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. HERBERT HOOVER 
The White House, 
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 because 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. HERBERT HOOVER The White House, 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 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 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 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 postponement of reparations and other intergovernmental debts was brought about upon our further initiative an agreement was made by germany 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 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 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 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 drought sufferers last winter it has undertaken this year to administer relief to 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 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 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 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 because of failure despite their closing many of them will pay in full although such withdrawals have practically ceased yet 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 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 which included the statutory reduction of the debt and represented an increase of the national debt by of this however 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 of which 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 and an increased expenditure on construction work which may reach despite large economies in other directions we have an indicated deficit including the statutory retirement of the debt of and an indicated net debt increase of about 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 after offsetting the statutory debt retirements this would indicate an increase in the national debt for the fiscal year 1933 of about 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 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 discount banks i recommend the establishment of a system of 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 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 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 to about 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 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 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 harbor highway waterway aviation merchant and naval ship construction in all history our expenditures on these works during this calendar year will reach about compared with 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 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 certificates has together with the loans made under previous laws resulted in payments of about appropriations have been exhausted the administrator of veterans affairs advises that a further appropriation of 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 per annum i am opposed to any extension of these expenditures until the country has recovered from the present situation 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 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 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 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 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 herbert hoover the white house december 8 1931
senate house representatives duty constitution transmit congress information state union recommend consideration necessary expedient measures chief influence affecting state union past year continued economic disturbance national concern meet emergencies created us lay foundations recovery lift vision beyond immediate emergencies find fundamental national gains even amid depression meeting problems difficult period witnessed remarkable development sense cooperation community first time history major economic depressions notable absence public disorders industrial conflict enlargement social spiritual responsibility among people strains stresses upon business resulted closer application saner policies better methods public improvements carried larger scale even normal times country richer physical property newly discovered resources productive capacity ever constant gain knowledge education continuous advance science invention distinct gain public health business depressions recurrent life country transitory nation emerged increased strength virility enlightenment brought readjustments larger understanding realities obligations life work come national defense army navy maintained high state efficiency ability devotion officers men sustain highest traditions service reductions postponements expenditure departments meet present emergency made without reducing existing personnel impairing morale either establishment agreement leading naval powers limitation naval armaments establishment relative strength thus elimination competitive building also implies gradual expansion deficient categories navy parities provided treaties however none nations parties agreements maintaining full rate construction treaty size fleets would imply although agreements secured maximum reduction fleets time possible attain hopeful naval powers party agreements realize establishment relative strength offers opportunity reduction without injury would possible pending negotiations successful france italy world regain standards life must decrease naval arms subject come general disarmament conference meets geneva february 2 foreign affairs peace world cooperated nations preserve peace rights citizens abroad protected economic depression continued deepened every part world past year many countries political instability excessive armaments debts governmental expenditures taxes resulted revolutions unbalanced budgets monetary collapse financial panics dumping goods upon world markets diminished consumption commodities within two years revolutions acute social disorders 19 countries embracing half population world ten countries unable meet external obligations 14 countries embracing quarter world population former monetary standards temporarily abandoned number countries acute financial panics compulsory restraints upon banking disturbances many roots dislocations world war every one reacted upon us sharply affected markets prices agricultural industrial products increased unemployment greatly embarrassed