The Bismarck Tribune Newspaper, December 8, 1931, Page 2

Senseseseet siees sé tree Pavesranee 2 . THE BISMARCK TRIBUNE, TUESDAY, DECEMBER 8, 1931 President Hoover Outlines U.S. Problems in Message to Congress Recommends Boost In Taxes; In Federal Expense ~-Executive Says First Requirement of Confidence and of Econo-| mic Recovery Is Financial Stability of United States Government URGES THAT WE PUT WHAT MONEY WE HAVE TO WORK, Believes Country Is Richer in Physical Property, in Newly| Discovered Resources, and in Productive | Capacity Than Ever Before Washington, Dec. 8.—(AP)—The text of President Hoo- = ver’s message to congress follows: To the senate and house of representatives: It is my duty under the s congress information on the state and 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 dis- - turbance. Our national concern has been to meet the emergen- “ cies it has created for us and to lay the foundation for re- covery. If we lift our vision beyond these immediate emergencies, we find fundamental national gains even amid depression. meeting the problems of this di: a remarkable development of community. For the first time in the history of our major economic depressions there has been a notable absence of pub- lic disorders and industrial cont largement of social and spiritual responsibility among the peo- ple. The strains and stresses upon business have resulted in it. There has been constant gain in knowledge and education; there has been continuous advance has been distinct gain in public health. have been recurrent in the life sitory. from them. NATIONAL DEFENSE Both our army and navy have efficiency. The ability and devotion highest traditions of the service. establishment. The agreement between the leading naval powers for limitation of naval armaments and establishment elimination of competitive building also implies for ourselves the gradual expansion of the deficient categories in those treaties. However, none o! agreements, is today maintaining thi treaty size of fleets would imply. Although these agreements secured the maximum reduction 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 rela- tive strength in itself offers opportunity for further reduction without in- jury to any of them. This would be tions are successful between France its standards of life, it must further The subject will come before the general disarmament conference which meets in Geneva on Feb. 2 next. FOREIGN AFFAIRS We are at peace with the world. tions to preserve peace. The rights tected. The economic depression has con- tinued and deepened in every part of the world during the past year. In many countries political instabil-) ity, excessive armaments, debts, gov- ernmental expenditures, and taxes have resulted in revolutions, in un- balanced budgets and monetary col- lapse and financial panics, in dump- ing of goods upon world markets, and in‘ diminished consumption of com- Mmodities. 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 populatioin, former ‘monetary standards have been temporarily abandoned. In a number of countries there have been acute financial pan- ics or compulsory restraint upon . 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 agricultural and industrial products. They have increased un- employment and greatly embarrassed our financial and credit system. Cooperation Necessary 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 coopera- tion by us with other nations in rea- sonable effort to restore world con- fidence and economic stability. Cooperation of our federal reserve system and our banks with the cen- tral banks in foreign countries has contributed to localize 4nd ameliorate @ 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 cf 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 immediate disasters and to maintain their important relations to and stability in the progress world. Upon the initiative of this government a year’s postponement of reparations and other inter-govern- mental debts was brought about. ‘Upan our further initiative an agree- ment was made by Germany's pri- vate creditors~providing for an ex- tension of such credits until the Ger- man people can develop more per- manent and definite forms of relief. Are Withdrawn We have continued our ‘policy of withdrawing our marines from Haiti and Nicaragua. The dificulties between China and Japan have given us great concern, not alone for the maintenance of the of the Kellogg-Briand pact, but the maintenance of the treaties The nation has emerged from each of them with in- creased strength and virility because of the enlightenment they have brought, the readjustments and the larger understandings of the realities and obligations of life and work which, comes Reductions and postponements in ex- penditures of these departments to meet the present emergency are being made without reducing existing personnel or impairing the morale of either Reduction e constitution to transmit to ihe In ifficult period, we have witnessed the sense of cooperation in the flict. Above all, there is an en- in science and invention; there Business depressions of our country and are but tran- been maintained in a high state ot of both officers and men sustain the . of their relative strength and thus in our navy to the parities provided f the other nations, parties to these e full rate of construction which the of fleets the more possible if pending negotia- and Italy. If the world is to regain ; decrease both naval and other arms. ‘We have cooperated with other na- of our citizens abroad have been pro- | Hoover Prosperity Program Outlined President Hoover's prosperity program— Decreased appropriations and increased taxes to assure the stability of the government. Creation of a Reconstruction |} Corporation to make advances to needy industries. Provision