Evening Star Newspaper, December 7, 1926, Page 34

Text of President’s Message S Country Should Continue Profitable ECONOMY. WASTE ELIMINATION Policies Nov.v in Effect, President Holds AND HIGHER EFFICIENCY LAUDED Combination of These Three Policies Has Brought Lower Prices and Better b Wages. He Declares. e e e The text of the President’s annual mMmessage as read to Congress today follows: Members of the Congress: In reporting to the Congress the state of the Union I find it impossible to characterize it other than one of general peace and prosperity. In some quarters our diplomacy vexed with difficult and as yet unsoived problem: hut nowhere are we met with armed conflict. 1f some occupations and areas are not flourishing, in none does there remain any acute, chronic de- pression. What the country requires is not so much new policies as a steady continuation of those which are already beinz crowned with such abundant success. It cannot be too often repeated that in common with | all the world we are engaged in liqui dating the war. In the present short session no great amount of new lezislation ix possible, but in order to comprehend what is most desirable some survey of our general situation is ne v large amount of time I8 consumed in the passage of appropriation bills. If each Congress in its opening session would make appropriations to continue for two vears, very much time would he saved, which eould either be de voted to a consideration of the general needs of the country or would result in decreasing the work of legislation. Our present state of prosperity has | been greatly promoted by three impor- tant causes, one of which is economy, resulting in reduction and reform in | Another the many kinds of waste. The third gencral raising of the standards of efficiency. This combina- tion has brought the perfectly aston- fshing result of a reduction in the in- dex ereas have sccured : national taxation. elimination of in the index rate of wages. lowering of the cost to produce and a raising of the ability to consume. Prosperity resulting from these causes rests on the securest of all foundations. It gathers strength from its own progre: In promoting this part which the National Government plays lies in the field Whatever doubts may have been en- tertained as to the necessity of this policy and the beneficial results which would a of the m, be considered thoroushly ed. It may not have apy a novel or perhaps brilliant tion, but it has turned out te eminently sound. It ha work. It has surely brought results. It does not have to be excused as a temporary expedient adopted as the lesser evil to remedy some abuse. It is not a palliative seeking symptoms, but a major operation for the eradication at the source of a large number of social diseases. Nothing is easier th ture of public money. It does not pear to belong to anybody. temptation is overwhelming to hestow it on somebody. But the results of extravazance are ruinous. The prop erty of the country. like the freedom of the country. belonzs to the people of the country. They have not em- powered their Government to take a dollar of it except for a necessary public purpose. But if the Constitu tion conferred such a ht, sound economics would forbid i rogress the chief its wisdom must demonstrat- 1 to he meep- he pre. Extravagance Is Condemned. Nothing is more destructive of the progress of the Nation than Govers ment extravagance. It means an in- crease in the burden of taxation, dis- sipation of the retwrns from enter- prise, a decrease in the real value of wages, with ultimate stagnation and decay. The whole theory of our in- atitutions 1s hased on the liberty and independence of the individual. He is dependent on himself for support and therefore entitled to the rewards of his own industry. He is not to be deprived of what h> earns that others | may be benefited by what they do not | earn. What he saves through his pri vate effort is not to be u d by Government extravagance. Our national activities have become 80 vast that it is necessary to scruti nize cach item of public expenditure it we are to apply the principle of economy. At the last session we made an immediate increase in the annual budget of more than $100.. 000,000 in benefi onferred on the veterans of three wars, public build- ings and river and harhor improve- ment Many proje are hoing broached requiring further larze out lays. 1 am convinced that it would be greatly for the welfare of the coun- try if we avoid at the present ses sion all commitments except those of the most pressing nature. From a reduction of the debt and taxes will accrue a wider ben>fit to all the peo- ple of this country than from embark ing on any new enterprise. When our war debt is decreased we shall have resources for expansion. Until that is accomplished we should con- fine ourselves to expenditures of the most urgent necessity The Departmer performed a most important func- tion in making plans and securing support of all kinds of national enter- for the elimination of waste. good management and the constantly increasing co-peration of the wage earners throughout whole realm of private busines It is my opinion that this whole devel- apment has been predicated on the foundation of a protective tariff. ——een Tax Reduction. l As a result of economy of adminis- tration by