financial credit system difficulties past year plainly originated large degree sources effort bring recuperation dictated necessity cooperation us nations reasonable effort restore world confidence economic stability cooperation federal reserve system banks central banks foreign countries contributed localize ameliorate number serious financial crises moderate pressures upon us thus avert disasters would affected us economic crisis germany central europe last june rose dimensions general panic apparent without assistance nations must collapse apprehensions collapse demoralized agricultural security markets threatened nations impose dangers upon us highest importance necessity cooperation part relieve people germany imminent disasters maintain important relations progress stability world upon initiative government year postponement reparations intergovernmental debts brought upon initiative agreement made germany private creditors providing extension credits german people develop permanent definite forms relief continued policy withdrawing marines haiti nicaragua difficulties china japan given us great concern alone maintenance spirit pact maintenance treaties party assuring territorial integrity china purpose assist finding solutions sustaining full spirit treaties shall deal greater length foreign relations later message domestic situation many undertakings organized forwarded past year meet new changing emergencies constantly confronted us broadly community cooperated meet needs honest distress take emergency measures would sustain confidence financial system would cushion violence liquidation industry commerce thus giving time orderly readjustment costs inventories credits without panic widespread bankruptcy measures served purposes promote recovery measures striven mobilize stimulate private initiative local community responsibility least possible government entry economic field temporary emergency form citizens local governments given magnificent display unity action initiative patriotism solving multitude difficulties cooperating federal government proper understanding recommendations congress desirable briefly review activities past year emergencies unemployment met action many directions appropriations continued speeding great federal construction program provided direct indirect aid employment upon large scale organized unity action states municipalities also maintained large programs public improvement many industries prevailed upon anticipate intensify construction industrial concerns employers organized spread available work amongst employees instead discharging portion large majority maintained wages high levels safe conduct business would permit course saved us industrial conflict disorder characterized previous depressions immigration curtailed administrative action upon basis normal immigration decrease amounts individuals otherwise would added unemployment expansion federal employment agencies appropriations congress proved effective president organization unemployment relief public private agencies successfully mobilized last winter provide employment measures distress similar organization gives assurance suffering coming winter committees leading citizens active practically every point unemployment large majority assured funds necessary together local government aids meet situation exceptional localities organized evidence public health service shows actual decrease sickness infant general mortality normal years greater proof could adduced people protected hunger cold sense social responsibility nation responded need unfortunate meet emergencies agriculture loans authorized congress rehabilitation drought areas enabled farmers produce abundant crops districts red cross undertook magnificently administered relief drought sufferers last winter undertaken year administer relief sufferers new drought area certain northwest states action federal farm board granting credits farm cooperatives saved many bankruptcy increased purpose strength enabling farm cooperatives cushion fall prices farm products 1930 1931 board secured higher prices farmer would obtained otherwise although benefits action partially defeated continued world overproduction incident action failure large number farmers country banks averted could quite possibly spread major disaster banks south cooperated farm board creation pool better marketing accumulated cotton growers materially assisted action constant effort made reduce overproduction relief agriculture promote foreign buying agricultural products sustaining economic stability abroad meet domestic emergencies credit banking arising reaction acute crisis abroad national credit association set banks resources support sound banks frightened withdrawals hoarding giving aid reopen solvent banks closed federal officials brought many beneficial unions banks employed means prevented many bank closings result measures hoarding withdrawals risen per week british crisis substantially ceased measures major economic forces weaknesses home abroad exposed appraised time ripe forward action expedite recovery although causes depression due speculation inflation securities real estate unsound foreign investments mismanagement financial institutions yet national economy matchless strength resources would enabled us recover long since continued dislocations shocks setbacks abroad whatever causes may vast liquidation readjustments taken place left us large degree credit paralysis together situation railways conditions abroad outstanding obstacles recuperation put financial resources work ameliorate financial situation railways confident make large measure recovery independent rest world strong america highest contribution world stability one phase credit situation indicated banks past year banks representing 3 per cent total deposits closed large part failures caused withdrawals hoarding distinguished failures early depression weakness due mismanagement larger failure despite closing many pay full although withdrawals practically ceased yet currency previously withdrawn still return circulation represents large reduction ability banks extend credit would otherwise fertilize industry agriculture furthermore many bankers order prepare meet possible withdrawals felt compelled call loans refuse new credits realize upon securities turn demoralized markets paralysis augmented steady increase recent years proportion bank assets invested securities mortgages bonds securities