to release assets fro- zen in failed banks. Further treasury subscriptions to the federal land banks. Establishment of home-loan banks to make home-owning easier. Liberalization of reserve banks rules to make more paper dis- countable. Revision of interstate com- merce laws to help solve the railway question. Revision of anti-trust laws to |j Prevent burdensome inequalities. to which we are a party assuring the territorial integrity of China. It is our purpose to assist in finding so- luticns sustaining the full spirit of | Scene as Congress Gets Under Way tions in regard to their solution. ship of the house. Garner is pic- . tured above while Representative | and municipalities have also main- tained large programs of public im- provement. Many intensify construction. concerns and other employers have been organized to spread available them. A large majority have main- tained wages at as high levels as the safe conduct of their business would permit. from industrial conflict and disorder which have characterized all previous depressions. curtailed by administrative action. Upon the basis of normal immigra- 300,000 individuals who otherwise would have been added to our unem- ployment. The expansion of federal employment agencies under appro- priations by the congress has proved most effective. Employment Provided the coming winter. ment. and general mortality below normal of the unfortunate. for industries have been prevailed upon to anticipate and Industrial werk amongst all their employees, instead of discharging a portion of This course has saved us Immigration has been tion the decrease amounts to about | Through the president's organiza- tion for unemployment relief, public and private agencies were successfuly mobilized last winter to provide em- ployment and other measures against distress. Similar organization gives | assurance against suffering during Committees of leading citizens are now active at practically every point of unemploy- In the large majority they have been assured the funds neces- sary which, together with local gov- ernment 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 years. No greater proof could be ad- duced that our people have been pro- tected from hunger and cold and that the sense of social responsibility in the nation has responded to the need To meet the emergency in agricul- ture, the loans authorized by congress rehabilitation in the drought Whatever the causes may be, the vast liquidation and readjustment which have taken place have left us with a large degree of credit pataly- sis, which, together with the situa- tion in our railways and the condi- tions abroad, are now the outstand- ing obstacles to recuperation. If we can put our financial resourfes to work and can ameliorate the finan- cial situation in the railways, I.am confident we can make a large meas- ure of recovery independent of the rest of the world. A strong America is the highest contribution to“world stability. Hoarding Is Menace One phase of the credit situation is indicated in the banks. During the past year banks, representing three per cent of our total deposits, have tbeen closed. A large part of these failures have been caused by with- drawals for hoarding, as distinguished from the failures early in the dépres- sion where weakness due to misman- agement was the larger cause of fail- | ure. Despite their closing, many of them will pay in full. Although such withdrawals have practically ceased, yet $1,100,000,000 of currency w: Pr sly “withdrawn. which has to return to circulation. This repre- sents 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 with- Grawals, have felt compelled to call in loans, to refuse new credits, and to realize upon securities, which in turn has demoralized the markets. 1 The paralysis has been further aug- mented by the steady increase in re- yeent years of the proportion of bank assets invested in long term securi- ties, 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 sud- ,den withdrawal is greatly lessened and the restriction of all credit is Declaring “a strong America is the, AS congress opened Monday, ,;Henry T. Rainey, prospective Demo- highest contribution to world stabll-| Representative John N. Garner, cratic floor leader, is pictured: below ity,” President Woover Tuesday listed; Texas, who as a Democfat is opposed | Problems which the United States! to Hoover, was elected to the speaker-| pictured below at the right. The house, | } confronts and gave his recommenda- ie at the left and Representative Bert- rand Snell, Republican floor leader is where Hoover’s message was delivered, is pictured above. June 30 last we incurred a deficit of ebout $903,000,000, which included the statutory reduction of the debt and represented an increase of the na- tional debt by $616,000,000. Of this, however, $153,000,000 is offset by in- creased cash balances. Cut $1,683,000,000 In comparison with the fiscal year 1928 there is indicated a fall in fed- eral receipts for the present fiscal year amounting to $1,683,000,000, of which $1,034,000,000 is on individual and corporate income taxes alone. During this fiscal year tinere will be an increased expenditure, as com- pared 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. 7 The budget for the fiscal year be- ginning 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 statu- tory debt retirements this would in- dicate an increase in the national debt for the fiscal year-1933 of about $921,000,000. Several conclusions are inevitable. We must have immediate and deter- mined reduction in government ex- penses. 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 1932 except for the statutory debt retire- ment. Such government receipts would assure the balance of the fol- lowing year's budget including debt retirement. areas have enabled farmers to pro- duce abundant crops in those dis- tricts. 