be called in connection with better housing and recreation +at a later date. + +In view of the considerable difference of opinion as to the policies which +should be pursued by the Federal Government with respect to education, I +have appointed a committee representative of the important educational +associations and others to investigate and present recommendations. In +cooperation with the Secretary of the Interior, I have also appointed a +voluntary committee of distinguished membership to assist in a nation-wide +movement for abolition of illiteracy. + +I have recommended additional appropriations for the Federal employment +service in order that it may more fully cover its cooperative work with +State and local services. I have also recommended additional appropriations +for the Women's and Children's Bureaus for much needed research as to facts +which I feel will prove most helpful. + +PUBLIC HEALTH + +The advance in scientific discovery as to disease and health imposes new +considerations upon us. The Nation as a whole is vitally interested in the +health of all the people; in protection from spread of contagious disease; +in the relation of physical and mental disabilities to criminality; and in +the economic and moral advancement which is fundamentally associated with +sound body and mind. The organization of preventive measures and health +education in its personal application is the province of public health +service. Such organization should be as universal as public education. Its +support is a proper burden upon the taxpayer. It can not be organized with +success, either in its sanitary or educational phases, except under public +authority. It should be based upon local and State responsibility, but I +consider that the Federal Government has an obligation of contribution to +the establishment of such agencies. + +In the practical working out of organization, exhaustive experiment and +trial have demonstrated that the base should be competent organization of +the municipality, county, or other local unit. Most of our municipalities +and some 400 rural counties out of 3,000 now have some such unit +organization. Where highly developed, a health unit comprises at least a +physician, sanitary engineer, and community nurse with the addition, in +some cases, of another nurse devoted to the problems of maternity and +children. Such organization gives at once a fundamental control of +preventive measures and assists in community instruction. The Federal +Government, through its interest in control of contagion, acting through +the United States Public Health Service and the State agencies, has in the +past and should in the future concern itself with this development, +particularly in the many rural sections which are unfortunately far behind +in progress. Some parts of the funds contributed under the Sheppard-Towner +Act through the Children's Bureau of the Department of Labor have also +found their way into these channels. + +I recommend to the Congress that the purpose of the Sheppard-Towner Act +should be continued through the Children's Bureau for a limited period of +years; and that the Congress should consider the desirability of confining +the use of Federal funds by the States to the building up of such county or +other local units, and that such outlay should be positively coordinated +with the funds expended through the United States Public Health Service +directed to other phases of the same county or other local unit +organization. All funds appropriated should of course be applied through +the States, so that the public health program of the county or local unit +will be efficiently coordinated with that of the whole State. + +FEDERAL PRISONS + +Closely related to crime conditions is the administration of the Federal +prison system. Our Federal penal institutions are overcrowded, and this +condition is daily becoming worse. The parole and probation systems are +inadequate. These conditions make it impossible to perform the work of +personal reconstruction of prisoners so as to prepare them for return to +the duties of citizenship. In order to relieve the pressing evils I have +directed the temporary transfer of the Army Disciplinary Barracks at +Leavenworth to the Department of Justice for use as a Federal prison. Not +only is this temporary but it is inadequate for present needs. + +We need some new Federal prisons and a reorganization of our probation and +parole systems; and there should be established in the Department of +Justice a Bureau of Prisons with a sufficient force to deal adequately with +the growing activities of our prison institutions. Authorization for the +improvements should be given speedily, with initial appropriations to allow +the construction of the new institutions to be undertaken at once. +IMMIGRATION + +Restriction of immigration has from every aspect proved a sound national +policy. Our pressing problem is to formulate a method by which the limited +number of immigrants whom we do welcome shall be adapted to our national +setting and our national needs. + +I have been opposed to the basis of the quotas now in force and I have +hoped that we could find some practical method to secure what I believe +should be our real national objective; that is, fitness of the immigrant as +to physique, character, training, and our need of service. Perhaps some +system of priorities within the quotas could produce these results and at +the same time enable some hardships in the present system to be cleared up. +I recommend that the Congress should give the subject further study, in +which the executive departments will gladly cooperate with the hope of +discovering such method as will more fully secure our national necessities. +VETERANS + +It has been the policy of our Government almost from its inception to make +provision for the men who have been disabled in defense of our country. +This policy should be maintained. Originally it took the form of land +grants and pensions. This system continued until our entry into the World +War. The Congress at that time inaugurated a new plan of compensation, +rehabilitation, hospitalization, medical care and treatment, and insurance, +whereby benefits were awarded to those veterans and their immediate +dependents whose disabilities were attributable to their war service. The +basic principle in this legislation is sound. + +In a desire to eliminate all possibilities of injustice due to difficulties +in establishing service connection of disabilities, these principles have +been to some degree extended. Veterans whose diseases or injuries have +become apparent within a brief period after the war are now receiving +compensation; insurance benefits have been liberalized. Emergency officers +are now receiving additional benefits. The doors of the Government's +hospitals have been opened to all veterans, even though their diseases or +injuries were not the result of their war service. In addition adjusted +service certificates have been issued to 3,433,300 veterans. This in itself +will mean an expenditure of nearly $3,500,000,000 before 1945, in addition +to the $600,000,000 which we are now appropriating annually for our +veterans' relief. + +The administration of all laws concerning the veterans and their dependents +has been upon the basis of dealing generously, humanely, and justly. While +some inequalities have arisen, substantial and adequate care has been given +and justice administered. Further improvement in administration may require +some amendment from time to time to the law, but care should be taken to +see that such changes conform to the basic principles of the legislation. + +I am convinced that we will gain in efficiency, economy, and more uniform +administration and better definition of national policies if the Pension +Bureau, the National Home for Volunteer Soldiers, and the Veterans' Bureau +are brought together under a single agency. The total appropriations to +these agencies now exceed $800,000,000 per annum. + +CIVIL SERVICE + +Approximately four-fifths of all the employees in the executive civil +service now occupy positions subject to competitive examination under the +civil service law. + +There are, however, still commanding opportunities for extending the +system. These opportunities lie within the province of Congress and not the +President. I recommend that a further step be taken by authorization that +appointments of third-class postmasters be made under the civil service +law. + +DEPARTMENTAL REORGANIZATION + +This subject has been under consideration for over 20 years. It was +promised by both political parties in the recent campaign. It has been +repeatedly examined by committees and commissions--congressional, +executive, and voluntary. The conclusions of these investigations have been +unanimous that reorganization is a necessity of sound administration; of +economy; of more effective governmental policies and of relief to the +citizen from unnecessary harassment in his relations with a multitude of +scattered governmental agencies. But the presentation of any specific plan +at once enlivens opposition from every official whose authority may be +curtailed or who fears his position is imperiled by such a result; of +bureaus and departments which wish to maintain their authority and +activities; of citizens and their organizations who are selfishly +interested, or who are inspired by fear that their favorite bureau may, in +a new setting, be less subject to their influence or more subject to some +other influence. + +It seems to me that the essential principles of reorganization are two in +number. First, all administrative activities of the same major purpose +should be placed in groups under single-headed responsibility; second, all +executive and administrative functions should be separated from boards and +commissions and placed under individual responsibility, while +quasi-legislative and quasi-judicial and broadly advisory functions should +be removed from individual authority and assigned to boards and +commissions. Indeed, these are the fundamental principles upon which our +Government was founded, and they are the principles which have been adhered +to in the whole development of our business structure, and they are the +distillation of the common sense of generations. + +For instance, the conservation of national resources is spread among eight +agencies in five departments. They suffer from conflict and overlap. There +is no proper development and adherence to broad national policies and no +central point where the searchlight of public opinion may concentrate +itself. These functions should be grouped under the direction of some such +official as an assistant secretary of conservation. The particular +department or cabinet officer under which such a group should be placed is +of secondary importance to the need of concentration. The same may be said +of educational services, of merchant marine aids, of public works, of +public health, of veterans' services, and many others, the component parts +of which are widely scattered in the various departments and independent +agencies. It is desirable that we first have experience with these +different groups in action before we create new departments. These may be +necessary later on. + +With this background of all previous experience I can see no hope for the +development of a sound reorganization of the Government unless Congress be +willing to delegate its authority over the problem (subject to defined +principles) to the Executive, who should act upon approval of a joint +committee of Congress or with the reservation of power of revision by +Congress within some limited period adequate for its consideration. +PROHIBITION + +The first duty of the President under his oath of office is to secure the +enforcement of the laws. The enforcement of the laws enacted to give effect +to the eighteenth amendment is far from satisfactory and this is in part +due to the inadequate organization of the administrative agencies of the +Federal Government. With the hope of expediting such reorganization, I +requested on June 6 last that Congress should appoint a joint committee to +collaborate with executive agencies in preparation of legislation. It would +be helpful if it could be so appointed. The subject has been earnestly +considered by the Law Enforcement Commission and the administrative +officials of the Government. Our joint conclusions are that certain steps +should be taken at once. First, there should be an immediate concentration +of responsibility and strengthening of enforcement agencies of the Federal +Government by transfer to the Department of Justice of the Federal +functions of detection and to a considerable degree of prosecution, which +are now lodged in the Prohibition Bureau in the Treasury; and at the same +time the control of the distribution of industrial alcohol and legalized +beverages should remain in the Treasury. Second, provision should be made +for relief of congestion in the Federal courts by modifying and simplifying +the procedure for dealing with the large volume of petty prosecutions under +various Federal acts. Third, there should be a codification of the laws +relating to prohibition to avoid the necessity which now exists of +resorting to more than 25 statutes enacted at various times over 40 years. +Technical defects in these statutes that have been disclosed should be +cured. I would add to these recommendations the desirability of +reorganizing the various services engaged in the prevention of smuggling +into one border patrol under the Coast Guard. Further recommendations upon +the subject as a whole will be developed after further examination by the +Law Enforcement Commission, but it is not to be expected that any criminal +law will ever be fully enforced so long as criminals exist. + +The District of Columbia should be the model of city law enforcement in the +Nation. While conditions here are much better than in many other cities, +they are far from perfect, and this is due in part to the congestion of +criminal cases in the Supreme Court of the District, resulting in long +delays. Furthermore, there is need for legislation in the District +supplementing the national prohibition act, more sharply defining and +enlarging the duties and powers of the District Commissioners and the +police of the District, and opening the way for better cooperation in the +enforcement of prohibition between the District officials and the +prohibition officers of the Federal Government. It is urgent that these +conditions be remedied. + +LAW ENFORCEMENT AND OBSERVANCE + +No one will look with satisfaction upon the volume of crime of all kinds +and the growth of organized crime in our country. We have pressing need so +to organize our system of administering criminal justice as to establish +full vigor and effectiveness. We need to reestablish faith that the highest +interests of our country are served by insistence upon the swift and +even-handed administration of justice to all offenders, whether they be +rich or poor. That we shall effect improvement is vital to the preservation +of our institutions. It is the most serious issue before our people. + +Under the authority of Congress I have appointed a National Commission on +Law Observance and Enforcement, for an exhaustive study of the entire +problem of the enforcement of our laws and the improvement of our judicial +system, including the special problems and abuses growing out of the +prohibition laws. The commission has been invited to make the widest +inquiry into the shortcomings of the administration of justice and into the +causes and remedies for them. It has organized its work under subcommittees +dealing with the many contributory causes of our situation and has enlisted +the aid of investigators in fields requiring special consideration. I am +confident that as a result of its studies now being carried forward it will +make a notable contribution to the solution of our pressing problems. + +Pending further legislation, the Department of Justice has been striving to +weed out inefficiency wherever it exists, to stimulate activity on the part +of its prosecuting officers, and to use increasing care in examining into +the qualifications of those appointed to serve as prosecutors. The +department is seeking systematically to strengthen the law enforcement +agencies week by week and month by month, not by dramatic displays but by +steady pressure; by removal of negligent officials and by encouragement and +assistance to the vigilant. During the course of these efforts it has been +revealed that in some districts causes contributing to the congestion of +criminal dockets, and to delays and inefficiency in prosecutions, have been +lack of sufficient forces in the offices of United States attorneys, clerks +of courts, and marshals. These conditions tend to clog the machinery of +justice. The last conference of senior circuit judges has taken note of +them and indorsed the department's proposals for improvement. Increases in +appropriations are necessary and will be asked for in order to reenforce +these offices. + +The orderly administration of the law involves more than the mere machinery +of law enforcement. The efficient use of that machinery and a spirit in our +people in support of law are alike essential. We have need for improvement +in both. However much we may perfect the mechanism, still if the citizen +who is himself dependent upon some laws for the protection of all that he +has and all that he holds dear, shall insist on selecting the particular +laws which he will obey, he undermines his own safety and that of his +country. His attitude may obscure, but it can not conceal, the ugly truth +that the lawbreaker, whoever he may be, is the enemy of society. We can no +longer gloss over the unpleasant reality which should be made vital in the +consciousness of every citizen, that he who condones or traffics with +crime, who is indifferent to it and to the punishment of the criminal, or +to the lax performance of official duty, is himself the most effective +agency for the breakdown of society. + +Law can not rise above its source in good citizenship--in what right-minded +men most earnestly believe and desire. If the law is upheld only by +Government officials, then all law is at an end. Our laws are made by the +people themselves; theirs is the right to work for their repeal; but until +repeal it is an equal duty to observe them and demand their enforcement. + +I have been gratified at the awakening sense of this responsibility in our +citizens during the past few months, and gratified that many instances have +occurred which refuted the cynicism which has asserted that our system +could not convict those who had defied the law and possessed the means to +resist its execution. These things reveal a moral awakening both in the +people and in officials which lies at the very foundation of the rule of +law. + +CONCLUSION + +The test of the rightfulness of our decisions must be whether we have +sustained and advanced the ideals of the American people; self-government +in its foundations of local government; justice whether to the individual +or to the group; ordered liberty; freedom from domination; open opportunity +and equality of opportunity; the initiative and individuality of our +people; prosperity and the lessening of poverty; freedom of public opinion; +education; advancement of knowledge; the growth of religious spirit; the +tolerance of all faiths; the foundations of the home and the advancement of +peace. + +The White House, + +December 3, 1929 + +*** + +State of the Union Address +Herbert Hoover +December 2, 1930 + +To the Senate and House of Representatives: + +I have the honor to comply with the requirement of the Constitution that I +should lay before the Congress information as to the state of the Union, +and recommend consideration of such measures as are necessary and +expedient. + +Substantial progress has been made during the year in national peace and +security; the fundamental strength of the Nation's economic life is +unimpaired; education and scientific discovery have made advances; our +country is more alive to its problems of moral and spiritual welfare. + +ECONOMIC SITUATION + +During the past 12 months we have suffered with other Nations from economic +depression. + +The origins of this depression lie to some extent within our own borders +through a speculative period which diverted capital and energy into +speculation rather than constructive enterprise. Had overspeculation in +securities been the only force operating, we should have seen recovery many +months ago, as these particular dislocations have generally readjusted +themselves. + +Other deep-seated causes have been in action, however, chiefly the +world-wide overproduction beyond even the demand of prosperous times for +such important basic commodities as wheat, rubber, coffee, sugar, copper, +silver, zinc, to some extent cotton, and other raw materials. The +cumulative effects of demoralizing price falls of these important +commodities in the process of adjustment of production to world consumption +have produced financial crises in many countries and have diminished the +buying power of these countries for imported goods to a degree which +extended the difficulties farther afield by creating unemployment in all +the industrial nations. The political agitation in Asia; revolutions in +South America and political unrest in some European States; the methods of +sale by Russia of her increasing agricultural exports to European markets; +and our own drought--have all contributed to prolong and deepen the +depression. + +In the larger view the major forces of the depression now lie outside of +the United States, and our recuperation has been retarded by the +unwarranted degree of fear and apprehension created by these outside +forces. + +The extent of the depression is indicated by the following approximate +percentages of activity during the past three months as compared with the +highly prosperous year of 1928: + +Value of department-store sales - 93% of 1928 + +Volume of manufacturing production - 80% of 1928 + +Volume of mineral production - 90% of 1928 + +Volume of factory employment - 84% of 1928 + +Total of bank deposits - 105% of 1928 + +Wholesale prices--all commodities - 83% of 1928 + +Cost of living - 94% of 1928 + +Various other indexes indicate total decrease of activity from 1928 of from +15 to 20 per cent. + +There are many factors which give encouragement for the future. The fact +that we are holding from 80 to 85 per cent of our normal activities and +incomes; that our major financial and industrial institutions have come +through the storm unimpaired; that price levels of major commodities have +remained approximately stable for some time; that a number of industries +are showing signs of increasing demand; that the world at large is +readjusting itself to the situation; all reflect grounds for confidence. We +should remember that these occasions have been met many times before, that +they are but temporary, that our country is to-day stronger and richer in +resources, in equipment, in skill, than ever in its history. We are in an +extraordinary degree self-sustaining, we will overcome world influences and +will lead the march of prosperity as we have always done hitherto. + +Economic depression can not be cured by legislative action or executive +pronouncement. Economic wounds must be healed by the action of the cells of +the economic body--the producers and consumers themselves. Recovery can be +expedited and its effects mitigated by cooperative action. That cooperation +requires that every individual should sustain faith and courage; that each +should maintain his self-reliance; that each and every one should search +for methods of improving his business or service; that the vast majority +whose income is unimpaired should not hoard out of fear but should pursue +their normal living and recreations; that each should seek to assist his +neighbors who may be less fortunate; that each industry should assist its +own employees; that each community and each State should assume its full +responsibilities for organization of employment and relief of distress with +that sturdiness and independence which built a great Nation. + +Our people are responding to these impulses in remarkable degree. The best +contribution of government lies in encouragement of this voluntary +cooperation in the community. The Government, National, State, and local, +can join with the community in such programs and do its part. A year ago I, +together with other officers of the Government, initiated extensive +cooperative measures throughout the country. + +The first of these measures was an agreement of leading employers to +maintain the standards of wages and of labor leaders to use their influence +against strife. In a large sense these undertakings have been adhered to +and we have not witnessed the usual reductions of wages which have always +heretofore marked depressions. The index of union wage scales shows them to +be today fully up to the level of any of the previous three years. In +consequence the buying power of the country has been much larger than would +otherwise have been the case. Of equal importance the Nation has had +unusual peace in industry and freedom from the public disorder which has +characterized previous depressions. + +The second direction of cooperation has been that our governments, +National, State, and local, the industries and business so distribute +employment as to give work to the maximum number of employees. + +The third direction of cooperation has been to maintain and even extend +construction work and betterments in anticipation of the future. It has +been the universal experience in previous depressions that public works and +private construction have fallen off rapidly with the general tide of +depression. On this occasion, however, the increased authorization and +generous appropriations by the Congress and the action of States and +municipalities have resulted in the expansion of public construction to an +amount even above that in the most prosperous years. In addition the +cooperation of public utilities, railways, and other large organizations +has been generously given in construction and betterment work in +anticipation of future need. The Department of Commerce advises me that as +a result, the volume of this type of construction work, which amounted to +roughly $6,300,000,000 in 1929, instead of decreasing will show a total of +about $7,000,000,000 for 1930. There has, of course, been a substantial +decrease in the types of construction which could not be undertaken in +advance of need. + +The fourth direction of cooperation was the organization in such States and +municipalities, as was deemed necessary, of committees to organize local +employment, to provide for employment agencies, and to effect relief of +distress. + +The result of magnificent cooperation throughout the country has been that +actual suffering has been kept to a minimum during the past 12 months, and +our unemployment has been far less in proportion than in other large +industrial countries. Some time ago it became evident that unemployment +would continue over the winter and would necessarily be added to from +seasonal causes and that the savings of workpeople would be more largely +depleted. We have as a Nation a definite duty to see that no deserving +person in our country suffers from hunger or cold. I therefore set up a +more extensive organization to stimulate more intensive cooperation +throughout the country. There has been a most gratifying degree of +response, from governors, mayors, and other public officials, from welfare +organizations, and from employers in concerns both large and small. The +local communities through their voluntary agencies have assumed the duty of +relieving individual distress and are being generously supported by the +public. + +The number of those wholly out of employment seeking for work was +accurately determined by the census last April as about 2,500,000. The +Department of Labor index of employment in the larger trades shows some +decrease in employment since that time. The problem from a relief point of +view is somewhat less than the published estimates of the number of +unemployed would indicate. The intensive community and individual efforts +in providing special employment outside the listed industries are not +reflected in the statistical indexes and tend to reduce such published +figures. Moreover, there is estimated to be a constant figure at all times +of nearly 1,000,000 unemployed who are not without annual income but +temporarily idle in the shift from one job to another. We have an average +of about three breadwinners to each two families, so that every person +unemployed does not represent a family without income. The view that the +relief problems are less than the gross numbers would indicate is confirmed +by the experience of several cities, which shows that the number of +families in distress represents from 10 to 20 per cent of the number of the +calculated unemployed. This is not said to minimize the very real problem +which exists but to weigh its actual proportions. + +As a contribution to the situation the Federal Government is engaged upon +the greatest program of waterway, harbor, flood control, public building, +highway, and airway improvement in all our history. This, together with +loans to merchant shipbuilders, improvement of the Navy and in military +aviation, and other construction work of the Government will exceed +$520,000,000 for this fiscal year. This compares with $253,000,000 in the +fiscal year 1928. The construction works already authorized and the +continuation of policies in Government aid will require a continual +expenditure upwards of half a billion dollars annually. + +I favor still further temporary expansion of these activities in aid to +unemployment during this winter. The Congress will, however, have presented +to it numbers of projects, some of them under the guise of, rather than the +reality of, their usefulness in the increase of employment during the +depression. There are certain commonsense limitations upon any expansions +of construction work. The Government must not undertake works that are not +of sound economic purpose and that have not been subject to searching +technical investigation, and which have not been given adequate +consideration by the Congress. The volume of construction work in the +Government is already at the maximum limit warranted by financial prudence +as a continuing policy. To increase taxation for purposes of construction +work defeats its own purpose, as such taxes directly diminish employment in +private industry. Again any kind of construction requires, after its +authorization, a considerable time before labor can be employed in which to +make engineering, architectural, and legal preparations. Our immediate +problem is the increase of employment for the next six months, and new +plans which do not produce such immediate result or which extend +commitments beyond this period are not warranted. + +The enlarged rivers and harbors, public building, and highway plans +authorized by the Congress last session, however, offer an opportunity for +assistance by the temporary acceleration of construction of these programs +even faster than originally planned, especially if the technical +requirements of the laws which entail great delays could be amended in such +fashion as to speed up acquirements of land and the letting of contracts. + +With view, however, to the possible need for acceleration, we, immediately +upon receiving those authorities from the Congress five months ago, began +the necessary technical work in preparation for such possible eventuality. +I have canvassed the departments of the Government as to the maximum amount +that can be properly added to our present expenditure to accelerate all +construction during the next six months, and I feel warranted in asking the +Congress for an appropriation of from $100,000,000 to $150,000,000 to +provide such further employment in this emergency. In connection therewith +we need some authority to make enlarged temporary advances of +Federal-highway aid to the States. + +I recommend that this appropriation be made distributable to the different +departments upon recommendation of a committee of the Cabinet and approval +by the President. Its application to works already authorized by the +Congress assures its use in directions of economic importance and to public +welfare. Such action will imply an expenditure upon construction of all +kinds of over $650,000,000 during the next twelve months. + +AGRICULTURE + +The world-wide depression has affected agriculture in common with all other +industries. The average price of farm produce has fallen to about 80 per +cent of the levels of 1928. This average is, however, greatly affected by +wheat and cotton, which have participated in world-wide overproduction and +have fallen to about 60 per cent of the average price of the year 1928. +Excluding these commodities, the prices of all other agricultural products +are about 84 per cent of those of 1928. The average wholesale prices of +other primary goods, such as nonferrous metals, have fallen to 76 per cent +of 1928. + +The price levels of our major agricultural commodities are, in fact, higher +than those in other principal producing countries, due to the combined +result of the tariff and the operations of the Farm Board. For instance, +wheat prices at Minneapolis are about 30 per cent higher than at Winnipeg, +and at Chicago they are about 20 per cent higher than at Buenos Aires. Corn +prices at Chicago are over twice as high as at Buenos Aires. Wool prices +average more than 80 per cent higher in this country than abroad, and +butter is 30 per cent higher in New York City than in Copenhagen. + +Aside from the misfortune to agriculture of the world-wide depression we +have had the most severe drought. It has affected particularly the States +bordering on the Potomac, Ohio, and Lower Mississippi Rivers, with some +areas in Montana, Kansas, Oklahoma, and Texas. It has found its major +expression in the shortage of pasturage and a shrinkage in the corn crop +from an average of about 2,800,000,000 bushels to about 2,090,000,000 +bushels. + +On August 14 I called a conference of the governors of the most acutely +affected States, and as a result of its conclusions I appointed a national +committee comprising the heads of the important Federal agencies under the +chairmanship of the Secretary of Agriculture. The governors in turn have +appointed State committees representative of the farmers, bankers, business +men, and the Red Cross, and subsidiary committees have been established in +most of the acutely affected counties. Railway rates were reduced on feed +and livestock in and out of the drought areas, and over 50,000 cars of such +products have been transported under these reduced rates. The Red Cross +established a preliminary fund of $5,000,000 for distress relief purposes +and established agencies for its administration in each county. Of this +fund less than $500,000 has been called for up to this time as the need +will appear more largely during the winter. The Federal Farm Loan Board has +extended its credit facilities, and the Federal Farm Board has given +financial assistance to all affected cooperatives. + +In order that the Government may meet its full obligation toward our +countrymen in distress through no fault of their own, I recommend that an +appropriation should be made to the Department of Agriculture to be loaned +for the purpose of seed and feed for animals. Its application should as +hitherto in such loans be limited to a gross amount to any one individual, +and secured upon the crop. + +The Red Cross can relieve the cases of individual distress by the +sympathetic assistance of our people. + +FINANCES OF THE GOVERNMENT + +I shall submit the detailed financial position of the Government with +recommendations in the usual Budget message. I will at this time, however, +mention that the Budget estimates of receipts and expenditures for the +current year were formulated by the Treasury and the Budget Bureau at a +time when it was impossible to forecast the severity of the business +depression and have been most seriously affected by it. At that time a +surplus of about $123,000,000 was estimated for this fiscal year and tax +reduction which affected the fiscal year to the extent of $75,000,000 was +authorized by the Congress, thus reducing the estimated surplus to about +$48,000,000. Closely revised estimates now made by the Treasury and the +Bureau of the Budget of the tax, postal, and other receipts for the current +fiscal year indicate a decrease of about $430,000,000 from the estimate of +a year ago, of which about $75,000,000 is due to tax reduction, leaving +about $355,000,000 due to the depression. Moreover, legislation enacted by +Congress subsequent to the submission of the Budget enlarging Federal +construction work to expand employment and for increase in veterans' +services and other items, have increased expenditures during the current +fiscal year by about $225,000,000. + +Thus the decrease of $430,000,000 in revenue and the increase of +$225,000,000 in expenditure adversely change the original Budget situation +by about $655,000,000. This large sum is offset by the original estimated +surplus a year ago of about $123,000,000, by the application of +$185,000,000 of interest payments upon the foreign debt to current +expenditures, by arrangements of the Farm Board through repayments, etc., +in consequence of which they reduced their net cash demands upon the +Treasury by $100,000,000 in this period, and by about $67,000,000 economies +and deferments brought about in the Government, thus reducing the practical +effect of the change in the situation to an estimated deficit of about +$180,000,000 for the present fiscal year. I shall make suggestions for +handling the present-year deficit in the Budget message, but I do not favor +encroachment upon the statutory reduction of the public debt. + +While it will be necessary in public interest to further increase +expenditures during the current fiscal year in aid to unemployment by +speeding up construction work and aid to the farmers affected by the +drought, I can not emphasize too strongly the absolute necessity to defer +any other plans for increase of Government expenditures. The Budget for +1932 fiscal year indicates estimated expenditure of about $4,054,000,000, +including postal deficit. The receipts are estimated at about +$4,085,000,000 if the temporary tax reduction of last year be discontinued, +leaving a surplus of only about $30,000,000. Most rigid economy is +therefore necessary to avoid increase in taxes. + +NATIONAL DEFENSE + +Our Army and Navy are being maintained at a high state of efficiency, under +officers of high training and intelligence, supported by a devoted +personnel of the rank and file. The London naval treaty has brought +important economies in the conduct of the Navy. The Navy Department will +lay before the committees of the Congress recommendations for a program of +authorization of new construction which should be initiated in the fiscal +year of 1932. + +LEGISLATION + +This is the last session of the Seventy-first Congress. During its previous +sittings it has completed a very large amount of important legislation, +notably: The establishment of the Federal Farm Board; fixing congressional +reapportionment; revision of the tariff, including the flexible provisions +and a reorganization of the Tariff Commission; reorganization of the Radio +Commission; reorganization of the Federal Power Commission; expansion of +Federal prisons; reorganization of parole and probation system in Federal +prisons; expansion of veterans' hospitals; establishment of disability +allowances to veterans; consolidation of veteran activities; consolidation +and strengthening of prohibition enforcement activities in the Department +of Justice; organization of a Narcotics Bureau; large expansion of rivers +and harbors improvements; substantial increase in Federal highways; +enlargement of public buildings construction program; and the ratification +of the London naval treaty. + +The Congress has before it legislation partially completed in the last +sitting in respect to Muscle Shoals, bus regulation, relief of congestion +in the courts, reorganization of border patrol in prevention of smuggling, +law enforcement in the District of Columbia, and other subjects. + +It is desirable that these measures should be completed. + +The short session does not permit of extensive legislative programs, but +there are a number of questions which, if time does not permit action, I +recommend should be placed in consideration by the Congress, perhaps +through committees cooperating in some instances with the Federal +departments, with view to preparation for subsequent action. Among them are +the following subjects: + +ELECTRICAL POWER + +I have in a previous message recommended effective regulation of interstate +electrical power. Such regulation should preserve the independence and +responsibility of the States. + +RAILWAYS + +We have determined upon a national policy of consolidation of the railways +as a necessity of more stable and more economically operated +transportation. Further legislation is necessary to facilitate such +consolidation. In the public interest we should strengthen the railways +that they may meet our future needs. + +ANTITRUST LAWS + +I recommend that the Congress institute an inquiry into some aspects of the +economic working of these laws. I do not favor repeal of the Sherman Act. +The prevention of monopolies is of most vital public importance. +Competition is not only the basis of protection to the consumer but is the +incentive to progress. However, the interpretation of these laws by the +courts, the changes in business, especially in the economic effects upon +those enterprises closely related to the use of the natural resources of +the country, make such an inquiry advisable. The producers of these +materials assert that certain unfortunate results of wasteful and +destructive use of these natural resources together with a destructive +competition which impoverishes both operator and worker can not be remedied +because of the prohibitive interpretation of the antitrust laws. The +well-known condition of the bituminous coal industry is an illustration. +The people have a vital interest in the conservation of their natural +resources; in the prevention of wasteful practices; in conditions of +destructive competition which may impoverish the producer and the wage +earner; and they have an equal interest in maintaining adequate +competition. I therefore suggest that an inquiry be directed especially to +the effect of the workings of the antitrust laws in these particular fields +to determine if these evils can be remedied without sacrifice of the +fundamental purpose of these laws. + +CAPITAL-GAINS TAX + +It is urged by many thoughtful citizens that the peculiar economic effect +of the income tax on so-called capital gains at the present rate is to +enhance speculative inflation and likewise impede business recovery. I +believe this to be the case and I recommend that a study be made of the +economic effects of this tax and of its relation to the general structure +of our income tax law. + +IMMIGRATION + +There is need for revision of our immigration laws upon a more limited and +more selective basis, flexible to the needs of the country. + +Under conditions of current unemployment it is obvious that persons coming +to the United States seeking work would likely become either a direct or +indirect public charge. As a temporary measure the officers issuing visas +to immigrants have been, in pursuance of the law, instructed to refuse +visas to applicants likely to fall into this class. As a result the visas +issued have decreased from an average of about 24,000 per month prior to +restrictions to a rate of about 7,000 during the last month. These are +largely preferred persons under the law. Visas from Mexico are about 250 +per month compared to about 4,000 previous to restrictions. The whole +subject requires exhaustive reconsideration. + +DEPORTATION OF ALIEN CRIMINALS + +I urge the strengthening of our deportation laws so as to more fully rid +ourselves of criminal aliens. Furthermore, thousands of persons have +entered the country in violation of the immigration laws. The very method +of their entry indicates their objectionable character, and our law-abiding +foreign-born residents suffer in consequence. I recommend that the Congress +provide methods of strengthening the Government to correct this abuse. + +POST OFFICE + +Due to deferment of Government building over many years, previous +administrations had been compelled to enter upon types of leases for +secondary facilities in large cities, some of which were objectionable as +representing too high a return upon the value of the property. To prevent +the occasion for further uneconomic leasing I recommend that the Congress +authorize the building by the Government of its own facilities. + +VETERANS + +The Nation has generously expanded its care for veterans. The consolidation +of all veterans' activities into the Veterans' Administration has produced +substantial administrative economies. The consolidation also brings +emphasis to the inequalities in service and allowances. The whole subject +is under study by the administrator, and I recommend it should also be +examined by the committees of the Congress. + +SOCIAL SERVICE + +I urge further consideration by the Congress of the recommendations I made +a year ago looking to the development through temporary Federal aid of +adequate State and local services for the health of children and the +further stamping out of communicable disease, particularly in the rural +sections. The advance of scientific discovery, methods, and social thought +imposes a new vision in these matters. The drain upon the Federal Treasury +is comparatively small. The results both economic and moral are of the +utmost importance. + +GENERAL + +It is my belief that after the passing of this depression, when we can +examine it in retrospect, we shall need to consider a number of other +questions as to what action may be taken by the Government to remove +Possible governmental influences which make for instability and to better +organize mitigation of the effect of depression. It is as yet too soon to +constructively formulate such measures. + +There are many administrative subjects, such as departmental +reorganization, extension of the civil service, readjustment of the postal +rates, etc., which at some appropriate time require the attention of the +Congress. + +FOREIGN RELATIONS + +Our relations with foreign countries have been maintained upon a high basis +of cordiality and good will. + +During the past year the London naval pact was completed, approved by the +Senate, and ratified by the governments concerned. By this treaty we have +abolished competition in the building of warships, have established the +basis of parity of the United States