the Executive and of ap- propriation by the Congress. the end of this fiscal vear will leave a sur- plus in the Treasury estimated at $383,000,000. Unless otherwise or- dered, such surplus is used for the retirement of war debt. A bond which can be retired today for 100 cents will cost the peopls 104l cents to retire a vear from now. While I favor a speedy as already required by law and accordance with the promises made to the holders of our Liberty bonds when they were issued. there is no reason why a balanced portion of sur. plus revenue should not be applied to & reduction of taxatio, It cannot be repeated too often that the enormo revenues of this Na tion could not be collected without becoming a charge on all the people whether or not they directly pay taxes. Every one who is paying fof the bare necessities of food and shel ter and clothing. without considering the better things of life, is indirectly paying a national t The nearl) 20,000,000 owners of securities, the additional scores of millions of hold ers of insurance policies and deposi tors in savings banks are all paving a mational tax. Millions of individu als and corporations are making a di- ce of commadities and an in- | We of economy. | ue from it to all the people | now | not failed to | to treat | n the expendi. | ap- | The | - | countries other of Commerce has | reduction of the debt | in | rect contribution to the National Treasury which runs runs from 11z to 25 per cent of their income, besides |a number of spectwl ‘requirements, | like automobile and admission taxes. | Whenever the state of the Treasury will permit, I believe in a reduction of taxation. 1 think the taxpayers | are entitled to it. But I am not ad- vocating tax reduction merely for the benefit of the taxpayer: 1 am advocat- ing it for the benefit of the countr. More Time Asked for Law. If it appeared feasible. I should wel | come permanent tax reduction at this time. The estimated surplus, however, for June 30, 1928, is not much larger than is required in a going business of nearly $4,000,000.000. We have had few months' experience under the present revenue act, and shall | need to know what is developed by | the returns of income produced under it, which are not required to be made until about the time this session termi. and what the economlic prob- bilities of the country are in the latter part of 14 before we can reach any justifiable conclusion as to ! permanent tax reduction. | o Jloreover, the present surplus re- sults from many non-recurrent items. Meantime, it is possible to grant some real relief by a simple measure mak- ing reductions in the payments which acrue on the 15th of March and June, 19 I am very strongly of the con viction that this is so much a purely business matter that it ought not to be dealt with in a partisan spirit. The Congress has already set the notable example of treating tax problems with- yut much reference to party, which might well be continued. What 1 de- sire to advocate most earnestly is re. lef for the country from unnecessary tax burdens. We cannot secure that if we stop to engage in a partisan con- troversy. As T do not think any change in the special ta or any permanent re- duction practical, T therefore urge both parties of the House ways and means committee to agree on a bill granting the temporary relief which 1 have Indlcated. Such a reduction would directly affect millions of ta | pavers, rele: large sums for invest- ment in new enterprise, stimulating fndustrial production and agricultural consumption and indirectly benefiting every family in the whole country. These are my convictions, stated with ull knowledge that it is for the C‘on- gress to decide whether they judge it best to make such a reduction or leave | the =urplus for the present year to be {applied to retirement of the war debt. That also is eventually tax reduction. | Protective Tariff. l It is estimated that customs receipts for the present fiscal vear will exceed $615,000.000, the largest which were ever secured from that source. The value of our imports for the last fiscal vear was $4.466,000,000, an increase of more than per cent since the present tariff law went into effect. Of these imports about 65 per cent, or. roughly, $2.900.000,000, came in free of duty. which means that the United States affords a dut ket to other countries alma value to the tetal imports of Germany and greatly exceeding the total im ports of France. We have admitted a greater volume of free imports than lany other country except England. We are, therefore. levying duties on about $1.550.000,000 of imports. Nearly half of this, or $700.000,000, is | subject to duties for the protection of | agriculture and have their origin in than Europe. They substantially increased the prices re- ceived by our farmers for their prod- nee. Ahout $300,000,000 more is rep- resented by luxuries, such as costly rugs, furs, precious stones, ete. This leaves only ahout $550.000,000 of our imports under a schedule of duties which is in general under considera- tion when there is discussion of low- ering the tariff. | While the duties on this small por- tion, representing only about 12 per »f our imports, undoubtedly rep- | e the difference between a fair lac of prorperity or marked de on to many of our industries and the difference between good pay |and steadv work or wide unemploy { ment to many of our wage earners, | it is impossible to concelve how other | countries or our own importers could | | but { bhe greatly benefited if these duties are reduced. Those wha are starting an agita- tion for a reduction of tariff dutles, partly at least for the benefit of those | to whom money has heen lent abroad. | ought to know that there does not seem to he a very large fleld within the area of our imports in which prob- able reductions would be advanta- | zeous to foreign goods. Those who ‘[\\ ish to henefit foreign producers are much more likely to secure that re- sult by continuing the present enor- mous purchasing power which comesr from our prosperity that has increased our imports over 71 per cent in four vears than from any advantages that are likely to accrue from a general | tariff reduction. | Agriculture, l —_ The important place which agricul- | | ture holds in the economic and social llife of the Nation cannot be overesti mated. The National vernment is justified in putting forth every effort | { place to live. No condition meets this | { requirement which fails to supply al | fair return on labor expended and | pital invested. While some locall- ties and some particular crops fur Inish exceptions. in general agricul- | ture is continuing to make progress [in recovering from the depression of | | 1921 and 1922 Animal products and food products are in a more encouraging position, | iwhile cotton, due to the high prices of past years supplemented by ideal weather conditions, has been stimu- lated to a point of temporary over production. Acting on the request of the cotton-growing interests, 1 ap- | pointed a committee to assist in carry- ing out their plans. As a result of | | this co-operation, sufficient funds have | been pledged to finance the storage | and carrying of 4,000,000 bales of cot- {ton. Whether those who own the [ cotion are willing to put a part of | | their stock into this plan depends on { themselves. The Federal Government | has co-operated in providing ample | facilities. No method of meeting the | situation would be adequate Which | does not contemplate a reduction of about one-third in the acreage for the .’mming vear. The responsibility for | making the plan effective lies with | those who own and finance cotton and cotton lands. The Department of Agriculture esti- mates the net income of agriculture for the vear 1920:21 at only $375,000,- 000: fu 5. 000,000; for 192526, $2,757,000,000. This increase | has heen brought about in part by | the method already referred to. of | Federal tax reduction. the elimination of waste, and increased efficiency in 1$635,800,001 N industry. The wide gap that existed a few years ago between the index price of agricultural products and the index price of other products has been gradually closing up, though the recent depression in cotton has somewhat enlarged it. Agriculture Going Higher. Agriculture had on the whole heen going higher while industry had been going lower. Industrial and com- mercial activities, being carried on for the most part by corporations, are taxed at a much higher rate than farming, which is carried on by indi- viduals. This will inevitably make in- dustrial commodity costs high while war taxation lasts. It is because of this circumstance that national tax reduction has a very large indirect benefit. upon the farmer, though it cannot relieve him from the very great burden of the local taxes which he pays directly. We have practically elieved the farmer of any Federal in- come tax. There is agreement on all sides that some portions of our agricultural in- dustry have lagged behind other in- dustries In recovery from the war and that further improvement in methods of marketing of agricultural products is most desirable. There ix belfef also that the Federal Government can further contrifbute to these ends bevond the many helpful measures taken during the last five years through the different acts of Congress for advancing the interests of the farmers, The packers and stockyards act. Establishing of the intermediate credit banks for agricultural pur- poses. ‘The Purnell act for agricultural re. search, The Capper-Volstead marketing act. The co-operative marketing act of 19208 Amendments to act, The enlargement of the activities of the Department of Agriculture, Enlargement of the scope of loans by the Farm Loan Board. The tariff on agricultural products, The large Federal expenditure in improvement of waterways and high- waye. The reduction of Federal taxes— in all comprise a great serles of gov ernmental actions in the advance- ment of the speclal interest of agri- culture, In determination of what further measures may be undertaken it seems to me there are certain pitfalls which must be avolded and our test in avoid- ing them should be to avoid disaster to the farmer himself. Acting upon my recommendation, the Congress has ordered the Inter- state Commerce Commission to in- vestigate the freight-rate structure, directing that such changes shall be made in freight rates as will promote freedom of movement of agricultural products, Rallroad consolidation, which I am advocating, would also result In a situation where rates could be made more advantageous for farm produce, as has recently heen done in the revision of rates on fertilizers in he South. Additional benefit will ac- rue from the development of our in- land waterways. The Mississippi River system carries a commerce of over 50,000,000 tons at a saving of nearly $18,000,000 annually. Highway System Vital. The Inland Waterways Corporation operates boats on 2,500 miles of navi- gable streams and through its rela- tion with 165 rallroads carries freight into and out of 45 States of the ['nion. During the past six months it has handled over 1,000.000 bushels of grain monthly, and by its lower freight rates has ralsed the price of such grain to the farmer probably 213 cents to 3 cents a bushel. The highway system, on which the Fed- eral Government expends about $85.