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 suf- ferers in the new drought area of’ certain northwest states. The action of the federal farm board in grant- ing credits to the farm cooperatives saved many of them from bankruptcy and increased their purpose and strength. By enabling farm coopera- tives to cushion the fall in prices thereby increased. The continuing credit paralysis has operated to ac- centuate the deflation and liquidation|| of commodities, real estate, and se- eurities below any reasonable basis of value. Tends to Stifle Business All of this tends to stifle business, especially the smaller units, and fi- nally expresses itself in further de- pression of prices and values, in re- striction on new enterprises, and in increased unemployment. The situation largely arises from obtained otherwise, production. those treaties. I shall deal at greater length with | our foreign relations in a later mes- | sage. | THE DOMESTIC SITUATION | Many undertakings have been or- ganized and forwarded during the past year to meet the new and chang- ing emergencies which have con-| stantly confronted us. Broadly the community has co- operated 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 with- out panic and widespread bank- ruptcy. These measures have served those purposes and will promote re- cov ery. In these measures we have striven to mobilize and stimulate private ini- tiative and local and community re- sponsibility. There has been the least Possible government entry into the economic field, and that only in tem- jPorary and emergency form. Our citizens and our local. governments have given a magnificent display of unity and action, initiative gnd pa- triotism in solving a multitude of difficulties and in cooperatng with the federal government. Activities Are Reviewed For a proper understanding of my recommendations to the congress it is desirable very briefly to review; jSuch activities during the past year. The emergencies of unemployment rections, The appropriations for the continued speeding up of the great employment upon a large scale. B: erganized unity of action, the states have spread into a major disaster. Southern Banks Cooperate products by sustaining bility abroad. of many banks closing. crisis have substantially ceased. FURTHER MEASURES and setbacks from abroad. of farm products in 1930 and 1931 the board secured higher prices to the farmer than would have been although the benefits of this action were partially defeated by continued world over- Incident to this action the failure of a large number of farmers and of country banks was averted which could quite possibly The banks in the south have co- operated with the farm board in creation of a pool for the better mar- keting of accumulated cotton. Grow- ers have been materially assisted by this action. Constant effort has been made to reduce over-production in relief of agriculture and to promote the foreign buying of agricultural economic To meet our domestic emergencies in credit and hanking arising from the reaction to acute crises abroad the National Credit association was set up by the banks with resources $500,000,000 to support sound banks against the frightened with- drawals 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 As a result of these measures the hoarding with- drawals which had risen to over $250,- 000,000 per week ‘efter the British That major economic forces and weaknesses at home and abroad have now been exposed and can be ap- | praised, and the time is ripe for for- ward action to expedite our recovery. Although some of the causes of our depression are due to specula- ‘of the deficits which have developed tion, inflation of securities and real jestate, unsound foreign investments, have been met by action in many di- j and mismanagement of financial in-y stitutions, yet our self-contained na-} nt tional economy, with its matchless 'due to the depression and to the in- federal construction program have | strength and resources, would have 'crease in expenditure on construction provided direct and indirect aid to;cnabled us to recover \long since but ‘in aid to unemployment, aids to agri- r the continued dislocations, shocks, ‘culture, and upon services to veterans. 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 work- ing capital’... We need to put what we have to work. The fundamental difficulties which brought about fi- nancial strains in foreign countries do not exist in the Urfited 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 depcsits are protected by the greatest gold reserve in history. Reestablish Confidence Our first step voward recovery {s 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 foundation 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 ce- curity against shocks and the repeti- tion of the weaknesses which have been proven. ‘The recommendations which I here lay before the congress are designed to meet these needs by strengthen- ing financial, industrial, and agri- cultural life through the medium of our existing institutions, and thus avoid the entry of the govern- ment into competition with private business. FEDERAL GOVERNMENT FINANCE The first requirement of confidence and of economic recovery is financial stability of the United States gov- ernment. I shall deal with fiscal jquestions at greater length in the budget message. But I must at this time call attention to the magnitude and the financial necessity for de- »itermined and courageous policies. These deficits arise in the main from the heavy decrease in tax receipts During the fiscal year ending | Solely as Emergency It is my further view that the ad- ditional taxation should be imposed solely as an emergency measure ter- minating definitely two years from