tend lose liquidity depression temporarily fall value ability banks meet shock sudden withdrawal greatly lessened restriction kinds credit thereby increased continuing credit paralysis operated accentuate deflation liquidation commodities real estate securities reasonable basis values tends stifle business especially smaller units finally expresses depression prices values restriction new enterprise increased unemployment situation largely arises unjustified lack confidence enormous volumes idle money banks hoarding require money working capital need put work fundamental difficulties brought financial strains foreign countries exist united states external drain resources threaten position balance international payments favor owe less foreign countries owe us industries efficiently organized currency bank deposits protected greatest gold reserve history first step toward recovery reestablish confidence thus restore flow credit basis economic life must put steel beams foundations credit structure duty apply full strength government immediate phases provide security shocks repetition weaknesses proven recommendations lay congress designed meet needs strengthening financial industrial agricultural life medium existing institutions thus avoid entry government competition private business federal government finance first requirement confidence economic recovery financial stability united states government shall deal fiscal questions greater length budget message must time call attention magnitude deficits developed resulting necessity determined courageous policies deficits arise main heavy decrease tax receipts due depression increase expenditure construction aid unemployment aids agriculture upon services veterans fiscal year ending june 30 last incurred deficit included statutory reduction debt represented increase national debt however offset increased cash balances comparison fiscal year 1928 indicated fall federal receipts present fiscal year amounting individual corporate income taxes alone fiscal year increased expenditure compared 1928 veterans increased expenditure construction work may reach despite large economies directions indicated deficit including statutory retirement debt indicated net debt increase budget fiscal year beginning july 1 next allowing increase taxes present laws allowing drastic reduction expenditures still indicates deficit offsetting statutory debt retirements would indicate increase national debt fiscal year 1933 several conclusions inevitable must insistent determined reduction government expenses must face temporary increase taxes increase cover whole deficits retard recovery must partially finance deficit borrowing view amount taxation fixed balance budget 1933 except statutory debt retirement government receipts would assure balance following year budget including debt retirement view additional taxation imposed solely emergency measure terminating definitely two years july 1 next basis give confidence determination government stabilize finance assure taxpayers temporary character even increased taxation government reach utmost safe limit borrowing capacity expenditures already obligated recommendations proposed go limits either expenditures taxes borrowing destroy confidence denude commerce industry resources jeopardize financial system actually extend unemployment demoralize agriculture rather relieve federal land banks recommend congress authorize subscription treasury capital federal land banks retired provided original act funds available repayments capital treated fund available subscriptions manner urgent banks supported stabilize market values bonds thus secure capital farmers low rates may continue services agriculture may meet present situation consideration farmers deposits closed banks method devised make available quickly depositors portion deposits closed banks assets banks may warrant provision would go far relieve distress multitude families would stabilize values many communities would liberate working capital thousands concerns recommend measures enacted promptly accomplish results suggest congress consider development plan federal reserve banks discount banks recommend establishment system discount banks necessary companion financial structure federal reserve banks federal land banks action relieve present distressing pressures home farm property owners relieve pressures upon give added strength building loan associations savings banks deposit banks engaged extending credits action would decentralize credit structure would revive residential construction employment would enable loaning institutions effectually promote home ownership discussed plan length statement made public november 14 last plan warmly indorsed recent national conference upon home ownership housing whose members designated governors states groups interested reconstruction finance corporation order public may absolutely assured government may position meet public necessity recommend emergency reconstruction corporation nature former war finance corporation established may necessary use instrumentality extensively existence bulwark strengthen confidence treasury authorized subscribe reasonable capital given authority issue debentures placed liquidation end two years purpose strengthening weak spots thus liberate full strength nation resources position facilitate exports american agencies make advances agricultural credit agencies necessary protect aid agricultural industry make temporary advances upon proper securities established industries railways financial institutions otherwise secure credit advances protect credit structure stimulate employment functions would overlap national credit corporation federal reserve eligibility october 6th issued statement recommend congress extension emergencies eligibility provisions federal reserve act statement approved representative gathering members houses congress including members appropriate committees approved officials treasury department understand extension approved majority governors federal reserve banks nothing done would lower safeguards system establishment banks herein referred also contribute reserve strength banks without inflation banking laws people right banking system deposits shall safeguarded flow credit less subject storms need sounder system plainly shown extent bank failures recommend prompt improvement banking laws changed financial conditions commercial practices must met congress investigate need