with the strongest of foreign powers, +and have accomplished a substantial reduction in war vessels. + +During the year there has been an extended political unrest in the world. +Asia continues in disturbed condition, and revolutions have taken place in +Brazil, Argentina, Peru, and Bolivia. Despite the jeopardy to our citizens +and their property which naturally arises in such circumstances, we have, +with the cooperation of the governments concerned, been able to meet all +such instances without friction. + +We have resumed normal relations with the new Governments of Brazil, +Argentina, Peru, and Bolivia immediately upon evidence that they were able +to give protection to our citizens and their property, and that they +recognized their international obligations. + +A commission which was supported by the Congress has completed its +investigation and reported upon our future policies in respect to Haiti and +proved of high value in securing the acceptance of these policies. An +election has been held and a new government established. We have replaced +our high commissioner by a minister and have begun the gradual withdrawal +of our activities with view to complete retirement at the expiration of the +present treaty in 1935. + +A number of arbitration and conciliation treaties have been completed or +negotiated during the year, and will be presented for approval by the +Senate. + +I shall, in a special message, lay before the Senate the protocols covering +the statutes of the World Court which have been revised to accord with the +sense of previous Senate reservations. + +The White House, + +December 2, 1930 + +*** + +State of the Union Address +Herbert Hoover +December 8, 1931 + +To the Senate and House of Representatives: + +It is my duty under the Constitution to transmit to the Congress +information on the state of the Union and to recommend for its +consideration necessary and expedient measures. + +The chief influence affecting the state of the Union during the past year +has been the continued world-wide economic disturbance. Our national +concern has been to meet the emergencies it has created for us and to lay +the foundations for recovery. + +If we lift our vision beyond these immediate emergencies we find +fundamental national gains even amid depression. In meeting the problems of +this difficult period, we have witnessed a remarkable development of the +sense of cooperation in the community. For the first time in the history of +our major economic depressions there has been a notable absence of public +disorders and industrial conflict. Above all there is an enlargement of +social and spiritual responsibility among the people. The strains and +stresses upon business have resulted in closer application, in saner +policies, and in better methods. Public improvements have been carried out +on a larger scale than even in normal times. The country is richer in +physical property, in newly discovered resources, and in productive +capacity than ever before. There has been constant gain in knowledge and +education; there has been continuous advance in science and invention; +there has been distinct gain in public health. Business depressions have +been recurrent in the life of our country and are but transitory. The +Nation has emerged from each of them with increased strength and virility +because of the enlightenment they have brought, the readjustments and the +larger understanding of the realities and obligations of life and work +which come from them. + +NATIONAL DEFENSE + +Both our Army and Navy have been maintained in a high state of efficiency. +The ability and devotion of both officers and men sustain the highest +traditions of the service. Reductions and postponements in expenditure of +these departments to meet the present emergency are being made without +reducing existing personnel or impairing the morale of either +establishment. + +The agreement between the leading naval powers for limitation of naval +armaments and establishment of their relative strength and thus elimination +of competitive building also implies for ourselves the gradual expansion of +the deficient categories in our Navy to the parities provided in those +treaties. However, none of the other nations, parties to these agreements, +is to-day maintaining the full rate of construction which the treaty size +of fleets would imply. + +Although these agreements secured the maximum reduction of fleets which it +was at that time possible to attain, I am hopeful that the naval powers, +party to these agreements, will realize that establishment of relative +strength in itself offers opportunity for further reduction without injury +to any of them. This would be the more possible if pending negotiations are +successful between France and Italy. If the world is to regain its +standards of life, it must further decrease both naval and other arms. The +subject will come before the General Disarmament Conference which meets in +Geneva on February 2. + +FOREIGN AFFAIRS + +We are at peace with the world. We have cooperated with other nations to +preserve peace. The rights of our citizens abroad have been protected. + +The economic depression has continued and deepened in every part of the +world during the past year. In many countries political instability, +excessive armaments, debts, governmental expenditures, and taxes have +resulted in revolutions, in unbalanced budgets and monetary collapse and +financial panics, in dumping of goods upon world markets, and in diminished +consumption of commodities. + +Within two years there have been revolutions or acute social disorders in +19 countries, embracing more than half the population of the world. Ten +countries have been unable to meet their external obligations. In 14 +countries, embracing a quarter of the world's population, former monetary +standards have been temporarily abandoned. In a number of countries there +have been acute financial panics or compulsory restraints upon banking. +These disturbances have many roots in the dislocations from the World War. +Every one of them has reacted upon us. They have sharply affected the +markets and prices of our agricultural and industrial products. They have +increased unemployment and greatly embarrassed our financial and credit +system. + +As our difficulties during the past year have plainly originated in large +degree from these sources, any effort to bring about our own recuperation +has dictated the necessity of cooperation by us with other nations in +reasonable effort to restore world confidence and economic stability. + +Cooperation of our Federal reserve system and our banks with the central +banks in foreign countries has contributed to localize and ameliorate a +number of serious financial crises or moderate the pressures upon us and +thus avert disasters which would have affected us. + +The economic crisis in Germany and Central Europe last June rose to the +dimensions of a general panic from which it was apparent that without +assistance these nations must collapse. Apprehensions of such collapse had +demoralized our agricultural and security markets and so threatened other +nations as to impose further dangers upon us. But of highest importance was +the necessity of cooperation on our part to relieve the people of Germany +from imminent disasters and to maintain their important relations to +progress and stability in the world. Upon the initiative of this Government +a year's postponement of reparations and other intergovernmental debts was +brought about. Upon our further initiative an agreement was made by +Germany's private creditors providing for an extension of such credits +until the German people can develop more permanent and definite forms of +relief. + +We have continued our policy of withdrawing our marines from Haiti and +Nicaragua. + +The difficulties between China and Japan have given us great concern, not +alone for the maintenance of the spirit of the Kellogg-Briand Pact, but for +the maintenance of the treaties to which we are a party assuring the +territorial integrity of China. It is our purpose to assist in finding +solutions sustaining the full spirit of those treaties. + +I shall deal at greater length with our foreign relations in a later +message. + +THE DOMESTIC SITUATION + +Many undertakings have been organized and forwarded during the past year to +meet the new and changing emergencies which have constantly confronted us. + +Broadly the community has cooperated to meet the needs of honest distress, +and to take such emergency measures as would sustain confidence in our +financial system and would cushion the violence of liquidation in industry +and commerce, thus giving time for orderly readjustment of costs, +inventories, and credits without panic and widespread bankruptcy. These +measures have served those purposes and will promote recovery. + +In these measures we have striven to mobilize and stimulate private +initiative and local and community responsibility. There has been the least +possible Government entry into the economic field, and that only in +temporary and emergency form. Our citizens and our local governments have +given a magnificent display of unity and action, initiative and patriotism +in solving a multitude of difficulties and in cooperating with the Federal +Government. + +For a proper understanding of my recommendations to the Congress it is +desirable very briefly to review such activities during the past year. + +The emergencies of unemployment have been met by action in many directions. +The appropriations for the continued speeding up of the great Federal +construction program have provided direct and indirect aid to employment +upon a large scale. By organized unity of action, the States and +municipalities have also maintained large programs of public improvement. +Many industries have been prevailed upon to anticipate and intensify +construction. Industrial concerns and other employers have been organized +to spread available work amongst all their employees, instead of +discharging a portion of them. A large majority have maintained wages at as +high levels as the safe conduct of their business would permit. This course +has saved us from industrial conflict and disorder which have characterized +all previous depressions. Immigration has been curtailed by administrative +action. Upon the basis of normal immigration the decrease amounts to about +300,000 individuals who otherwise would have been added to our +unemployment. The expansion of Federal employment agencies under +appropriations by the Congress has proved most effective. Through the +President's organization for unemployment relief, public and private +agencies were successfully mobilized last winter to provide employment and +other measures against distress. Similar organization gives assurance +against suffering during the coming winter. Committees of leading citizens +are now active at practically every point of unemployment. In the large +majority they have been assured the funds necessary which, together with +local government aids, will meet the situation. A few exceptional +localities will be further organized. The evidence of the Public Health +Service shows an actual decrease of sickness and infant and general +mortality below normal years. No greater proof could be adduced that our +people have been protected from hunger and cold and that the sense of +social responsibility in the Nation has responded to the need of the +unfortunate. + +To meet the emergencies in agriculture the loans authorized by Congress for +rehabilitation in the drought areas have enabled farmers to produce +abundant crops in those districts. The Red Cross undertook and +magnificently administered relief for over 2,500,000 drought sufferers last +winter. It has undertaken this year to administer relief to 100,000 +sufferers in the new drought area of certain Northwest States. The action +of the Federal Farm Board in granting credits to farm cooperatives saved +many of them from bankruptcy and increased their purpose and strength. By +enabling farm cooperatives to cushion the fall in prices of farm products +in 1930 and 1931 the Board secured higher prices to the farmer than would +have been obtained otherwise, although the benefits of this action were +partially defeated by continued world overproduction. Incident to this +action the failure of a large number of farmers and of country banks was +averted which could quite possibly have spread into a major disaster. The +banks in the South have cooperated with the Farm Board in creation of a +pool for the better marketing of accumulated cotton. Growers have been +materially assisted by this action. Constant effort has been made to reduce +overproduction in relief of agriculture and to promote the foreign buying +of agricultural products by sustaining economic stability abroad. + +To meet our domestic emergencies in credit and banking arising from the +reaction to acute crisis abroad the National Credit Association was set up +by the banks with resources of $500,000,000 to support sound banks against +the frightened withdrawals and hoarding. It is giving aid to reopen solvent +banks which have been closed. Federal officials have brought about many +beneficial unions of banks and have employed other means which have +prevented many bank closings. As a result of these measures the hoarding +withdrawals which had risen to over $250,000,000 per week after the British +crisis have substantially ceased. + +FURTHER MEASURES + +The major economic forces and weaknesses at home and abroad have now been +exposed and can be appraised, and the time is ripe for forward action to +expedite our recovery. + +Although some of the causes of our depression are due to speculation, +inflation of securities and real estate, unsound foreign investments, and +mismanagement of financial institutions, yet our self-contained national +economy, with its matchless strength and resources, would have enabled us +to recover long since but for the continued dislocations, shocks, and +setbacks from abroad. + +Whatever the causes may be, the vast liquidation and readjustments which +have taken place have left us with a large degree of credit paralysis, +which together with the situation in our railways and the conditions +abroad, are now the outstanding obstacles to recuperation. If we can put +our financial resources to work and can ameliorate the financial situation +in the railways, I am confident we can make a large measure of recovery +independent of the rest of the world. A strong America is the highest +contribution to world stability. + +One phase of the credit situation is indicated in the banks. During the +past year banks, representing 3 per cent of our total deposits have been +closed. A large part of these failures have been caused by withdrawals for +hoarding, as distinguished from the failures early in the depression where +weakness due to mismanagement was the larger cause of failure. Despite +their closing, many of them will pay in full. Although such withdrawals +have practically ceased, yet $1,100,000,000 of currency was previously +withdrawn which has still to return to circulation. This represents a large +reduction of the ability of our banks to extend credit which would +otherwise fertilize industry and agriculture. Furthermore, many of our +bankers, in order to prepare themselves to meet possible withdrawals, have +felt compelled to call in loans, to refuse new credits, and to realize upon +securities, which in turn has demoralized the markets. The paralysis has +been further augmented by the steady increase in recent years of the +proportion of bank assets invested in long-term securities, such as +mortgages and bonds. These securities tend to lose their liquidity in +depression or temporarily to fall in value so that the ability of the banks +to meet the shock of sudden withdrawal is greatly lessened and the +restriction of all kinds of credit is thereby increased. The continuing +credit paralysis has operated to accentuate the deflation and liquidation +of commodities, real estate, and securities below any reasonable basis of +values. + +All of this tends to stifle business, especially the smaller units, and +finally expresses itself in further depression of prices and values, in +restriction on new enterprise, and in increased unemployment. + +The situation largely arises from an unjustified lack of confidence. We +have enormous volumes of idle money in the banks and in hoarding. We do not +require more money or working capital--we need to put what we have to +work. + +The fundamental difficulties which have brought about financial strains in +foreign countries do not exist in the United States. No external drain on +our resources can threaten our position, because the balance of +international payments is in our favor; we owe less to foreign countries +than they owe to us; our industries are efficiently organized; our currency +and bank deposits are protected by the greatest gold reserve in history. + +Our first step toward recovery is to reestablish confidence and thus +restore the flow of credit which is the very basis of our economic life. We +must put some steel beams in the foundations of our credit structure. It is +our duty to apply the full strength of our Government not only to the +immediate phases, but to provide security against shocks and the repetition +of the weaknesses which have been proven. + +The recommendations which I here lay before the Congress are designed to +meet these needs by strengthening financial, industrial, and agricultural +life through the medium of our existing institutions, and thus to avoid the +entry of the Government into competition with private business. + +FEDERAL GOVERNMENT FINANCE + +The first requirement of confidence and of economic recovery is financial +stability of the United States Government. I shall deal with fiscal +questions at greater length in the Budget message. But I must at this time +call attention to the magnitude of the deficits which have developed and +the resulting necessity for determined and courageous policies. These +deficits arise in the main from the heavy decrease in tax receipts due to +the depression and to the increase in expenditure on construction in aid to +unemployment, aids to agriculture, and upon services to veterans. + +During the fiscal year ending June 30 last we incurred a deficit of about +$903,000,000, which included the statutory reduction of the debt and +represented an increase of the national debt by $616,000,000. Of this, +however, $153,000,000 is offset by increased cash balances. + +In comparison with the fiscal year 1928 there is indicated a fall in +Federal receipts for the present fiscal year amounting to $1,683,000,000, +of which $1,034,000,000 is in individual and corporate income taxes alone. +During this fiscal year there will be an increased expenditure, as compared +to 1928, on veterans of $255,000,000, and an increased expenditure on +construction work which may reach $520,000,000. Despite large economies in +other directions, we have an indicated deficit, including the statutory +retirement of the debt, of $2,123,000,000, and an indicated net debt +increase of about $1,711,000,000. + +The Budget for the fiscal year beginning July 1 next, after allowing for +some increase of taxes under the present laws and after allowing for +drastic reduction in expenditures, still indicates a deficit of +$1,417,000,000. After offsetting the statutory debt retirements this would +indicate an increase in the national debt for the fiscal year 1933 of about +$921,000,000. + +Several conclusions are inevitable. We must have insistent and determined +reduction in Government expenses. We must face a temporary increase in +taxes. Such increase should not cover the whole of these deficits or it +will retard recovery. We must partially finance the deficit by borrowing. +It is my view that the amount of taxation should be fixed so as to balance +the Budget for 1933 except for the statutory debt retirement. Such +Government receipts would assure the balance of the following year's budget +including debt retirement. It is my further view that the additional +taxation should be imposed solely as an emergency measure terminating +definitely two years from July 1 next. Such a basis will give confidence in +the determination of the Government to stabilize its finance and will +assure taxpayers of its temporary character. Even with increased taxation, +the Government will reach the utmost safe limit of its borrowing capacity +by the expenditures for which we are already obligated and the +recommendations here proposed. To go further than these limits in either +expenditures, taxes, or borrowing will destroy confidence, denude commerce +and industry of its resources, jeopardize the financial system, and +actually extend unemployment and demoralize agriculture rather than relieve +it. + +FEDERAL LAND BANKS + +I recommend that the Congress authorize the subscription by the Treasury of +further capital to the Federal land banks to be retired as provided in the +original act, or when funds are available, and that repayments of such +capital be treated as a fund available for further subscriptions in the +same manner. It is urgent that the banks be supported so as to stabilize +the market values of their bonds and thus secure capital for the farmers at +low rates, that they may continue their services to agriculture and that +they may meet the present situation with consideration to the farmers. + +DEPOSITS IN CLOSED BANKS + +A method should be devised to make available quickly to depositors some +portion of their deposits in closed banks as the assets of such banks may +warrant. Such provision would go far to relieve distress in a multitude of +families, would stabilize values in many communities, and would liberate +working capital to thousands of concerns. I recommend that measures be +enacted promptly to accomplish these results and I suggest that the +Congress should consider the development of such a plan through the Federal +Reserve Banks. + +HOME-LOAN DISCOUNT BANKS + +I recommend the establishment of a system of home-loan discount banks as +the necessary companion in our financial structure of the Federal Reserve +Banks and our Federal Land Banks. Such action will relieve present +distressing pressures against home and farm property owners. It will +relieve pressures upon and give added strength to building and loan +associations, savings banks, and deposit banks, engaged in extending such +credits. Such action would further decentralize our credit structure. It +would revive residential construction and employment. It would enable such +loaning institutions more effectually to promote home ownership. I +discussed this plan at some length in a statement made public November 14, +last. This plan has been warmly indorsed by the recent National Conference +upon Home Ownership and Housing, whose members were designated by the +governors of the States and the groups interested. + +RECONSTRUCTION FINANCE CORPORATION + +In order that the public may be absolutely assured and that the Government +may be in position to meet any public necessity, I recommend that an +emergency Reconstruction Corporation of the nature of the former War +Finance Corporation should be established. It may not be necessary to use +such an instrumentality very extensively. The very existence of such a +bulwark will strengthen confidence. The Treasury should be authorized to +subscribe a reasonable capital to it, and it should be given authority to +issue its own debentures. It should be placed in liquidation at the end of +two years. Its purpose is that by strengthening the weak spots to thus +liberate the full strength of the Nation's resources. It should be in +position to facilitate exports by American agencies; make advances to +agricultural credit agencies where necessary to protect and aid the +agricultural industry; to make temporary advances upon proper securities to +established industries, railways, and financial institutions which can not +otherwise secure credit, and where such advances will protect the credit +structure and stimulate employment. Its functions would not overlap those +of the National Credit Corporation. + +FEDERAL RESERVE ELIGIBILITY + +On October 6th I issued a statement that I should recommend to the Congress +an extension during emergencies of the eligibility provisions in the +Federal reserve act. This statement was approved by a representative +gathering of the Members of both Houses of the Congress, including members +of the appropriate committees. It was approved by the officials of the +Treasury Department, and I understand such an extension has been approved +by a majority of the governors of the Federal reserve banks. Nothing should +be done which would lower the safeguards of the system. + +The establishment of the mortgage-discount banks herein referred to will +also contribute to further reserve strength in the banks without +inflation. + +BANKING LAWS + +Our people have a right to a banking system in which their deposits shall +be safeguarded and the flow of credit less subject to storms. The need of a +sounder system is plainly shown by the extent of bank failures. I recommend +the prompt improvement of the banking laws. Changed financial conditions +and commercial practices must be met. The Congress should investigate the +need for separation between different kinds of banking; an enlargement of +branch banking under proper restrictions; and the methods by which enlarged +membership in the Federal reserve system may be brought about. + +POSTAL SAVINGS BANKS + +The Postal Savings deposits have increased from about $200,000,000 to about +$550,000,000 during the past year. This experience has raised important +practical questions in relation to deposits and investments which should +receive the attention of the Congress. + +RAILWAYS + +The railways present one of our immediate and pressing problems. They are +and must remain the backbone of our transportation system. Their prosperity +is interrelated with the prosperity of all industries. Their fundamental +service in transportation, the volume of their employment, their buying +power for supplies from other industries, the enormous investment in their +securities, particularly their bonds, by insurance companies, savings +banks, benevolent and other trusts, all reflect their partnership in the +whole economic fabric. Through these institutions the railway bonds are in +a large sense the investment of every family. The well-maintained and +successful operation and the stability of railway finances are of primary +importance to economic recovery. They should have more effective +opportunity to reduce operating costs by proper consolidation. As their +rates must be regulated in public interest, so also approximate regulation +should be applied to competing services by some authority. The methods of +their regulation should be revised. The Interstate Commerce Commission has +made important and far-reaching recommendations upon the whole subject, +which I commend to the early consideration of the Congress. + +ANTITRUST LAWS + +In my message of a year ago I commented on the necessity of congressional +inquiry into the economic action of the antitrust laws. There is wide +conviction that some change should be made especially in the procedure +under these laws. I do not favor their repeal. Such action would open wide +the door to price fixing, monopoly, and destruction of healthy competition. +Particular attention should be given to the industries rounded upon natural +resources, especially where destructive competition produces great wastes +of these resources and brings great hardships upon operators, employees, +and the public. In recent years there has been continued demoralization in +the bituminous coal, oil, and lumber industries. I again commend the matter +to the consideration of the Congress. + +UNEMPLOYMENT + +As an aid to unemployment the Federal Government is engaged in the greatest +program of public-building, harbor, flood-control, highway, waterway, +aviation, merchant and naval ship construction in all history. Our +expenditures on these works during this calendar year will reach about +$780,000,000 compared with $260,000,000 in 1928. Through this increased +construction, through the maintenance of a full complement of Federal +employees, and through services to veterans it is estimated that the +Federal taxpayer is now directly contributing to the livelihood of +10,000,000 of our citizens. + +We must avoid burdens upon the Government which will create more +unemployment in private industry than can be gained by further expansion of +employment by the Federal Government. We can now stimulate employment and +agriculture more effectually and speedily through the voluntary measures in +progress, through the thawing out of credit, through the building up of +stability abroad, through the home loan discount banks, through an +emergency finance corporation and the rehabilitation of the railways and +other such directions. + +I am opposed to any direct or indirect Government dole. The breakdown and +increased unemployment in Europe is due in part to such practices. Our +people are providing against distress from unemployment in true American +fashion by a magnificent response to public appeal and by action of the +local governments. + +GENERAL LEGISLATION + +There are many other subjects requiring legislative action at this session +of the Congress. I may list the following among them: + +VETERANS' SERVICES + +The law enacted last March authorizing loans of 50 per cent upon +adjusted-service certificates has, together with the loans made under +previous laws, resulted in payments of about $1,260,000,000. Appropriations +have been exhausted. The Administrator of Veterans' Affairs advises that a +further appropriation of $200,000,000 is required at once to meet the +obligations made necessary by existing legislation. + +There will be demands for further veterans' legislation; there are +inequalities in our system of veterans' relief; it is our national duty to +meet our obligations to those who have served the Nation. But our present +expenditure upon these services now exceeds $1,000,000,000 per annum. I am +opposed to any extension of these expenditures until the country has +recovered from the present situation. + +ELECTRICAL-POWER REGULATION + +I have recommended in previous messages the effective regulation of +interstate electrical power as the essential function of the reorganized +Federal Power Commission. I renew the recommendation. It is urgently needed +in public protection. + +MUSCLE SHOALS + +At my suggestion, the Governors and Legislatures of Alabama and Tennessee +selected three members each for service on a committee to which I appointed +a representative of the farm organizations and two representatives of the +War Department for the purpose of recommending a plan for the disposal of +these properties which would be in the interest of the people of those +States and the agricultural industry throughout the country. I shall +transmit the recommendations to the Congress. + +REORGANIZATION OF FEDERAL DEPARTMENTS + +I have referred in previous messages to the profound need of further +reorganization and consolidation of Federal administrative functions to +eliminate overlap and waste, and to enable coordination and definition of +Government policies now wholly impossible in scattered and conflicting +agencies which deal with parts of the same major function. I shall lay +before the Congress further recommendations upon this subject, particularly +in relation to the Department of the Interior. There are two directions of +such reorganization, however, which have an important bearing upon the +emergency problems with which we are confronted. + +SHIPPING BOARD + +At present the Shipping Board exercises large administrative functions +independent of the Executive. These administrative functions should be +transferred to the Department of Commerce, in keeping with that single +responsibility which has been the basis of our governmental structure since +its foundation. There should be created in that department a position of +Assistant Secretary for Merchant Marine, under whom this work and the +several bureaus having to do with merchant marine may be grouped. + +The Shipping Board should be made a regulatory body acting also in advisory +capacity on loans and policies, in keeping with its original conception. +Its regulatory powers should be amended to include regulation of coastwise +shipping so as to assure stability and better service. It is also worthy of +consideration that the regulation of rates and services upon the inland +waterways should be assigned to such a reorganized board. + +REORGANIZATION OF PUBLIC WORKS ADMINISTRATION + +I recommend that all building and construction activities of the Government +now carried on by many departments be consolidated into an independent +establishment under the President to be known as the "Public Works +Administration" directed by a Public Works Administrator. This agency +should undertake all construction work in service to the different +departments of the Government (except naval and military work). The +services of the Corps of Army Engineers should be delegated in rotation for +military duty to this administration in continuation of their supervision +of river and harbor work. Great economies, sounder policies, more effective +coordination to employment, and expedition in all construction work would +result from this consolidation. + +LAW ENFORCEMENT + +I shall present some recommendations in a special message looking to the +strengthening of criminal-law enforcement and improvement in judicial +procedure connected therewith. + +INLAND WATERWAY AND HARBOR IMPROVEMENT + +These improvements are now proceeding upon an unprecedented scale. Some +indication of the volume of work in progress is conveyed by the fact that +during the current year over 380,000,000 cubic yards of material have been +moved--an amount equal to the entire removal in the construction of the +Panama Canal. The Mississippi waterway system, connecting Chicago, Kansas +City, Pittsburgh, and New Orleans, will be in full operation during 1933. +Substantial progress is being made upon the projects of the upper Missouri, +upper Mississippi, etc. + +Negotiations are now in progress with Canada for the construction of the +St. Lawrence Waterway. + +THE TARIFF + +Wages and standards of living abroad have been materially lowered during +the past year. The temporary abandonment of the gold standard by certain +countries has also reduced their production costs compared to ours. +Fortunately any increases in the tariff which may be necessary to protect +agriculture and industry from these lowered foreign costs, or decreases in +items which may prove to be excessive, may be undertaken at any time by the +Tariff Commission under authority which it possesses by virtue of the +tariff act of 1930. The commission during the past year has reviewed the +rates upon over 254 items subject to tariff. As a result of vigorous and +industrious action, it is up to date in the consideration of pending +references and is prepared to give prompt attention to any further +applications. This procedure presents an orderly method for correcting +inequalities. I am opposed to any general congressional revision of the +tariff. Such action would disturb industry, business, and agriculture. It +would prolong the depression. + +IMMIGRATION AND DEPORTATION + +I recommend that immigration restriction now in force under administrative +action be placed upon a more definite basis by law. The deportation laws +should be strengthened. Aliens lawfully in the country should be protected +by the issuance of a certificate of residence. + +PUBLIC HEALTH + +I again call attention to my previous recommendations upon this subject, +particularly in its relation to children. The moral results are of the +utmost importance. + +CONCLUSION + +It is inevitable that in these times much of the legislation proposed to +the Congress and many of the recommendations of the Executive must be +designed to meet emergencies. In reaching solutions we must not jeopardize +those principles which we have found to be the basis of the growth of the +Nation. The Federal Government must not encroach upon nor permit local +communities to abandon that precious possession of local initiative and +responsibility. Again, just as the largest measure of responsibility in the +government of the Nation rests upon local self-government, so does the +largest measure of social responsibility in our country rest upon the +individual. If the individual surrenders his own initiative and +responsibilities, he is surrendering his own freedom and his own liberty. +It is the duty of the National Government to insist that both the local +governments and the individual shall assume and bear these responsibilities +as a fundamental of preserving the very basis of our freedom. + +Many vital changes and movements of vast proportions are taking place in +the economic world. The effect of these changes upon the future can not be +seen clearly as yet. Of this, however, we are sure: Our system, based upon +the ideals of individual initiative and of equality of opportunity, is not +an artificial thing. Rather it is the outgrowth of the experience of +America, and expresses the faith and spirit of our people. It has carried +us in a century and a half to leadership of the economic world. If our +economic system does not match our highest expectations at all times, it +does not require revolutionary action to bring it into accord with any +necessity that experience may prove. It has successfully adjusted itself to +changing conditions in the past. It will do so again. The mobility of our +institutions, the richness of our resources, and the abilities of our +people enable us to meet them unafraid. It is a distressful time for many +of our people, but they have shown qualities as high in fortitude, courage, +and resourcefulness as ever in our history. With that spirit, I have faith +that out of it will come a sounder life, a truer standard of values, a +greater recognition of the results of honest effort, and a healthier +atmosphere in which to rear our children. Ours must be a country of such +stability and security as can not fail to carry forward and enlarge among +all the people that abundant life of material and spiritual opportunity +which it has represented among all nations since its beginning. + +The White House, + +December 8, 1931 + +*** + +State of the Union Address +Herbert Hoover +December 6, 1932 + +To the Senate and House of Representatives: + +In accord with my constitutional duty, I transmit herewith to the Congress +information upon the state of the Union together with recommendation of +measures for its consideration. + +Our country is at peace. Our national defense has been maintained at a high +state of effectiveness. All of the executive departments of the Government +have been conducted during the year with a high devotion to public +interest. There has been a far larger degree of freedom from industrial +conflict than hitherto known. Education and science have made further +advances. The public health is to-day at its highest known level. While we +have recently engaged in the aggressive contest of a national election, its +very tranquillity and the acceptance of its results furnish abundant proof +of the strength of our institutions. + +In the face of widespread hardship our people have demonstrated daily a +magnificent sense of humanity, of individual and community responsibility +for the welfare of the less fortunate. They have grown in their conceptions +and organization for cooperative action for the common welfare. + +In the provision against distress during this winter, the great private +agencies of the country have been mobilized again; the generosity of our +people has again come into evidence to a degree in which all America may +take great pride. Likewise the local authorities and the States are engaged +everywhere in supplemental measures of relief. The provisions made for +loans from the Reconstruction Finance Corporation, to States that have +exhausted their own resources, guarantee that there should be no hunger or +suffering from cold in the country. The large majority of States are +showing a sturdy cooperation in the spirit of the Federal aid. + +The Surgeon General, in charge of the Public Health Service, furnishes me +with the following information upon the state of public health: + +MORTALITY RATE PER 1,000 OF POPULATION ON AN ANNUAL BASIS FROM +REPRESENTATIVE STATES - General - Infant + +First 9 months of-- - - + +1928 - 11.9 - 67.8 + +1929 - 12.0 - 65.8 + +1930 - 11.4 - 62.0 + +1931 - 11.2 - 60.0 + +1932 - 10.6 - 55.0 + +The sickness rates from data available show the same trends. These facts +indicate the fine endeavor of the agencies which have been mobilized for +care of those in distress. + +ECONOMIC SITUATION + +The unparalleled world-wide economic depression has continued through the +year. Due to the European collapse, the situation developed during last +fall and winter into a series of most acute crises. The unprecedented +emergency measures enacted and policies adopted undoubtedly saved the +country from economic disaster. After serving to defend the national +security, these measures began in July to show their weight and influence +toward improvement of conditions in many parts of the country. The +following tables of current business indicators show the general economic +movement during the past eleven months. + +MONTHLY BUSINESS INDICES WITH SEASONAL VARIATIONS ELIMINATED + +Year and Month - Industrial Production - Factory Employment - Freight-car +loadings - Department Store sales, value - Exports, value - Imports, value +- Building Contracts, all types - Industrial Electric power consumption + +1931 - - - - - - - - + +December - 74 - 69.4 - 69 - 81 - 46 - 48 - 38 - 89.1 + +1932 - - - - - - - - + +January - 72 - 68.1 - 64 - 78 - 39 - 42 - 31 - 93.9 + +February - 69 - 67.8 - 62 - 78 - 45 - 41 - 27 - 98.8 + +March - 67 - 66.4 - 61 - 72 - 41 - 37 - 26 - 88.0 + +April - 63 - 64.3 - 59 - 80 - 38 - 36 - 27 - 82.2 + +May - 60 - 62.1 - 54 - 73 - 37 - 34 - 26 - 82.0 + +June - 59 - 60.0 - 52 - 71 - 34 - 36 - 27 - 78.1 + +July - 58 - 58.3 - 51 - 67 - 32 - 27 - 27 - 79.2 + +August - 60 - 58.8 - 51 - 66 - 31 - 29 - 30 - 73.5 + +September - 66 - 60.3 - 54 - 70 - 33 - 32 - 30 - 84.0 + +October - 66 - 61.1 - 57 - 70 - 33 - 32 - 29 - 84.4 + +The measures and policies which have procured this turn toward recovery +should be continued until the depression is passed, and then the emergency +agencies should be promptly liquidated. The expansion of credit facilities +by the Federal Reserve System and the Reconstruction Finance Corporation +has been of incalculable value. The loans of the latter for reproductive +works, and to railways for the creation of employment; its support of the +credit structure through loans to banks, insurance companies, railways, +building and loan associations, and to agriculture has protected the +savings and insurance policies of millions of our citizens and has relieved +millions of borrowers from duress; they have enabled industry and business +to function and expand. The assistance given to Farm Loan Banks, the +establishment of the Home Loan Banks and Agricultural Credit +Associations--all in their various ramifications have placed large sums of +money at the disposal of the people in protection and aid. Beyond this, the +extensive organization of the country in voluntary action has produced +profound results. + +The following table indicates direct expenditures of the Federal Government +in aid to unemployment, agriculture, and financial relief over the past +four years. The sums applied to financial relief multiply themselves many +fold, being in considerable measure the initial capital supplied to the +Reconstruction Finance Corporation, Farm Loan Banks, etc., which will be +recovered to the Treasury. + +- Public works (1) - Agricultural relief and financial loans + +Fiscal year ending June 30 - - + +1930 - $410,420,000 - $156,100,000 + +1931 - 574,870,000 - 196,700,000 + +1932 - 655,880,000 - 772,700,000 + +1933 - 717,260,000 - 52,000,000 - + + + + + + + + + +End of the Project Gutenberg EBook of State of the Union Addresses of +Herbert Hoover, by Herbert Hoover + +*** END OF THIS PROJECT GUTENBERG EBOOK STATE OF THE UNION ADDRESSES *** + +***** This file should be named 5037.txt or 5037.zip ***** +This and all associated files of various formats will be found in: + http://www.gutenberg.org/5/0/3/5037/ + +Produced by James Linden. 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Do not change or edit the +header without written permission. + +Please read the "legal small print," and other information about the +eBook and Project Gutenberg at the bottom of this file. Included is +important information about your specific rights and restrictions in +how the file may be used. You can also find out about how to make a +donation to Project Gutenberg, and how to get involved. + + +**Welcome To The World of Free Plain Vanilla Electronic Texts** + +**eBooks Readable By Both Humans and By Computers, Since 1971** + +*****These eBooks Were Prepared By Thousands of Volunteers!