July 1 next. Such a basis will give the government to stabilize its fi- nance 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 ex- Penditures for which we are already obligated and the recommendaticns here proposed. To go further than these limits in either expenditures, taxes, or borrowing will destroy con- fidence, denude commerce and in- dustry of its resources, jeopardize the financial system, and actually extend unemployment and demoralize agri- culture rather than relieve it. FEDERAL LAND BANKS I recommend that the congress al thorize the subscription by the treas- ury of further capital to the federal land banks to be retired as provided in the original act, or when funds are available, and that repayment 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 stab- ilize the market values of their bonds and thus secure capital for the farm- ers at low rates, that they may con- tinue their services to agriculture and that they may meet the present situa~ tion with consideration to the farmers. DEPOSITS IN CLOSED BANKS A method should be devised to make available quickly to the deposi- tors 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 sug- gest 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 @ 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 pres- ent 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 de- posit banks, engaged in extending Such credits. Such action would fur- ther decentralize our credit structure. It would revive residential construc- tion and employment. It would en- confidence in the determination of | able such loaning institutions more effectually to promote home owner- ship. I discussed this plan at some length in a statement made public | Nov. 14, last. This plan has been warmly indorsed by the recent na- tional conference upon home owner- ship and housing; whose members were designated by the governors of the states and the groups interested. CORPORATION absolutely assured and thatjthe gov- ernment may be in a pcsition to meet any public necessity, I recommend that an emergency reconstruction corporation of the nature of the for- mer war finance corporation should be established. It may not be neces- 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 deben- tures. It should be placed in liqui- dation 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 ex- ports by American agencies; make advances to agricultural eredit agen- cies where necessary to protect and aid the agricultural industry; to make temporary advances upon proper se- curities to establish industries, rail- ways, and financial which can not otherwise secure credit, and where such advances will protect the credit structure and stim- ulate employment. Its functions would not overlap those of the na- tional credit corporation. ing of the members of both houses of the congress, including members stand such an extension has been ap- proved by a majority of the gover- 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 in- flation. BANKING LAWS Our people have a right to a bank- ing 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 improve- ment of the banking laws. Changed financial conditions and commercial practices must’ be met, The congress should investigate the need for sep- sration between different kinds of banking; an enlargement of branch banking under proper restriction; and the methods by which enlarged membership in the federal reserve system may be brought about. POSTAL SAVINGS BANK- ‘The postal deposits have increased from about bear ta} ae about $550,000,000 during, year. \"This experience haé raisde fmportaht practical questions in relations to de- posits and investments which should, receive the attention of congress. | RAILWAYS | ‘The railways present one of our |immediate and pressing: problems. They are and must remain the back- }bone of our transportation systém. Their prosperity is interrelated with the prosperity of all industries. Their | fundamental service in transporta- tion, the volume of their employment, their buying power for supplies from other industries, the enormous in- vestment in their securities, particu- larly their bonds, by insurance com- panies, saving banks, benevolent and other trusts, all reflect their partner- ship in the whole economic fabric. Through these institutions the rail- ; way 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 eco- nomic recovery. They should have more effective opportunity to reduce loperating costs by proper consolida- tion. As their rates must be regu- lated in public interest, so also ap- proximate regulation should be ap- plied to competing services by some authority. The methods of their reg- if ulation should be revised. The inter- state commerce commission has made important and far-reaching recom- mendations upon the whole sibject, | which I commend .to the early con- jSideration of the congress. ANTI-TRUST LAWS | In my message of a year ago I! commented on the necessity of con- ;Sressional inquiry into the economic jaction of the anti-trust laws. There | ds 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 doors to price- fixing and monopoly, and destruction of healthy competition. Particular attention should be given to the in-; dustries founded upon natural re- sources, especially where destructive competition produces great waste of these resources and brings great hardships upon operators, employees, ;and the public. In recent years, there has been continued demorali- zation in the bituminous coal, oil, and lumber industries. I again com- mend the matter to the consideration of col 5 UNEMPLOYMENT - As an aid to unemployment the federal government is engaged in the greatest program of public building, harbor, flood-control, highway, wa- terway, aviation, merchant and naval ship construction in all history. Our expenditures