separation different kinds banking enlargement branch banking proper restrictions methods enlarged membership federal reserve system may brought postal savings banks postal savings deposits increased past year experience raised important practical questions relation deposits investments receive attention congress railways railways present one immediate pressing problems must remain backbone transportation system prosperity interrelated prosperity industries fundamental service transportation volume employment buying power supplies industries enormous investment securities particularly bonds insurance companies savings banks benevolent trusts reflect partnership whole economic fabric institutions railway bonds large sense investment every family successful operation stability railway finances primary importance economic recovery effective opportunity reduce operating costs proper consolidation rates must regulated public interest also approximate regulation applied competing services authority methods regulation revised interstate commerce commission made important recommendations upon whole subject commend early consideration congress antitrust laws message year ago commented necessity congressional inquiry economic action antitrust laws wide conviction change made especially procedure laws favor repeal action would open wide door price fixing monopoly destruction healthy competition particular attention given industries rounded upon natural resources especially destructive competition produces great wastes resources brings great hardships upon operators employees public recent years continued demoralization bituminous coal oil lumber industries commend matter consideration congress unemployment aid unemployment federal government engaged greatest program harbor highway waterway aviation merchant naval ship construction history expenditures works calendar year reach compared 1928 increased construction maintenance full complement federal employees services veterans estimated federal taxpayer directly contributing livelihood citizens must avoid burdens upon government create unemployment private industry gained expansion employment federal government stimulate employment agriculture effectually speedily voluntary measures progress thawing credit building stability abroad home loan discount banks emergency finance corporation rehabilitation railways directions opposed direct indirect government dole breakdown increased unemployment europe due part practices people providing distress unemployment true american fashion magnificent response public appeal action local governments general legislation many subjects requiring legislative action session congress may list following among veterans services law enacted last march authorizing loans 50 per cent upon certificates together loans made previous laws resulted payments appropriations exhausted administrator veterans affairs advises appropriation required meet obligations made necessary existing legislation demands veterans legislation inequalities system veterans relief national duty meet obligations served nation present expenditure upon services exceeds per annum opposed extension expenditures country recovered present situation regulation recommended previous messages effective regulation interstate electrical power essential function reorganized federal power commission renew recommendation urgently needed public protection muscle shoals suggestion governors legislatures alabama tennessee selected three members service committee appointed representative farm organizations two representatives war department purpose recommending plan disposal properties would interest people states agricultural industry throughout country shall transmit recommendations congress reorganization federal departments referred previous messages profound need reorganization consolidation federal administrative functions eliminate overlap waste enable coordination definition government policies wholly impossible scattered conflicting agencies deal parts major function shall lay congress recommendations upon subject particularly relation department interior two directions reorganization however important bearing upon emergency problems confronted shipping board present shipping board exercises large administrative functions independent executive administrative functions transferred department commerce keeping single responsibility basis governmental structure since foundation created department position assistant secretary merchant marine work several bureaus merchant marine may grouped shipping board made regulatory body acting also advisory capacity loans policies keeping original conception regulatory powers amended include regulation coastwise shipping assure stability better service also worthy consideration regulation rates services upon inland waterways assigned reorganized board reorganization public works administration recommend building construction activities government carried many departments consolidated independent establishment president known public works administration directed public works administrator agency undertake construction work service different departments government except naval military work services corps army engineers delegated rotation military duty administration continuation supervision river harbor work great economies sounder policies effective coordination employment expedition construction work would result consolidation law enforcement shall present recommendations special message looking strengthening enforcement improvement judicial procedure connected therewith inland waterway harbor improvement improvements proceeding upon unprecedented scale indication volume work progress conveyed fact current year cubic yards material moved amount equal entire removal construction panama canal mississippi waterway system connecting chicago kansas city pittsburgh new orleans full operation 1933 substantial progress made upon projects upper missouri upper mississippi etc negotiations progress canada construction lawrence waterway tariff wages standards living abroad materially lowered past year temporary abandonment gold standard certain countries also reduced production costs compared fortunately increases tariff may necessary protect agriculture industry lowered foreign costs decreases items may prove excessive may undertaken time tariff commission authority possesses virtue tariff act 1930 commission past year reviewed rates