***** + + +Title: State of the Union Addresses of Herbert Hoover + +Author: Herbert Hoover + +Release Date: February, 2004 [EBook #5037] +[Yes, we are more than one year ahead of schedule] +[This file was first posted on April 11, 2002] + +Edition: 10 + +Language: English + +Character set encoding: ASCII + +*** START OF THE PROJECT GUTENBERG EBOOK OF ADDRESSES BY HERBERT HOOVER *** + + + + +This eBook was produced by James Linden. + +The addresses are separated by three asterisks: *** + +Dates of addresses by Herbert Hoover in this eBook: + December 3, 1929 + December 2, 1930 + December 8, 1931 + December 6, 1932 + + + +*** + +State of the Union Address +Herbert Hoover +December 3, 1929 + +To the Senate and House of Representatives: + +The Constitution requires that the President "shall, from time to time, +give to the Congress information of the state of the Union, and recommend +to their consideration such measures as he shall judge necessary and +expedient." In complying with that requirement I wish to emphasize that +during the past year the Nation has continued to grow in strength; our +people have advanced in comfort; we have gained in knowledge; the education +of youth has been more widely spread; moral and spiritual forces have been +maintained; peace has become more assured. The problems with which we are +confronted are the problems of growth and of progress. In their solution we +have to determine the facts, to develop the relative importance to be +assigned to such facts, to formulate a common judgment upon them, and to +realize solutions in spirit of conciliation. + +FOREIGN RELATIONS + +We are not only at peace with all the world, but the foundations for future +peace are being substantially strengthened. To promote peace is our +long-established policy. Through the Kellogg-Briand pact a great moral +standard has been raised in the world. By it fifty-four nations have +covenanted to renounce war and to settle all disputes by pacific means. +Through it a new world outlook has been inaugurated which has profoundly +affected the foreign policies of nations. Since its inauguration we have +initiated new efforts not only in the organization of the machinery of +peace but also to eliminate dangerous forces which produce controversies +amongst nations. + +In January, 1926, the Senate gave its consent to adherence to the Court of +International Justice with certain reservations. In September of this year +the statute establishing the court has, by the action of the nations +signatory, been amended to meet the Senate's reservations and to go even +beyond those reservations to make clear that the court is a true +international court of justice. I believe it will be clear to everyone that +no controversy or question in which this country has or claims an interest +can be passed on by the court without our consent at the time the question +arises. The doubt about advisory opinions has been completely safeguarded. +Our adherence to the International Court is, as now constituted, not the +slightest step toward entry into the League of Nations. As I have before +indicated, I shall direct that our signature be affixed to the protocol of +adherence and shall submit it for the approval of the Senate with a special +message at some time when it is convenient to deal with it. + +In the hope of reducing friction in the world, and with the desire that we +may reduce the great economic burdens of naval armament, we have joined in +conference with Great Britain, France, Italy, and Japan to be held in +London in January to consider the further limitation and reduction of naval +arms. We hold high hopes that success may attend this effort. + +At the beginning of the present administration the neighboring State of +Mexico was best with domestic insurrection. We maintained the embargo upon +the shipment of arms to Mexico but permitted the duly constituted +Government to procure supplies from our surplus war stocks. Fortunately, +the Mexican Government by its own strength successfully withstood the +insurrection with but slight damage. Opportunity of further peaceful +development is given to that country. At the request of the Mexican +Government, we have since lifted the embargo on shipment of arms +altogether. The two governments have taken further steps to promote +friendly relationships and so solve our differences. Conventions prolonging +for a period of two years the life of the general and special claims +commissions have been concluded. + +In South America we are proud to have had part in the settlement of the +long-standing dispute between Chile and Peru in the disposal of the +question of Tacna-Arica. + +The work of the commission of inquiry and conciliation between Bolivia and +Paraguay, in which a representative of this Government participated, has +successfully terminated an incident which seemed to threaten war. The +proposed plan for final settlement as suggested by the neutral governments +is still under consideration. + +This Government has continued its efforts to act as a mediator in boundary +difficulties between Guatemala and Honduras. + +A further instance of profound importance in establishing good will was the +inauguration of regular air mail service between the United States and +Caribbean, Central American, and South American countries. + +We still have marines on foreign soil--in Nicaragua, Haiti, and China. In +the large sense we do not wish to be represented abroad in such manner. +About 1,600 marines remain in Nicaragua at the urgent request of that +government and the leaders of all parties pending the training of a +domestic constabulary capable of insuring tranquility. We have already +reduced these forces materially and we are anxious to withdraw them further +as the situation warrants. In Haiti we have about 700 marines, but it is a +much more difficult problem, the solution of which is still obscure. If +Congress approves, I shall dispatch a commission to Haiti to review and +study the matter in an endeavor to arrive at some more definite policy than +at present. Our forces in China constitute 2,605 men, which we hope also +further to reduce to the normal legation guard. + +It is my desire to establish more firmly our understanding and +relationships with the Latin American countries by strengthening the +diplomatic missions to those countries. It is my hope to secure men long +experienced in our Diplomatic Service, who speak the languages of the +peoples to whom they are accredited, as chiefs of our diplomatic missions +in these States. I shall send to the Senate at an early date the +nominations of several such men. + +The Congress has by numerous wise and foresighted acts in the past few +years greatly strengthened the character of our representation abroad. It +has made liberal provision for the establishment of suitable quarters for +our foreign staffs in the different countries. In order, however, that we +may further develop the most effective force in this, one of the most +responsible functions of our Government, I shall recommend to the Congress +more liberal appropriations for the work of the State Department. I know of +no expenditure of public money from which a greater economic and moral +return can come to us than by assuring the most effective conduct of our +foreign relations. + +NATIONAL DEFENSE + +To preserve internal order and freedom from encroachment is the first +purpose of government. Our Army and Navy are being maintained in a most +efficient state under officers of high intelligence and zeal. The extent +and expansion of their numbers and equipment as at present authorized are +ample for this purpose. + +We can well be deeply concerned, however, at the growing expense. From a +total expenditure for national defense purposes in 1914 of $267,000,000, it +naturally rose with the Great War, but receded again to $612,000,000 in +1924, when again it began to rise until during the current fiscal year the +expenditures will reach to over $730,000,000, excluding all civilian +services of those departments. Programs now authorized will carry it to +still larger figures in future years. While the remuneration paid to our +soldiers and sailors is justly at a higher rate than that of any other +country in the world, and while the cost of subsistence is higher, yet the +total of our expenditures is in excess of those of the most highly +militarized nations of the world. + +Upon the conference shortly to be held in London will depend such +moderation as we can make in naval expenditure. If we shall be compelled to +undertake the naval construction implied in the Washington arms treaty as +well as other construction which would appear to be necessary if no +international agreement can be completed, we shall be committed during the +next six years to a construction expenditure of upward of $1,200,000,000 +besides the necessary further increase in costs for annual upkeep. + +After 1914 the various Army contingents necessarily expanded to the end of +the Great War and then receded to the low point in 1924, when expansion +again began. In 1914 the officers and men in our regular forces, both Army +and Navy, were about 164,000, in 1924 there were about 256,000, and in 1929 +there were about 250,000. Our citizens' army, however, including the +National Guard and other forms of reserves, increase these totals up to +about 299,000 in 1914, about 672,000 in 1924, and about 728,000 in 1929. + +Under the Kellogg pact we have undertaken never to use war as an instrument +of national policy. We have, therefore, undertaken by covenant to use these +equipments solely for defensive purposes. From a defense point of view our +forces should be proportioned to national need and should, therefore, to +some extent be modified by the prospects of peace, which were never +brighter than to-day. + +It should be borne in mind that the improvement in the National Guard by +Federal support begun in 1920 has definitely strengthened our national +security by rendering them far more effective than ever heretofore. The +advance of aviation has also greatly increased our effectiveness in +defense. In addition to the very large program of air forces which we are +maintaining in the Army and Navy, there has been an enormous growth of +commercial aviation. This has provided unanticipated reserves in +manufacturing capacity and in industrial and air personnel, which again +adds to our security. + +I recommend that Congress give earnest consideration to the possibilities +of prudent action which will give relief from our continuously mounting +expenditures. + +FINANCES OF THE GOVERNMENT + +The finances of the Government are in sound condition. I shall submit the +detailed evidences and the usual recommendations in the special Budget +message. I may, however, summarize our position. The public debt on June 30 +this year stood at $16,931,000,000, compared to the maximum in August, +1919, of $26,596,000,000. Since June 30 it has been reduced by a further +$238,000,000. In the Budget to be submitted the total appropriations +recommended for the fiscal year 1931 are $3,830,445,231, as compared to +$3,976,141,651 for the present fiscal year. The present fiscal year, +however, includes $150,000,000 for the Federal Farm Board, as to which no +estimate can as yet be determined for 1931. + +Owing to the many necessary burdens assumed by Congress in previous years +which now require large outlays, it is with extreme difficulty that we +shall be able to keep the expenditures for the next fiscal year within the +bounds of the present year. Economies in many directions have permitted +some accommodation of pressing needs, the net result being an increase, as +shown above, of about one-tenth of 1 per cent above the present fiscal +year. We can not fail to recognize the obligations of the Government in +support of the public welfare but we must coincidentally bear in mind the +burden of taxes and strive to find relief through some tax reduction. Every +dollar so returned fertilizes the soil of prosperity. + +TAX REDUCTION + +The estimate submitted to me by the Secretary of the Treasury and the +Budget Director indicates that the Government will close the fiscal year +1930 with a surplus of about $225,000,000 and the fiscal year 1931 with a +surplus of about $123,000,000. Owing to unusual circumstances, it has been +extremely difficult to estimate future revenues with accuracy. + +I believe, however, that the Congress will be fully justified in giving the +benefits of the prospective surpluses to the taxpayers, particularly as +ample provision for debt reduction has been made in both years through the +form of debt retirement from ordinary revenues. In view of the uncertainty +in respect of future revenues and the comparatively small size of the +indicated surplus in 1931, relief should take the form of a provisional +revision of tax rates. + +I recommend that the normal income tax rates applicable to the incomes of +individuals for the calendar year 1929 be reduced from 5, 3, and 1 ½ +per cent, to 4, 2, and ½ per cent, and that the tax on the income of +corporations for the calendar year 1929 be reduced from 12 to 11 per cent. +It is estimated that this will result in a reduction of $160,000,000 in +income taxes to be collected during the calendar year 1930. The loss in +revenue will be divided approximately equally between the fiscal years 1930 +and 1931. Such a program will give a measure of tax relief to the maximum +number of taxpayers, with relatively larger benefits to taxpayers with +small or moderate incomes. + +FOREIGN DEBTS + +The past year has brought us near to completion of settlements of the +indebtedness of foreign governments to the United States. + +The act of Congress approved February 4, 1929, authorized the settlement +with the Government of Austria along lines similar to the terms of +settlement offered by that Government to its other relief creditors. No +agreement has yet been concluded with that government, but the form of +agreement has been settled and its execution only awaits the Government of +Austria securing the assent by all the other relief creditors of the terms +offered. The act of Congress approved February 14, 1929, authorized the +settlement with the Government of Greece, and an agreement was concluded on +May 10, 1929. + +The Government of France ratified the agreement with us on July 27, 1929. +This agreement will shortly be before the Congress and I recommend its +approval. + +The only indebtedness of foreign governments to the United States now +unsettled is that of Russia and Armenia. + +During the past year a committee of distinguished experts under American +leadership submitted a plan looking to a revision of claims against Germany +by the various Governments. The United States denied itself any +participation in the war settlement of general reparations and our claims +are comparatively small in amount. They arise from costs of the army of +occupation and claims of our private citizens for losses under awards from +the Mixed Claims Commission established under agreement with the German +Government. In finding a basis for settlement it was necessary for the +committee of experts to request all the Governments concerned to make some +contribution to the adjustment and we have felt that we should share a +proportion of the concessions made. + +The State and Treasury Departments will be in a position shortly to submit +for your consideration a draft of an agreement to be executed between the +United States and Germany providing for the payments of these revised +amounts. A more extensive statement will be submitted at that time. + +The total amount of indebtedness of the various countries to the United +States now funded is $11,579,465,885. This sum was in effect provided by +the issue of United States Government bonds to our own people. The payments +of the various Governments to us on account of principal and interest for +1930 are estimated at a total of about $239,000,000, for 1931 at about +$236,000,000, for 1932 at about $246,000,000. The measure of American +compromise in these settlements may be appreciated from the fact that our +taxpayers are called upon to find annually about $475,000,000 in interest +and in addition to redeem the principal of sums borrowed by the United +States Government for these purposes. + +ALIEN ENEMY PROPERTY + +The wise determination that this property seized in war should be returned +to its owners has proceeded with considerable rapidity. Of the original +seized cash and property (valued at a total of about $625,000,000), all but +$111,566,700 has been returned. Most of the remainder should be disposed of +during the next year. + +GENERAL ECONOMIC SITUATION + +The country has enjoyed a large degree of prosperity and sound progress +during the past year with a steady improvement in methods of production and +distribution and consequent advancement in standards of living. Progress +has, of course, been unequal among industries, and some, such as coal, +lumber, leather, and textiles, still lag behind. The long upward trend of +fundamental progress, however, gave rise to over-optimism as to profits, +which translated itself into a wave of uncontrolled speculation in +securities, resulting in the diversion of capital from business to the +stock market and the inevitable crash. The natural consequences have been a +reduction in the consumption of luxuries and semi-necessities by those who +have met with losses, and a number of persons thrown temporarily out of +employment. Prices of agricultural products dealt in upon the great markets +have been affected in sympathy with the stock crash. + +Fortunately, the Federal reserve system had taken measures to strengthen +the position against the day when speculation would break, which together +with the strong position of the banks has carried the whole credit system +through the crisis without impairment. The capital which has been hitherto +absorbed in stock-market loans for speculative purposes is now returning to +the normal channels of business. There has been no inflation in the prices +of commodities; there has been no undue accumulation of goods, and foreign +trade has expanded to a magnitude which exerts a steadying influence upon +activity in industry and employment. + +The sudden threat of unemployment and especially the recollection of the +economic consequences of previous crashes under a much less secured +financial system created unwarranted pessimism and fear. It was recalled +that past storms of similar character had resulted in retrenchment of +construction, reduction of wages, and laying off of workers. The natural +result was the tendency of business agencies throughout the country to +pause in their plans and proposals for continuation and extension of their +businesses, and this hesitation unchecked could in itself intensify into a +depression with widespread unemployment and suffering. + +I have, therefore, instituted systematic, voluntary measures of cooperation +with the business institutions and with State and municipal authorities to +make certain that fundamental businesses of the country shall continue as +usual, that wages and therefore consuming power shall not be reduced, and +that a special effort shall be made to expand construction work in order to +assist in equalizing other deficits in employment. Due to the enlarged +sense of cooperation and responsibility which has grown in the business +world during the past few years the response has been remarkable and +satisfactory. We have canvassed the Federal Government and instituted +measures of prudent expansion in such work that should be helpful, and upon +which the different departments will make some early recommendations to +Congress. + +I am convinced that through these measures we have reestablished +confidence. Wages should remain stable. A very large degree of industrial +unemployment and suffering which would otherwise have occurred has been +prevented. Agricultural prices have reflected the returning confidence. The +measures taken must be vigorously pursued until normal conditions are +restored. AGRICULTURE + +The agricultural situation is improving. The gross farm income as estimated +by the Department of Agriculture for the crop season 1926-27 was +$12,100,000,000; for 1927-28 it was $12,300,000,000; for 1928-29 it was +$12,500,000,000; and estimated on the basis of prices since the last +harvest the value of the 1929-30 crop would be over $12,650,000,000. The +slight decline in general commodity prices during the past few years +naturally assists the farmers' buying power. + +The number of farmer bankruptcies is very materially decreased below +previous years. The decline in land values now seems to be arrested and +rate of movement from the farm to the city has been reduced. Not all +sections of agriculture, of course, have fared equally, and some areas have +suffered from drought. Responsible farm leaders have assured me that a +large measure of confidence is returning to agriculture and that a feeling +of optimism pervades that industry. + +The most extensive action for strengthening the agricultural industry ever +taken by any government was inaugurated through the farm marketing act of +June 15 last. Under its provisions the Federal Farm Board has been +established, comprised of men long and widely experienced in agriculture +and sponsored by the farm organizations of the country. During its short +period of existence the board has taken definite steps toward a more +efficient organization of agriculture, toward the elimination of waste in +marketing, and toward the upbuilding of farmers' marketing organizations on +sounder and more efficient lines. Substantial headway has been made in the +organization of four of the basic commodities--grain, cotton, livestock, +and wool. Support by the board to cooperative marketing organizations and +other board activities undoubtedly have served to steady the farmers' +market during the recent crisis and have operated also as a great stimulus +to the cooperative organization of agriculture. The problems of the +industry are most complex, and the need for sound organization is +imperative. Yet the board is moving rapidly along the lines laid out for it +in the act, facilitating the creation by farmers of farmer-owned and +farmer-controlled organizations and federating them into central +institutions, with a view to increasing the bargaining power of +agriculture, preventing and controlling surpluses, and mobilizing the +economic power of agriculture. + +THE TARIFF + +The special session of Congress was called to expedite the fulfillment of +party pledges of agricultural relief and the tariff. The pledge of farm +relief has been carried out. At that time I stated the principles upon +which I believed action should be taken in respect to the tariff: "An +effective tariff upon agricultural products, that will compensate the +farmer's higher costs and higher standards of living, has a dual purpose. +Such a tariff not only protects the farmer in our domestic market but it +also stimulates him to diversify his crops and to grow products that he +could not otherwise produce, and thus lessens his dependence upon exports +to foreign markets. The great expansion of production abroad under the +conditions I have mentioned renders foreign competition in our export +markets increasingly serious. It seems but natural, therefore, that the +American farmer, having been greatly handicapped in his foreign market by +such competition from the younger expanding countries, should ask that +foreign access to our domestic market should be regulated by taking into +account the differences in our costs of production. + +"In considering the tariff for other industries than agriculture, we find +that there have been economic shifts necessitating a readjustment of some +of the tariff schedules. Seven years of experience under the tariff bill +enacted in 1922 have demonstrated the wisdom of Congress in the enactment +of that measure. On the whole it has worked well. In the main our wages +have been maintained at high levels; our exports and imports have steadily +increased; with some exceptions our manufacturing industries have been +prosperous. Nevertheless, economic changes have taken place during that +time which have placed certain domestic products at a disadvantage and new +industries have come into being, all of which create the necessity for some +limited changes in the schedules and in the administrative clauses of the +laws as written in 1922. + +"It would seem to me that the test of necessity for revision is, in the +main, whether there has been a substantial slackening of activity in an +industry during the past few years, and a consequent decrease of employment +due to insurmountable competition in the products of that industry. It is +not as if we were setting up a new basis of protective duties. We did that +seven years ago. What we need to remedy now is whatever substantial loss of +employment may have resulted from shifts since that time. + +"In determining changes in our tariff we must not fail to take into account +the broad interests of the country as a whole, and such interests include +our trade relations with other countries." No condition has arisen in my +view to change these principles stated at the opening of the special +session. I am firmly of the opinion that their application to the pending +revision will give the country the kind of a tariff law it both needs and +wants. It would be most helpful if action should be taken at an early +moment, more especially at a time when business and agriculture are both +cooperating to minimize future uncertainties. It is just that they should +know what the rates are to be. + +Even a limited revision requires the consideration and readjustment of many +items. The exhaustive inquiries and valuable debate from men representative +of all parts of the country which is needed to determine the detailed rates +must necessarily be accomplished in the Congress. However perfectly this +rate structure may be framed at any given time, the shifting of economic +forces which inevitably occurs will render changes in some items desirable +between the necessarily long intervals of congressional revision. +Injustices are bound to develop, such as were experienced by the dairymen, +the flaxseed producers, the glass industry, and others, under the 1922 +rates. For this reason, I have been most anxious that the broad principle +of the flexible tariff as provided in the existing law should be preserved +and its delays in action avoided by more expeditious methods of determining +the costs of production at home and abroad, with executive authority to +promulgate such changes upon recommendation of the Tariff Commission after +exhaustive investigation. Changes by the Congress in the isolated items +such as those to which I have referred would have been most unlikely both +because of the concentrations of oppositions in the country, who could see +no advantage to their own industry or State, and because of the difficulty +of limiting consideration by the Congress to such isolated cases. + +There is no fundamental conflict between the interests of the farmer and +the worker. Lowering of the standards of living of either tends to destroy +the other. The prosperity of one rests upon the well-being of the other. +Nor is there any real conflict between the East and the West or the North +and the South in the United States. The complete interlocking of economic +dependence, the common striving for social and spiritual progress, our +common heritage as Americans, and the infinite web of national sentiment, +have created a solidarity in a great people unparalleled in all human +history. These invisible bonds should not and can not be shattered by +differences of opinion growing out of discussion of a tariff. + +PUBLIC BUILDINGS + +Under the provisions of various acts of Congress $300,000,000 has been +authorized for public buildings and the land upon which to construct them, +being $75,000,000 for the District of Columbia and $225,000,000 for the +country at large. Excluding $25,000,000 which is for the acquisition of +land in the so-called "triangle" in this city, this public building +legislation provides for a five-year program for the District of Columbia +and between an eight and nine year program for the country at large. Of +this sum approximately $27,400,000 was expended up to June 30 last, of +which $11,400,000 has been expended in the District and $16,000,000 +outside. + +Even this generous provision for both the District of Columbia and the +country is insufficient For most pressing governmental needs. Expensive +rents and inadequate facilities are extravagance and not economy. In the +District even after the completion of these projects we shall have fully +20,000 clerks housed in rented and temporary war buildings which can last +but a little longer. + +I therefore recommend that consideration should be given to the extension +of authorizations both for the country at large and for the District of +Columbia again distributed over a term of years. A survey of the need in +both categories has been made by the Secretary of the Treasury and the +Postmaster General. It would be helpful in the present economic situation +if such steps were taken as would enable early construction work. + +An expedition and enlargement of the program in the District would bring +about direct economies in construction by enabling the erection of +buildings in regular sequence. By maintaining a stable labor force in the +city, contracts can be made on more advantageous terms. + +The earlier completion of this program which is an acknowledged need would +add dignity to the celebration in 1932 of the two hundredth anniversary of +the birth of President Washington. + +In consideration of these projects which contribute so much to dignify the +National Capital I should like to renew the suggestion that the Fine Arts +Commission should be required to pass upon private buildings which are +proposed for sites facing upon public buildings and parks. Without such +control much of the effort of the Congress in beautification of the Capital +will be minimized. + +THE WATERWAYS AND FLOOD CONTROL + +The development of inland waterways has received new impulse from the +completion during this year of the canalization of the Ohio to a uniform +9-foot depth. The development of the other segments of the Mississippi +system should be expedited and with this in view I am recommending an +increase in appropriations for rivers and harbors from $50,000,000 to +$55,000,000 per annum which, together with about $4,000,000 per annum +released by completion of the Ohio, should make available after providing +for other river and harbor works a sum of from $25,000,000 to $30,000,000 +per annum for the Mississippi system and thus bring it to early +completion. + +Conflict of opinion which has arisen over the proposed floodway from the +Arkansas River to the Gulf of Mexico via the Atchafalaya River has led me +to withhold construction upon this portion of the Mississippi flood control +plan until it could be again reviewed by the engineers for any further +recommendation to Congress. The other portions of the project are being +vigorously prosecuted and I have recommended an increase in appropriations +for this from $30,000,000 of the present year to $35,000,000 during the +next fiscal year. + +Expansion of our intracoastal waterways to effective barge depths is well +warranted. We are awaiting the action of Canada upon the St. Lawrence +waterway project. HIGHWAYS + +There are over 3,000,000 miles of legally established highways in the +United States, of which about 10 per cent are included in the State highway +systems, the remainder being county and other local roads. About 626,000 +miles have been improved with some type of surfacing, comprising some 63 +per cent of the State highway systems and 16 per cent of the local roads. +Of the improved roads about 102,000 miles are hard surfaced, comprising +about 22 per cent of the State highway systems and about 8 per cent of the +local roads. + +While proper planning should materially reduce the listed mileage of public +roads, particularly in the agricultural districts, and turn these roads +back to useful purposes, it is evident that road construction must be a +long-continued program. Progress in improvement is about 50,000 miles of +all types per annum, of which some 12,000 miles are of the more durable +types. The total expenditures of Federal, State, and local governments last +year for construction and maintenance assumed the huge total of +$1,660,000,000. + +Federal aid in the construction of the highway systems in conjunction with +the States has proved to be beneficial and stimulating. We must ultimately +give consideration to the increase of our contribution to these systems, +particularly with a view to stimulating the improvement of farm-to-market +roads. + +POST OFFICE + +Our Post Office deficit has now increased to over $80,000,000 a year, of +which perhaps $14,000,000 is due to losses on ocean mail and air mail +contracts. The department is making an exhaustive study of the sources of +the deficit with view to later recommendation to Congress in respect to +it. + +The Post Office quarters are provided in part by the Federal construction, +in part by various forms of rent and lease arrangements. The practice has +grown up in recent years of contracting long term leases under which both +rent and amortization principal cost of buildings is included. I am advised +that fully 40 per cent could be saved from many such rent and lease +agreements even after allowing interest on the capital required at the +normal Government rate. There are also many objectionable features to some +of these practices. The provision of adequate quarters for the Post Office +should be put on a sound basis. + +A revision of air mail rates upon a more systematic and permanent footing +is necessary. The subject is under study, and if legislation should prove +necessary the subject will be presented to the Congress. In the meantime I +recommend that the Congress should consider the desirability of authorizing +further expansion of the South American services. + +COMMERCIAL AVIATION + +During the past year progress in civil aeronautics has been remarkable. +This is to a considerable degree due to the wise assistance of the Federal +Government through the establishment and maintenance of airways by the +Department of Commerce and the mail contracts from the Post Office +Department. The Government-improved airways now exceed 25,000 miles--more +than 14,000 miles of which will be lighted and equipped for night-flying +operations by the close of the current year. Airport construction through +all the States is extremely active. There are now 1,000 commercial and +municipal airports in operation with an additional 1,200 proposed for early +development. + +Through this assistance the Nation is building a sound aviation system, +operated by private enterprise. Over 6,400 planes are in commercial use, +and 9,400 pilots are licensed by the Government. Our manufacturing capacity +has risen to 7,500 planes per annum. The aviation companies have increased +regular air transportation until it now totals 90,000 miles per +day--one-fourth of which is flown by night. Mail and express services now +connect our principal cities, and extensive services for passenger +transportation have been inaugurated, and others of importance are +imminent. American air lines now reach into Canada and Mexico, to Cuba, +Porto Rico, Central America, and most of the important countries of South +America. RAILWAYS + +As a whole, the railroads never were in such good physical and financial +condition, and the country has never been so well served by them. The +greatest volume of freight traffic ever tendered is being carried at a +speed never before attained and with satisfaction to the shippers. +Efficiencies and new methods have resulted in reduction in the cost of +providing freight transportation, and freight rates show a continuous +descending line from the level enforced by the World War. + +We have, however, not yet assured for the future that adequate system of +transportation through consolidations which was the objective of the +Congress in the transportation act. The chief purpose of consolidation is +to secure well-balanced systems with more uniform and satisfactory rate +structure, a more stable financial structure, more equitable distribution +of traffic, greater efficiency, and single-line instead of multiple-line +hauls. In this way the country will have the assurance of better service +and ultimately at lower and more even rates than would otherwise be +attained. Legislation to simplify and expedite consolidation methods and +better to protect public interest should be enacted. + +Consideration should also be given to relief of the members of the +Commission from the necessity of detailed attention to comparatively +inconsequential matters which, under the existing law, must receive their +direct and personal consideration. It is in the public interest that the +members of the Commission should not be so pressed by minor matters that +they have inadequate time for investigation and consideration of the larger +questions committed to them for solution. As to many of these minor +matters, the function of the Commission might well be made revisory, and +the primary responsibility delegated to subordinate officials after the +practice long in vogue in the executive departments. + +MERCHANT MARINE + +Under the impulse of the merchant marine act of 1928 the transfer to +private enterprise of the Government-owned steamship lines is going forward +with increasing success. The Shipping Board now operates about 18 lines, +which is less than half the number originally established, and the estimate +of expenditures for the coming fiscal year is based upon reduction in +losses on Government lines by approximately one-half. Construction loans +have been made to the amount of approximately $75,000,000 out of the +revolving fund authorized by Congress and have furnished an additional aid +to American shipping and further stimulated the building of vessels in +American yards. + +Desirous of securing the full values to the Nation of the great effort to +develop our merchant marine by the merchant marine act soon after the +inauguration of the present administration, I appointed an +interdepartmental committee, consisting of the Secretary of Commerce, as +chairman, the Secretary of the Navy, the Postmaster General, and the +chairman of the Shipping Board, to make a survey of the policies being +pursued under the act of 1928 in respect of mail contracts; to inquire into +its workings and to advise the Postmaster General in the administration of +the act. + +In particular it seemed to me necessary to determine if the result of the +contracts already let would assure the purpose expressed in the act, "to +further develop an American merchant marine, to assure its permanence in +the transportation of the foreign trade of the United States, and for other +purposes," and to develop a coordinated policy by which these purposes may +be translated into actualities. + +In review of the mail contracts already awarded it was found that they +aggregated 25 separate awards imposing a governmental obligation of a +little over $12,000,000 per annum. Provision had been imposed in five of +the contracts for construction of new vessels with which to replace and +expand services. These requirements come to a total of 12 vessels in the +10-year period, aggregating 122,000 tons. Some other conditions in the +contracts had not worked out satisfactorily. + +That study has now been substantially completed and the committee has +advised the desirability and the necessity of securing much larger +undertakings as to service and new construction in future contracts. The +committee at this time is recommending the advertising of 14 additional +routes, making substantial requirements for the construction of new vessels +during the life of each contract recommended. A total of 40 new vessels +will be required under the contracts proposed, about half of which will be +required to be built during the next three years. The capital cost of this +new construction will be approximately $250,000,000, involving +approximately 460,000 gross tons. Should bidders be found who will make +these undertakings, it will be necessary to recommend to Congress an +increase in the authorized expenditure by the Post Office of about +$5,500,000 annually. It will be most advantageous to grant such an +authority. + +A conflict as to the administration of the act has arisen in the contention +of persons who have purchased Shipping Board vessels that they are entitled +to mail contracts irrespective of whether they are the lowest bidder, the +Post Office, on the other hand, being required by law to let contracts in +that manner. It is urgent that Congress should clarify this situation. + +THE BANKING SYSTEM + +It is desirable that Congress should consider the revision of some portions +of the banking law. + +The development of "group" and "chain" banking presents many new problems. +The question naturally arises as to whether if allowed to expand without +restraint these methods would dangerously concentrate control of credit, +and whether they would not in any event seriously threaten one of the +fundamentals of the American credit system--which is that credit which is +based upon banking deposits should be controlled by persons within those +areas which furnish these deposits and thus be subject to the restraints of +local interest and public opinion in those areas. To some degree, however, +this movement of chain or group banking is a groping for stronger support +to the banks and a more secure basis for these institutions. + +The growth in size and stability of the metropolitan banks is in marked +contrast to the trend in the country districts, with its many failures and +the losses these failures have imposed upon the agricultural community. + +The relinquishment of charters of national banks in great commercial +centers in favor of State charters indicates that some conditions surround +the national banks which render them unable to compete with State banks; +and their withdrawal results in weakening our national banking system. + +It has been proposed that permission should be granted to national banks to +engage in branch banking of a nature that would preserve within limited +regions the local responsibility and the control of such credit +institutions. + +All these subjects, however, require careful investigation, and it might be +found advantageous to create a joint commission embracing Members of the +Congress and other appropriate Federal officials for subsequent report. + +ELECTRICAL POWER REGULATION + +The Federal Power Commission is now comprised of three Cabinet officers, +and the duties involved in the competent conduct of the growing +responsibilities of this commission far exceed the time and attention which +these officials can properly afford from other important duties. I +recommended that authority be given for the appointment of full-time +commissioners to replace them. + +It is also desirable that the authority of the commission should be +extended to certain phases of power regulation. The nature of the electric +utilities industry is such that about 90 per cent of all power generation +and distribution is intrastate in character, and most of the States have +developed their own regulatory systems as to certificates of convenience, +rates, and profits of such utilities. To encroach upon their authorities +and responsibilities would be an encroachment upon the rights of the +States. There are cases, however, of interstate character beyond the +jurisdiction of the States. To meet these cases it would be most desirable +if a method could be worked out by which initial action may be taken +between the commissions of the States whose joint action should be made +effective by the Federal Power Commission with a reserve to act on its own +motion in case of disagreement or nonaction by the States. + +THE RADIO COMMISSION + +I recommend the reorganization of the Radio Commission into a permanent +body from its present temporary status. The requirement of the present law +that the commissioners shall be appointed from specified zones should be +abolished and a general provision made for their equitable selection from +different parts of the country. Despite the effort of the commissioners, +the present method develops a public insistence that the commissioners are +specially charged with supervision of radio affairs in the zone from which +each is appointed. As a result there is danger that the system will +degenerate from a national system into five regional agencies with varying +practices, varying policies, competitive tendencies, and consequent failure +to attain its utmost capacity for service to the people as a whole. + +MUSCLE SHOALS + +It is most desirable that this question should be disposed of. Under +present conditions the income from these plants is less than could +otherwise be secured for its use, and more especially the public is not +securing the full benefits which could be obtained from them. + +It is my belief that such parts of these plants as would be useful and the +revenues from the remainder should be dedicated for all time to the farmers +of the United States for investigation and experimentation on a commercial +scale in agricultural chemistry. By such means advancing discoveries of +science can be systematically applied to agricultural need, and development +of the chemical industry of the Tennessee Valley can be assured. + +I do not favor the operation by the Government of either power or +manufacturing business except as an unavoidable by-product of some other +major public purpose. + +Any form of settlement of this question will imply entering upon a contract +or contracts for the lease of the plants either as a whole or in parts and +the reservation of facilities, products, or income for agricultural +purposes. The extremely technical and involved nature of such contracts +dealing with chemical and electrical enterprises, added to the unusual +difficulties surrounding these special plants, and the rapid commercial +changes now in progress in power and synthetic nitrogen manufacture, lead +me to suggest that Congress create a special commission, not to investigate +and report as in the past, but with authority to negotiate and complete +some sort of contract or contracts on behalf of the Government, subject, of +course, to such general requirements as Congress may stipulate. + +BOULDER DAM + +The Secretary of the Interior is making satisfactory progress in +negotiation of the very complex contracts required for the sale of the +power to be generated at this project. These contracts must assure the +return of all Government outlays upon the project. I recommend that the +necessary funds be appropriated for the initiation of this work as soon as +the contracts are in the hands of Congress. CONSERVATION + +Conservation of national resources is a fixed policy of the Government. +Three important questions bearing upon conservation of the public lands +have become urgent. + +Conservation of our oil and gas resources against future need is a national +necessity. The working of the oil permit system in development of oil and +gas resources on the public domain has been subject to great abuse. I +considered it necessary to suspend the issuance of such permits and to +direct the review of all outstanding permits as to compliance of the +holders with the law. The purpose was not only to end such abuse but to +place the Government in position to review the entire subject. + +We are also confronted with a major problem in conservation due to the +overgrazing on public lands. The effect of overgrazing (which has now +become general) is not only to destroy the ranges but by impairing the +ground coverage seriously to menace the water supply in many parts of the +West through quick run-off, spring floods, and autumn drought. + +We have a third problem of major dimensions in the reconsideration of our +reclamation policy. The inclusion of most of the available lands of the +public domain in existing or planned reclamation projects largely completes +the original purpose of the Reclamation Service. There still remains the +necessity for extensive storage of water in the arid States which renders +it desirable that we should give a wider vision and purpose to this +service. + +To provide for careful consideration of these questions and also of better +division of responsibilities in them as between the State and Federal +Governments, including the possible transfer to the States for school +purposes of the lands unreserved for forests, parks, power, minerals, etc., +I have appointed a Commission on Conservation of the Public Domain, with a +membership representing the major public land States and at the same time +the public at large. I recommend that Congress should authorize a moderate +sum to defray their expenses. + +SOCIAL