on these works during the calendar year will reach about $780,000,000 compared with $260,000,- 000 in 1928. Through this increased construction, through the mainten- ance of a full complement of federal employees, and service to veterans it is estimated that the fed- eral taxpayer is now directly contri- buting to the livelihood of 10,000,000 of our citizens. s We must avoid burdens upon the government which will create more |unemployment in private industry than can be gained by further ex- pansion of employment by the federal gevernment, We can now estimate employment and agriculture more ef- fectually 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 dis- count banks, through an emergency RECONSTRUTION FINANCE | In order that the public may be: sary to use such an Hast institutions | ——: Highlights of Hoover's Message To 72nd United States Congress le bility.” structure.” Washington, Dec. 8—(?)—High spots in President Hoover's message: “A strong America is the highest contribution to world sta- “We must put some steel beams in the foundations of our credit “The first requirement of confidence and of economic recovery is financial stability of the United States government.” “We must have insistent and determined reduction in govern- ment expenses.” “We must face a temporary increase in taxes.” “I am opposed to any direct or inSirect government dole.” “The emergencies of unemployment have been met by action in many directions.” Xv “I am opposed to any general congressional revision of the tariff.” “The country fs richer in- physical property, in newly discov- ered resources, and in productive capacity than ever before,” “We are at peace with the world, other nations to preserve peace. have been protected.” We have cooperated with The rights of our citizens abroad “We do not require more money or working capital—we need to put what we have to work.” “If the world is to regain its standards of life, it must further decrease both naval and other arms.” ‘ “Our system, based on ideals of indjvidual initiative and ot equal opportunity, is not an artificial thing. adjusted itself to changing conditions in the past. again.” “Business depressions * * * are but transitory. emerged from each of them with increased strength and virility.” It has successfully It will do so The nation has | F finance corporation, and the dehab- dicial procedure connected therewith. ilitation of the railways and other such directions. I am opposed to any direct or indirect government dole. The break- | ceeding Inland Waterway and Harbor Improvement These improvements are now pro- upon an unprecedented down and increased unemployment | scale. Some indication of the volume GENERAL LEGISLATION FEDERAL RESERVE ELIGIBILITY {in Europe is due in part to suchjof work in progress is conveyed by On Oct. 6, I issued a statement that | practices. Our people are providing | the fact that during the current year I sheuld recommend to the congress | against distress from unemployment | over 380,000,000 cubic yards of ma- an extension during emergenctes of |in true American fashion by a mag-/terial have been moved—an amount the eligibility provisions in the fed-|nificent response to public appeal | equal to the entire removal in the eral reserve act. This statement was|and by action of the local govern- approved by a representative gather- | ments. |construction of the Panama canal. {The Mississippi waterway system, | connecting Chicago, Kansas City, There are many other subjects re- | Pittsburgh, and New Orleans, will be Veterans’ Services The law enacted last March au-| nors of the federal reserve banks. |thorizing loans of 50 per cent upon adjusted-service certificates has, to- gether with the loans made under previous laws, resulted in payment of about $1,260,000,000. . Appropriations have been exhausted. The adminis- trators 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 turther veterans’ legislation: there are in- equalities 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. expenditures upon these services’ now exceed $1,000,000,000 per annum. am opposed to any extension of these expenditures until, the country has Tecovered from the present situation Electrical-Power Regulation I have recommended in previous messages the effective regulation of interstate electrical power as the es- sential function of the reorganized federal power commission. I senew the recommendation. needed in public protection. ee Muscle Shoals At my suggestion, the governors and legislatures of Alabama and Ten- nessee selected three members each for service on a committee to which I appointed a representative of the farm organizations and two represen-} tatives of the war department for the purpose of recommending a plan for disposal of these properties which would be in the interest of the peo-| ple of those states and the agricul- ently; ek 1Y; posed to any general congressional | Teyiston. of the tariff. j would disturb industry, business, and t of the appropriate committees. It | quiring legislative action at this ses-| in full operation during 1933. Sub- was approved by the officials of the |sion of the congress. I may list the | Leite a treasury department, and I under- following among them: stantial 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 abro2d have been materially lowered during the past year. The tempo- |tary abandonment of the gold stand- ard by certain countries has also re- ;duced their production costs com- |Pared to ours. Fortunately any in- ,creases in the tariff which may be |Mecessary to protect agriculture and industry from these lowered foreign | costs or decreases in items which may | Prove to be excessive, may be under- taken in any time by the tariff com- {mission under authority which it pos- Isesses by virtue of the tariff act of !1930. The