upon 254 items subject tariff result vigorous industrious action date consideration pending references prepared give prompt attention applications procedure presents orderly method correcting inequalities opposed general congressional revision tariff action would disturb industry business agriculture would prolong depression immigration deportation recommend immigration restriction force administrative action placed upon definite basis law deportation laws strengthened aliens lawfully country protected issuance certificate residence public health call attention previous recommendations upon subject particularly relation children moral results utmost importance conclusion inevitable times much legislation proposed congress many recommendations executive must designed meet emergencies reaching solutions must jeopardize principles found basis growth nation federal government must encroach upon permit local communities abandon precious possession local initiative responsibility largest measure responsibility government nation rests upon local largest measure social responsibility country rest upon individual individual surrenders initiative responsibilities surrendering freedom liberty duty national government insist local governments individual shall assume bear responsibilities fundamental preserving basis freedom many vital changes movements vast proportions taking place economic world effect changes upon future seen clearly yet however sure system based upon ideals individual initiative equality opportunity artificial thing rather outgrowth experience america expresses faith spirit people carried us century half leadership economic world economic system match highest expectations times require revolutionary action bring accord necessity experience may prove successfully adjusted changing conditions past mobility institutions richness resources abilities people enable us meet unafraid distressful time many people shown qualities high fortitude courage resourcefulness ever history spirit faith come sounder life truer standard values greater recognition results honest effort healthier atmosphere rear children must country stability security fail carry forward enlarge among people abundant life material spiritual opportunity represented among nations since beginning herbert hoover white house december 8 1931
senate house representative duty constitution transmit congress information state union recommend consideration necessary expedient measure chief influence affect state union past year continue economic disturbance national concern meet emergency create u lay foundation recovery lift vision beyond immediate emergency find fundamental national gain even amid depression meeting problem difficult period witness remarkable development sense cooperation community first time history major economic depression notable absence public disorder industrial conflict enlargement social spiritual responsibility among people strain stress upon business result close application saner policy well method public improvement carry large scale even normal time country richer physical property newly discover resource productive capacity ever constant gain knowledge education continuous advance science invention distinct gain public health business depression recurrent life country transitory nation emerge increased strength virility enlightenment bring readjustment large understanding reality obligation life work come national defense army navy maintain high state efficiency ability devotion officer men sustain high tradition service reduction postponement expenditure department meet present emergency make without reduce exist personnel impair morale either establishment agreement lead naval power limitation naval armament establishment relative strength thus elimination competitive building also imply gradual expansion deficient category navy parity provide treaty however none nation party agreement maintain full rate construction treaty size fleet would imply although agreement secure maximum reduction fleet time possible attain hopeful naval power party agreement realize establishment relative strength offer opportunity reduction without injury would possible pending negotiation successful france italy world regain standard life must decrease naval arm subject come general disarmament conference meet geneva february 2 foreign affair peace world cooperate nation preserve peace right citizen abroad protect economic depression continue deepen every part world past year many country political instability excessive armament debt governmental expenditure tax result revolution unbalanced budget monetary collapse financial panic dump good upon world market diminish consumption commodity within two year revolution acute social disorder 19 country embrace half population world ten country unable meet external obligation 14 country embrace quarter world population former monetary standard temporarily abandon number country acute financial panic compulsory restraint upon bank disturbance many root dislocation world war every one react upon u sharply affect market price agricultural industrial product increase unemployment greatly embarrass financial credit system difficulty past year plainly originate large degree source effort bring recuperation dictate necessity cooperation u nation reasonable effort restore world confidence economic stability cooperation federal reserve system bank central bank foreign country contribute localize ameliorate number serious financial crisis moderate pressure upon u thus avert disaster would affect u economic crisis germany central europe last june rise dimension general panic apparent without assistance nation must collapse apprehension collapse demoralized agricultural security market threaten nation impose danger upon u high importance necessity cooperation part relieve people germany imminent disaster maintain important relation progress stability world upon initiative government year postponement reparation intergovernmental debt bring upon initiative agreement make germany private creditor provide extension credit german people develop permanent definite form relief continued policy withdraw marine haiti nicaragua difficulty china japan give u great concern alone maintenance spirit pact maintenance treaty party assure territorial integrity china purpose assist find solution sustain full spirit treaty shall deal great length foreign relation later message domestic situation many