SERVICE + +The Federal Government provides for an extensive and valuable program of +constructive social service, in education, home building, protection to +women and children, employment, public health, recreation, and many other +directions. + +In a broad sense Federal activity in these directions has been confined to +research and dissemination of information and experience, and at most to +temporary subsidies to the States in order to secure uniform advancement in +practice and methods. Any other attitude by the Federal Government will +undermine one of the most precious possessions of the American people; that +is, local and individual responsibility. We should adhere to this policy. + +Federal officials can, however, make a further and most important +contribution by leadership in stimulation of the community and voluntary +agencies, and by extending Federal assistance in organization of these +forces and bringing about cooperation among them. + +As an instance of this character, I have recently, in cooperation with the +Secretaries of Interior and Labor, laid the foundations of an exhaustive +inquiry into the facts precedent to a nation-wide White House conference on +child health and protection. This cooperative movement among interested +agencies will impose no expense upon the Government. Similar nation-wide +conferences will be called in connection with better housing and recreation +at a later date. + +In view of the considerable difference of opinion as to the policies which +should be pursued by the Federal Government with respect to education, I +have appointed a committee representative of the important educational +associations and others to investigate and present recommendations. In +cooperation with the Secretary of the Interior, I have also appointed a +voluntary committee of distinguished membership to assist in a nation-wide +movement for abolition of illiteracy. + +I have recommended additional appropriations for the Federal employment +service in order that it may more fully cover its cooperative work with +State and local services. I have also recommended additional appropriations +for the Women's and Children's Bureaus for much needed research as to facts +which I feel will prove most helpful. + +PUBLIC HEALTH + +The advance in scientific discovery as to disease and health imposes new +considerations upon us..The Nation as a whole is vitally interested in the +health of all the people; in protection from spread of contagious disease; +in the relation of physical and mental disabilities to criminality; and in +the economic and moral advancement which is fundamentally associated with +sound body and mind. The organization of preventive measures and health +education in its personal application is the province of public health +service. Such organization should be as universal as public education. Its +support is a proper burden upon the taxpayer. It can not be organized with +success, either in its sanitary or educational phases, except under public +authority. It should be based upon local and State responsibility, but I +consider that the Federal Government has an obligation of contribution to +the establishment of such agencies. + +In the practical working out of organization, exhaustive experiment and +trial have demonstrated that the base should be competent organization of +the municipality, county, or other local unit. Most of our municipalities +and some 400 rural counties out of 3,000 now have some such unit +organization. Where highly developed, a health unit comprises at least a +physician, sanitary engineer, and community nurse with the addition, in +some cases, of another nurse devoted to the problems of maternity and +children. Such organization gives at once a fundamental control of +preventive measures and assists in community instruction. The Federal +Government, through its interest in control of contagion, acting through +the United States Public Health Service and the State agencies, has in the +past and should in the future concern itself with this development, +particularly in the many rural sections which are unfortunately far behind +in progress. Some parts of the funds contributed under the Sheppard-Towner +Act through the Children's Bureau of the Department of Labor have also +found their way into these channels. + +I recommend to the Congress that the purpose of the Sheppard Towner Act +should be continued through the Children's Bureau for a limited period of +years; and that the Congress should consider the desirability of confining +the use of Federal funds by the States to the building up of such county or +other local units, and that such outlay should be positively coordinated +with the funds expended through the United States Public Health Service +directed to other phases of the same county or other local unit +organization. All funds appropriated should of course be applied through +the States, so that the public health program of the county or local unit +will be efficiently coordinated with that of the whole State. + +FEDERAL PRISONS + +Closely related to crime conditions is the administration of the Federal +prison system. Our Federal penal institutions are overcrowded, and this +condition is daily becoming worse. The parole and probation systems are +inadequate. These conditions make it impossible to perform the work of +personal reconstruction of prisoners so as to prepare them for return to +the duties of citizenship. In order to relieve the pressing evils I have +directed the temporary transfer of the Army Disciplinary Barracks at +Leavenworth to the Department of Justice for use as a Federal prison. Not +only is this temporary but it is inadequate for present needs. + +We need some new Federal prisons and a reorganization of our probation and +parole systems; and there should be established in the Department of +Justice a Bureau of Prisons with a sufficient force to deal adequately with +the growing activities of our prison institutions. Authorization for the +improvements should be given speedily, with initial appropriations to allow +the construction of the new institutions to be undertaken at once. +IMMIGRATION + +Restriction of immigration has from every aspect proved a sound national +policy. Our pressing problem is to formulate a method by which the limited +number of immigrants whom we do welcome shall be adapted to our national +setting and our national needs. + +I have been opposed to the basis of the quotas now in force and I have +hoped that we could find some practical method to secure what I believe +should be our real national objective; that is, fitness of the immigrant as +to physique, character, training, and our need of service. Perhaps some +system of priorities within the quotas could produce these results and at +the same time enable some hardships in the present system to be cleared up. +I recommend that the Congress should give the subject further study, in +which the executive departments will gladly cooperate with the hope of +discovering such method as will more fully secure our national necessities. +VETERANS + +It has been the policy of our Government almost from its inception to make +provision for the men who have been disabled in defense of our country. +This policy should be maintained. Originally it took the form of land +grants and pensions. This system continued until our entry into the World +War. The Congress at that time inaugurated a new plan of compensation, +rehabilitation, hospitalization, medical care and treatment, and insurance, +whereby benefits were awarded to those veterans and their immediate +dependents whose disabilities were attributable to their war service. The +basic principle in this legislation is sound. + +In a desire to eliminate all possibilities of injustice due to difficulties +in establishing service connection of disabilities, these principles have +been to some degree extended. Veterans whose diseases or injuries have +become apparent within a brief period after the war are now receiving +compensation; insurance benefits have been liberalized. Emergency officers +are now receiving additional benefits. The doors of the Government's +hospitals have been opened to all veterans, even though their diseases or +injuries were not the result of their war service. In addition adjusted +service certificates have been issued to 3,433,300 veterans. This in itself +will mean an expenditure of nearly $3,500,000,000 before 1945, in addition +to the $600,000,000 which we are now appropriating annually for our +veterans' relief. + +The administration of all laws concerning the veterans and their dependents +has been upon the basis of dealing generously, humanely, and justly. While +some inequalities have arisen, substantial and adequate care has been given +and justice administered. Further improvement in administration may require +some amendment from time to time to the law, but care should be taken to +see that such changes conform to the basic principles of the legislation. + +I am convinced that we will gain in efficiency, economy, and more uniform +administration and better definition of national policies if the Pension +Bureau, the National Home for Volunteer Soldiers, and the Veterans' Bureau +are brought together under a single agency. The total appropriations to +these agencies now exceed $800,000,000 per annum. + +CIVIL SERVICE + +Approximately four-fifths of all the employees in the executive civil +service now occupy positions subject to competitive examination under the +civil service law. + +There are, however, still commanding opportunities for extending the +system. These opportunities lie within the province of Congress and not the +President. I recommend that a further step be taken by authorization that +appointments of third-class postmasters be made under the civil service +law. + +DEPARTMENTAL REORGANIZATION + +This subject has been under consideration for over 20 years. It was +promised by both political parties in the recent campaign. It has been +repeatedly examined by committees and commissions--congressional, +executive, and voluntary. The conclusions of these investigations have been +unanimous that reorganization is a necessity of sound administration; of +economy; of more effective governmental policies and of relief to the +citizen from unnecessary harassment in his relations with a multitude of +scattered governmental agencies. But the presentation of any specific plan +at once enlivens opposition from every official whose authority may be +curtailed or who fears his position is imperiled by such a result; of +bureaus and departments which wish to maintain their authority and +activities; of citizens and their organizations who are selfishly +interested, or who are inspired by fear that their favorite bureau may, in +a new setting, be less subject to their influence or more subject to some +other influence. + +It seems to me that the essential principles of reorganization are two in +number. First, all administrative activities of the same major purpose +should be placed in groups under single-headed responsibility; second, all +executive and administrative functions should be separated from boards and +commissions and placed under individual responsibility, while +quasi-legislative and quasi-judicial and broadly advisory functions should +be removed from individual authority and assigned to boards and +commissions. Indeed, these are the fundamental principles upon which our +Government was founded, and they are the principles which have been adhered +to in the whole development of our business structure, and they are the +distillation of the common sense of generations. + +For instance, the conservation of national resources is spread among eight +agencies in five departments. They suffer from conflict and overlap. There +is no proper development and adherence to broad national policies and no +central point where the searchlight of public opinion may concentrate +itself. These functions should be grouped under the direction of some such +official as an assistant secretary of conservation. The particular +department or cabinet officer under which such a group should be placed is +of secondary importance to the need of concentration. The same may be said +of educational services, of merchant marine aids, of public works, of +public health, of veterans' services, and many others, the component parts +of which are widely scattered in the various departments and independent +agencies. It is desirable that we first have experience with these +different groups in action before we create new departments. These may be +necessary later on. + +With this background of all previous experience I can see no hope for the +development of a sound reorganization of the Government unless Congress be +willing to delegate its authority over the problem (subject to defined +principles) to the Executive, who should act upon approval of a joint +committee of Congress or with the reservation of power of revision by +Congress within some limited period adequate for its consideration. +PROHIBITION + +The first duty of the President under his oath of office is to secure the +enforcement of the laws. The enforcement of the laws enacted to give effect +to the eighteenth amendment is far from satisfactory and this is in part +due to the inadequate organization of the administrative agencies of the +Federal Government. With the hope of expediting such reorganization, I +requested on June 6 last that Congress should appoint a joint committee to +collaborate with executive agencies in preparation of legislation. It would +be helpful if it could be so appointed. The subject has been earnestly +considered by the Law Enforcement Commission and the administrative +officials of the Government. Our joint conclusions are that certain steps +should be taken at once. First, there should be an immediate concentration +of responsibility and strengthening of enforcement agencies of the Federal +Government by transfer to the Department of Justice of the Federal +functions of detection and to a considerable degree of prosecution, which +are now lodged in the Prohibition Bureau in the Treasury; and at the same +time the control of the distribution of industrial alcohol and legalized +beverages should remain in the Treasury. Second, provision should be made +for relief of congestion in the Federal courts by modifying and simplifying +the procedure for dealing with the large volume of petty prosecutions under +various Federal acts. Third, there should be a codification of the laws +relating to prohibition to avoid the necessity which now exists of +resorting to more than 25 statutes enacted at various times over 40 years. +Technical defects in these statutes that have been disclosed should be +cured. I would add to these recommendations the desirability of +reorganizing the various services engaged in the prevention of smuggling +into one border patrol under the Coast Guard. Further recommendations upon +the subject as a whole will be developed after further examination by the +Law Enforcement Commission, but it is not to be expected that any criminal +law will ever be fully enforced so long as criminals exist. + +The District of Columbia should be the model of city law enforcement in the +Nation. While conditions here are much better than in many other cities, +they are far from perfect, and this is due in part to the congestion of +criminal cases in the Supreme Court of the District, resulting in long +delays. Furthermore, there is need for legislation in the District +supplementing the national prohibition act, more sharply defining and +enlarging the duties and powers of the District Commissioners and the +police of the District, and opening the way for better cooperation in the +enforcement of prohibition between the District officials and the +prohibition officers of the Federal Government. It is urgent that these +conditions be remedied. + +LAW ENFORCEMENT AND OBSERVANCE + +No one will look with satisfaction upon the volume of crime of all kinds +and the growth of organized crime in our country. We have pressing need so +to organize our system of administering criminal justice as to establish +full vigor and effectiveness. We need to reestablish faith that the highest +interests of our country are served by insistence upon the swift and +even-handed administration of justice to all offenders, whether they be +rich or poor. That we shall effect improvement is vital to the preservation +of our institutions. It is the most serious issue before our people. + +Under the authority of Congress I have appointed a National Commission on +Law Observance and Enforcement, for an exhaustive study of the entire +problem of the enforcement of our laws and the improvement of our judicial +system, including the special problems and abuses growing out of the +prohibition laws. The commission has been invited to make the widest +inquiry into the shortcomings of the administration of justice and into the +causes and remedies for them. It has organized its work under subcommittees +dealing with the many contributory causes of our situation and has enlisted +the aid of investigators in fields requiring special consideration. I am +confident that as a result of its studies now being carried forward it will +make a notable contribution to the solution of our pressing problems. + +Pending further legislation, the Department of Justice has been striving to +weed out inefficiency wherever it exists, to stimulate activity on the part +of its prosecuting officers, and to use increasing care in examining into +the qualifications of those appointed to serve as prosecutors. The +department is seeking systematically to strengthen the law enforcement +agencies week by week and month by month, not by dramatic displays but by +steady pressure; by removal of negligent officials and by encouragement and +assistance to the vigilant. During the course of these efforts it has been +revealed that in some districts causes contributing to the congestion of +criminal dockets, and to delays and inefficiency in prosecutions, have been +lack of sufficient forces in the offices of United States attorneys, clerks +of courts, and marshals. These conditions tend to clog the machinery of +justice. The last conference of senior circuit judges has taken note of +them and indorsed the department's proposals for improvement. Increases in +appropriations are necessary and will be asked for in order to reenforce +these offices. + +The orderly administration of the law involves more than the mere machinery +of law enforcement. The efficient use of that machinery and a spirit in our +people in support of law are alike essential. We have need for improvement +in both. However much we may perfect the mechanism, still if the citizen +who is himself dependent upon some laws for the protection of all that he +has and all that he holds dear, shall insist on selecting the particular +laws which he will obey, he undermines his own safety and that of his +country. His attitude may obscure, but it can not conceal, the ugly truth +that the lawbreaker, whoever he may be, is the enemy of society. We can no +longer gloss over the unpleasant reality which should be made vital in the +consciousness of every citizen, that he who condones or traffics with +crime, who is indifferent to it and to the punishment of the criminal, or +to the lax performance of official duty, is himself the most effective +agency for the breakdown of society. + +Law can not rise above its source in good citizenship--in what right-minded +men most earnestly believe and desire. If the law is upheld only by +Government officials, then all law is at an end. Our laws are made by the +people themselves; theirs is the right to work for their repeal; but until +repeal it is an equal duty to observe them and demand their enforcement. + +I have been gratified at the awakening sense of this responsibility in our +citizens during the past few months, and gratified that many instances have +occurred which refuted the cynicism which has asserted that our system +could not convict those who had defied the law and possessed the means to +resist its execution. These things reveal a moral awakening both in the +people and in officials which lies at the very foundation of the rule of +law. CONCLUSION + +The test of the rightfulness of our decisions must be whether we have +sustained and advanced the ideals of the American people; self-government +in its foundations of local government; justice whether to the individual +or to the group; ordered liberty; freedom from domination; open opportunity +and equality of opportunity; the initiative and individuality of our +people; prosperity and the lessening of poverty; freedom of public opinion; +education; advancement of knowledge; the growth of religious spirit; the +tolerance of all faiths; the foundations of the home and the advancement of +peace. + +The White House, + +December 3, 1929 + +*** + +State of the Union Address +Herbert Hoover +December 2, 1930 + +To the Senate and House of Representatives: + +I have the honor to comply with the requirement of the Constitution that I +should lay before the Congress information as to the state of the Union, +and recommend consideration of such measures as are necessary and +expedient. + +Substantial progress has been made during the year in national peace and +security; the fundamental strength of the Nation's economic life is +unimpaired; education and scientific discovery have made advances; our +country is more alive to its problems of moral and spiritual welfare. + +ECONOMIC SITUATION + +During the past 12 months we have suffered with other Nations from economic +depression. + +The origins of this depression lie to some extent within our own borders +through a speculative period which diverted capital and energy into +speculation rather than constructive enterprise. Had overspeculation in +securities been the only force operating, we should have seen recovery many +months ago, as these particular dislocations have generally readjusted +themselves. + +Other deep-seated causes have been in action, however, chiefly the +world-wide overproduction beyond even the demand of prosperous times for +such important basic commodities as wheat, rubber, coffee, sugar, copper, +silver, zinc, to some extent cotton, and other raw materials. The +cumulative effects of demoralizing price falls of these important +commodities in the process of adjustment of production to world consumption +have produced financial crises in many countries and have diminished the +buying power of these countries for imported goods to a degree which +extended the difficulties farther afield by creating unemployment in all +the industrial nations. The political agitation in Asia; revolutions in +South America and political unrest in some European States; the methods of +sale by Russia of her increasing agricultural exports to European markets; +and our own drought--have all contributed to prolong and deepen the +depression. + +In the larger view the major forces of the depression now lie outside of +the United States, and our recuperation has been retarded by the +unwarranted degree of fear and apprehension created by these outside +forces. + +The extent of the depression is indicated by the following approximate +percentages of activity during the past three months as compared with the +highly prosperous year of 1928: + +Value of department-store sales - 93% of 1928 + +Volume of manufacturing production - 80% of 1928 + +Volume of mineral production - 90% of 1928 + +Volume of factory employment - 84% of 1928 + +Total of bank deposits - 105% of 1928 + +Wholesale prices--all commodities - 83% of 1928 + +Cost of living - 94% of 1928 + +Various other indexes indicate total decrease of activity from 1928 of from +15 to 20 per cent. + +There are many factors which give encouragement for the future. The fact +that we are holding from 80 to 85 per cent of our normal activities and +incomes; that our major financial and industrial institutions have come +through the storm unimpaired; that price levels of major commodities have +remained approximately stable for some time; that a number of industries +are showing signs of increasing demand; that the world at large is +readjusting itself to the situation; all reflect grounds for confidence. We +should remember that these occasions have been met many times before, that +they are but temporary, that our country is to-day stronger and richer in +resources, in equipment, in skill, than ever in its history. We are in an +extraordinary degree self-sustaining, we will overcome world influences and +will lead the march of prosperity as we have always done hitherto. + +Economic depression can not be cured by legislative action or executive +pronouncement. Economic wounds must be healed by the action of the cells of +the economic body--the producers and consumers themselves. Recovery can be +expedited and its effects mitigated by cooperative action. That cooperation +requires that every individual should sustain faith and courage; that each +should maintain his self-reliance; that each and every one should search +for methods of improving his business or service; that the vast majority +whose income is unimpaired should not hoard out of fear but should pursue +their normal living and recreations; that each should seek to assist his +neighbors who may be less fortunate; that each industry should assist its +own employees; that each community and each State should assume its full +responsibilities for organization of employment and relief of distress with +that sturdiness and independence which built a great Nation. + +Our people are responding to these impulses in remarkable degree. The best +contribution of government lies in encouragement of this voluntary +cooperation in the community. The Government, National, State, and local, +can join with the community in such programs and do its part. A year ago I, +together with other officers of the Government, initiated extensive +cooperative measures throughout the country. + +The first of these measures was an agreement of leading employers to +maintain the standards of wages and of labor leaders to use their influence +against strife. In a large sense these undertakings have been adhered to +and we have not witnessed the usual reductions of wages which have always +heretofore marked depressions. The index of union wage scales shows them to +be today fully up to the level of any of the previous three years. In +consequence the buying power of the country has been much larger than would +otherwise have been the case. Of equal importance the Nation has had +unusual peace in industry and freedom from the public disorder which has +characterized previous depressions. + +The second direction of cooperation has been that our governments, +National, State, and local, the industries and business so distribute +employment as to give work to the maximum number of employees. + +The third direction of cooperation has been to maintain and even extend +construction work and betterments in anticipation of the future. It has +been the universal experience in previous depressions that public works and +private construction have fallen off rapidly with the general tide of +depression. On this occasion, however, the increased authorization and +generous appropriations by the Congress and the action of States and +municipalities have resulted in the expansion of public construction to an +amount even above that in the most prosperous years. In addition the +cooperation of public utilities, railways, and other large organizations +has been generously given in construction and betterment work in +anticipation of future need. The Department of Commerce advises me that as +a result, the volume of this type of construction work, which amounted to +roughly $6,300,000,000 in 1929, instead of decreasing will show a total of +about $7,000,000,000 for 1930. There has, of course, been a substantial +decrease in the types of construction which could not be undertaken in +advance of need. + +The fourth direction of cooperation was the organization in such States and +municipalities, as was deemed necessary, of committees to organize local +employment, to provide for employment agencies, and to effect relief of +distress. + +The result of magnificent cooperation throughout the country has been that +actual suffering has been kept to a minimum during the past 12 months, and +our unemployment has been far less in proportion than in other large +industrial countries. Some time ago it became evident that unemployment +would continue over the winter and would necessarily be added to from +seasonal causes and that the savings of workpeople would be more largely +depleted. We have as a Nation a definite duty to see that no deserving +person in our country suffers from hunger or cold. I therefore set up a +more extensive organization to stimulate more intensive cooperation +throughout the country. There has been a most gratifying degree of +response, from governors, mayors, and other public officials, from welfare +organizations, and from employers in concerns both large and small. The +local communities through their voluntary agencies have assumed the duty of +relieving individual distress and are being generously supported by the +public. + +The number of those wholly out of employment seeking for work was +accurately determined by the census last April as about 2,500,000. The +Department of Labor index of employment in the larger trades shows some +decrease in employment since that time. The problem from a relief point of +view is somewhat less than the published estimates of the number of +unemployed would indicate. The intensive community and individual efforts +in providing special employment outside the listed industries are not +reflected in the statistical indexes and tend to reduce such published +figures. Moreover, there is estimated to be a constant figure at all times +of nearly 1,000,000 unemployed who are not without annual income but +temporarily idle in the shift from one job to another. We have an average +of about three breadwinners to each two families, so that every person +unemployed does not represent a family without income. The view that the +relief problems are less than the gross numbers would indicate is confirmed +by the experience of several cities, which shows that the number of +families in distress represents from 10 to 20 per cent of the number of the +calculated unemployed. This is not said to minimize the very real problem +which exists but to weigh its actual proportions. + +As a contribution to the situation the Federal Government is engaged upon +the greatest program of waterway, harbor, flood control, public building, +highway, and airway improvement in all our history. This, together with +loans to merchant shipbuilders, improvement of the Navy and in military +aviation, and other construction work of the Government will exceed +$520,000,000 for this fiscal year. This compares with $253,000,000 in the +fiscal year 1928. The construction works already authorized and the +continuation of policies in Government aid will require a continual +expenditure upwards of half a billion dollars annually. + +I favor still further temporary expansion of these activities in aid to +unemployment during this winter. The Congress will, however, have presented +to it numbers of projects, some of them under the guise of, rather than the +reality of, their usefulness in the increase of employment during the +depression. There are certain commonsense limitations upon any expansions +of construction work. The Government must not undertake works that are not +of sound economic purpose and that have not been subject to searching +technical investigation, and which have not been given adequate +consideration by the Congress. The volume of construction work in the +Government is already at the maximum limit warranted by financial prudence +as a continuing policy. To increase taxation for purposes of construction +work defeats its own purpose, as such taxes directly diminish employment in +private industry. Again any kind of construction requires, after its +authorization, a considerable time before labor can be employed in which to +make engineering, architectural, and legal preparations. Our immediate +problem is the increase of employment for the next six months, and new +plans which do not produce such immediate result or which extend +commitments beyond this period are not warranted. + +The enlarged rivers and harbors, public building, and highway plans +authorized by the Congress last session, however, offer an opportunity for +assistance by the temporary acceleration of construction of these programs +even faster than originally planned, especially if the technical +requirements of the laws which entail great delays could be amended in such +fashion as to speed up acquirements of land and the letting of contracts. + +With view, however, to the possible need for acceleration, we, immediately +upon receiving those authorities from the Congress five months ago, began +the necessary technical work in preparation for such possible eventuality. +I have canvassed the departments of the Government as to the maximum amount +that can be properly added to our present expenditure to accelerate all +construction during the next six months, and I feel warranted in asking the +Congress for an appropriation of from $100,000,000 to $150,000,000 to +provide such further employment in this emergency. In connection therewith +we need some authority to make enlarged temporary advances of +Federal-highway aid to the States. + +I recommend that this appropriation be made distributable to the different +departments upon recommendation of a committee of the Cabinet and approval +by the President. Its application to works already authorized by the +Congress assures its use in directions of economic importance and to public +welfare. Such action will imply an expenditure upon construction of all +kinds of over $650,000,000 during the next twelve months. AGRICULTURE + +The world-wide depression has affected agriculture in common with all other +industries. The average price of farm produce has fallen to about 80 per +cent of the levels of 1928. This average is, however, greatly affected by +wheat and cotton, which have participated in world-wide overproduction and +have fallen to about 60 per cent of the average price of the year 1928. +Excluding these commodities, the prices of all other agricultural products +are about 84 per cent of those of 1928. The average wholesale prices of +other primary goods, such as nonferrous metals, have fallen to 76 per cent +of 1928. + +The price levels of our major agricultural commodities are, in fact, higher +than those in other principal producing countries, due to the combined +result of the tariff and the operations of the Farm Board. For instance, +wheat prices at Minneapolis are about 30 per cent higher than at Winnipeg, +and at Chicago they are about 20 per cent higher than at Buenos Aires. Corn +prices at Chicago are over twice as high as at Buenos Aires. Wool prices +average more than 80 per cent higher in this country than abroad, and +butter is 30 per cent higher in New York City than in Copenhagen. + +Aside from the misfortune to agriculture of the world-wide depression we +have had the most severe drought. It has affected particularly the States +bordering on the Potomac, Ohio, and Lower Mississippi Rivers, with some +areas in Montana, Kansas, Oklahoma, and Texas. It has found its major +expression in the shortage of pasturage and a shrinkage in the corn crop +from an average of about 2,800,000,000 bushels to about 2,090,000,000 +bushels. + +On August 14 I called a conference of the governors of the most acutely +affected States, and as a result of its conclusions I appointed a national +committee comprising the heads of the important Federal agencies under the +chairmanship of the Secretary of Agriculture. The governors in turn have +appointed State committees representative of the farmers, bankers, business +men, and the Red Cross, and subsidiary committees have been established in +most of the acutely affected counties. Railway rates were reduced on feed +and livestock in and out of the drought areas, and over 50,000 cars of such +products have been transported under these reduced rates. The Red Cross +established a preliminary fund of $5,000,000 for distress relief purposes +and established agencies for its administration in each county. Of this +fund less than $500,000 has been called for up to this time as the need +will appear more largely during the winter. The Federal Farm Loan Board has +extended its credit facilities, and the Federal Farm Board has given +financial assistance to all affected cooperatives. + +In order that the Government may meet its full obligation toward our +countrymen in distress through no fault of their own, I recommend that an +appropriation should be made to the Department of Agriculture to be loaned +for the purpose of seed and feed for animals. Its application should as +hitherto in such loans be limited to a gross amount to any one individual, +and secured upon the crop. + +The Red Cross can relieve the cases of individual distress by the +sympathetic assistance of our people. + +FINANCES OF THE GOVERNMENT + +I shall submit the detailed financial position of the Government with +recommendations in the usual Budget message. I will at this time, however, +mention that the Budget estimates of receipts and expenditures for the +current year were formulated by the Treasury and the Budget Bureau at a +time when it was impossible to forecast the severity of the business +depression and have been most seriously affected by it. At that time a +surplus of about $123,000,000 was estimated for this fiscal year and tax +reduction which affected the fiscal year to the extent of $75,000,000 was +authorized by the Congress, thus reducing the estimated surplus to about +$48,000,000. Closely revised estimates now made by the Treasury and the +Bureau of the Budget of the tax, postal, and other receipts for the current +fiscal year indicate a decrease of about $430,000,000 from the estimate of +a year ago, of which about $75,000,000 is due to tax reduction, leaving +about $355,000,000 due to the depression. Moreover, legislation enacted by +Congress subsequent to the submission of the Budget enlarging Federal +construction work to expand employment and for increase in veterans' +services and other items, have increased expenditures during the current +fiscal year by about $225,000,000. + +Thus the decrease of $430,000,000 in revenue and the increase of +$225,000,000 in expenditure adversely change the original Budget situation +by about $655,000,000. This large sum is offset by the original estimated +surplus a year ago of about $123,000,000, by the application of +$185,000,000 of interest payments upon the foreign debt to current +expenditures, by arrangements of the Farm Board through repayments, etc., +in consequence of which they reduced their net cash demands upon the +Treasury by $100,000,000 in this period, and by about $67,000,000 economies +and deferments brought about in the Government, thus reducing the practical +effect of the change in the situation to an estimated deficit of about +$180,000,000 for the present fiscal year. I shall make suggestions for +handling the present-year deficit in the Budget message, but I do not favor +encroachment upon the statutory reduction of the public debt. + +While it will be necessary in public interest to further increase +expenditures during the current fiscal year in aid to unemployment by +speeding up construction work and aid to the farmers affected by the +drought, I can not emphasize too strongly the absolute necessity to defer +any other plans for increase of Government expenditures. The Budget for +1932 fiscal year indicates estimated expenditure of about $4,054,000,000, +including postal deficit. The receipts are estimated at about +$4,085,000,000 if the temporary tax reduction of last year be discontinued, +leaving a surplus of only about $30,000,000. Most rigid economy is +therefore necessary to avoid increase in taxes. + +NATIONAL DEFENSE + +Our Army and Navy are being maintained at a high state of efficiency, under +officers of high training and intelligence, supported by a devoted +personnel of the rank and file. The London naval treaty has brought +important economies in the conduct of the Navy. The Navy Department will +lay before the committees of the Congress recommendations for a program of +authorization of new construction which should be initiated in the fiscal +year of 1932. LEGISLATION + +This is the last session of the Seventy-first Congress. During its previous +sittings it has completed a very large amount of important legislation, +notably: The establishment of the Federal Farm Board; fixing congressional +reapportionment; revision of the tariff, including the flexible provisions +and a reorganization of the Tariff Commission; reorganization of the Radio +Commission; reorganization of the Federal Power Commission; expansion of +Federal prisons; reorganization of parole and probation system in Federal +prisons; expansion of veterans' hospitals; establishment of disability +allowances to veterans; consolidation of veteran activities; consolidation +and strengthening of prohibition enforcement activities in the Department +of Justice; organization of a Narcotics Bureau; large expansion of rivers +and harbors improvements; substantial increase in Federal highways; +enlargement of public buildings construction program; and the ratification +of the London naval treaty. + +The Congress has before it legislation partially completed in the last +sitting in respect to Muscle Shoals, bus regulation, relief of congestion +in the courts, reorganization of border patrol in prevention of smuggling, +law enforcement in the District of Columbia, and other subjects. + +It is desirable that these measures should be completed. + +The short session does not permit of extensive legislative programs, but +there are a number of questions which, if time does not permit action, I +recommend should be placed in consideration by the Congress, perhaps +through committees cooperating in some instances with the Federal +departments, with view to preparation for subsequent action. Among them are +the following subjects: + +ELECTRICAL POWER + +I have in a previous message recommended effective regulation of interstate +electrical power. Such regulation should preserve the independence and +responsibility of the States. RAILWAYS + +We have determined upon a national policy of consolidation of the railways +as a necessity of more stable and more economically operated +transportation. Further legislation is necessary to facilitate such +consolidation. In the public interest we should strengthen the railways +that they may meet our future needs. + +ANTITRUST LAWS + +I recommend that the Congress institute an inquiry into some aspects of the +economic working of these laws. I do not favor repeal of the Sherman Act. +The prevention of monopolies is of most vital public importance. +Competition is not only the basis of protection to the consumer but is the +incentive to progress. However, the interpretation of these laws by the +courts, the changes in business, especially in the economic effects upon +those enterprises closely related to the use of the natural resources of +the country, make such an inquiry advisable. The producers of these +materials assert that certain unfortunate results of wasteful and +destructive use of these natural resources together with a destructive +competition which impoverishes both operator and worker can not be remedied +because of the prohibitive interpretation of the antitrust laws. The +well-known condition of the bituminous coal industry is an illustration. +The people have a vital interest in the conservation of their natural +resources; in the prevention of wasteful practices; in conditions of +destructive competition which may impoverish the producer and the wage +earner; and they have an equal interest in maintaining adequate +competition. I therefore suggest that an inquiry be directed especially to +the effect of the workings of the antitrust laws in these particular fields +to determine if these evils can be remedied without sacrifice of the +fundamental purpose of these laws. + +CAPITAL-GAINS TAX + +It is urged by many thoughtful citizens that the peculiar economic effect +of the income tax on so-called capital gains at the present rate is to +enhance speculative inflation and likewise impede business recovery. I +believe this to be the case and I recommend that a study be made of the +economic effects of this tax and of its relation to the general structure +of our income tax law. IMMIGRATION + +There is need for revision of our immigration laws upon a more limited and +more selective basis, flexible to the needs of the country. + +Under conditions of current unemployment it is obvious that persons coming +to the United States seeking work would likely become either a direct or +indirect public charge. As a temporary measure the officers issuing visas +to immigrants have been, in pursuance of the law, instructed to refuse +visas to applicants likely to fall into this class. As a result the visas +issued have decreased from an average of about 24,000 per month prior to +restrictions to a rate of about 7,000 during the last month. These are +largely preferred persons under the law. Visas from Mexico are about 250 +per month compared to about 4,000 previous to restrictions. The whole +subject requires exhaustive reconsideration. + +DEPORTATION OF ALIEN CRIMINALS + +I urge the strengthening of our deportation laws so as to more fully rid +ourselves of criminal aliens. Furthermore, thousands of persons have +entered the country in violation of the immigration laws. The very method +of their entry indicates their objectionable character, and our law-abiding +foreign-born residents suffer in consequence. I recommend that the Congress +provide methods of strengthening the Government to correct this abuse. + +POST OFFICE + +Due to deferment of Government building over many years, previous +administrations had been compelled to enter upon types of leases for +secondary facilities in large cities, some of which were objectionable as +representing too high a return upon the value of the property. To prevent +the occasion for further uneconomic leasing I recommend that the Congress +authorize the building by the Government of its own facilities. VETERANS + +The Nation has generously expanded its care for veterans. The consolidation +of all veterans' activities into the Veterans' Administration has produced +substantial administrative economies. The consolidation also brings +emphasis to the inequalities in service and allowances. The whole subject +is under study by the administrator, and I recommend it should also be +examined by the committees of the Congress. + +SOCIAL SERVICE + +I urge further consideration by the Congress of the recommendations I made +a year ago looking to the development through temporary Federal aid of +adequate State and local services for the health of children and the +further