commission during the past year has reviewed the rate upon over 254 items subject to tariff. As @ result of vigorous and industrious action, it is up to date in the con- sideration of pending references and is prepared give prompt attention to any further applications. This procedure presents an orderly method for correcting inequalities. I am op- Such action agricultur>. depression. Immigration and Deportation It would prolong the | I recommend that immigration re- striction now in force under admin- istrative action be placed upon a more definite basis by law. The de- portation laws should be strength- ened. Aliens lawfully in the country should be protected by the issuance tural industry throughout the coun-|Of @ certificate of residence. try. I shall submit the recommenda- tions to the congress. Reorganization of Federal Depart- ments- I have referred in previous mes- Sages to the profound need of fur- ther reorganization and consolidation} , of federal administrative functions to eliminate overlap and waste, and to’ enable coordination and definition of government policies now wholly im- possible in scattered and conflicting agencies which deal with parts of the same major function. I shall lay before the congress further recom- mendations upon the subject, partic- ularly in relation to the department of the interior. There are two direc- tions of such reorganization, how- ever, which have an important bear- ing upon the emergency problems with which we are confronted. Shipping Board At present the shipping board ex- ercises large administrative functions) independent of the executive. ‘These administrative functions should be transferred to the department of commerce, in keeping with that sin- gle responsibility which has been the! basis of our governmental structure} since its foundation. There should be created in that department a po- sition of assistant secretary for mer- chant marine, under whom this work and the several bureaus having to do with merchant marine may be grouped. The shipping board should be made @ regulatory body acting also in ad- visory capacity on loans policies, in| keeping with the original conception. The regulatory powers should be amended to include coastwise shipping so as to assure stability and better service. It is also! of consideration that the reg-| ulation of rates and services upon the inland waterways should be as- signed to such a reorganized board. Reorganization of Public Works Administration I recommend that all building and construction activities of the govern- ment now carried on by many de- partments be consolidated into an in- dependent establishment under the president to be known as the “public works ition” directed by a public| works administrator. This| agency should undertake all con- struction work in service to the dif- ferent departments of the govern- ment (except naval' and military work). The services of the corps of the army engineers should be dele- gated in rotation for military duty to this administration in continuance for military duty to this administra- tion in continuation of their super- vision of river and harbor work.' Great economies, sounder policies, more efficient coordination to em- ployment, and expedition in all con-| struction work would result from this: consolidation. Law Enforcement I shall present some recommenda- tions in a special message looking to the strengthening of criminal-law, enforcement and: improvement in ju- regulation of; Public Health I again call attention to my previ- ous recommendations upon this sub- ject, 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 recom- jMendations of the executive must be j@esigned to meet emergencies. In reaching solutions we must not jeop- ardize those principles which we have found to be the basis of the growth of the nation. The federal govern- ment must not encroach upon nor rermit local communities to abandon that precious possession of local ini- tiative and responsibility. Again, just as the largest measure of re- sponsibility in the government of the nation rests upon local self-govern- ment, so does the largest. measure of social responsibility in our country rest upon the individual. If the in- dividual surrenders his own initia- tive and responsibilities, he is sur- rendering his own freedom and his own liberty. It is the duty of the na- tional government to insist that both the local governments and the indi- viduel shall assume and bear these responsibilities as a fundamental of preserving the very basis of our free- dom. Changes Taking Place Many vital changes and move- ments of vast proportions are taking place in the economic world. The effect of these changes upog the fu- ture cannot be seen clearly as yet. Of this, however, we are sure: our system, based upon the ideals of in- dividual 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 revo- lutionary action to bring it into ac- cord with any necessity that experi- ence may prove. It has successfully adjusted itself to changing condi- tions in the past. It will do so again. The morality of our institutions, the richness of our resources, and the abilities of our people enable ts to meet them unafraid. It is a distress- ful time for many of our people, but they have shown qualities as high in fortitude, courage, and resource- fulness as ever in our history. With that spirit, I have faith that out of it will come a sounder life, @ truer standard of values, a greater recog- Nition of the results of honest effart, and a healthier atmosphere in which to rear our children, Ours mus. be @ country of such stability and se- curity as cannot fail to carry for- ward and enlarge among all the peo- ple that abundant life of material and spiritual opportunity which it has represented among all nations sittce its beginning. HERBERT HOOVER. -<