- 000,000 a year, is of vital importance to the rural regions. The advantages to be derived from a more comprehensive and less ex- pensive system of transportation for agriculture ought to be supplemented by provision for an adequate supply of fertilizer at lower cost than it is at present obtainable. This advantage we are attempting to secure by the ed development at Muscle , and there are promising ex- periments heing made in synthetic chemistry for the production of ni- trates. A surve co-operative the warehousing should be made of the relation of vernment grazing lands to the live stock industry. Additional legislation ix desirable more definitely to establish the place of grazing in the administration of the national forests, properly subordinated to their functions of producing timber and conserving the water supply. Over 180.000.000 acres of grazing lands are still pastured as commons in the public domain, with little or no regulation. This has made their use so uncertain that it has contrib- d greatly to the instability of the live stock industr, Very little of this land is suited to settlement or private ownership. Some plan ought to be adopted for its use in grazing, cdrresponding broadly to that already successfully applied to the national forests. The development of sound and strong co-operative associations is of fundamental importance to our agri- culture. It is encouraging to note, therefore, that a vigorous and healthy growth in the co-operative movement is continuing, perative associa- tions reporting to the Department of Agriculture at the end of 1925 had on their membership rolls a total of 2,700,000 producers. Their total busi- ness in 1925 amounted to approxi- mately $2.400.000.000, compared with in 1915. Legislative action to assist co-opera- tive associations and supplement their efforta was passed at the last session of Congress. Important credit meas. ures were also provided by Congre: in 1923 which have been of inestima- ble value to the co-operative assocla- tions. Although the Federal credit agencies have served agriculture well, 1 think it mayv be possible to broaden and strengthen the service of these the | to make the open country a desirable | inatitutions. Attention is again directed to the surplus problem of agriculture by the present cotton situation. Surplus dften affect prices of various farm commodities in a disastrous manner, and the problem urgently demands a solution. Discussions both in and out of Congress during the past few vears have given us a better understanding of the subject, and it is my hope that out of the various proposals made the basie will be found for a sound and effective solution upon which agree- ment can be reached. Associations Great Aids. In my opinion, co-operative market- g associations will be important alds to the uitimate solution of the prob- lem. It may well be, however, that additional measures will be needed to supplement their efforts. 1 believe all will agree that such measures should not confiict. with the best interests of the co-operatives. but rather assist and strengthen them. In working out this problem to any sound conclusion it i necessary to avoid putting the Government inte the business of pro- duction or marketing or attempting to enact legislation for the purpose of price fixing. The farmer does not faver any at- tempted remedies that partake of these elements. He has a sincere and candid desire for assistance. It matched by an equally sincere and candid consideration of the different remedies proposed, a sound measure of rellef ought to result. It is unfor- tunate that no general agreement has heen reached by the various agri- cultural interests upon any of the pro. posed remedies. Out of the discussion BiE ressing President Coolidge say as a steady propriations to continue for would be saved which could ei tion of the general needs of a raising of the ability to co reduction at this time. The by a simple measure making which accrue on March 15 and to hesitate to adopt it. law ought not to be tolerated those in public places, who hav the Constitution, ought to observance. valuable if they are practical. We need ideals that can of various proposals which can be had before the committees of agriculture some measure ought to be perfected which would be generally satisfactory. Due to the emergency arising from a heavy tropical storm in southern Florida, T authorized the Secretary of Agriculture to use certain funds in anticipation of legislation to enable the farmers in that region to plant thelr crops. The department will pre- sent a bill ratifying the loans which were made