stamping out of communicable disease, particularly in the rural +sections. The advance of scientific discovery, methods, and social thought +imposes a new vision in these matters. The drain upon the Federal Treasury +is comparatively small. The results both economic and moral are of the +utmost importance. GENERAL + +It is my belief that after the passing of this depression, when we can +examine it in retrospect, we shall need to consider a number of other +questions as to what action may be taken by the Government to remove +Possible governmental influences which make for instability and to better +organize mitigation of the effect of depression. It is as yet too soon to +constructively formulate such measures. + +There are many administrative subjects, such as departmental +reorganization, extension of the civil service, readjustment of the postal +rates, etc., which at some appropriate time require the attention of the +Congress. + +FOREIGN RELATIONS + +Our relations with foreign countries have been maintained upon a high basis +of cordiality and good will. + +During the past year the London naval pact was completed, approved by the +Senate, and ratified by the governments concerned. By this treaty we have +abolished competition in the building of warships, have established the +basis of parity of the United States with the strongest of foreign powers, +and have accomplished a substantial reduction in war vessels. + +During the year there has been an extended political unrest in the world. +Asia continues in disturbed condition, and revolutions have taken place in +Brazil, Argentina, Peru, and Bolivia. Despite the jeopardy to our citizens +and their property which naturally arises in such circumstances, we have, +with the cooperation of the governments concerned, been able to meet all +such instances without friction. + +We have resumed normal relations with the new Governments of Brazil, +Argentina, Peru, and Bolivia immediately upon evidence that they were able +to give protection to our citizens and their property, and that they +recognized their international obligations. + +A commission which was supported by the Congress has completed its +investigation and reported upon our future policies in respect to Haiti and +proved of high value in securing the acceptance of these policies. An +election has been held and a new government established. We have replaced +our high commissioner by a minister and have begun the gradual withdrawal +of our activities with view to complete retirement at the expiration of the +present treaty in 1935. + +A number of arbitration and conciliation treaties have been completed or +negotiated during the year, and will be presented for approval by the +Senate. + +I shall, in a special message, lay before the Senate the protocols covering +the statutes of the World Court which have been revised to accord with the +sense of previous Senate reservations. + +The White House, + +December 2, 1930 + +*** + +State of the Union Address +Herbert Hoover +December 8, 1931 + +To the Senate and House of Representatives: + +It is my duty under the Constitution to transmit to the Congress +information on the state of the Union and to recommend for its +consideration necessary and expedient measures. + +The chief influence affecting the state of the Union during the past year +has been the continued world-wide economic disturbance. Our national +concern has been to meet the emergencies it has created for us and to lay +the foundations for recovery. + +If we lift our vision beyond these immediate emergencies we find +fundamental national gains even amid depression. In meeting the problems of +this difficult period, we have witnessed a remarkable development of the +sense of cooperation in the community. For the first time in the history of +our major economic depressions there has been a notable absence of public +disorders and industrial conflict. Above all there is an enlargement of +social and spiritual responsibility among the people. The strains and +stresses upon business have resulted in closer application, in saner +policies, and in better methods. Public improvements have been carried out +on a larger scale than even in normal times. The country is richer in +physical property, in newly discovered resources, and in productive +capacity than ever before. There has been constant gain in knowledge and +education; there has been continuous advance in science and invention; +there has been distinct gain in public health. Business depressions have +been recurrent in the life of our country and are but transitory. The +Nation has emerged from each of them with increased strength and virility +because of the enlightenment they have brought, the readjustments and the +larger understanding of the realities and obligations of life and work +which come from them. + +NATIONAL DEFENSE + +Both our Army and Navy have been maintained in a high state of efficiency. +The ability and devotion of both officers and men sustain the highest +traditions of the service. Reductions and postponements in expenditure of +these departments to meet the present emergency are being made without +reducing existing personnel or impairing the morale of either +establishment. + +The agreement between the leading naval powers for limitation of naval +armaments and establishment of their relative strength and thus elimination +of competitive building also implies for ourselves the gradual expansion of +the deficient categories in our Navy to the parities provided in those +treaties. However, none of the other nations, parties to these agreements, +is to-day maintaining the full rate of construction which the treaty size +of fleets would imply. + +Although these agreements secured the maximum reduction of fleets which it +was at that time possible to attain, I am hopeful that the naval powers, +party to these agreements, will realize that establishment of relative +strength in itself offers opportunity for further reduction without injury +to any of them. This would be the more possible if pending negotiations are +successful between France and Italy. If the world is to regain its +standards of life, it must further decrease both naval and other arms. The +subject will come before the General Disarmament Conference which meets in +Geneva on February 2 + +FOREIGN AFFAIRS + +We are at peace with the world. We have cooperated with other nations to +preserve peace. The rights of our citizens abroad have been protected. + +The economic depression has continued and deepened in every part of the +world during the past year. In many countries political instability, +excessive armaments, debts, governmental expenditures, and taxes have +resulted in revolutions, in unbalanced budgets and monetary collapse and +financial panics, in dumping of goods upon world markets, and in diminished +consumption of commodities. + +Within two years there have been revolutions or acute social disorders in +19 countries, embracing more than half the population of the world. Ten +countries have been unable to meet their external obligations. In 14 +countries, embracing a quarter of the world's population, former monetary +standards have been temporarily abandoned. In a number of countries there +have been acute financial panics or compulsory restraints upon banking. +These disturbances have many roots in the dislocations from the World War. +Every one of them has reacted upon us. They have sharply affected the +markets and prices of our agricultural and industrial products. They have +increased unemployment and greatly embarrassed our financial and credit +system. + +As our difficulties during the past year have plainly originated in large +degree from these sources, any effort to bring about our own recuperation +has dictated the necessity of cooperation by us with other nations in +reasonable effort to restore world confidence and economic stability. + +Cooperation of our Federal reserve system and our banks with the central +banks in foreign countries has contributed to localize and ameliorate a +number of serious financial crises or moderate the pressures upon us and +thus avert disasters which would have affected us. + +The economic crisis in Germany and Central Europe last June rose to the +dimensions of a general panic from which it was apparent that without +assistance these nations must collapse. Apprehensions of such collapse had +demoralized our agricultural and security markets and so threatened other +nations as to impose further dangers upon us. But of highest importance was +the necessity of cooperation on our part to relieve the people of Germany +from imminent disasters and to maintain their important relations to +progress and stability in the world. Upon the initiative of this Government +a year's postponement of reparations and other intergovernmental debts was +brought about. Upon our further initiative an agreement was made by +Germany's private creditors providing for an extension of such credits +until the German people can develop more permanent and definite forms of +relief. + +We have continued our policy of withdrawing our marines from Haiti and +Nicaragua. + +The difficulties between China and Japan have given us great concern, not +alone for the maintenance of the spirit of the Kellogg-Briand Pact, but for +the maintenance of the treaties to which we are a party assuring the +territorial integrity of China. It is our purpose to assist in finding +solutions sustaining the full spirit of those treaties. + +I shall deal at greater length with our foreign relations in a later +message. + +THE DOMESTIC SITUATION + +Many undertakings have been organized and forwarded during the past year to +meet the new and changing emergencies which have constantly confronted us. + +Broadly the community has cooperated to meet the needs of honest distress, +and to take such emergency measures as would sustain confidence in our +financial system and would cushion the violence of liquidation in industry +and commerce, thus giving time for orderly readjustment of costs, +inventories, and credits without panic and widespread bankruptcy. These +measures have served those purposes and will promote recovery. + +In these measures we have striven to mobilize and stimulate private +initiative and local and community responsibility. There has been the least +possible Government entry into the economic field, and that only in +temporary and emergency form. Our citizens and our local governments have +given a magnificent display of unity and action, initiative and patriotism +in solving a multitude of difficulties and in cooperating with the Federal +Government. + +For a proper understanding of my recommendations to the Congress it is +desirable very briefly to review such activities during the past year. + +The emergencies of unemployment have been met by action in many directions. +The appropriations for the continued speeding up of the great Federal +construction program have provided direct and indirect aid to employment +upon a large scale. By organized unity of action, the States and +municipalities have also maintained large programs of public improvement. +Many industries have been prevailed upon to anticipate and intensify +construction. Industrial concerns and other employers have been organized +to spread available work amongst all their employees, instead of +discharging a portion of them. A large majority have maintained wages at as +high levels as the safe conduct of their business would permit. This course +has saved us from industrial conflict and disorder which have characterized +all previous depressions. Immigration has been curtailed by administrative +action. Upon the basis of normal immigration the decrease amounts to about +300,000 individuals who otherwise would have been added to our +unemployment. The expansion of Federal employment agencies under +appropriations by the Congress has proved most effective. Through the +President's organization for unemployment relief, public and private +agencies were successfully mobilized last winter to provide employment and +other measures against distress. Similar organization gives assurance +against suffering during the coming winter. Committees of leading citizens +are now active at practically every point of unemployment. In the large +majority they have been assured the funds necessary which, together with +local government aids, will meet the situation. A few exceptional +localities will be further organized. The evidence of the Public Health +Service shows an actual decrease of sickness and infant and general +mortality below normal years. No greater proof could be adduced that our +people have been protected from hunger and cold and that the sense of +social responsibility in the Nation has responded to the need of the +unfortunate. + +To meet the emergencies in agriculture the loans authorized by Congress for +rehabilitation in the drought areas have enabled farmers to produce +abundant crops in those districts. The Red Cross undertook and +magnificently administered relief for over 2,500,000 drought sufferers last +winter. It has undertaken this year to administer relief to 100,000 +sufferers in the new drought area of certain Northwest States. The action +of the Federal Farm Board in granting credits to farm cooperatives saved +many of them from bankruptcy and increased their purpose and strength. By +enabling farm cooperatives to cushion the fall in prices of farm products +in 1930 and 1931 the Board secured higher prices to the farmer than would +have been obtained otherwise, although the benefits of this action were +partially defeated by continued world overproduction. Incident to this +action the failure of a large number of farmers and of country banks was +averted which could quite possibly have spread into a major disaster. The +banks in the South have cooperated with the Farm Board in creation of a +pool for the better marketing of accumulated cotton. Growers have been +materially assisted by this action. Constant effort has been made to reduce +overproduction in relief of agriculture and to promote the foreign buying +of agricultural products by sustaining economic stability abroad. + +To meet our domestic emergencies in credit and banking arising from the +reaction to acute crisis abroad the National Credit Association was set up +by the banks with resources of $500,000,000 to support sound banks against +the frightened withdrawals and hoarding. It is giving aid to reopen solvent +banks which have been closed. Federal officials have brought about many +beneficial unions of banks and have employed other means which have +prevented many bank closings. As a result of these measures the hoarding +withdrawals which had risen to over $250,000,000 per week after the British +crisis have substantially ceased. + +FURTHER MEASURES + +The major economic forces and weaknesses at home and abroad have now been +exposed and can be appraised, and the time is ripe for forward action to +expedite our recovery. + +Although some of the causes of our depression are due to speculation, +inflation of securities and real estate, unsound foreign investments, and +mismanagement of financial institutions, yet our self-contained national +economy, with its matchless strength and resources, would have enabled us +to recover long since but for the continued dislocations, shocks, and +setbacks from abroad. + +Whatever the causes may be, the vast liquidation and readjustments which +have taken place have left us with a large degree of credit paralysis, +which together with the situation in our railways and the conditions +abroad, are now the outstanding obstacles to recuperation. If we can put +our financial resources to work and can ameliorate the financial situation +in the railways, I am confident we can make a large measure of recovery +independent of the rest of the world. A strong America is the highest +contribution to world stability. + +One phase of the credit situation is indicated in the banks. During the +past year banks, representing 3 per cent of our total deposits have been +closed. A large part of these failures have been caused by withdrawals for +hoarding, as distinguished from the failures early in the depression where +weakness due to mismanagement was the larger cause of failure. Despite +their closing, many of them will pay in full. Although such withdrawals +have practically ceased, yet $1,100,000,000 of currency was previously +withdrawn which has still to return to circulation. This represents a large +reduction of the ability of our banks to extend credit which would +otherwise fertilize industry and agriculture. Furthermore, many of our +bankers, in order to prepare themselves to meet possible withdrawals, have +felt compelled to call in loans, to refuse new credits, and to realize upon +securities, which in turn has demoralized the markets. The paralysis has +been further augmented by the steady increase in recent years of the +proportion of bank assets invested in long-term securities, such as +mortgages and bonds. These securities tend to lose their liquidity in +depression or temporarily to fall in value so that the ability of the banks +to meet the shock of sudden withdrawal is greatly lessened and the +restriction of all kinds of credit is thereby increased. The continuing +credit paralysis has operated to accentuate the deflation and liquidation +of commodities, real estate, and securities below any reasonable basis of +values. + +All of this tends to stifle business, especially the smaller units, and +finally expresses itself in further depression of prices and values, in +restriction on new enterprise, and in increased unemployment. + +The situation largely arises from an unjustified lack of confidence. We +have enormous volumes of idle money in the banks and in hoarding. We do not +require more money or working capital--we need to put what we have to +work. + +The fundamental difficulties which have brought about financial strains in +foreign countries do not exist in the United States. No external drain on +our resources can threaten our position, because the balance of +international payments is in our favor; we owe less to foreign countries +than they owe to us; our industries are efficiently organized; our currency +and bank deposits are protected by the greatest gold reserve in history. + +Our first step toward recovery is to reestablish confidence and thus +restore the flow of credit which is the very basis of our economic life. We +must put some steel beams in the foundations of our credit structure. It is +our duty to apply the full strength of our Government not only to the +immediate phases, but to provide security against shocks and the repetition +of the weaknesses which have been proven. + +The recommendations which I here lay before the Congress are designed to +meet these needs by strengthening financial, industrial, and agricultural +life through the medium of our existing institutions, and thus to avoid the +entry of the Government into competition with private business. + +FEDERAL GOVERNMENT FINANCE + +The first requirement of confidence and of economic recovery is financial +stability of the United States Government. I shall deal with fiscal +questions at greater length in the Budget message. But I must at this time +call attention to the magnitude of the deficits which have developed and +the resulting necessity for determined and courageous policies. These +deficits arise in the main from the heavy decrease in tax receipts due to +the depression and to the increase in expenditure on construction in aid to +unemployment, aids to agriculture, and upon services to veterans. + +During the fiscal year ending June 30 last we incurred a deficit of about +$903,000,000, which included the statutory reduction of the debt and +represented an increase of the national debt by $616,000,000. Of this, +however, $153,000,000 is offset by increased cash balances. + +In comparison with the fiscal year 1928 there is indicated a fall in +Federal receipts for the present fiscal year amounting to $1,683,000,000, +of which $1,034,000,000 is in individual and corporate income taxes alone. +During this fiscal year there will be an increased expenditure, as compared +to 1928, on veterans of $255,000,000, and an increased expenditure on +construction work which may reach $520,000,000. Despite large economies in +other directions, we have an indicated deficit, including the statutory +retirement of the debt, of $2,123,000,000, and an indicated net debt +increase of about $1,711,000,000. + +The Budget for the fiscal year beginning July 1 next, after allowing for +some increase of taxes under the present laws and after allowing for +drastic reduction in expenditures, still indicates a deficit of +$1,417,000,000. After offsetting the statutory debt retirements this would +indicate an increase in the national debt for the fiscal year 1933 of about +$921,000,000. + +Several conclusions are inevitable. We must have insistent and determined +reduction in Government expenses. We must face a temporary increase in +taxes. Such increase should not cover the whole of these deficits or it +will retard recovery. We must partially finance the deficit by borrowing. +It is my view that the amount of taxation should be fixed so as to balance +the Budget for 1933 except for the statutory debt retirement. Such +Government receipts would assure the balance of the following year's budget +including debt retirement. It is my further view that the additional +taxation should be imposed solely as an emergency measure terminating +definitely two years from July 1 next. Such a basis will give confidence in +the determination of the Government to stabilize its finance and will +assure taxpayers of its temporary character. Even with increased taxation, +the Government will reach the utmost safe limit of its borrowing capacity +by the expenditures for which we are already obligated and the +recommendations here proposed. To go further than these limits in either +expenditures, taxes, or borrowing will destroy confidence, denude commerce +and industry of its resources, jeopardize the financial system, and +actually extend unemployment and demoralize agriculture rather than relieve +it. + +FEDERAL LAND BANKS + +I recommend that the Congress authorize the subscription by the Treasury of +further capital to the Federal land banks to be retired as provided in the +original act, or when funds are available, and that repayments of such +capital be treated as a fund available for further subscriptions in the +same manner. It is urgent that the banks be supported so as to stabilize +the market values of their bonds and thus secure capital for the farmers at +low rates, that they may continue their services to agriculture and that +they may meet the present situation with consideration to the farmers. + +DEPOSITS IN CLOSED BANKS + +A method should be devised to make available quickly to depositors some +portion of their deposits in closed banks as the assets of such banks may +warrant. Such provision would go far to relieve distress in a multitude of +families, would stabilize values in many communities, and would liberate +working capital to thousands of concerns. I recommend that measures be +enacted promptly to accomplish these results and I suggest that the +Congress should consider the development of such a plan through the Federal +Reserve Banks. + +HOME-LOAN DISCOUNT BANKS + +I recommend the establishment of a system of home-loan discount banks as +the necessary companion in our financial structure of the Federal Reserve +Banks and our Federal Land Banks. Such action will relieve present +distressing pressures against home and farm property owners. It will +relieve pressures upon and give added strength to building and loan +associations, savings banks, and deposit banks, engaged in extending such +credits. Such action would further decentralize our credit structure. It +would revive residential construction and employment. It would enable such +loaning institutions more effectually to promote home ownership. I +discussed this plan at some length in a statement made public November 14, +last. This plan has been warmly indorsed by the recent National Conference +upon Home Ownership and Housing, whose members were designated by the +governors of the States and the groups interested. + +RECONSTRUCTION FINANCE CORPORATION + +In order that the public may be absolutely assured and that the Government +may be in position to meet any public necessity, I recommend that an +emergency Reconstruction Corporation of the nature of the former War +Finance Corporation should be established. It may not be necessary to use +such an instrumentality very extensively. The very existence of such a +bulwark will strengthen confidence. The Treasury should be authorized to +subscribe a reasonable capital to it, and it should be given authority to +issue its own debentures. It should be placed in liquidation at the end of +two years. Its purpose is that by strengthening the weak spots to thus +liberate the full strength of the Nation's resources. It should be in +position to facilitate exports by American agencies; make advances to +agricultural credit agencies where necessary to protect and aid the +agricultural industry; to make temporary advances upon proper securities to +established industries, railways, and financial institutions which can not +otherwise secure credit, and where such advances will protect the credit +structure and stimulate employment. Its functions would not overlap those +of the National Credit Corporation. + +FEDERAL RESERVE ELIGIBILITY + +On October 6th I issued a statement that I should recommend to the Congress +an extension during emergencies of the eligibility provisions in the +Federal reserve act. This statement was approved by a representative +gathering of the Members of both Houses of the Congress, including members +of the appropriate committees. It was approved by the officials of the +Treasury Department, and I understand such an extension has been approved +by a majority of the governors of the Federal reserve banks. Nothing should +be done which would lower the safeguards of the system. + +The establishment of the mortgage-discount banks herein referred to will +also contribute to further reserve strength in the banks without +inflation. + +BANKING LAWS + +Our people have a right to a banking system in which their deposits shall +be safeguarded and the flow of credit less subject to storms. The need of a +sounder system is plainly shown by the extent of bank failures. I recommend +the prompt improvement of the banking laws. Changed financial conditions +and commercial practices must be met. The Congress should investigate the +need for separation between different kinds of banking; an enlargement of +branch banking under proper restrictions; and the methods by which enlarged +membership in the Federal reserve system may be brought about. + +POSTAL SAVINGS BANKS + +The Postal Savings deposits have increased from about $200,000,000 to about +$550,000,000 during the past year. This experience has raised important +practical questions in relation to deposits and investments which should +receive the attention of the Congress. RAILWAYS + +The railways present one of our immediate and pressing problems. They are +and must remain the backbone of our transportation system. Their prosperity +is interrelated with the prosperity of all industries. Their fundamental +service in transportation, the volume of their employment, their buying +power for supplies from other industries, the enormous investment in their +securities, particularly their bonds, by insurance companies, savings +banks, benevolent and other trusts, all reflect their partnership in the +whole economic fabric. Through these institutions the railway bonds are in +a large sense the investment of every family. The well-maintained and +successful operation and the stability of railway finances are of primary +importance to economic recovery. They should have more effective +opportunity to reduce operating costs by proper consolidation. As their +rates must be regulated in public interest, so also approximate regulation +should be applied to competing services by some authority. The methods of +their regulation should be revised. The Interstate Commerce Commission has +made important and far-reaching recommendations upon the whole subject, +which I commend to the early consideration of the Congress. + +ANTITRUST LAWS + +In my message of a year ago I commented on the necessity of congressional +inquiry into the economic action of the antitrust laws. There is wide +conviction that some change should be made especially in the procedure +under these laws. I do not favor their repeal. Such action would open wide +the door to price fixing, monopoly, and destruction of healthy competition. +Particular attention should be given to the industries rounded upon natural +resources, especially where destructive competition produces great wastes +of these resources and brings great hardships upon operators, employees, +and the public. In recent years there has been continued demoralization in +the bituminous coal, oil, and lumber industries. I again commend the matter +to the consideration of the Congress. UNEMPLOYMENT + +As an aid to unemployment the Federal Government is engaged in the greatest +program of public-building, harbor, flood-control, highway, waterway, +aviation, merchant and naval ship construction in all history. Our +expenditures on these works during this calendar year will reach about +$780,000,000 compared with $260,000,000 in 1928. Through this increased +construction, through the maintenance of a full complement of Federal +employees, and through services to veterans it is estimated that the +Federal taxpayer is now directly contributing to the livelihood of +10,000,000 of our citizens. + +We must avoid burdens upon the Government which will create more +unemployment in private industry than can be gained by further expansion of +employment by the Federal Government. We can now stimulate employment and +agriculture more effectually and speedily through the voluntary measures in +progress, through the thawing out of credit, through the building up of +stability abroad, through the home loan discount banks, through an +emergency finance corporation and the rehabilitation of the railways and +other such directions. + +I am opposed to any direct or indirect Government dole. The breakdown and +increased unemployment in Europe is due in part to such practices. Our +people are providing against distress from unemployment in true American +fashion by a magnificent response to public appeal and by action of the +local governments. + +GENERAL LEGISLATION + +There are many other subjects requiring legislative action at this session +of the Congress. I may list the following among them: + +VETERANS' SERVICES + +The law enacted last March authorizing loans of 50 per cent upon +adjusted-service certificates has, together with the loans made under +previous laws, resulted in payments of about $1,260,000,000. Appropriations +have been exhausted. The Administrator of Veterans' Affairs advises that a +further appropriation of $200,000,000 is required at once to meet the +obligations made necessary by existing legislation. + +There will be demands for further veterans' legislation; there are +inequalities in our system of veterans' relief; it is our national duty to +meet our obligations to those who have served the Nation. But our present +expenditure upon these services now exceeds $1,000,000,000 per annum. I am +opposed to any extension of these expenditures until the country has +recovered from the present situation. + +ELECTRICAL-POWER REGULATION I have recommended in previous messages the +effective regulation of interstate electrical power as the essential +function of the reorganized Federal Power Commission. I renew the +recommendation. It is urgently needed in public protection. + +MUSCLE SHOALS + +At my suggestion, the Governors and Legislatures of Alabama and Tennessee +selected three members each for service on a committee to which I appointed +a representative of the farm organizations and two representatives of the +War Department for the purpose of recommending a plan for the disposal of +these properties which would be in the interest of the people of those +States and the agricultural industry throughout the country. I shall +transmit the recommendations to the Congress. + +REORGANIZATION OF FEDERAL DEPARTMENTS + +I have referred in previous messages to the profound need of further +reorganization and consolidation of Federal administrative functions to +eliminate overlap and waste, and to enable coordination and definition of +Government policies now wholly impossible in scattered and conflicting +agencies which deal with parts of the same major function. I shall lay +before the Congress further recommendations upon this subject, particularly +in relation to the Department of the Interior. There are two directions of +such reorganization, however, which have an important bearing upon the +emergency problems with which we are confronted. + +SHIPPING BOARD + +At present the Shipping Board exercises large administrative functions +independent of the Executive. These administrative functions should be +transferred to the Department of Commerce, in keeping with that single +responsibility which has been the basis of our governmental structure since +its foundation. There should be created in that department a position of +Assistant Secretary for Merchant Marine, under whom this work and the +several bureaus having to do with merchant marine may be grouped. + +The Shipping Board should be made a regulatory body acting also in advisory +capacity on loans and policies, in keeping with its original conception. +Its regulatory powers should be amended to include regulation of coastwise +shipping so as to assure stability and better service. It is also worthy of +consideration that the regulation of rates and services upon the inland +waterways should be assigned to such a reorganized board. + +REORGANIZATION OF PUBLIC WORKS ADMINISTRATION + +I recommend that all building and construction activities of the Government +now carried on by many departments be consolidated into an independent +establishment under the President to be known as the "Public Works +Administration" directed by a Public Works Administrator. This agency +should undertake all construction work in service to the different +departments of the Government (except naval and military work). The +services of the Corps of Army Engineers should be delegated in rotation for +military duty to this administration in continuation of their supervision +of river and harbor work. Great economies, sounder policies, more effective +coordination to employment, and expedition in all construction work would +result from this consolidation. + +LAW ENFORCEMENT + +I shall present some recommendations in a special message looking to the +strengthening of criminal-law enforcement and improvement in judicial +procedure connected therewith. + +INLAND WATERWAY AND HARBOR IMPROVEMENT + +These improvements are now proceeding upon an unprecedented scale. Some +indication of the volume of work in progress is conveyed by the fact that +during the current year over 380,000,000 cubic yards of material have been +moved--an amount equal to the entire removal in the construction of the +Panama Canal. The Mississippi waterway system, connecting Chicago, Kansas +City, Pittsburgh, and New Orleans, will be in full operation during 1933. +Substantial progress is being made upon the projects of the upper Missouri, +upper Mississippi, etc. + +Negotiations are now in progress with Canada for the construction of the +St. Lawrence Waterway. + +THE TARIFF + +Wages and standards of living abroad have been materially lowered during +the past year. The temporary abandonment of the gold standard by certain +countries has also reduced their production costs compared to ours. +Fortunately any increases in the tariff which may be necessary to protect +agriculture and industry from these lowered foreign costs, or decreases in +items which may prove to be excessive, may be undertaken at any time by the +Tariff Commission under authority which it possesses by virtue of the +tariff act of 1930. The commission during the past year has reviewed the +rates upon over 254 items subject to tariff. As a result of vigorous and +industrious action, it is up to date in the consideration of pending +references and is prepared to give prompt attention to any further +applications. This procedure presents an orderly method for correcting +inequalities. I am opposed to any general congressional revision of the +tariff. Such action would disturb industry, business, and agriculture. It +would prolong the depression. + +IMMIGRATION AND DEPORTATION + +I recommend that immigration restriction now in force under administrative +action be placed upon a more definite basis by law. The deportation laws +should be strengthened. Aliens lawfully in the country should be protected +by the issuance of a certificate of residence. + +PUBLIC HEALTH + +I again call attention to my previous recommendations upon this subject, +particularly in its relation to children. The moral results are of the +utmost importance. CONCLUSION + +It is inevitable that in these times much of the legislation proposed to +the Congress and many of the recommendations of the Executive must be +designed to meet emergencies. In reaching solutions we must not jeopardize +those principles which we have found to be the basis of the growth of the +Nation. The Federal Government must not encroach upon nor permit local +communities to abandon that precious possession of local initiative and +responsibility. Again, just as the largest measure of responsibility in the +government of the Nation rests upon local self-government, so does the +largest measure of social responsibility in our country rest upon the +individual. If the individual surrenders his own initiative and +responsibilities, he is surrendering his own freedom and his own liberty. +It is the duty of the National Government to insist that both the local +governments and the individual shall assume and bear these responsibilities +as a fundamental of preserving the very basis of our freedom. + +Many vital changes and movements of vast proportions are taking place in +the economic world. The effect of these changes upon the future can not be +seen clearly as yet. Of this, however, we are sure: Our system, based upon +the ideals of individual initiative and of equality of opportunity, is not +an artificial thing. Rather it is the outgrowth of the experience of +America, and expresses the faith and spirit of our people. It has carried +us in a century and a half to leadership of the economic world. If our +economic system does not match our highest expectations at all times, it +does not require revolutionary action to bring it into accord with any +necessity that experience may prove. It has successfully adjusted itself to +changing conditions in the past. It will do so again. The mobility of our +institutions, the richness of our resources, and the abilities of our +people enable us to meet them unafraid. It is a distressful time for many +of our people, but they have shown qualities as high in fortitude, courage, +and resourcefulness as ever in our history. With that spirit, I have faith +that out of it will come a sounder life, a truer standard of values, a +greater recognition of the results of honest effort, and a healthier +atmosphere in which to rear our children. Ours must be a country of such +stability and security as can not fail to carry forward and enlarge among +all the people that abundant life of material and spiritual opportunity +which it has represented among all nations since its beginning. + +The White House, + +December 8, 1931 + +*** + +State of the Union Address +Herbert Hoover +December 6, 1932 + +To the Senate and House of Representatives: + +In accord with my constitutional duty, I transmit herewith to the Congress +information upon the state of the Union together with recommendation of +measures for its consideration. + +Our country is at peace. Our national defense has been maintained at a high +state of effectiveness. All of the executive departments of the Government +have been conducted during the year with a high devotion to public +interest. There has been a far larger degree of freedom from industrial +conflict than hitherto known. Education and science have made further +advances. The public health is to-day at its highest known level. While we +have recently engaged in the aggressive contest of a national election, its +very tranquillity and the acceptance of its results furnish abundant proof +of the strength of our institutions. + +In the face of widespread hardship our people have demonstrated daily a +magnificent sense of humanity, of individual and community responsibility +for the welfare of the less fortunate. They have grown in their conceptions +and organization for cooperative action for the common welfare. + +In the provision against distress during this winter, the great private +agencies of the country have been mobilized again; the generosity of our +people has again come into evidence to a degree in which all America may +take great pride. Likewise the local authorities and the States are engaged +everywhere in supplemental measures of relief. The provisions made for +loans from the Reconstruction Finance Corporation, to States that have +exhausted their own resources, guarantee that there should be no hunger or +suffering from cold in the country. The large majority of States are +showing a sturdy cooperation in the spirit of the Federal aid. + +The Surgeon General, in charge of the Public Health Service, furnishes me +with the following information upon the state of public health: + +MORTALITY RATE PER 1,000 OF POPULATION ON AN ANNUAL BASIS FROM +REPRESENTATIVE STATES - General - Infant + +First 9 months of-- - - + +1928 - 11.9 - 67.8 + +1929 - 12.0 - 65.8 + +1930 - 11.4 - 62.0 + +1931 - 11.2 - 60.0 + +1932 - 10.6 - 55.0 + +The sickness rates from data available show the same trends. These facts +indicate the fine endeavor of the agencies which have been mobilized for +care of those in distress. + +ECONOMIC SITUATION + +The unparalleled world-wide economic depression has continued through the +year. Due to the European collapse, the situation developed during last +fall and winter into a series of most acute crises. The unprecedented +emergency measures enacted and policies adopted undoubtedly saved the +country from economic disaster. After serving to defend the national +security, these measures began in July to show their weight and influence +toward improvement of conditions in many parts of the country. The +following tables of current business indicators show the general economic +movement during the past eleven months. + +MONTHLY BUSINESS INDICES WITH SEASONAL VARIATIONS ELIMINATED + +Year and Month - Industrial Production - Factory Employment - Freight-car +loadings - Department Store sales, value - Exports, value - Imports, value +- Building Contracts, all types - Industrial Electric power consumption + +1931 - - - - - - - - + +December - 74 - 69.4 - 69 - 81 - 46 - 48 - 38 - 89.1 + +1932 - - - - - - - - + +January - 72 - 68.1 - 64 - 78 - 39 - 42 - 31 - 93.9 + +February - 69 - 67.8 - 62 - 78 - 45 - 41 - 27 - 98.8 + +March - 67 - 66.4 - 61 - 72 - 41 - 37 - 26 - 88.0 + +April - 63 - 64.3 - 59 - 80 - 38 - 36 - 27 - 82.2 + +May - 60 - 62.1 - 54 - 73 - 37 - 34 - 26 - 82.0 + +June - 59 - 60.0 - 52 - 71 - 34 - 36 - 27 - 78.1 + +July - 58 - 58.3 - 51 - 67 - 32 - 27 - 27 - 79.2 + +August - 60 - 58.8 - 51 - 66 - 31 - 29 - 30 - 73.5 + +September - 66 - 60.3 - 54 - 70 - 33 - 32 - 30 - 84.0 + +October - 66 - 61.1 - 57 - 70 - 33 - 32 - 29 - 84.4 + +The measures and policies which have procured this turn toward recovery +should be continued until the depression is passed, and then the emergency +agencies should be promptly liquidated. The expansion of credit facilities +by the Federal Reserve System and the Reconstruction Finance Corporation +has been of incalculable value. The loans of the latter for reproductive +works, and to railways for the creation of employment; its support of the +credit structure through loans to banks, insurance companies, railways, +building and loan associations, and to agriculture has protected the +savings and insurance policies of millions of our citizens and has relieved +millions of borrowers from duress; they have enabled industry and business +to function and expand. The assistance given to Farm Loan Banks, the +establishment of the Home Loan Banks and Agricultural Credit +Associations--all in their various ramifications have placed large sums of +money at the disposal of the people in protection and aid. Beyond this, the +extensive organization of the country in voluntary action has produced +profound results. + +The following table indicates direct expenditures of the Federal Government +in aid to unemployment, agriculture, and financial relief over the past +four years. The sums applied to financial relief multiply themselves many +fold, being in considerable measure the initial capital supplied to the +Reconstruction Finance Corporation, Farm Loan Banks, etc., which will be +recovered to the Treasury. + +- Public works (1) - Agricultural relief and financial loans + +Fiscal year ending June 30 - - + +1930 - $410,420,000 - $156,100,000 + +1931 - 574,870,000 - 196,700,000 + +1932 - 655,880,000 - 772,700,000 + +1933 - 717,260,000 - 52,000,000 - + + + +*** END OF THE PROJECT GUTENBERG EBOOK OF ADDRESSES BY HERBERT HOOVER *** + +This file should be named suhoo10.txt or suhoo10.zip +Corrected EDITIONS of our eBooks get a new NUMBER, suhoo11.txt +VERSIONS based on separate sources get new LETTER, suhoo10a.txt + +Project Gutenberg eBooks are often created from several printed +editions, all of which are confirmed as Public Domain in the US +unless a copyright notice is included. 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You can also find out about how to make a +donation to Project Gutenberg, and how to get involved. + + +**Welcome To The World of Free Plain Vanilla Electronic Texts** + +**eBooks Readable By Both Humans and By Computers, Since 1971** + +*****These eBooks Were Prepared By Thousands of Volunteers!