undertaking organize forward past year meet new change emergency constantly confront u broadly community cooperate meet need honest distress take emergency measure would sustain confidence financial system would cushion violence liquidation industry commerce thus give time orderly readjustment cost inventory credit without panic widespread bankruptcy measure serve purpose promote recovery measure striven mobilize stimulate private initiative local community responsibility least possible government entry economic field temporary emergency form citizens local government give magnificent display unity action initiative patriotism solve multitude difficulty cooperate federal government proper understand recommendation congress desirable briefly review activity past year emergency unemployment meet action many direction appropriation continue speed great federal construction program provide direct indirect aid employment upon large scale organize unity action state municipality also maintain large program public improvement many industry prevail upon anticipate intensify construction industrial concern employer organize spread available work amongst employee instead discharge portion large majority maintain wage high level safe conduct business would permit course save u industrial conflict disorder characterize previous depression immigration curtail administrative action upon basis normal immigration decrease amount individual otherwise would add unemployment expansion federal employment agency appropriation congress prove effective president organization unemployment relief public private agency successfully mobilize last winter provide employment measure distress similar organization give assurance suffer come winter committee lead citizen active practically every point unemployment large majority assure fund necessary together local government aid meet situation exceptional locality organize evidence public health service show actual decrease sickness infant general mortality normal year great proof could adduce people protect hunger cold sense social responsibility nation respond need unfortunate meet emergency agriculture loan authorize congress rehabilitation drought area enable farmer produce abundant crop district red cross undertook magnificently administer relief drought sufferer last winter undertaken year administer relief sufferer new drought area certain northwest state action federal farm board grant credit farm cooperative save many bankruptcy increase purpose strength enable farm cooperative cushion fall price farm product 1930 1931 board secure high price farmer would obtain otherwise although benefit action partially defeat continued world overproduction incident action failure large number farmer country bank avert could quite possibly spread major disaster bank south cooperate farm board creation pool well marketing accumulated cotton grower materially assist action constant effort make reduce overproduction relief agriculture promote foreign buying agricultural product sustain economic stability abroad meet domestic emergency credit banking arise reaction acute crisis abroad national credit association set bank resource support sound bank frighten withdrawal hoard give aid reopen solvent bank close federal official bring many beneficial union bank employ mean prevent many bank closing result measure hoard withdrawal rise per week british crisis substantially cease measure major economic force weaknesses home abroad expose appraised time ripe forward action expedite recovery although cause depression due speculation inflation security real estate unsound foreign investment mismanagement financial institution yet national economy matchless strength resource would enable u recover long since continue dislocation shock setback abroad whatever cause may vast liquidation readjustment take place leave u large degree credit paralysis together situation railway condition abroad outstanding obstacle recuperation put financial resource work ameliorate financial situation railways confident make large measure recovery independent rest world strong america high contribution world stability one phase credit situation indicate bank past year bank represent 3 per cent total deposit close large part failure cause withdrawal hoard distinguished failure early depression weakness due mismanagement large failure despite close many pay full although withdrawal practically cease yet currency previously withdraw still return circulation represent large reduction ability bank extend credit would otherwise fertilize industry agriculture furthermore many banker order prepare meet possible withdrawal felt compel call loan refuse new credit realize upon security turn demoralize market paralysis augment steady increase recent year proportion bank asset invest security mortgage bond security tend lose liquidity depression temporarily fall value ability bank meet shock sudden withdrawal greatly lessen restriction kind credit thereby increase continue credit paralysis operate accentuate deflation liquidation commodity real estate security reasonable basis value tend stifle business especially small unit finally express depression price value restriction new enterprise increase unemployment situation largely arise unjustified lack confidence enormous volume idle money bank hoard require money work capital need put work fundamental difficulty bring financial strain foreign country exist united state external drain resource threaten position balance international payment favor owe less foreign country owe u industry efficiently organize currency bank deposit protect great gold reserve history first step toward recovery reestablish confidence thus restore flow credit basis economic life must put steel beam foundation credit structure duty apply full strength government immediate phase provide security shock repetition weakness prove recommendation lay congress design meet need strengthen financial industrial agricultural life medium exist institution thus avoid entry government competition private business federal government finance first requirement confidence economic recovery financial stability unite states government shall deal fiscal question great length budget message must time call attention magnitude deficit develop result necessity determine courageous policy deficit arise main heavy decrease tax receipt due depression increase expenditure construction aid unemployment aid agriculture upon