***** + + +Title: State of the Union Addresses of Herbert Hoover + +Author: Herbert Hoover + +Release Date: February, 2004 [EBook #5037] +[Yes, we are more than one year ahead of schedule] +[This file was first posted on April 11, 2002] +[Date last updated: December 16, 2004] + +Edition: 11 + +Language: English + +Character set encoding: ASCII + +*** START OF THE PROJECT GUTENBERG EBOOK OF ADDRESSES BY HERBERT HOOVER *** + + + + +This eBook was produced by James Linden. + +The addresses are separated by three asterisks: *** + +Dates of addresses by Herbert Hoover in this eBook: + December 3, 1929 + December 2, 1930 + December 8, 1931 + December 6, 1932 + + + +*** + +State of the Union Address +Herbert Hoover +December 3, 1929 + +To the Senate and House of Representatives: + +The Constitution requires that the President "shall, from time to time, +give to the Congress information of the state of the Union, and recommend +to their consideration such measures as he shall judge necessary and +expedient." In complying with that requirement I wish to emphasize that +during the past year the Nation has continued to grow in strength; our +people have advanced in comfort; we have gained in knowledge; the education +of youth has been more widely spread; moral and spiritual forces have been +maintained; peace has become more assured. The problems with which we are +confronted are the problems of growth and of progress. In their solution we +have to determine the facts, to develop the relative importance to be +assigned to such facts, to formulate a common judgment upon them, and to +realize solutions in spirit of conciliation. + +FOREIGN RELATIONS + +We are not only at peace with all the world, but the foundations for future +peace are being substantially strengthened. To promote peace is our +long-established policy. Through the Kellogg-Briand pact a great moral +standard has been raised in the world. By it fifty-four nations have +covenanted to renounce war and to settle all disputes by pacific means. +Through it a new world outlook has been inaugurated which has profoundly +affected the foreign policies of nations. Since its inauguration we have +initiated new efforts not only in the organization of the machinery of +peace but also to eliminate dangerous forces which produce controversies +amongst nations. + +In January, 1926, the Senate gave its consent to adherence to the Court of +International Justice with certain reservations. In September of this year +the statute establishing the court has, by the action of the nations +signatory, been amended to meet the Senate's reservations and to go even +beyond those reservations to make clear that the court is a true +international court of justice. I believe it will be clear to everyone that +no controversy or question in which this country has or claims an interest +can be passed on by the court without our consent at the time the question +arises. The doubt about advisory opinions has been completely safeguarded. +Our adherence to the International Court is, as now constituted, not the +slightest step toward entry into the League of Nations. As I have before +indicated, I shall direct that our signature be affixed to the protocol of +adherence and shall submit it for the approval of the Senate with a special +message at some time when it is convenient to deal with it. + +In the hope of reducing friction in the world, and with the desire that we +may reduce the great economic burdens of naval armament, we have joined in +conference with Great Britain, France, Italy, and Japan to be held in +London in January to consider the further limitation and reduction of naval +arms. We hold high hopes that success may attend this effort. + +At the beginning of the present administration the neighboring State of +Mexico was best with domestic insurrection. We maintained the embargo upon +the shipment of arms to Mexico but permitted the duly constituted +Government to procure supplies from our surplus war stocks. Fortunately, +the Mexican Government by its own strength successfully withstood the +insurrection with but slight damage. Opportunity of further peaceful +development is given to that country. At the request of the Mexican +Government, we have since lifted the embargo on shipment of arms +altogether. The two governments have taken further steps to promote +friendly relationships and so solve our differences. Conventions prolonging +for a period of two years the life of the general and special claims +commissions have been concluded. + +In South America we are proud to have had part in the settlement of the +long-standing dispute between Chile and Peru in the disposal of the +question of Tacna-Arica. + +The work of the commission of inquiry and conciliation between Bolivia and +Paraguay, in which a representative of this Government participated, has +successfully terminated an incident which seemed to threaten war. The +proposed plan for final settlement as suggested by the neutral governments +is still under consideration. + +This Government has continued its efforts to act as a mediator in boundary +difficulties between Guatemala and Honduras. + +A further instance of profound importance in establishing good will was the +inauguration of regular air mail service between the United States and +Caribbean, Central American, and South American countries. + +We still have marines on foreign soil--in Nicaragua, Haiti, and China. In +the large sense we do not wish to be represented abroad in such manner. +About 1,600 marines remain in Nicaragua at the urgent request of that +government and the leaders of all parties pending the training of a +domestic constabulary capable of insuring tranquility. We have already +reduced these forces materially and we are anxious to withdraw them further +as the situation warrants. In Haiti we have about 700 marines, but it is a +much more difficult problem, the solution of which is still obscure. If +Congress approves, I shall dispatch a commission to Haiti to review and +study the matter in an endeavor to arrive at some more definite policy than +at present. Our forces in China constitute 2,605 men, which we hope also +further to reduce to the normal legation guard. + +It is my desire to establish more firmly our understanding and +relationships with the Latin American countries by strengthening the +diplomatic missions to those countries. It is my hope to secure men long +experienced in our Diplomatic Service, who speak the languages of the +peoples to whom they are accredited, as chiefs of our diplomatic missions +in these States. I shall send to the Senate at an early date the +nominations of several such men. + +The Congress has by numerous wise and foresighted acts in the past few +years greatly strengthened the character of our representation abroad. It +has made liberal provision for the establishment of suitable quarters for +our foreign staffs in the different countries. In order, however, that we +may further develop the most effective force in this, one of the most +responsible functions of our Government, I shall recommend to the Congress +more liberal appropriations for the work of the State Department. I know of +no expenditure of public money from which a greater economic and moral +return can come to us than by assuring the most effective conduct of our +foreign relations. + +NATIONAL DEFENSE + +To preserve internal order and freedom from encroachment is the first +purpose of government. Our Army and Navy are being maintained in a most +efficient state under officers of high intelligence and zeal. The extent +and expansion of their numbers and equipment as at present authorized are +ample for this purpose. + +We can well be deeply concerned, however, at the growing expense. From a +total expenditure for national defense purposes in 1914 of $267,000,000, it +naturally rose with the Great War, but receded again to $612,000,000 in +1924, when again it began to rise until during the current fiscal year the +expenditures will reach to over $730,000,000, excluding all civilian +services of those departments. Programs now authorized will carry it to +still larger figures in future years. While the remuneration paid to our +soldiers and sailors is justly at a higher rate than that of any other +country in the world, and while the cost of subsistence is higher, yet the +total of our expenditures is in excess of those of the most highly +militarized nations of the world. + +Upon the conference shortly to be held in London will depend such +moderation as we can make in naval expenditure. If we shall be compelled to +undertake the naval construction implied in the Washington arms treaty as +well as other construction which would appear to be necessary if no +international agreement can be completed, we shall be committed during the +next six years to a construction expenditure of upward of $1,200,000,000 +besides the necessary further increase in costs for annual upkeep. + +After 1914 the various Army contingents necessarily expanded to the end of +the Great War and then receded to the low point in 1924, when expansion +again began. In 1914 the officers and men in our regular forces, both Army +and Navy, were about 164,000, in 1924 there were about 256,000, and in 1929 +there were about 250,000. Our citizens' army, however, including the +National Guard and other forms of reserves, increase these totals up to +about 299,000 in 1914, about 672,000 in 1924, and about 728,000 in 1929. + +Under the Kellogg pact we have undertaken never to use war as an instrument +of national policy. We have, therefore, undertaken by covenant to use these +equipments solely for defensive purposes. From a defense point of view our +forces should be proportioned to national need and should, therefore, to +some extent be modified by the prospects of peace, which were never +brighter than to-day. + +It should be borne in mind that the improvement in the National Guard by +Federal support begun in 1920 has definitely strengthened our national +security by rendering them far more effective than ever heretofore. The +advance of aviation has also greatly increased our effectiveness in +defense. In addition to the very large program of air forces which we are +maintaining in the Army and Navy, there has been an enormous growth of +commercial aviation. This has provided unanticipated reserves in +manufacturing capacity and in industrial and air personnel, which again +adds to our security. + +I recommend that Congress give earnest consideration to the possibilities +of prudent action which will give relief from our continuously mounting +expenditures. + +FINANCES OF THE GOVERNMENT + +The finances of the Government are in sound condition. I shall submit the +detailed evidences and the usual recommendations in the special Budget +message. I may, however, summarize our position. The public debt on June 30 +this year stood at $16,931,000,000, compared to the maximum in August, +1919, of $26,596,000,000. Since June 30 it has been reduced by a further +$238,000,000. In the Budget to be submitted the total appropriations +recommended for the fiscal year 1931 are $3,830,445,231, as compared to +$3,976,141,651 for the present fiscal year. The present fiscal year, +however, includes $150,000,000 for the Federal Farm Board, as to which no +estimate can as yet be determined for 1931. + +Owing to the many necessary burdens assumed by Congress in previous years +which now require large outlays, it is with extreme difficulty that we +shall be able to keep the expenditures for the next fiscal year within the +bounds of the present year. Economies in many directions have permitted +some accommodation of pressing needs, the net result being an increase, as +shown above, of about one-tenth of 1 per cent above the present fiscal +year. We can not fail to recognize the obligations of the Government in +support of the public welfare but we must coincidentally bear in mind the +burden of taxes and strive to find relief through some tax reduction. Every +dollar so returned fertilizes the soil of prosperity. + +TAX REDUCTION + +The estimate submitted to me by the Secretary of the Treasury and the +Budget Director indicates that the Government will close the fiscal year +1930 with a surplus of about $225,000,000 and the fiscal year 1931 with a +surplus of about $123,000,000. Owing to unusual circumstances, it has been +extremely difficult to estimate future revenues with accuracy. + +I believe, however, that the Congress will be fully justified in giving the +benefits of the prospective surpluses to the taxpayers, particularly as +ample provision for debt reduction has been made in both years through the +form of debt retirement from ordinary revenues. In view of the uncertainty +in respect of future revenues and the comparatively small size of the +indicated surplus in 1931, relief should take the form of a provisional +revision of tax rates. + +I recommend that the normal income tax rates applicable to the incomes of +individuals for the calendar year 1929 be reduced from 5, 3, and 1 1/2; +per cent, to 4, 2, and 1/2; per cent, and that the tax on the income of +corporations for the calendar year 1929 be reduced from 12 to 11 per cent. +It is estimated that this will result in a reduction of $160,000,000 in +income taxes to be collected during the calendar year 1930. The loss in +revenue will be divided approximately equally between the fiscal years 1930 +and 1931. Such a program will give a measure of tax relief to the maximum +number of taxpayers, with relatively larger benefits to taxpayers with +small or moderate incomes. + +FOREIGN DEBTS + +The past year has brought us near to completion of settlements of the +indebtedness of foreign governments to the United States. + +The act of Congress approved February 4, 1929, authorized the settlement +with the Government of Austria along lines similar to the terms of +settlement offered by that Government to its other relief creditors. No +agreement has yet been concluded with that government, but the form of +agreement has been settled and its execution only awaits the Government of +Austria securing the assent by all the other relief creditors of the terms +offered. The act of Congress approved February 14, 1929, authorized the +settlement with the Government of Greece, and an agreement was concluded on +May 10, 1929. + +The Government of France ratified the agreement with us on July 27, 1929. +This agreement will shortly be before the Congress and I recommend its +approval. + +The only indebtedness of foreign governments to the United States now +unsettled is that of Russia and Armenia. + +During the past year a committee of distinguished experts under American +leadership submitted a plan looking to a revision of claims against Germany +by the various Governments. The United States denied itself any +participation in the war settlement of general reparations and our claims +are comparatively small in amount. They arise from costs of the army of +occupation and claims of our private citizens for losses under awards from +the Mixed Claims Commission established under agreement with the German +Government. In finding a basis for settlement it was necessary for the +committee of experts to request all the Governments concerned to make some +contribution to the adjustment and we have felt that we should share a +proportion of the concessions made. + +The State and Treasury Departments will be in a position shortly to submit +for your consideration a draft of an agreement to be executed between the +United States and Germany providing for the payments of these revised +amounts. A more extensive statement will be submitted at that time. + +The total amount of indebtedness of the various countries to the United +States now funded is $11,579,465,885. This sum was in effect provided by +the issue of United States Government bonds to our own people. The payments +of the various Governments to us on account of principal and interest for +1930 are estimated at a total of about $239,000,000, for 1931 at about +$236,000,000, for 1932 at about $246,000,000. The measure of American +compromise in these settlements may be appreciated from the fact that our +taxpayers are called upon to find annually about $475,000,000 in interest +and in addition to redeem the principal of sums borrowed by the United +States Government for these purposes. + +ALIEN ENEMY PROPERTY + +The wise determination that this property seized in war should be returned +to its owners has proceeded with considerable rapidity. Of the original +seized cash and property (valued at a total of about $625,000,000), all but +$111,566,700 has been returned. Most of the remainder should be disposed of +during the next year. + +GENERAL ECONOMIC SITUATION + +The country has enjoyed a large degree of prosperity and sound progress +during the past year with a steady improvement in methods of production and +distribution and consequent advancement in standards of living. Progress +has, of course, been unequal among industries, and some, such as coal, +lumber, leather, and textiles, still lag behind. The long upward trend of +fundamental progress, however, gave rise to over-optimism as to profits, +which translated itself into a wave of uncontrolled speculation in +securities, resulting in the diversion of capital from business to the +stock market and the inevitable crash. The natural consequences have been a +reduction in the consumption of luxuries and semi-necessities by those who +have met with losses, and a number of persons thrown temporarily out of +employment. Prices of agricultural products dealt in upon the great markets +have been affected in sympathy with the stock crash. + +Fortunately, the Federal reserve system had taken measures to strengthen +the position against the day when speculation would break, which together +with the strong position of the banks has carried the whole credit system +through the crisis without impairment. The capital which has been hitherto +absorbed in stock-market loans for speculative purposes is now returning to +the normal channels of business. There has been no inflation in the prices +of commodities; there has been no undue accumulation of goods, and foreign +trade has expanded to a magnitude which exerts a steadying influence upon +activity in industry and employment. + +The sudden threat of unemployment and especially the recollection of the +economic consequences of previous crashes under a much less secured +financial system created unwarranted pessimism and fear. It was recalled +that past storms of similar character had resulted in retrenchment of +construction, reduction of wages, and laying off of workers. The natural +result was the tendency of business agencies throughout the country to +pause in their plans and proposals for continuation and extension of their +businesses, and this hesitation unchecked could in itself intensify into a +depression with widespread unemployment and suffering. + +I have, therefore, instituted systematic, voluntary measures of cooperation +with the business institutions and with State and municipal authorities to +make certain that fundamental businesses of the country shall continue as +usual, that wages and therefore consuming power shall not be reduced, and +that a special effort shall be made to expand construction work in order to +assist in equalizing other deficits in employment. Due to the enlarged +sense of cooperation and responsibility which has grown in the business +world during the past few years the response has been remarkable and +satisfactory. We have canvassed the Federal Government and instituted +measures of prudent expansion in such work that should be helpful, and upon +which the different departments will make some early recommendations to +Congress. + +I am convinced that through these measures we have reestablished +confidence. Wages should remain stable. A very large degree of industrial +unemployment and suffering which would otherwise have occurred has been +prevented. Agricultural prices have reflected the returning confidence. The +measures taken must be vigorously pursued until normal conditions are +restored. + +AGRICULTURE + +The agricultural situation is improving. The gross farm income as estimated +by the Department of Agriculture for the crop season 1926-27 was +$12,100,000,000; for 1927-28 it was $12,300,000,000; for 1928-29 it was +$12,500,000,000; and estimated on the basis of prices since the last +harvest the value of the 1929-30 crop would be over $12,650,000,000. The +slight decline in general commodity prices during the past few years +naturally assists the farmers' buying power. + +The number of farmer bankruptcies is very materially decreased below +previous years. The decline in land values now seems to be arrested and +rate of movement from the farm to the city has been reduced. Not all +sections of agriculture, of course, have fared equally, and some areas have +suffered from drought. Responsible farm leaders have assured me that a +large measure of confidence is returning to agriculture and that a feeling +of optimism pervades that industry. + +The most extensive action for strengthening the agricultural industry ever +taken by any government was inaugurated through the farm marketing act of +June 15 last. Under its provisions the Federal Farm Board has been +established, comprised of men long and widely experienced in agriculture +and sponsored by the farm organizations of the country. During its short +period of existence the board has taken definite steps toward a more +efficient organization of agriculture, toward the elimination of waste in +marketing, and toward the upbuilding of farmers' marketing organizations on +sounder and more efficient lines. Substantial headway has been made in the +organization of four of the basic commodities--grain, cotton, livestock, +and wool. Support by the board to cooperative marketing organizations and +other board activities undoubtedly have served to steady the farmers' +market during the recent crisis and have operated also as a great stimulus +to the cooperative organization of agriculture. The problems of the +industry are most complex, and the need for sound organization is +imperative. Yet the board is moving rapidly along the lines laid out for it +in the act, facilitating the creation by farmers of farmer-owned and +farmer-controlled organizations and federating them into central +institutions, with a view to increasing the bargaining power of +agriculture, preventing and controlling surpluses, and mobilizing the +economic power of agriculture. + +THE TARIFF + +The special session of Congress was called to expedite the fulfillment of +party pledges of agricultural relief and the tariff. The pledge of farm +relief has been carried out. At that time I stated the principles upon +which I believed action should be taken in respect to the tariff: "An +effective tariff upon agricultural products, that will compensate the +farmer's higher costs and higher standards of living, has a dual purpose. +Such a tariff not only protects the farmer in our domestic market but it +also stimulates him to diversify his crops and to grow products that he +could not otherwise produce, and thus lessens his dependence upon exports +to foreign markets. The great expansion of production abroad under the +conditions I have mentioned renders foreign competition in our export +markets increasingly serious. It seems but natural, therefore, that the +American farmer, having been greatly handicapped in his foreign market by +such competition from the younger expanding countries, should ask that +foreign access to our domestic market should be regulated by taking into +account the differences in our costs of production. + +"In considering the tariff for other industries than agriculture, we find +that there have been economic shifts necessitating a readjustment of some +of the tariff schedules. Seven years of experience under the tariff bill +enacted in 1922 have demonstrated the wisdom of Congress in the enactment +of that measure. On the whole it has worked well. In the main our wages +have been maintained at high levels; our exports and imports have steadily +increased; with some exceptions our manufacturing industries have been +prosperous. Nevertheless, economic changes have taken place during that +time which have placed certain domestic products at a disadvantage and new +industries have come into being, all of which create the necessity for some +limited changes in the schedules and in the administrative clauses of the +laws as written in 1922. + +"It would seem to me that the test of necessity for revision is, in the +main, whether there has been a substantial slackening of activity in an +industry during the past few years, and a consequent decrease of employment +due to insurmountable competition in the products of that industry. It is +not as if we were setting up a new basis of protective duties. We did that +seven years ago. What we need to remedy now is whatever substantial loss of +employment may have resulted from shifts since that time. + +"In determining changes in our tariff we must not fail to take into account +the broad interests of the country as a whole, and such interests include +our trade relations with other countries." No condition has arisen in my +view to change these principles stated at the opening of the special +session. I am firmly of the opinion that their application to the pending +revision will give the country the kind of a tariff law it both needs and +wants. It would be most helpful if action should be taken at an early +moment, more especially at a time when business and agriculture are both +cooperating to minimize future uncertainties. It is just that they should +know what the rates are to be. + +Even a limited revision requires the consideration and readjustment of many +items. The exhaustive inquiries and valuable debate from men representative +of all parts of the country which is needed to determine the detailed rates +must necessarily be accomplished in the Congress. However perfectly this +rate structure may be framed at any given time, the shifting of economic +forces which inevitably occurs will render changes in some items desirable +between the necessarily long intervals of congressional revision. +Injustices are bound to develop, such as were experienced by the dairymen, +the flaxseed producers, the glass industry, and others, under the 1922 +rates. For this reason, I have been most anxious that the broad principle +of the flexible tariff as provided in the existing law should be preserved +and its delays in action avoided by more expeditious methods of determining +the costs of production at home and abroad, with executive authority to +promulgate such changes upon recommendation of the Tariff Commission after +exhaustive investigation. Changes by the Congress in the isolated items +such as those to which I have referred would have been most unlikely both +because of the concentrations of oppositions in the country, who could see +no advantage to their own industry or State, and because of the difficulty +of limiting consideration by the Congress to such isolated cases. + +There is no fundamental conflict between the interests of the farmer and +the worker. Lowering of the standards of living of either tends to destroy +the other. The prosperity of one rests upon the well-being of the other. +Nor is there any real conflict between the East and the West or the North +and the South in the United States. The complete interlocking of economic +dependence, the common striving for social and spiritual progress, our +common heritage as Americans, and the infinite web of national sentiment, +have created a solidarity in a great people unparalleled in all human +history. These invisible bonds should not and can not be shattered by +differences of opinion growing out of discussion of a tariff. + +PUBLIC BUILDINGS + +Under the provisions of various acts of Congress $300,000,000 has been +authorized for public buildings and the land upon which to construct them, +being $75,000,000 for the District of Columbia and $225,000,000 for the +country at large. Excluding $25,000,000 which is for the acquisition of +land in the so-called "triangle" in this city, this public building +legislation provides for a five-year program for the District of Columbia +and between an eight and nine year program for the country at large. Of +this sum approximately $27,400,000 was expended up to June 30 last, of +which $11,400,000 has been expended in the District and $16,000,000 +outside. + +Even this generous provision for both the District of Columbia and the +country is insufficient For most pressing governmental needs. Expensive +rents and inadequate facilities are extravagance and not economy. In the +District even after the completion of these projects we shall have fully +20,000 clerks housed in rented and temporary war buildings which can last +but a little longer. + +I therefore recommend that consideration should be given to the extension +of authorizations both for the country at large and for the District of +Columbia again distributed over a term of years. A survey of the need in +both categories has been made by the Secretary of the Treasury and the +Postmaster General. It would be helpful in the present economic situation +if such steps were taken as would enable early construction work. + +An expedition and enlargement of the program in the District would bring +about direct economies in construction by enabling the erection of +buildings in regular sequence. By maintaining a stable labor force in the +city, contracts can be made on more advantageous terms. + +The earlier completion of this program which is an acknowledged need would +add dignity to the celebration in 1932 of the two hundredth anniversary of +the birth of President Washington. + +In consideration of these projects which contribute so much to dignify the +National Capital I should like to renew the suggestion that the Fine Arts +Commission should be required to pass upon private buildings which are +proposed for sites facing upon public buildings and parks. Without such +control much of the effort of the Congress in beautification of the Capital +will be minimized. + +THE WATERWAYS AND FLOOD CONTROL + +The development of inland waterways has received new impulse from the +completion during this year of the canalization of the Ohio to a uniform +9-foot depth. The development of the other segments of the Mississippi +system should be expedited and with this in view I am recommending an +increase in appropriations for rivers and harbors from $50,000,000 to +$55,000,000 per annum which, together with about $4,000,000 per annum +released by completion of the Ohio, should make available after providing +for other river and harbor works a sum of from $25,000,000 to $30,000,000 +per annum for the Mississippi system and thus bring it to early +completion. + +Conflict of opinion which has arisen over the proposed floodway from the +Arkansas River to the Gulf of Mexico via the Atchafalaya River has led me +to withhold construction upon this portion of the Mississippi flood control +plan until it could be again reviewed by the engineers for any further +recommendation to Congress. The other portions of the project are being +vigorously prosecuted and I have recommended an increase in appropriations +for this from $30,000,000 of the present year to $35,000,000 during the +next fiscal year. + +Expansion of our intracoastal waterways to effective barge depths is well +warranted. We are awaiting the action of Canada upon the St. Lawrence +waterway project. + +HIGHWAYS + +There are over 3,000,000 miles of legally established highways in the +United States, of which about 10 per cent are included in the State highway +systems, the remainder being county and other local roads. About 626,000 +miles have been improved with some type of surfacing, comprising some 63 +per cent of the State highway systems and 16 per cent of the local roads. +Of the improved roads about 102,000 miles are hard surfaced, comprising +about 22 per cent of the State highway systems and about 8 per cent of the +local roads. + +While proper planning should materially reduce the listed mileage of public +roads, particularly in the agricultural districts, and turn these roads +back to useful purposes, it is evident that road construction must be a +long-continued program. Progress in improvement is about 50,000 miles of +all types per annum, of which some 12,000 miles are of the more durable +types. The total expenditures of Federal, State, and local governments last +year for construction and maintenance assumed the huge total of +$1,660,000,000. + +Federal aid in the construction of the highway systems in conjunction with +the States has proved to be beneficial and stimulating. We must ultimately +give consideration to the increase of our contribution to these systems, +particularly with a view to stimulating the improvement of farm-to-market +roads. + +POST OFFICE + +Our Post Office deficit has now increased to over $80,000,000 a year, of +which perhaps $14,000,000 is due to losses on ocean mail and air mail +contracts. The department is making an exhaustive study of the sources of +the deficit with view to later recommendation to Congress in respect to +it. + +The Post Office quarters are provided in part by the Federal construction, +in part by various forms of rent and lease arrangements. The practice has +grown up in recent years of contracting long term leases under which both +rent and amortization principal cost of buildings is included. I am advised +that fully 40 per cent could be saved from many such rent and lease +agreements even after allowing interest on the capital required at the +normal Government rate. There are also many objectionable features to some +of these practices. The provision of adequate quarters for the Post Office +should be put on a sound basis. + +A revision of air mail rates upon a more systematic and permanent footing +is necessary. The subject is under study, and if legislation should prove +necessary the subject will be presented to the Congress. In the meantime I +recommend that the Congress should consider the desirability of authorizing +further expansion of the South American services. + +COMMERCIAL AVIATION + +During the past year progress in civil aeronautics has been remarkable. +This is to a considerable degree due to the wise assistance of the Federal +Government through the establishment and maintenance of airways by the +Department of Commerce and the mail contracts from the Post Office +Department. The Government-improved airways now exceed 25,000 miles--more +than 14,000 miles of which will be lighted and equipped for night-flying +operations by the close of the current year. Airport construction through +all the States is extremely active. There are now 1,000 commercial and +municipal airports in operation with an additional 1,200 proposed for early +development. + +Through this assistance the Nation is building a sound aviation system, +operated by private enterprise. Over 6,400 planes are in commercial use, +and 9,400 pilots are licensed by the Government. Our manufacturing capacity +has risen to 7,500 planes per annum. The aviation companies have increased +regular air transportation until it now totals 90,000 miles per +day--one-fourth of which is flown by night. Mail and express services now +connect our principal cities, and extensive services for passenger +transportation have been inaugurated, and others of importance are +imminent. American air lines now reach into Canada and Mexico, to Cuba, +Porto Rico, Central America, and most of the important countries of South +America. + +RAILWAYS + +As a whole, the railroads never were in such good physical and financial +condition, and the country has never been so well served by them. The +greatest volume of freight traffic ever tendered is being carried at a +speed never before attained and with satisfaction to the shippers. +Efficiencies and new methods have resulted in reduction in the cost of +providing freight transportation, and freight rates show a continuous +descending line from the level enforced by the World War. + +We have, however, not yet assured for the future that adequate system of +transportation through consolidations which was the objective of the +Congress in the transportation act. The chief purpose of consolidation is +to secure well-balanced systems with more uniform and satisfactory rate +structure, a more stable financial structure, more equitable distribution +of traffic, greater efficiency, and single-line instead of multiple-line +hauls. In this way the country will have the assurance of better service +and ultimately at lower and more even rates than would otherwise be +attained. Legislation to simplify and expedite consolidation methods and +better to protect public interest should be enacted. + +Consideration should also be given to relief of the members of the +Commission from the necessity of detailed attention to comparatively +inconsequential matters which, under the existing law, must receive their +direct and personal consideration. It is in the public interest that the +members of the Commission should not be so pressed by minor matters that +they have inadequate time for investigation and consideration of the larger +questions committed to them for solution. As to many of these minor +matters, the function of the Commission might well be made revisory, and +the primary responsibility delegated to subordinate officials after the +practice long in vogue in the executive departments. + +MERCHANT MARINE + +Under the impulse of the merchant marine act of 1928 the transfer to +private enterprise of the Government-owned steamship lines is going forward +with increasing success. The Shipping Board now operates about 18 lines, +which is less than half the number originally established, and the estimate +of expenditures for the coming fiscal year is based upon reduction in +losses on Government lines by approximately one-half. Construction loans +have been made to the amount of approximately $75,000,000 out of the +revolving fund authorized by Congress and have furnished an additional aid +to American shipping and further stimulated the building of vessels in +American yards. + +Desirous of securing the full values to the Nation of the great effort to +develop our merchant marine by the merchant marine act soon after the +inauguration of the present administration, I appointed an +interdepartmental committee, consisting of the Secretary of Commerce, as +chairman, the Secretary of the Navy, the Postmaster General, and the +chairman of the Shipping Board, to make a survey of the policies being +pursued under the act of 1928 in respect of mail contracts; to inquire into +its workings and to advise the Postmaster General in the administration of +the act. + +In particular it seemed to me necessary to determine if the result of the +contracts already let would assure the purpose expressed in the act, "to +further develop an American merchant marine, to assure its permanence in +the transportation of the foreign trade of the United States, and for other +purposes," and to develop a coordinated policy by which these purposes may +be translated into actualities. + +In review of the mail contracts already awarded it was found that they +aggregated 25 separate awards imposing a governmental obligation of a +little over $12,000,000 per annum. Provision had been imposed in five of +the contracts for construction of new vessels with which to replace and +expand services. These requirements come to a total of 12 vessels in the +10-year period, aggregating 122,000 tons. Some other conditions in the +contracts had not worked out satisfactorily. + +That study has now been substantially completed and the committee has +advised the desirability and the necessity of securing much larger +undertakings as to service and new construction in future contracts. The +committee at this time is recommending the advertising of 14 additional +routes, making substantial requirements for the construction of new vessels +during the life of each contract recommended. A total of 40 new vessels +will be required under the contracts proposed, about half of which will be +required to be built during the next three years. The capital cost of this +new construction will be approximately $250,000,000, involving +approximately 460,000 gross tons. Should bidders be found who will make +these undertakings, it will be necessary to recommend to Congress an +increase in the authorized expenditure by the Post Office of about +$5,500,000 annually. It will be most advantageous to grant such an +authority. + +A conflict as to the administration of the act has arisen in the contention +of persons who have purchased Shipping Board vessels that they are entitled +to mail contracts irrespective of whether they are the lowest bidder, the +Post Office, on the other hand, being required by law to let contracts in +that manner. It is urgent that Congress should clarify this situation. + +THE BANKING SYSTEM + +It is desirable that Congress should consider the revision of some portions +of the banking law. + +The development of "group" and "chain" banking presents many new problems. +The question naturally arises as to whether if allowed to expand without +restraint these methods would dangerously concentrate control of credit, +and whether they would not in any event seriously threaten one of the +fundamentals of the American credit system--which is that credit which is +based upon banking deposits should be controlled by persons within those +areas which furnish these deposits and thus be subject to the restraints of +local interest and public opinion in those areas. To some degree, however, +this movement of chain or group banking is a groping for stronger support +to the banks and a more secure basis for these institutions. + +The growth in size and stability of the metropolitan banks is in marked +contrast to the trend in the country districts, with its many failures and +the losses these failures have imposed upon the agricultural community. + +The relinquishment of charters of national banks in great commercial +centers in favor of State charters indicates that some conditions surround +the national banks which render them unable to compete with State banks; +and their withdrawal results in weakening our national banking system. + +It has been proposed that permission should be granted to national banks to +engage in branch banking of a nature that would preserve within limited +regions the local responsibility and the control of such credit +institutions. + +All these subjects, however, require careful investigation, and it might be +found advantageous to create a joint commission embracing Members of the +Congress and other appropriate Federal officials for subsequent report. + +ELECTRICAL POWER REGULATION + +The Federal Power Commission is now comprised of three Cabinet officers, +and the duties involved in the competent conduct of the growing +responsibilities of this commission far exceed the time and attention which +these officials can properly afford from other important duties. I +recommended that authority be given for the appointment of full-time +commissioners to replace them. + +It is also desirable that the authority of the commission should be +extended to certain phases of power regulation. The nature of the electric +utilities industry is such that about 90 per cent of all power generation +and distribution is intrastate in character, and most of the States have +developed their own regulatory systems as to certificates of convenience, +rates, and profits of such utilities. To encroach upon their authorities +and responsibilities would be an encroachment upon the rights of the +States. There are cases, however, of interstate character beyond the +jurisdiction of the States. To meet these cases it would be most desirable +if a method could be worked out by which initial action may be taken +between the commissions of the States whose joint action should be made +effective by the Federal Power Commission with a reserve to act on its own +motion in case of disagreement or nonaction by the States. + +THE RADIO COMMISSION + +I recommend the reorganization of the Radio Commission into a permanent +body from its present temporary status. The requirement of the present law +that the commissioners shall be appointed from specified zones should be +abolished and a general provision made for their equitable selection from +different parts of the country. Despite the effort of the commissioners, +the present method develops a public insistence that the commissioners are +specially charged with supervision of radio affairs in the zone from which +each is appointed. As a result there is danger that the system will +degenerate from a national system into five regional agencies with varying +practices, varying policies, competitive tendencies, and consequent failure +to attain its utmost capacity for service to the people as a whole. + +MUSCLE SHOALS + +It is most desirable that this question should be disposed of. Under +present conditions the income from these plants is less than could +otherwise be secured for its use, and more especially the public is not +securing the full benefits which could be obtained from them. + +It is my belief that such parts of these plants as would be useful and the +revenues from the remainder should be dedicated for all time to the farmers +of the United States for investigation and experimentation on a commercial +scale in agricultural chemistry. By such means advancing discoveries of +science can be systematically applied to agricultural need, and development +of the chemical industry of the Tennessee Valley can be assured. + +I do not favor the operation by the Government of either power or +manufacturing business except as an unavoidable by-product of some other +major public purpose. + +Any form of settlement of this question will imply entering upon a contract +or contracts for the lease of the plants either as a whole or in parts and +the reservation of facilities, products, or income for agricultural +purposes. The extremely technical and involved nature of such contracts +dealing with chemical and electrical enterprises, added to the unusual +difficulties surrounding these special plants, and the rapid commercial +changes now in progress in power and synthetic nitrogen manufacture, lead +me to suggest that Congress create a special commission, not to investigate +and report as in the past, but with authority to negotiate and complete +some sort of contract or contracts on behalf of the Government, subject, of +course, to such general requirements as Congress may stipulate. + +BOULDER DAM + +The Secretary of the Interior is making satisfactory progress in +negotiation of the very complex contracts required for the sale of the +power to be generated at this project. These contracts must assure the +return of all Government outlays upon the project. I recommend that the +necessary funds be appropriated for the initiation of this work as soon as +the contracts are in the hands of Congress. + +CONSERVATION + +Conservation of national resources is a fixed policy of the Government. +Three important questions bearing upon conservation of the public lands +have become urgent. + +Conservation of our oil and gas resources against future need is a national +necessity. The working of the oil permit system in development of oil and +gas resources on the public domain has been subject to great abuse. I +considered it necessary to suspend the issuance of such permits and to +direct the review of all outstanding permits as to compliance of the +holders with the law. The purpose was not only to end such abuse but to +place the Government in position to review the entire subject. + +We are also confronted with a major problem in conservation due to the +overgrazing on public lands. The effect of overgrazing (which has now +become general) is not only to destroy the ranges but by impairing the +ground coverage seriously to menace the water supply in many parts of the +West through quick run-off, spring floods, and autumn drought. + +We have a third problem of major dimensions in the reconsideration of our +reclamation policy. The inclusion of most of the available lands of the +public domain in existing or planned reclamation projects largely completes +the original purpose of the Reclamation Service. There still remains the +necessity for extensive storage of water in the arid States which renders +it desirable that we should give a wider vision and purpose to this +service. + +To provide for careful consideration of these questions and also of better +division of responsibilities in them as between the State and Federal +Governments, including the possible transfer to the States for school +purposes of the lands unreserved for forests, parks, power, minerals, etc., +I have appointed a Commission on Conservation of the Public Domain, with a +membership representing the major public land States and at the same time +the public at large. I recommend that Congress should authorize a moderate +sum to defray their expenses. + +SOCIAL SERVICE + +The Federal Government provides for an extensive and valuable program of +constructive social service, in education, home building, protection to +women and children, employment, public health, recreation, and many other +directions. + +In a broad sense Federal activity in these directions has been confined to +research and dissemination of information and experience, and at most to +temporary subsidies to the States in order to secure uniform advancement in +practice and methods. Any other attitude by the Federal Government will +undermine one of the most precious possessions of the American people; that +is, local and individual responsibility. We should adhere to this policy. + +Federal officials can, however, make a further and most important +contribution by leadership in stimulation of the community and voluntary +agencies, and by extending Federal assistance in organization of these +forces and bringing about cooperation among them. + +As an instance of this character, I have recently, in cooperation with the +Secretaries of Interior and Labor, laid the foundations of an exhaustive +inquiry into the facts precedent to a nation-wide White House conference on +child health and protection. This cooperative movement among interested +agencies will impose no expense upon the Government. Similar nation-wide +conferences will be called in connection with better housing and recreation +at a later date. + +In view of the considerable difference of opinion as to the policies which +should be pursued by the Federal Government with respect to education, I +have appointed a committee representative of the important educational +associations and others to investigate and present recommendations. In +cooperation with the Secretary of the Interior, I have also appointed a +voluntary committee of distinguished membership to assist in a nation-wide +movement for abolition of illiteracy. + +I have recommended additional appropriations for the Federal employment +service in order that it may more fully cover its cooperative work with +State and local services. I have also recommended additional appropriations +for the Women's and Children's Bureaus for much needed research as to facts +which I feel will prove most helpful. + +PUBLIC HEALTH + +The advance in scientific discovery as to disease and health imposes new +considerations upon us. The Nation as a whole is vitally interested in the +health of all the people; in protection from spread of contagious disease; +in the relation of physical and mental disabilities to criminality; and in +the economic and moral advancement which is fundamentally associated with +sound body and mind. The organization of preventive measures and health +education in its personal application is the province of public health +service. Such organization should be as universal as public education. Its +support is a proper burden upon the taxpayer. It can not be organized with +success, either in its sanitary or educational phases, except under public +authority. It should be based upon local and State responsibility, but I +consider that the Federal Government has an obligation of contribution to +the establishment of such agencies. + +In the practical working out of organization, exhaustive experiment and +trial have demonstrated that the base should be competent organization of +the municipality, county, or other local unit. Most of our municipalities +and some 400 rural counties out of 3,000 now have some such unit +organization. Where highly developed, a health unit comprises at least a +physician, sanitary engineer, and community nurse with the addition, in +some cases, of another nurse devoted to the problems of maternity and +children. Such organization gives at once a fundamental control of +preventive measures and assists in community instruction. The Federal +Government, through its interest in control of contagion, acting through +the United States Public Health Service and the State agencies, has in the +past and should in the future concern itself with this development, +particularly in the many rural sections which are unfortunately far behind +in progress. Some parts of the funds contributed under the Sheppard-Towner +Act through the Children's Bureau of the Department of Labor have also +found their way into these channels. + +I recommend to the Congress that the purpose of the Sheppard-Towner Act +should be continued through the Children's Bureau for a limited period of +years; and that the Congress should consider the desirability of confining +the use of Federal funds by the States to the building up of such county or +other local units, and that such outlay should be positively coordinated +with the funds expended through the United States Public Health Service +directed to other phases of the same county or other local unit +organization. All funds appropriated should of course be applied through +the States, so that the public health program of the county or local unit +will be efficiently coordinated with that of the whole State. + +FEDERAL PRISONS + +Closely related to crime conditions is the administration of the Federal +prison system. Our Federal penal institutions are overcrowded, and this +condition is daily becoming worse. The parole and probation systems are +inadequate. These conditions make it impossible to perform the work of +personal reconstruction of prisoners so as to prepare them for return to +the duties of citizenship. In order to relieve the pressing evils I have +directed the temporary transfer of the Army Disciplinary Barracks at +Leavenworth to the Department of Justice for use as a Federal prison. Not +only is this temporary but it is inadequate for present needs. + +We need some new Federal prisons and a reorganization of our probation and +parole systems; and there should be established in the Department of +Justice a Bureau of Prisons with a sufficient force to deal adequately with +the growing activities of our prison institutions. Authorization for the +improvements should be given speedily, with initial appropriations to allow +the construction of the new institutions to be undertaken at once. +IMMIGRATION + +Restriction of immigration has from every aspect proved a sound national +policy. Our pressing problem is to formulate a method by which the limited +number of immigrants whom we do welcome shall be adapted to our national +setting and our national needs. + +I have been opposed to the basis of the quotas now in force and I have +hoped that we could find some practical method to secure what I believe +should be our real national objective; that is, fitness of the immigrant as +to physique, character, training, and our need of service. Perhaps some +system of priorities within the quotas could produce these results and at +the same time enable some hardships in the present system to be cleared up. +I recommend that the Congress should give the subject further study, in +which the executive departments will gladly cooperate with the hope of +discovering such method as will more fully secure our national necessities. +VETERANS + +It has been the policy of our Government almost from its inception to make +provision for the men who have been disabled in defense of our country. +This policy should be maintained. Originally it took the form of land +grants and pensions. This system continued until our entry into the World +War. The Congress at that time inaugurated a new plan of compensation, +rehabilitation, hospitalization, medical care and treatment, and insurance, +whereby benefits were awarded to those veterans and their immediate +dependents whose disabilities were attributable to their war service. The +basic principle in this legislation is sound. + +In a desire to eliminate all possibilities of injustice due to difficulties +in establishing service connection of disabilities, these principles have +been to some degree extended. Veterans whose diseases or injuries have +become apparent within a brief period after the war are now receiving +compensation; insurance benefits have been liberalized. Emergency officers +are now receiving additional benefits. The doors of the Government's +hospitals have been opened to all veterans, even though their diseases or +injuries were not the result of their war service. In addition adjusted +service certificates have been issued to 3,433,300 veterans. This in itself +will mean an expenditure of nearly $3,500,000,000 before 1945, in addition +to the $600,000,000 which we are now appropriating annually for our +veterans' relief. + +The administration of all laws concerning the veterans and their dependents +has been upon the basis of dealing generously, humanely, and justly. While +some inequalities have arisen, substantial and adequate care has been given +and justice administered. Further improvement in administration may require +some amendment from time to time to the law, but care should be taken to +see that such changes conform to the basic principles of the legislation. + +I am convinced that we will gain in efficiency, economy, and more uniform +administration and better definition of national policies if the Pension +Bureau, the National Home for Volunteer Soldiers, and the Veterans' Bureau +are brought together under a single agency. The total appropriations to +these agencies now exceed $800,000,000 per annum. + +CIVIL SERVICE + +Approximately four-fifths of all the employees in the executive civil +service now occupy positions subject to competitive examination under the +civil service law. + +There are, however, still commanding opportunities for extending the +system. These opportunities lie within the province of Congress and not the +President. I recommend that a further step be taken by authorization that +appointments of third-class postmasters be made under the civil service +law. + +DEPARTMENTAL REORGANIZATION + +This subject has been under consideration for over 20 years. It was +promised by both political parties in the recent campaign. It has been +repeatedly examined by committees and commissions--congressional, +executive, and voluntary. The conclusions of these investigations have been +unanimous that reorganization is a necessity of sound administration; of +economy; of more effective governmental policies and of relief to the +citizen from unnecessary harassment in his relations with a multitude of +scattered governmental agencies. But the presentation of any specific plan +at once enlivens opposition from every official whose authority may be +curtailed or who fears his position is imperiled by such a result; of +bureaus and departments which wish to maintain their authority and +activities; of citizens and their organizations who are selfishly +interested, or who are inspired by fear that their favorite bureau may, in +a new setting, be less subject to their influence or more subject to some +other influence. + +It seems to me that the essential principles of reorganization are two in +number. First, all administrative activities of the same major purpose +should be placed in groups under single-headed responsibility; second, all +executive and administrative functions should be separated from boards and +commissions and placed under individual responsibility, while +quasi-legislative and quasi-judicial and broadly advisory functions should +be removed from individual authority and assigned to boards and +commissions. Indeed, these are the fundamental principles upon which our +Government was founded, and they are the principles which have been adhered +to in the whole development of our business structure, and they are the +distillation of the common sense of generations. + +For instance, the conservation of national resources is spread among eight +agencies in five departments. They suffer from conflict and overlap. There +is no proper development and adherence to broad national policies and no +central point where the searchlight of public opinion may concentrate +itself. These functions should be grouped under the direction of some such +official as an assistant secretary of conservation. The particular +department or cabinet officer under which such a group should be placed is +of secondary importance to the need of concentration. The same may be said +of educational services, of merchant marine aids, of public works, of +public health, of veterans' services, and many others, the component parts +of which are widely scattered in the various departments and independent +agencies. It is desirable that we first have experience with these +different groups in action before we create new departments. These may be +necessary later on. + +With this background of all previous experience I can see no hope for the +development of a sound reorganization of the Government unless Congress be +willing to delegate its authority over the problem (subject to defined +principles) to the Executive, who should act upon approval of a joint +committee of Congress or with the reservation of power of revision by +Congress within some limited period adequate for its consideration. +PROHIBITION + +The first duty of the President under his oath of office is to secure the +enforcement of the laws. The enforcement of the laws enacted to give effect +to the eighteenth amendment is far from satisfactory and this is in part +due to the inadequate organization of the administrative agencies of the +Federal Government. With the hope of expediting such reorganization, I +requested on June 6 last that Congress should appoint a joint committee to +collaborate with executive agencies in preparation of legislation. It would +be helpful if it could be so appointed. The subject has been earnestly +considered by the Law Enforcement Commission and the administrative +officials of the Government. Our joint conclusions are that certain steps +should be taken at once. First, there should be an immediate concentration +of responsibility and strengthening of enforcement agencies of the Federal +Government by transfer to the Department of Justice of the Federal +functions of detection and to a considerable degree of prosecution, which +are now lodged in the Prohibition Bureau in the Treasury; and at the same +time the control of the distribution of industrial alcohol and legalized +beverages should remain in the Treasury. Second, provision should be made +for relief of congestion in the Federal courts by modifying and simplifying +the procedure for dealing with the large volume of petty prosecutions under +various Federal acts. Third, there should be a codification of the laws +relating to prohibition to avoid the necessity which now exists of +resorting to more than 25 statutes enacted at various times over 40 years. +Technical defects in these statutes that have been disclosed should be +cured. I would add to these recommendations the desirability of +reorganizing the various services engaged in the prevention of smuggling +into one border patrol under the Coast Guard. Further recommendations upon +the subject as a whole will be developed after further examination by the +Law Enforcement Commission, but it is not to be expected that any criminal +law will ever be fully enforced so long as criminals exist. + +The District of Columbia should be the model of city law enforcement in the +Nation. While conditions here are much better than in many other cities, +they are far from perfect, and this is due in part to the congestion of +criminal cases in the Supreme Court of the District, resulting in long +delays. Furthermore, there is need for legislation in the District +supplementing the national prohibition act, more sharply defining and +enlarging the duties and powers of the District Commissioners and the +police of the District, and opening the way for better cooperation in the +enforcement of prohibition between the District officials and the +prohibition officers of the Federal Government. It is urgent that these +conditions be remedied. + +LAW ENFORCEMENT AND OBSERVANCE + +No one will look with satisfaction upon the volume of crime of all kinds +and the growth of organized crime in our country. We have pressing need so +to organize our system of administering criminal justice as to establish +full vigor and effectiveness. We need to reestablish faith that the highest +interests of our country are served by insistence upon the swift and +even-handed administration of justice to all offenders, whether they be +rich or poor. That we shall effect improvement is vital to the preservation +of our institutions. It is the most serious issue before our people. + +Under the authority of Congress I have appointed a National Commission on +Law Observance and Enforcement, for an exhaustive study of the entire +problem of the enforcement of our laws and the improvement of our judicial +system, including the special problems and abuses growing out of the +prohibition laws. The commission has been invited to make the widest +inquiry into the shortcomings of the administration of justice and into the +causes and remedies for them. It has organized its work under subcommittees +dealing with the many contributory causes of our situation and has enlisted +the aid of investigators in fields requiring special consideration. I am +confident that as a result of its studies now being carried forward it will +make a notable contribution to the solution of our pressing problems. + +Pending further legislation, the Department of Justice has been striving to +weed out inefficiency wherever it exists, to stimulate activity on the part +of its prosecuting officers, and to use increasing care in examining into +the qualifications of those appointed to serve as prosecutors. The +department is seeking systematically to strengthen the law enforcement +agencies week by week and month by month, not by dramatic displays but by +steady pressure; by removal of negligent officials and by encouragement and +assistance to the vigilant. During the course of these efforts it has been +revealed that in some districts causes contributing to the congestion of +criminal dockets, and to delays and inefficiency in prosecutions, have been +lack of sufficient forces in the offices of United States attorneys, clerks +of courts, and marshals. These conditions tend to clog the machinery of +justice. The last conference of senior circuit judges has taken note of +them and indorsed the department's proposals for improvement. Increases in +appropriations are necessary and will be asked for in order to reenforce +these offices. + +The orderly administration of the law involves more than the mere machinery +of law enforcement. The efficient use of that machinery and a spirit in our +people in support of law are alike essential. We have need for improvement +in both. However much we may perfect the mechanism, still if the citizen +who is himself dependent upon some laws for the protection of all that he +has and all that he holds dear, shall insist on selecting the particular +laws which he will obey, he undermines his own safety and that of his +country. His attitude may obscure, but it can not conceal, the ugly truth +that the lawbreaker, whoever he may be, is the enemy of society. We can no +longer gloss over the unpleasant reality which should be made vital in the +consciousness of every citizen, that he who condones or traffics with +crime, who is indifferent to it and to the punishment of the criminal, or +to the lax performance of official duty, is himself the most effective +agency for the breakdown of society. + +Law can not rise above its source in good citizenship--in what right-minded +men most earnestly believe and desire. If the law is upheld only by +Government officials, then all law is at an end. Our laws are made by the +people themselves; theirs is the right to work for their repeal; but until +repeal it is an equal duty to observe them and demand their enforcement. + +I have been gratified at the awakening sense of this responsibility in our +citizens during the past few months, and gratified that many instances have +occurred which refuted the cynicism which has asserted that our system +could not convict those who had defied the law and possessed the means to +resist its execution. These things reveal a moral awakening both in the +people and in officials which lies at the very foundation of the rule of +law. + +CONCLUSION + +The test of the rightfulness of our decisions must be whether we have +sustained and advanced the ideals of the American people; self-government +in its foundations of local government; justice whether to the individual +or to the group; ordered liberty; freedom from domination; open opportunity +and equality of opportunity; the initiative and individuality of our +people; prosperity and the lessening of poverty; freedom of public opinion; +education; advancement of knowledge; the growth of religious spirit; the +tolerance of all faiths; the foundations of the home and the advancement of +peace. + +The White House, + +December 3, 1929 + +*** + +State of the Union Address +Herbert Hoover +December 2, 1930 + +To the Senate and House of Representatives: + +I have the honor to comply with the requirement of the Constitution that I +should lay before the Congress information as to the state of the Union, +and recommend consideration of such measures as are necessary and +expedient. + +Substantial progress has been made during the year in national peace and +security; the fundamental strength of the Nation's economic life is +unimpaired; education and scientific discovery have made advances; our +country is more alive to its problems of moral and spiritual welfare. + +ECONOMIC SITUATION + +During the past 12 months we have suffered with other Nations from economic +depression. + +The origins of this depression lie to some extent within our own borders +through a speculative period which diverted capital and energy into +speculation rather than constructive enterprise. Had overspeculation in +securities been the only force operating, we should have seen recovery many +months ago, as these particular dislocations have generally readjusted +themselves. + +Other deep-seated causes have been in action, however, chiefly the +world-wide overproduction beyond even the demand of prosperous times for +such important basic commodities as wheat, rubber, coffee, sugar, copper, +silver, zinc, to some extent cotton, and other raw materials. The +cumulative effects of demoralizing price falls of these important +commodities in the process of adjustment of production to world consumption +have produced financial crises in many countries and have diminished the +buying power of these countries for imported goods to a degree which +extended the difficulties farther afield by creating unemployment in all +the industrial nations. The political agitation in Asia; revolutions in +South America and political unrest in some European States; the methods of +sale by Russia of her increasing agricultural exports to European markets; +and our own drought--have all contributed to prolong and deepen the +depression. + +In the larger view the major forces of the depression now lie outside of +the United States, and our recuperation has been retarded by the +unwarranted degree of fear and apprehension created by these outside +forces. + +The extent of the depression is indicated by the following approximate +percentages of activity during the past three months as compared with the +highly prosperous year of 1928: + +Value of department-store sales - 93% of 1928 + +Volume of manufacturing production - 80% of 1928 + +Volume of mineral production - 90% of 1928 + +Volume of factory employment - 84% of 1928 + +Total of bank deposits - 105% of 1928 + +Wholesale prices--all commodities - 83% of 1928 + +Cost of living - 94% of 1928 + +Various other indexes indicate total decrease of activity from 1928 of from +15 to 20 per cent. + +There are many factors which give encouragement for the future. The fact +that we are holding from 80 to 85 per cent of our normal activities and +incomes; that our major financial and industrial institutions have come +through the storm unimpaired; that price levels of major commodities have +remained approximately stable for some time; that a number of industries +are showing signs of increasing demand; that the world at large is +readjusting itself to the situation; all reflect grounds for confidence. We +should remember that these occasions have been met many times before, that +they are but temporary, that our country is to-day stronger and richer in +resources, in equipment, in skill, than ever in its history. We are in an +extraordinary degree self-sustaining, we will overcome world influences and +will lead the march of prosperity as we have always done hitherto. + +Economic depression can not be cured by legislative action or executive +pronouncement. Economic wounds must be healed by the action of the cells of +the economic body--the producers and consumers themselves. Recovery can be +expedited and its effects mitigated by cooperative action. That cooperation +requires that every individual should sustain faith and courage; that each +should maintain his self-reliance; that each and every one should search +for methods of improving his business or service; that the vast majority +whose income is unimpaired should not hoard out of fear but should pursue +their normal living and recreations; that each should seek to assist his +neighbors who may be less fortunate; that each industry should assist its +own employees; that each community and each State should assume its full +responsibilities for organization of employment and relief of distress with +that sturdiness and independence which built a great Nation. + +Our people are responding to these impulses in remarkable degree. The best +contribution of government lies in encouragement of this voluntary +cooperation in the community. The Government, National, State, and local, +can join with the community in such programs and do its part. A year ago I, +together with other officers of the Government, initiated extensive +cooperative measures throughout the country. + +The first of these measures was an agreement of leading employers to +maintain the standards of wages and of labor leaders to use their influence +against strife. In a large sense these undertakings have been adhered to +and we have not witnessed the usual reductions of wages which have always +heretofore marked depressions. The index of union wage scales shows them to +be today fully up to the level of any of the previous three years. In +consequence the buying power of the country has been much larger than would +otherwise have been the case. Of equal importance the Nation has had +unusual peace in industry and freedom from the public disorder which has +characterized previous depressions. + +The second direction of cooperation has been that our governments, +National, State, and local, the industries and business so distribute +employment as to give work to the maximum number of employees. + +The third direction of cooperation has been to maintain and even extend +construction work and betterments in anticipation of the future. It has +been the universal experience in previous depressions that public works and +private construction have fallen off rapidly with the general tide of +depression. On this occasion, however, the increased authorization and +generous appropriations by the Congress and the action of States and +municipalities have resulted in the expansion of public construction to an +amount even above that in the most prosperous years. In addition the +cooperation of public utilities, railways, and other large organizations +has been generously given in construction and betterment work in +anticipation of future need. The Department of Commerce advises me that as +a result, the volume of this type of construction work, which amounted to +roughly $6,300,000,000 in 1929, instead of decreasing will show a total of +about $7,000,000,000 for 1930. There has, of course, been a substantial +decrease in the types of construction which could not be undertaken in +advance of need. + +The fourth direction of cooperation was the organization in such States and +municipalities, as was deemed necessary, of committees to organize local +employment, to provide for employment agencies, and to effect relief of +distress. + +The result of magnificent cooperation throughout the country has been that +actual suffering has been kept to a minimum during the past 12 months, and +our unemployment has been far less in proportion than in other large +industrial countries. Some time ago it became evident that unemployment +would continue over the winter and would necessarily be added to from +seasonal causes and that the savings of workpeople would be more largely +depleted. We have as a Nation a definite duty to see that no deserving +person in our country suffers from hunger or cold. I therefore set up a +more extensive organization to stimulate more intensive cooperation +throughout the country. There has been a most gratifying degree of +response, from governors, mayors, and other public officials, from welfare +organizations, and from employers in concerns both large and small. The +local communities through their voluntary agencies have assumed the duty of +relieving individual distress and are being generously supported by the +public. + +The number of those wholly out of employment seeking for work was +accurately determined by the census last April as about 2,500,000. The +Department of Labor index of employment in the larger trades shows some +decrease in employment since that time. The problem from a relief point of +view is somewhat less than the published estimates of the number of +unemployed would indicate. The intensive community and individual efforts +in providing special employment outside the listed industries are not +reflected in the statistical indexes and tend to reduce such published +figures. Moreover, there is estimated to be a constant figure at all times +of nearly 1,000,000 unemployed who are not without annual income but +temporarily idle in the shift from one job to another. We have an average +of about three breadwinners to each two families, so that every person +unemployed does not represent a family without income. The view that the +relief problems are less than the gross numbers would indicate is confirmed +by the experience of several cities, which shows that the number of +families in distress represents from 10 to 20 per cent of the number of the +calculated unemployed. This is not said to minimize the very real problem +which exists but to weigh its actual proportions. + +As a contribution to the situation the Federal Government is engaged upon +the greatest program of waterway, harbor, flood control, public building, +highway, and airway improvement in all our history. This, together with +loans to merchant shipbuilders, improvement of the Navy and in military +aviation, and other construction work of the Government will exceed +$520,000,000 for this fiscal year. This compares with $253,000,000 in the +fiscal year 1928. The construction works already authorized and the +continuation of policies in Government aid will require a continual +expenditure upwards of half a billion dollars annually. + +I favor still further temporary expansion of these activities in aid to +unemployment during this winter. The Congress will, however, have presented +to it numbers of projects, some of them under the guise of, rather than the +reality of, their usefulness in the increase of employment during the +depression. There are certain commonsense limitations upon any expansions +of construction work. The Government must not undertake works that are not +of sound economic purpose and that have not been subject to searching +technical investigation, and which have not been given adequate +consideration by the Congress. The volume of construction work in the +Government is already at the maximum limit warranted by financial prudence +as a continuing policy. To increase taxation for purposes of construction +work defeats its own purpose, as such taxes directly diminish employment in +private industry. Again any kind of construction requires, after its +authorization, a considerable time before labor can be employed in which to +make engineering, architectural, and legal preparations. Our immediate +problem is the increase of employment for the next six months, and new +plans which do not produce such immediate result or which extend +commitments beyond this period are not warranted. + +The enlarged rivers and harbors, public building, and highway plans +authorized by the Congress last session, however, offer an opportunity for +assistance by the temporary acceleration of construction of these programs +even faster than originally planned, especially if the technical +requirements of the laws which entail great delays could be amended in such +fashion as to speed up acquirements of land and the letting of contracts. + +With view, however, to the possible need for acceleration, we, immediately +upon receiving those authorities from the Congress five months ago, began +the necessary technical work in preparation for such possible eventuality. +I have canvassed the departments of the Government as to the maximum amount +that can be properly added to our present expenditure to accelerate all +construction during the next six months, and I feel warranted in asking the +Congress for an appropriation of from $100,000,000 to $150,000,000 to +provide such further employment in this emergency. In connection therewith +we need some authority to make enlarged temporary advances of +Federal-highway aid to the States. + +I recommend that this appropriation be made distributable to the different +departments upon recommendation of a committee of the Cabinet and approval +by the President. Its application to works already authorized by the +Congress assures its use in directions of economic importance and to public +welfare. Such action will imply an expenditure upon construction of all +kinds of over $650,000,000 during the next twelve months. + +AGRICULTURE + +The world-wide depression has affected agriculture in common with all other +industries. The average price of farm produce has fallen to about 80 per +cent of the levels of 1928. This average is, however, greatly affected by +wheat and cotton, which have participated in world-wide overproduction and +have fallen to about 60 per cent of the average price of the year 1928. +Excluding these commodities, the prices of all other agricultural products +are about 84 per cent of those of 1928. The average wholesale prices of +other primary goods, such as nonferrous metals, have fallen to 76 per cent +of 1928. + +The price levels of our major agricultural commodities are, in fact, higher +than those in other principal producing countries, due to the combined +result of the tariff and the operations of the Farm Board. For instance, +wheat prices at Minneapolis are about 30 per cent higher than at Winnipeg, +and at Chicago they are about 20 per cent higher than at Buenos Aires. Corn +prices at Chicago are over twice as high as at Buenos Aires. Wool prices +average more than 80 per cent higher in this country than abroad, and +butter is 30 per cent higher in New York City than in Copenhagen. + +Aside from the misfortune to agriculture of the world-wide depression we +have had the most severe drought. It has affected particularly the States +bordering on the Potomac, Ohio, and Lower Mississippi Rivers, with some +areas in Montana, Kansas, Oklahoma, and Texas. It has found its major +expression in the shortage of pasturage and a shrinkage in the corn crop +from an average of about 2,800,000,000 bushels to about 2,090,000,000 +bushels. + +On August 14 I called a conference of the governors of the most acutely +affected States, and as a result of its conclusions I appointed a national +committee comprising the heads of the important Federal agencies under the +chairmanship of the Secretary of Agriculture. The governors in turn have +appointed State committees representative of the farmers, bankers, business +men, and the Red Cross, and subsidiary committees have been established in +most of the acutely affected counties. Railway rates were reduced on feed +and livestock in and out of the drought areas, and over 50,000 cars of such +products have been transported under these reduced rates. The Red Cross +established a preliminary fund of $5,000,000 for distress relief purposes +and established agencies for its administration in each county. Of this +fund less than $500,000 has been called for up to this time as the need +will appear more largely during the winter. The Federal Farm Loan Board has +extended its credit facilities, and the Federal Farm Board has given +financial assistance to all affected cooperatives. + +In order that the Government may meet its full obligation toward our +countrymen in distress through no fault of their own, I recommend that an +appropriation should be made to the Department of Agriculture to be loaned +for the purpose of seed and feed for animals. Its application should as +hitherto in such loans be limited to a gross amount to any one individual, +and secured upon the crop. + +The Red Cross can relieve the cases of individual distress by the +sympathetic assistance of our people. + +FINANCES OF THE GOVERNMENT + +I shall submit the detailed financial position of the Government with +recommendations in the usual Budget message. I will at this time, however, +mention that the Budget estimates of receipts and expenditures for the +current year were formulated by the Treasury and the Budget Bureau at a +time when it was impossible to forecast the severity of the business +depression and have been most seriously affected by it. At that time a +surplus of about $123,000,000 was estimated for this fiscal year and tax +reduction which affected the fiscal year to the extent of $75,000,000 was +authorized by the Congress, thus reducing the estimated surplus to about +$48,000,000. Closely revised estimates now made by the Treasury and the +Bureau of the Budget of the tax, postal, and other receipts for the current +fiscal year indicate a decrease of about $430,000,000 from the estimate of +a year ago, of which about $75,000,000 is due to tax reduction, leaving +about $355,000,000 due to the depression. Moreover, legislation enacted by +Congress subsequent to the submission of the Budget enlarging Federal +construction work to expand employment and for increase in veterans' +services and other items, have increased expenditures during the current +fiscal year by about $225,000,000. + +Thus the decrease of $430,000,000 in revenue and the increase of +$225,000,000 in expenditure adversely change the original Budget situation +by about $655,000,000. This large sum is offset by the original estimated +surplus a year ago of about $123,000,000, by the application of +$185,000,000 of interest payments upon the foreign debt to current +expenditures, by arrangements of the Farm Board through repayments, etc., +in consequence of which they reduced their net cash demands upon the +Treasury by $100,000,000 in this period, and by about $67,000,000 economies +and deferments brought about in the Government, thus reducing the practical +effect of the change in the situation to an estimated deficit of about +$180,000,000 for the present fiscal year. I shall make suggestions for +handling the present-year deficit in the Budget message, but I do not favor +encroachment upon the statutory reduction of the public debt. + +While it will be necessary in public interest to further increase +expenditures during the current fiscal year in aid to unemployment by +speeding up construction work and aid to the farmers affected by the +drought, I can not emphasize too strongly the absolute necessity to defer +any other plans for increase of Government expenditures. The Budget for +1932 fiscal year indicates estimated expenditure of about $4,054,000,000, +including postal deficit. The receipts are estimated at about +$4,085,000,000 if the temporary tax reduction of last year be discontinued, +leaving a surplus of only about $30,000,000. Most rigid economy is +therefore necessary to avoid increase in taxes. + +NATIONAL DEFENSE + +Our Army and Navy are being maintained at a high state of efficiency, under +officers of high training and intelligence, supported by a devoted +personnel of the rank and file. The London naval treaty has brought +important economies in the conduct of the Navy. The Navy Department will +lay before the committees of the Congress recommendations for a program of +authorization of new construction which should be initiated in the fiscal +year of 1932. + +LEGISLATION + +This is the last session of the Seventy-first Congress. During its previous +sittings it has completed a very large amount of important legislation, +notably: The establishment of the Federal Farm Board; fixing congressional +reapportionment; revision of the tariff, including the flexible provisions +and a reorganization of the Tariff Commission; reorganization of the Radio +Commission; reorganization of the Federal Power Commission; expansion of +Federal prisons; reorganization of parole and probation system in Federal +prisons; expansion of veterans' hospitals; establishment of disability +allowances to veterans; consolidation of veteran activities; consolidation +and strengthening of prohibition enforcement activities in the Department +of Justice; organization of a Narcotics Bureau; large expansion of rivers +and harbors improvements; substantial increase in Federal highways; +enlargement of public buildings construction program; and the ratification +of the London naval treaty. + +The Congress has before it legislation partially completed in the last +sitting in respect to Muscle Shoals, bus regulation, relief of congestion +in the courts, reorganization of border patrol in prevention of smuggling, +law enforcement in the District of Columbia, and other subjects. + +It is desirable that these measures should be completed. + +The short session does not permit of extensive legislative programs, but +there are a number of questions which, if time does not permit action, I +recommend should be placed in consideration by the Congress, perhaps +through committees cooperating in some instances with the Federal +departments, with view to preparation for subsequent action. Among them are +the following subjects: + +ELECTRICAL POWER + +I have in a previous message recommended effective regulation of interstate +electrical power. Such regulation should preserve the independence and +responsibility of the States. + +RAILWAYS + +We have determined upon a national policy of consolidation of the railways +as a necessity of more stable and more economically operated +transportation. Further legislation is necessary to facilitate such +consolidation. In the public interest we should strengthen the railways +that they may meet our future needs. + +ANTITRUST LAWS + +I recommend that the Congress institute an inquiry into some aspects of the +economic working of these laws. I do not favor repeal of the Sherman Act. +The prevention of monopolies is of most vital public importance. +Competition is not only the basis of protection to the consumer but is the +incentive to progress. However, the interpretation of these laws by the +courts, the changes in business, especially in the economic effects upon +those enterprises closely related to the use of the natural resources of +the country, make such an inquiry advisable. The producers of these +materials assert that certain unfortunate results of wasteful and +destructive use of these natural resources together with a destructive +competition which impoverishes both operator and worker can not be remedied +because of the prohibitive interpretation of the antitrust laws. The +well-known condition of the bituminous coal industry is an illustration. +The people have a vital interest in the conservation of their natural +resources; in the prevention of wasteful practices; in conditions of +destructive competition which may impoverish the producer and the wage +earner; and they have an equal interest in maintaining adequate +competition. I therefore suggest that an inquiry be directed especially to +the effect of the workings of the antitrust laws in these particular fields +to determine if these evils can be remedied without sacrifice of the +fundamental purpose of these laws. + +CAPITAL-GAINS TAX + +It is urged by many thoughtful citizens that the peculiar economic effect +of the income tax on so-called capital gains at the present rate is to +enhance speculative inflation and likewise impede business recovery. I +believe this to be the case and I recommend that a study be made of the +economic effects of this tax and of its relation to the general structure +of our income tax law. + +IMMIGRATION + +There is need for revision of our immigration laws upon a more limited and +more selective basis, flexible to the needs of the country. + +Under conditions of current unemployment it is obvious that persons coming +to the United States seeking work would likely become either a direct or +indirect public charge. As a temporary measure the officers issuing visas +to immigrants have been, in pursuance of the law, instructed to refuse +visas to applicants likely to fall into this class. As a result the visas +issued have decreased from an average of about 24,000 per month prior to +restrictions to a rate of about 7,000 during the last month. These are +largely preferred persons under the law. Visas from Mexico are about 250 +per month compared to about 4,000 previous to restrictions. The whole +subject requires exhaustive reconsideration. + +DEPORTATION OF ALIEN CRIMINALS + +I urge the strengthening of our deportation laws so as to more fully rid +ourselves of criminal aliens. Furthermore, thousands of persons have +entered the country in violation of the immigration laws. The very method +of their entry indicates their objectionable character, and our law-abiding +foreign-born residents suffer in consequence. I recommend that the Congress +provide methods of strengthening the Government to