service veteran fiscal year end june 30 last incurred deficit include statutory reduction debt represent increase national debt however offset increase cash balance comparison fiscal year 1928 indicate fall federal receipt present fiscal year amount individual corporate income tax alone fiscal year increase expenditure compare 1928 veteran increase expenditure construction work may reach despite large economy direction indicate deficit include statutory retirement debt indicate net debt increase budget fiscal year begin july 1 next allow increase tax present law allow drastic reduction expenditure still indicate deficit offset statutory debt retirement would indicate increase national debt fiscal year 1933 several conclusion inevitable must insistent determine reduction government expense must face temporary increase tax increase cover whole deficit retard recovery must partially finance deficit borrow view amount taxation fix balance budget 1933 except statutory debt retirement government receipt would assure balance follow year budget include debt retirement view additional taxation impose solely emergency measure terminate definitely two year july 1 next basis give confidence determination government stabilize finance assure taxpayer temporary character even increase taxation government reach utmost safe limit borrow capacity expenditure already obligate recommendation propose go limit either expenditures tax borrow destroy confidence denude commerce industry resource jeopardize financial system actually extend unemployment demoralize agriculture rather relieve federal land bank recommend congress authorize subscription treasury capital federal land bank retire provide original act fund available repayment capital treat fund available subscription manner urgent bank support stabilize market value bond thus secure capital farmer low rate may continue service agriculture may meet present situation consideration farmer deposit close bank method devised make available quickly depositor portion deposit close bank asset bank may warrant provision would go far relieve distress multitude family would stabilize value many community would liberate work capital thousand concern recommend measure enact promptly accomplish result suggest congress consider development plan federal reserve bank discount bank recommend establishment system discount bank necessary companion financial structure federal reserve bank federal land bank action relieve present distressing pressure home farm property owner relieve pressure upon give added strength building loan association saving bank deposit bank engage extend credit action would decentralize credit structure would revive residential construction employment would enable loan institution effectually promote home ownership discuss plan length statement make public november 14 last plan warmly indorse recent national conference upon home ownership housing whose member designate governor state group interested reconstruction finance corporation order public may absolutely assured government may position meet public necessity recommend emergency reconstruction corporation nature former war finance corporation establish may necessary use instrumentality extensively existence bulwark strengthen confidence treasury authorize subscribe reasonable capital give authority issue debenture place liquidation end two year purpose strengthen weak spot thus liberate full strength nation resource position facilitate export american agency make advance agricultural credit agency necessary protect aid agricultural industry make temporary advance upon proper security establish industry railways financial institution otherwise secure credit advance protect credit structure stimulate employment function would overlap national credit corporation federal reserve eligibility october 6th issued statement recommend congress extension emergency eligibility provision federal reserve act statement approve representative gather member house congress include member appropriate committee approve official treasury department understand extension approve majority governor federal reserve bank nothing do would lower safeguard system establishment bank herein refer also contribute reserve strength bank without inflation banking law people right bank system deposit shall safeguard flow credit less subject storm need sounder system plainly show extent bank failure recommend prompt improvement banking law change financial condition commercial practice must meet congress investigate need separation different kind bank enlargement branch bank proper restriction method enlarge membership federal reserve system may bring postal saving bank postal saving deposit increase past year experience raise important practical question relation deposit investment receive attention congress railway railways present one immediate pressing problem must remain backbone transportation system prosperity interrelate prosperity industry fundamental service transportation volume employment buy power supply industry enormous investment security particularly bond insurance company savings bank benevolent trust reflect partnership whole economic fabric institution railway bond large sense investment every family successful operation stability railway finance primary importance economic recovery effective opportunity reduce operating cost proper consolidation rate must regulate public interest also approximate regulation apply compete service authority method regulation revise interstate commerce commission make important recommendation upon whole subject commend early consideration congress antitrust law message year ago comment necessity congressional inquiry economic action antitrust law wide conviction change make especially procedure law favor repeal action would open wide door price fix monopoly destruction healthy competition particular attention give industry round upon natural resource especially destructive competition produce great waste resource bring great hardship upon operator employee public recent year continue demoralization bituminous coal oil lumber industry commend matter consideration congress unemployment aid unemployment federal government engage great program harbor highway waterway aviation merchant naval ship construction history expenditures work calendar year reach compare 1928 increased construction maintenance full complement federal employee service veteran estimate federal taxpayer directly