correct this abuse. + +POST OFFICE + +Due to deferment of Government building over many years, previous +administrations had been compelled to enter upon types of leases for +secondary facilities in large cities, some of which were objectionable as +representing too high a return upon the value of the property. To prevent +the occasion for further uneconomic leasing I recommend that the Congress +authorize the building by the Government of its own facilities. + +VETERANS + +The Nation has generously expanded its care for veterans. The consolidation +of all veterans' activities into the Veterans' Administration has produced +substantial administrative economies. The consolidation also brings +emphasis to the inequalities in service and allowances. The whole subject +is under study by the administrator, and I recommend it should also be +examined by the committees of the Congress. + +SOCIAL SERVICE + +I urge further consideration by the Congress of the recommendations I made +a year ago looking to the development through temporary Federal aid of +adequate State and local services for the health of children and the +further stamping out of communicable disease, particularly in the rural +sections. The advance of scientific discovery, methods, and social thought +imposes a new vision in these matters. The drain upon the Federal Treasury +is comparatively small. The results both economic and moral are of the +utmost importance. + +GENERAL + +It is my belief that after the passing of this depression, when we can +examine it in retrospect, we shall need to consider a number of other +questions as to what action may be taken by the Government to remove +Possible governmental influences which make for instability and to better +organize mitigation of the effect of depression. It is as yet too soon to +constructively formulate such measures. + +There are many administrative subjects, such as departmental +reorganization, extension of the civil service, readjustment of the postal +rates, etc., which at some appropriate time require the attention of the +Congress. + +FOREIGN RELATIONS + +Our relations with foreign countries have been maintained upon a high basis +of cordiality and good will. + +During the past year the London naval pact was completed, approved by the +Senate, and ratified by the governments concerned. By this treaty we have +abolished competition in the building of warships, have established the +basis of parity of the United States with the strongest of foreign powers, +and have accomplished a substantial reduction in war vessels. + +During the year there has been an extended political unrest in the world. +Asia continues in disturbed condition, and revolutions have taken place in +Brazil, Argentina, Peru, and Bolivia. Despite the jeopardy to our citizens +and their property which naturally arises in such circumstances, we have, +with the cooperation of the governments concerned, been able to meet all +such instances without friction. + +We have resumed normal relations with the new Governments of Brazil, +Argentina, Peru, and Bolivia immediately upon evidence that they were able +to give protection to our citizens and their property, and that they +recognized their international obligations. + +A commission which was supported by the Congress has completed its +investigation and reported upon our future policies in respect to Haiti and +proved of high value in securing the acceptance of these policies. An +election has been held and a new government established. We have replaced +our high commissioner by a minister and have begun the gradual withdrawal +of our activities with view to complete retirement at the expiration of the +present treaty in 1935. + +A number of arbitration and conciliation treaties have been completed or +negotiated during the year, and will be presented for approval by the +Senate. + +I shall, in a special message, lay before the Senate the protocols covering +the statutes of the World Court which have been revised to accord with the +sense of previous Senate reservations. + +The White House, + +December 2, 1930 + +*** + +State of the Union Address +Herbert Hoover +December 8, 1931 + +To the Senate and House of Representatives: + +It is my duty under the Constitution to transmit to the Congress +information on the state of the Union and to recommend for its +consideration necessary and expedient measures. + +The chief influence affecting the state of the Union during the past year +has been the continued world-wide economic disturbance. Our national +concern has been to meet the emergencies it has created for us and to lay +the foundations for recovery. + +If we lift our vision beyond these immediate emergencies we find +fundamental national gains even amid depression. In meeting the problems of +this difficult period, we have witnessed a remarkable development of the +sense of cooperation in the community. For the first time in the history of +our major economic depressions there has been a notable absence of public +disorders and industrial conflict. Above all there is an enlargement of +social and spiritual responsibility among the people. The strains and +stresses upon business have resulted in closer application, in saner +policies, and in better methods. Public improvements have been carried out +on a larger scale than even in normal times. The country is richer in +physical property, in newly discovered resources, and in productive +capacity than ever before. There has been constant gain in knowledge and +education; there has been continuous advance in science and invention; +there has been distinct gain in public health. Business depressions have +been recurrent in the life of our country and are but transitory. The +Nation has emerged from each of them with increased strength and virility +because of the enlightenment they have brought, the readjustments and the +larger understanding of the realities and obligations of life and work +which come from them. + +NATIONAL DEFENSE + +Both our Army and Navy have been maintained in a high state of efficiency. +The ability and devotion of both officers and men sustain the highest +traditions of the service. Reductions and postponements in expenditure of +these departments to meet the present emergency are being made without +reducing existing personnel or impairing the morale of either +establishment. + +The agreement between the leading naval powers for limitation of naval +armaments and establishment of their relative strength and thus elimination +of competitive building also implies for ourselves the gradual expansion of +the deficient categories in our Navy to the parities provided in those +treaties. However, none of the other nations, parties to these agreements, +is to-day maintaining the full rate of construction which the treaty size +of fleets would imply. + +Although these agreements secured the maximum reduction of fleets which it +was at that time possible to attain, I am hopeful that the naval powers, +party to these agreements, will realize that establishment of relative +strength in itself offers opportunity for further reduction without injury +to any of them. This would be the more possible if pending negotiations are +successful between France and Italy. If the world is to regain its +standards of life, it must further decrease both naval and other arms. The +subject will come before the General Disarmament Conference which meets in +Geneva on February 2. + +FOREIGN AFFAIRS + +We are at peace with the world. We have cooperated with other nations to +preserve peace. The rights of our citizens abroad have been protected. + +The economic depression has continued and deepened in every part of the +world during the past year. In many countries political instability, +excessive armaments, debts, governmental expenditures, and taxes have +resulted in revolutions, in unbalanced budgets and monetary collapse and +financial panics, in dumping of goods upon world markets, and in diminished +consumption of commodities. + +Within two years there have been revolutions or acute social disorders in +19 countries, embracing more than half the population of the world. Ten +countries have been unable to meet their external obligations. In 14 +countries, embracing a quarter of the world's population, former monetary +standards have been temporarily abandoned. In a number of countries there +have been acute financial panics or compulsory restraints upon banking. +These disturbances have many roots in the dislocations from the World War. +Every one of them has reacted upon us. They have sharply affected the +markets and prices of our agricultural and industrial products. They have +increased unemployment and greatly embarrassed our financial and credit +system. + +As our difficulties during the past year have plainly originated in large +degree from these sources, any effort to bring about our own recuperation +has dictated the necessity of cooperation by us with other nations in +reasonable effort to restore world confidence and economic stability. + +Cooperation of our Federal reserve system and our banks with the central +banks in foreign countries has contributed to localize and ameliorate a +number of serious financial crises or moderate the pressures upon us and +thus avert disasters which would have affected us. + +The economic crisis in Germany and Central Europe last June rose to the +dimensions of a general panic from which it was apparent that without +assistance these nations must collapse. Apprehensions of such collapse had +demoralized our agricultural and security markets and so threatened other +nations as to impose further dangers upon us. But of highest importance was +the necessity of cooperation on our part to relieve the people of Germany +from imminent disasters and to maintain their important relations to +progress and stability in the world. Upon the initiative of this Government +a year's postponement of reparations and other intergovernmental debts was +brought about. Upon our further initiative an agreement was made by +Germany's private creditors providing for an extension of such credits +until the German people can develop more permanent and definite forms of +relief. + +We have continued our policy of withdrawing our marines from Haiti and +Nicaragua. + +The difficulties between China and Japan have given us great concern, not +alone for the maintenance of the spirit of the Kellogg-Briand Pact, but for +the maintenance of the treaties to which we are a party assuring the +territorial integrity of China. It is our purpose to assist in finding +solutions sustaining the full spirit of those treaties. + +I shall deal at greater length with our foreign relations in a later +message. + +THE DOMESTIC SITUATION + +Many undertakings have been organized and forwarded during the past year to +meet the new and changing emergencies which have constantly confronted us. + +Broadly the community has cooperated to meet the needs of honest distress, +and to take such emergency measures as would sustain confidence in our +financial system and would cushion the violence of liquidation in industry +and commerce, thus giving time for orderly readjustment of costs, +inventories, and credits without panic and widespread bankruptcy. These +measures have served those purposes and will promote recovery. + +In these measures we have striven to mobilize and stimulate private +initiative and local and community responsibility. There has been the least +possible Government entry into the economic field, and that only in +temporary and emergency form. Our citizens and our local governments have +given a magnificent display of unity and action, initiative and patriotism +in solving a multitude of difficulties and in cooperating with the Federal +Government. + +For a proper understanding of my recommendations to the Congress it is +desirable very briefly to review such activities during the past year. + +The emergencies of unemployment have been met by action in many directions. +The appropriations for the continued speeding up of the great Federal +construction program have provided direct and indirect aid to employment +upon a large scale. By organized unity of action, the States and +municipalities have also maintained large programs of public improvement. +Many industries have been prevailed upon to anticipate and intensify +construction. Industrial concerns and other employers have been organized +to spread available work amongst all their employees, instead of +discharging a portion of them. A large majority have maintained wages at as +high levels as the safe conduct of their business would permit. This course +has saved us from industrial conflict and disorder which have characterized +all previous depressions. Immigration has been curtailed by administrative +action. Upon the basis of normal immigration the decrease amounts to about +300,000 individuals who otherwise would have been added to our +unemployment. The expansion of Federal employment agencies under +appropriations by the Congress has proved most effective. Through the +President's organization for unemployment relief, public and private +agencies were successfully mobilized last winter to provide employment and +other measures against distress. Similar organization gives assurance +against suffering during the coming winter. Committees of leading citizens +are now active at practically every point of unemployment. In the large +majority they have been assured the funds necessary which, together with +local government aids, will meet the situation. A few exceptional +localities will be further organized. The evidence of the Public Health +Service shows an actual decrease of sickness and infant and general +mortality below normal years. No greater proof could be adduced that our +people have been protected from hunger and cold and that the sense of +social responsibility in the Nation has responded to the need of the +unfortunate. + +To meet the emergencies in agriculture the loans authorized by Congress for +rehabilitation in the drought areas have enabled farmers to produce +abundant crops in those districts. The Red Cross undertook and +magnificently administered relief for over 2,500,000 drought sufferers last +winter. It has undertaken this year to administer relief to 100,000 +sufferers in the new drought area of certain Northwest States. The action +of the Federal Farm Board in granting credits to farm cooperatives saved +many of them from bankruptcy and increased their purpose and strength. By +enabling farm cooperatives to cushion the fall in prices of farm products +in 1930 and 1931 the Board secured higher prices to the farmer than would +have been obtained otherwise, although the benefits of this action were +partially defeated by continued world overproduction. Incident to this +action the failure of a large number of farmers and of country banks was +averted which could quite possibly have spread into a major disaster. The +banks in the South have cooperated with the Farm Board in creation of a +pool for the better marketing of accumulated cotton. Growers have been +materially assisted by this action. Constant effort has been made to reduce +overproduction in relief of agriculture and to promote the foreign buying +of agricultural products by sustaining economic stability abroad. + +To meet our domestic emergencies in credit and banking arising from the +reaction to acute crisis abroad the National Credit Association was set up +by the banks with resources of $500,000,000 to support sound banks against +the frightened withdrawals and hoarding. It is giving aid to reopen solvent +banks which have been closed. Federal officials have brought about many +beneficial unions of banks and have employed other means which have +prevented many bank closings. As a result of these measures the hoarding +withdrawals which had risen to over $250,000,000 per week after the British +crisis have substantially ceased. + +FURTHER MEASURES + +The major economic forces and weaknesses at home and abroad have now been +exposed and can be appraised, and the time is ripe for forward action to +expedite our recovery. + +Although some of the causes of our depression are due to speculation, +inflation of securities and real estate, unsound foreign investments, and +mismanagement of financial institutions, yet our self-contained national +economy, with its matchless strength and resources, would have enabled us +to recover long since but for the continued dislocations, shocks, and +setbacks from abroad. + +Whatever the causes may be, the vast liquidation and readjustments which +have taken place have left us with a large degree of credit paralysis, +which together with the situation in our railways and the conditions +abroad, are now the outstanding obstacles to recuperation. If we can put +our financial resources to work and can ameliorate the financial situation +in the railways, I am confident we can make a large measure of recovery +independent of the rest of the world. A strong America is the highest +contribution to world stability. + +One phase of the credit situation is indicated in the banks. During the +past year banks, representing 3 per cent of our total deposits have been +closed. A large part of these failures have been caused by withdrawals for +hoarding, as distinguished from the failures early in the depression where +weakness due to mismanagement was the larger cause of failure. Despite +their closing, many of them will pay in full. Although such withdrawals +have practically ceased, yet $1,100,000,000 of currency was previously +withdrawn which has still to return to circulation. This represents a large +reduction of the ability of our banks to extend credit which would +otherwise fertilize industry and agriculture. Furthermore, many of our +bankers, in order to prepare themselves to meet possible withdrawals, have +felt compelled to call in loans, to refuse new credits, and to realize upon +securities, which in turn has demoralized the markets. The paralysis has +been further augmented by the steady increase in recent years of the +proportion of bank assets invested in long-term securities, such as +mortgages and bonds. These securities tend to lose their liquidity in +depression or temporarily to fall in value so that the ability of the banks +to meet the shock of sudden withdrawal is greatly lessened and the +restriction of all kinds of credit is thereby increased. The continuing +credit paralysis has operated to accentuate the deflation and liquidation +of commodities, real estate, and securities below any reasonable basis of +values. + +All of this tends to stifle business, especially the smaller units, and +finally expresses itself in further depression of prices and values, in +restriction on new enterprise, and in increased unemployment. + +The situation largely arises from an unjustified lack of confidence. We +have enormous volumes of idle money in the banks and in hoarding. We do not +require more money or working capital--we need to put what we have to +work. + +The fundamental difficulties which have brought about financial strains in +foreign countries do not exist in the United States. No external drain on +our resources can threaten our position, because the balance of +international payments is in our favor; we owe less to foreign countries +than they owe to us; our industries are efficiently organized; our currency +and bank deposits are protected by the greatest gold reserve in history. + +Our first step toward recovery is to reestablish confidence and thus +restore the flow of credit which is the very basis of our economic life. We +must put some steel beams in the foundations of our credit structure. It is +our duty to apply the full strength of our Government not only to the +immediate phases, but to provide security against shocks and the repetition +of the weaknesses which have been proven. + +The recommendations which I here lay before the Congress are designed to +meet these needs by strengthening financial, industrial, and agricultural +life through the medium of our existing institutions, and thus to avoid the +entry of the Government into competition with private business. + +FEDERAL GOVERNMENT FINANCE + +The first requirement of confidence and of economic recovery is financial +stability of the United States Government. I shall deal with fiscal +questions at greater length in the Budget message. But I must at this time +call attention to the magnitude of the deficits which have developed and +the resulting necessity for determined and courageous policies. These +deficits arise in the main from the heavy decrease in tax receipts due to +the depression and to the increase in expenditure on construction in aid to +unemployment, aids to agriculture, and upon services to veterans. + +During the fiscal year ending June 30 last we incurred a deficit of about +$903,000,000, which included the statutory reduction of the debt and +represented an increase of the national debt by $616,000,000. Of this, +however, $153,000,000 is offset by increased cash balances. + +In comparison with the fiscal year 1928 there is indicated a fall in +Federal receipts for the present fiscal year amounting to $1,683,000,000, +of which $1,034,000,000 is in individual and corporate income taxes alone. +During this fiscal year there will be an increased expenditure, as compared +to 1928, on veterans of $255,000,000, and an increased expenditure on +construction work which may reach $520,000,000. Despite large economies in +other directions, we have an indicated deficit, including the statutory +retirement of the debt, of $2,123,000,000, and an indicated net debt +increase of about $1,711,000,000. + +The Budget for the fiscal year beginning July 1 next, after allowing for +some increase of taxes under the present laws and after allowing for +drastic reduction in expenditures, still indicates a deficit of +$1,417,000,000. After offsetting the statutory debt retirements this would +indicate an increase in the national debt for the fiscal year 1933 of about +$921,000,000. + +Several conclusions are inevitable. We must have insistent and determined +reduction in Government expenses. We must face a temporary increase in +taxes. Such increase should not cover the whole of these deficits or it +will retard recovery. We must partially finance the deficit by borrowing. +It is my view that the amount of taxation should be fixed so as to balance +the Budget for 1933 except for the statutory debt retirement. Such +Government receipts would assure the balance of the following year's budget +including debt retirement. It is my further view that the additional +taxation should be imposed solely as an emergency measure terminating +definitely two years from July 1 next. Such a basis will give confidence in +the determination of the Government to stabilize its finance and will +assure taxpayers of its temporary character. Even with increased taxation, +the Government will reach the utmost safe limit of its borrowing capacity +by the expenditures for which we are already obligated and the +recommendations here proposed. To go further than these limits in either +expenditures, taxes, or borrowing will destroy confidence, denude commerce +and industry of its resources, jeopardize the financial system, and +actually extend unemployment and demoralize agriculture rather than relieve +it. + +FEDERAL LAND BANKS + +I recommend that the Congress authorize the subscription by the Treasury of +further capital to the Federal land banks to be retired as provided in the +original act, or when funds are available, and that repayments of such +capital be treated as a fund available for further subscriptions in the +same manner. It is urgent that the banks be supported so as to stabilize +the market values of their bonds and thus secure capital for the farmers at +low rates, that they may continue their services to agriculture and that +they may meet the present situation with consideration to the farmers. + +DEPOSITS IN CLOSED BANKS + +A method should be devised to make available quickly to depositors some +portion of their deposits in closed banks as the assets of such banks may +warrant. Such provision would go far to relieve distress in a multitude of +families, would stabilize values in many communities, and would liberate +working capital to thousands of concerns. I recommend that measures be +enacted promptly to accomplish these results and I suggest that the +Congress should consider the development of such a plan through the Federal +Reserve Banks. + +HOME-LOAN DISCOUNT BANKS + +I recommend the establishment of a system of home-loan discount banks as +the necessary companion in our financial structure of the Federal Reserve +Banks and our Federal Land Banks. Such action will relieve present +distressing pressures against home and farm property owners. It will +relieve pressures upon and give added strength to building and loan +associations, savings banks, and deposit banks, engaged in extending such +credits. Such action would further decentralize our credit structure. It +would revive residential construction and employment. It would enable such +loaning institutions more effectually to promote home ownership. I +discussed this plan at some length in a statement made public November 14, +last. This plan has been warmly indorsed by the recent National Conference +upon Home Ownership and Housing, whose members were designated by the +governors of the States and the groups interested. + +RECONSTRUCTION FINANCE CORPORATION + +In order that the public may be absolutely assured and that the Government +may be in position to meet any public necessity, I recommend that an +emergency Reconstruction Corporation of the nature of the former War +Finance Corporation should be established. It may not be necessary to use +such an instrumentality very extensively. The very existence of such a +bulwark will strengthen confidence. The Treasury should be authorized to +subscribe a reasonable capital to it, and it should be given authority to +issue its own debentures. It should be placed in liquidation at the end of +two years. Its purpose is that by strengthening the weak spots to thus +liberate the full strength of the Nation's resources. It should be in +position to facilitate exports by American agencies; make advances to +agricultural credit agencies where necessary to protect and aid the +agricultural industry; to make temporary advances upon proper securities to +established industries, railways, and financial institutions which can not +otherwise secure credit, and where such advances will protect the credit +structure and stimulate employment. Its functions would not overlap those +of the National Credit Corporation. + +FEDERAL RESERVE ELIGIBILITY + +On October 6th I issued a statement that I should recommend to the Congress +an extension during emergencies of the eligibility provisions in the +Federal reserve act. This statement was approved by a representative +gathering of the Members of both Houses of the Congress, including members +of the appropriate committees. It was approved by the officials of the +Treasury Department, and I understand such an extension has been approved +by a majority of the governors of the Federal reserve banks. Nothing should +be done which would lower the safeguards of the system. + +The establishment of the mortgage-discount banks herein referred to will +also contribute to further reserve strength in the banks without +inflation. + +BANKING LAWS + +Our people have a right to a banking system in which their deposits shall +be safeguarded and the flow of credit less subject to storms. The need of a +sounder system is plainly shown by the extent of bank failures. I recommend +the prompt improvement of the banking laws. Changed financial conditions +and commercial practices must be met. The Congress should investigate the +need for separation between different kinds of banking; an enlargement of +branch banking under proper restrictions; and the methods by which enlarged +membership in the Federal reserve system may be brought about. + +POSTAL SAVINGS BANKS + +The Postal Savings deposits have increased from about $200,000,000 to about +$550,000,000 during the past year. This experience has raised important +practical questions in relation to deposits and investments which should +receive the attention of the Congress. + +RAILWAYS + +The railways present one of our immediate and pressing problems. They are +and must remain the backbone of our transportation system. Their prosperity +is interrelated with the prosperity of all industries. Their fundamental +service in transportation, the volume of their employment, their buying +power for supplies from other industries, the enormous investment in their +securities, particularly their bonds, by insurance companies, savings +banks, benevolent and other trusts, all reflect their partnership in the +whole economic fabric. Through these institutions the railway bonds are in +a large sense the investment of every family. The well-maintained and +successful operation and the stability of railway finances are of primary +importance to economic recovery. They should have more effective +opportunity to reduce operating costs by proper consolidation. As their +rates must be regulated in public interest, so also approximate regulation +should be applied to competing services by some authority. The methods of +their regulation should be revised. The Interstate Commerce Commission has +made important and far-reaching recommendations upon the whole subject, +which I commend to the early consideration of the Congress. + +ANTITRUST LAWS + +In my message of a year ago I commented on the necessity of congressional +inquiry into the economic action of the antitrust laws. There is wide +conviction that some change should be made especially in the procedure +under these laws. I do not favor their repeal. Such action would open wide +the door to price fixing, monopoly, and destruction of healthy competition. +Particular attention should be given to the industries rounded upon natural +resources, especially where destructive competition produces great wastes +of these resources and brings great hardships upon operators, employees, +and the public. In recent years there has been continued demoralization in +the bituminous coal, oil, and lumber industries. I again commend the matter +to the consideration of the Congress. + +UNEMPLOYMENT + +As an aid to unemployment the Federal Government is engaged in the greatest +program of public-building, harbor, flood-control, highway, waterway, +aviation, merchant and naval ship construction in all history. Our +expenditures on these works during this calendar year will reach about +$780,000,000 compared with $260,000,000 in 1928. Through this increased +construction, through the maintenance of a full complement of Federal +employees, and through services to veterans it is estimated that the +Federal taxpayer is now directly contributing to the livelihood of +10,000,000 of our citizens. + +We must avoid burdens upon the Government which will create more +unemployment in private industry than can be gained by further expansion of +employment by the Federal Government. We can now stimulate employment and +agriculture more effectually and speedily through the voluntary measures in +progress, through the thawing out of credit, through the building up of +stability abroad, through the home loan discount banks, through an +emergency finance corporation and the rehabilitation of the railways and +other such directions. + +I am opposed to any direct or indirect Government dole. The breakdown and +increased unemployment in Europe is due in part to such practices. Our +people are providing against distress from unemployment in true American +fashion by a magnificent response to public appeal and by action of the +local governments. + +GENERAL LEGISLATION + +There are many other subjects requiring legislative action at this session +of the Congress. I may list the following among them: + +VETERANS' SERVICES + +The law enacted last March authorizing loans of 50 per cent upon +adjusted-service certificates has, together with the loans made under +previous laws, resulted in payments of about $1,260,000,000. Appropriations +have been exhausted. The Administrator of Veterans' Affairs advises that a +further appropriation of $200,000,000 is required at once to meet the +obligations made necessary by existing legislation. + +There will be demands for further veterans' legislation; there are +inequalities in our system of veterans' relief; it is our national duty to +meet our obligations to those who have served the Nation. But our present +expenditure upon these services now exceeds $1,000,000,000 per annum. I am +opposed to any extension of these expenditures until the country has +recovered from the present situation. + +ELECTRICAL-POWER REGULATION + +I have recommended in previous messages the effective regulation of +interstate electrical power as the essential function of the reorganized +Federal Power Commission. I renew the recommendation. It is urgently needed +in public protection. + +MUSCLE SHOALS + +At my suggestion, the Governors and Legislatures of Alabama and Tennessee +selected three members each for service on a committee to which I appointed +a representative of the farm organizations and two representatives of the +War Department for the purpose of recommending a plan for the disposal of +these properties which would be in the interest of the people of those +States and the agricultural industry throughout the country. I shall +transmit the recommendations to the Congress. + +REORGANIZATION OF FEDERAL DEPARTMENTS + +I have referred in previous messages to the profound need of further +reorganization and consolidation of Federal administrative functions to +eliminate overlap and waste, and to enable coordination and definition of +Government policies now wholly impossible in scattered and conflicting +agencies which deal with parts of the same major function. I shall lay +before the Congress further recommendations upon this subject, particularly +in relation to the Department of the Interior. There are two directions of +such reorganization, however, which have an important bearing upon the +emergency problems with which we are confronted. + +SHIPPING BOARD + +At present the Shipping Board exercises large administrative functions +independent of the Executive. These administrative functions should be +transferred to the Department of Commerce, in keeping with that single +responsibility which has been the basis of our governmental structure since +its foundation. There should be created in that department a position of +Assistant Secretary for Merchant Marine, under whom this work and the +several bureaus having to do with merchant marine may be grouped. + +The Shipping Board should be made a regulatory body acting also in advisory +capacity on loans and policies, in keeping with its original conception. +Its regulatory powers should be amended to include regulation of coastwise +shipping so as to assure stability and better service. It is also worthy of +consideration that the regulation of rates and services upon the inland +waterways should be assigned to such a reorganized board. + +REORGANIZATION OF PUBLIC WORKS ADMINISTRATION + +I recommend that all building and construction activities of the Government +now carried on by many departments be consolidated into an independent +establishment under the President to be known as the "Public Works +Administration" directed by a Public Works Administrator. This agency +should undertake all construction work in service to the different +departments of the Government (except naval and military work). The +services of the Corps of Army Engineers should be delegated in rotation for +military duty to this administration in continuation of their supervision +of river and harbor work. Great economies, sounder policies, more effective +coordination to employment, and expedition in all construction work would +result from this consolidation. + +LAW ENFORCEMENT + +I shall present some recommendations in a special message looking to the +strengthening of criminal-law enforcement and improvement in judicial +procedure connected therewith. + +INLAND WATERWAY AND HARBOR IMPROVEMENT + +These improvements are now proceeding upon an unprecedented scale. Some +indication of the volume of work in progress is conveyed by the fact that +during the current year over 380,000,000 cubic yards of material have been +moved--an amount equal to the entire removal in the construction of the +Panama Canal. The Mississippi waterway system, connecting Chicago, Kansas +City, Pittsburgh, and New Orleans, will be in full operation during 1933. +Substantial progress is being made upon the projects of the upper Missouri, +upper Mississippi, etc. + +Negotiations are now in progress with Canada for the construction of the +St. Lawrence Waterway. + +THE TARIFF + +Wages and standards of living abroad have been materially lowered during +the past year. The temporary abandonment of the gold standard by certain +countries has also reduced their production costs compared to ours. +Fortunately any increases in the tariff which may be necessary to protect +agriculture and industry from these lowered foreign costs, or decreases in +items which may prove to be excessive, may be undertaken at any time by the +Tariff Commission under authority which it possesses by virtue of the +tariff act of 1930. The commission during the past year has reviewed the +rates upon over 254 items subject to tariff. As a result of vigorous and +industrious action, it is up to date in the consideration of pending +references and is prepared to give prompt attention to any further +applications. This procedure presents an orderly method for correcting +inequalities. I am opposed to any general congressional revision of the +tariff. Such action would disturb industry, business, and agriculture. It +would prolong the depression. + +IMMIGRATION AND DEPORTATION + +I recommend that immigration restriction now in force under administrative +action be placed upon a more definite basis by law. The deportation laws +should be strengthened. Aliens lawfully in the country should be protected +by the issuance of a certificate of residence. + +PUBLIC HEALTH + +I again call attention to my previous recommendations upon this subject, +particularly in its relation to children. The moral results are of the +utmost importance. + +CONCLUSION + +It is inevitable that in these times much of the legislation proposed to +the Congress and many of the recommendations of the Executive must be +designed to meet emergencies. In reaching solutions we must not jeopardize +those principles which we have found to be the basis of the growth of the +Nation. The Federal Government must not encroach upon nor permit local +communities to abandon that precious possession of local initiative and +responsibility. Again, just as the largest measure of responsibility in the +government of the Nation rests upon local self-government, so does the +largest measure of social responsibility in our country rest upon the +individual. If the individual surrenders his own initiative and +responsibilities, he is surrendering his own freedom and his own liberty. +It is the duty of the National Government to insist that both the local +governments and the individual shall assume and bear these responsibilities +as a fundamental of preserving the very basis of our freedom. + +Many vital changes and movements of vast proportions are taking place in +the economic world. The effect of these changes upon the future can not be +seen clearly as yet. Of this, however, we are sure: Our system, based upon +the ideals of individual initiative and of equality of opportunity, is not +an artificial thing. Rather it is the outgrowth of the experience of +America, and expresses the faith and spirit of our people. It has carried +us in a century and a half to leadership of the economic world. If our +economic system does not match our highest expectations at all times, it +does not require revolutionary action to bring it into accord with any +necessity that experience may prove. It has successfully adjusted itself to +changing conditions in the past. It will do so again. The mobility of our +institutions, the richness of our resources, and the abilities of our +people enable us to meet them unafraid. It is a distressful time for many +of our people, but they have shown qualities as high in fortitude, courage, +and resourcefulness as ever in our history. With that spirit, I have faith +that out of it will come a sounder life, a truer standard of values, a +greater recognition of the results of honest effort, and a healthier +atmosphere in which to rear our children. Ours must be a country of such +stability and security as can not fail to carry forward and enlarge among +all the people that abundant life of material and spiritual opportunity +which it has represented among all nations since its beginning. + +The White House, + +December 8, 1931 + +*** + +State of the Union Address +Herbert Hoover +December 6, 1932 + +To the Senate and House of Representatives: + +In accord with my constitutional duty, I transmit herewith to the Congress +information upon the state of the Union together with recommendation of +measures for its consideration. + +Our country is at peace. Our national defense has been maintained at a high +state of effectiveness. All of the executive departments of the Government +have been conducted during the year with a high devotion to public +interest. There has been a far larger degree of freedom from industrial +conflict than hitherto known. Education and science have made further +advances. The public health is to-day at its highest known level. While we +have recently engaged in the aggressive contest of a national election, its +very tranquillity and the acceptance of its results furnish abundant proof +of the strength of our institutions. + +In the face of widespread hardship our people have demonstrated daily a +magnificent sense of humanity, of individual and community responsibility +for the welfare of the less fortunate. They have grown in their conceptions +and organization for cooperative action for the common welfare. + +In the provision against distress during this winter, the great private +agencies of the country have been mobilized again; the generosity of our +people has again come into evidence to a degree in which all America may +take great pride. Likewise the local authorities and the States are engaged +everywhere in supplemental measures of relief. The provisions made for +loans from the Reconstruction Finance Corporation, to States that have +exhausted their own resources, guarantee that there should be no hunger or +suffering from cold in the country. The large majority of States are +showing a sturdy cooperation in the spirit of the Federal aid. + +The Surgeon General, in charge of the Public Health Service, furnishes me +with the following information upon the state of public health: + +MORTALITY RATE PER 1,000 OF POPULATION ON AN ANNUAL BASIS FROM +REPRESENTATIVE STATES - General - Infant + +First 9 months of-- - - + +1928 - 11.9 - 67.8 + +1929 - 12.0 - 65.8 + +1930 - 11.4 - 62.0 + +1931 - 11.2 - 60.0 + +1932 - 10.6 - 55.0 + +The sickness rates from data available show the same trends. These facts +indicate the fine endeavor of the agencies which have been mobilized for +care of those in distress. + +ECONOMIC SITUATION + +The unparalleled world-wide economic depression has continued through the +year. Due to the European collapse, the situation developed during last +fall and winter into a series of most acute crises. The unprecedented +emergency measures enacted and policies adopted undoubtedly saved the +country from economic disaster. After serving to defend the national +security, these measures began in July to show their weight and influence +toward improvement of conditions in many parts of the country. The +following tables of current business indicators show the general economic +movement during the past eleven months. + +MONTHLY BUSINESS INDICES WITH SEASONAL VARIATIONS ELIMINATED + +Year and Month - Industrial Production - Factory Employment - Freight-car +loadings - Department Store sales, value - Exports, value - Imports, value +- Building Contracts, all types - Industrial Electric power consumption + +1931 - - - - - - - - + +December - 74 - 69.4 - 69 - 81 - 46 - 48 - 38 - 89.1 + +1932 - - - - - - - - + +January - 72 - 68.1 - 64 - 78 - 39 - 42 - 31 - 93.9 + +February - 69 - 67.8 - 62 - 78 - 45 - 41 - 27 - 98.8 + +March - 67 - 66.4 - 61 - 72 - 41 - 37 - 26 - 88.0 + +April - 63 - 64.3 - 59 - 80 - 38 - 36 - 27 - 82.2 + +May - 60 - 62.1 - 54 - 73 - 37 - 34 - 26 - 82.0 + +June - 59 - 60.0 - 52 - 71 - 34 - 36 - 27 - 78.1 + +July - 58 - 58.3 - 51 - 67 - 32 - 27 - 27 - 79.2 + +August - 60 - 58.8 - 51 - 66 - 31 - 29 - 30 - 73.5 + +September - 66 - 60.3 - 54 - 70 - 33 - 32 - 30 - 84.0 + +October - 66 - 61.1 - 57 - 70 - 33 - 32 - 29 - 84.4 + +The measures and policies which have procured this turn toward recovery +should be continued until the depression is passed, and then the emergency +agencies should be promptly liquidated. The expansion of credit facilities +by the Federal Reserve System and the Reconstruction Finance Corporation +has been of incalculable value. The loans of the latter for reproductive +works, and to railways for the creation of employment; its support of the +credit structure through loans to banks, insurance companies, railways, +building and loan associations, and to agriculture has protected the +savings and insurance policies of millions of our citizens and has relieved +millions of borrowers from duress; they have enabled industry and business +to function and expand. The assistance given to Farm Loan Banks, the +establishment of the Home Loan Banks and Agricultural Credit +Associations--all in their various ramifications have placed large sums of +money at the disposal of the people in protection and aid. Beyond this, the +extensive organization of the country in voluntary action has produced +profound results. + +The following table indicates direct expenditures of the Federal Government +in aid to unemployment, agriculture, and financial relief over the past +four years. The sums applied to financial relief multiply themselves many +fold, being in considerable measure the initial capital supplied to the +Reconstruction Finance Corporation, Farm Loan Banks, etc., which will be +recovered to the Treasury. + +- Public works (1) - Agricultural relief and financial loans + +Fiscal year ending June 30 - - + +1930 - $410,420,000 - $156,100,000 + +1931 - 574,870,000 - 196,700,000 + +1932 - 655,880,000 - 772,700,000 + +1933 - 717,260,000 - 52,000,000 - + + + +*** END OF THE PROJECT GUTENBERG EBOOK OF ADDRESSES BY HERBERT HOOVER *** + +This file should be named suhoo11.txt or suhoo11.zip +Corrected EDITIONS of our eBooks get a new NUMBER, suhoo12.txt +VERSIONS based on separate sources get new LETTER, suhoo10a.txt + +Project Gutenberg eBooks are often created from several printed +editions, all of which are confirmed as Public Domain in the US +unless a copyright notice is included. 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