contribute livelihood citizen must avoid burden upon government create unemployment private industry gain expansion employment federal government stimulate employment agriculture effectually speedily voluntary measure progress thaw credit building stability abroad home loan discount bank emergency finance corporation rehabilitation railway direction oppose direct indirect government dole breakdown increase unemployment europe due part practice people provide distress unemployment true american fashion magnificent response public appeal action local government general legislation many subject require legislative action session congress may list follow among veteran service law enact last march authorize loan 50 per cent upon certificate together loan make previous law result payment appropriation exhaust administrator veteran affair advise appropriation require meet obligation make necessary existing legislation demand veteran legislation inequality system veteran relief national duty meet obligation serve nation present expenditure upon service exceeds per annum oppose extension expenditures country recover present situation regulation recommend previous message effective regulation interstate electrical power essential function reorganize federal power commission renew recommendation urgently need public protection muscle shoal suggestion governor legislatures alabama tennessee select three member service committee appoint representative farm organization two representative war department purpose recommend plan disposal property would interest people state agricultural industry throughout country shall transmit recommendation congress reorganization federal department refer previous message profound need reorganization consolidation federal administrative function eliminate overlap waste enable coordination definition government policy wholly impossible scattered conflicting agency deal part major function shall lay congress recommendation upon subject particularly relation department interior two direction reorganization however important bearing upon emergency problem confront ship board present ship board exercise large administrative function independent executive administrative function transfer department commerce keep single responsibility basis governmental structure since foundation create department position assistant secretary merchant marine work several bureaus merchant marine may group ship board make regulatory body act also advisory capacity loan policy keep original conception regulatory power amend include regulation coastwise shipping assure stability well service also worthy consideration regulation rate service upon inland waterway assign reorganize board reorganization public work administration recommend build construction activity government carry many department consolidated independent establishment president know public work administration direct public work administrator agency undertake construction work service different department government except naval military work service corps army engineer delegate rotation military duty administration continuation supervision river harbor work great economy sounder policy effective coordination employment expedition construction work would result consolidation law enforcement shall present recommendation special message look strengthen enforcement improvement judicial procedure connect therewith inland waterway harbor improvement improvement proceed upon unprecedented scale indication volume work progress convey fact current year cubic yard material move amount equal entire removal construction panama canal mississippi waterway system connect chicago kansa city pittsburgh new orleans full operation 1933 substantial progress make upon project upper missouri upper mississippi etc negotiation progress canada construction lawrence waterway tariff wage standard live abroad materially lower past year temporary abandonment gold standard certain country also reduce production cost compare fortunately increase tariff may necessary protect agriculture industry lower foreign cost decrease item may prove excessive may undertake time tariff commission authority possess virtue tariff act 1930 commission past year review rate upon 254 item subject tariff result vigorous industrious action date consideration pending reference prepare give prompt attention application procedure present orderly method correct inequality oppose general congressional revision tariff action would disturb industry business agriculture would prolong depression immigration deportation recommend immigration restriction force administrative action place upon definite basis law deportation law strengthen alien lawfully country protect issuance certificate residence public health call attention previous recommendation upon subject particularly relation child moral result utmost importance conclusion inevitable time much legislation propose congress many recommendation executive must design meet emergency reach solution must jeopardize principle find basis growth nation federal government must encroach upon permit local community abandon precious possession local initiative responsibility large measure responsibility government nation rest upon local large measure social responsibility country rest upon individual individual surrender initiative responsibility surrender freedom liberty duty national government insist local government individual shall assume bear responsibility fundamental preserve basis freedom many vital change movement vast proportion take place economic world effect change upon future see clearly yet however sure system base upon ideal individual initiative equality opportunity artificial thing rather outgrowth experience america express faith spirit people carry u century half leadership economic world economic system match high expectation time require revolutionary action bring accord necessity experience may prove successfully adjust change condition past mobility institution richness resource ability people enable u meet unafraid distressful time many people show quality high fortitude courage resourcefulness ever history spirit faith come sound life truer standard value great recognition result honest effort healthier atmosphere rear child must country stability security fail carry forward enlarge among people abundant life material spiritual opportunity represent among nation since begin herbert hoover white house december 8 1931