for this purpose. Federal legislation has been adopted authorizing the co-operation of the Government with States and private | owners in the protection of forest lands from fire. This preventive measure is of such great importance that I have recommended for it an in- creased appropriation. Another preventive measure of great economic and sanitary importance is the eradication of tuberculosis in cat- tle. Active work is now in progress in one-fourth of the counties of the United States to secure this result. Over 12,000,000 cattle have been under treatment, and the average degree of infection has fallen from 4.9 per cent to 2.8 per cent. The Federal Govern- ment is making substantial expendi- tures for this purpose. Corn Crop Threatened. Serfous damage is threatened to the corn crop by the European corn borer. 8ince 1917 it has spread from eastern New England westward into Indiana and now covers about 100, 000 square miles. It is one of the most formidable pests because it spreads rapidly and is exceedingly difficult of control. It has assumed a menace that is of national magni- tude and warrants the Federal Gov- ernment in extending its co-operation to the State and local agencies which are attempting to prevent its further spread and secure its eradication. The whole question of agricuiture needs most careful consideration. In the past few years the Government has given this subject more atten- tion than any other and has held more consultations in relation to it than on any other subject. While the Gov- ernment is not to be blamed for fail- ure to perform the impossible, the agricultural regions are entitled to know that they have Its constant so- licitude and sympathy. Many of the farmers are burdened with debts and taxes which they are unable to carr We are expending in this country many millions of dol- lars each year to increase farm pro- duction. We ought now to put more emphasis on_the question of farm marketing. If a sound solution of a permanent nature can be found for this problem, the Congress ought not to hesitate to adopt it. N I Development of er Resourc: | In previous messages T have refer- red to the national importance of the proper development of our water re- sources. The/great projects of exten- sion of the AMississippi system, the protection and_development of the lower Colorado River, are before Con- gress, and 1 have previously com- mented upon them. I favor the nec- essary legislation to expedite these projects. Engineering studies are be- ing made for connecting the Great Lakes with the North Atlantic, either through an_all-American_canal or by way of the St. Lawrence River. These reports will undoubtedly be before the Congress during its present session. It is unnecessary to dwell upon the great importance of such a waterway [ not only to our mid-continental basin, but to the commerce and development of practically the whole Nation. Our river and harbor improvement should be continued in accordance with the present policy. Expenditure of this | character is compatible with economy it is in the nature of capital invest- ment. Work should proceed on the | basic trunk lines if this work is to {be a success. If the country will be content to be ! moderate and patient and permit im- | provements to be made where they will do the greatest general good, rather than insisting on expenditures jat this time on secondary projects, our internal waterways can be made ia success. If proposed legislation re- sults in a gross manifestation of local jealousies and _selfishness, this pro- gram cannot be carried out. Ulti- mately we can take care of exten-, sions, but our first effort should be confined to the main arteries. ' Our inland commerce has been put to great inconveniences and expense by reason of the lowering of the water level of the Great Lakes. This is an international problem on which com- petent engineers are making reports. Out of their study it is expected that a feasible method will be developed for raising the level to provide relief for our commerce and supply water for drainage. Whenever a practical plan | is presented it ought to be speedily | opted. ! It is increasingly evident that the Federal Government must in the future take a leading part in the im- pounding of water for conservation with incidental power for the develop- ment of the irrigable lands of the arld region. The unused waters of the West are found mainly in large rivers. Works to store and distribute these have such magnitude and cost that they are net attractive to private enterprise. Water Is the irreplace. able natural resource. Its precipita- ¥ What the country requires is not so much new policies continuation of those which are already being crowned with such abundant success. 1f each Congress in its apening session would make ap- in decreasing the work of legislation. We have secured a lowering of the cost to produce and from these causes rests on the securest of all foundations. Nothing is more destructive of the progress of the Nation than Government extravagance. 1f it appeared feasible, 1 should welcome permanent tax for June 30. 1928, is not much larger than is required in a going business of nearly $4,000,000,000. It is possible to grant some real relief (from taxation) . The whole question of agriculture needs most careful consideration. * * * 1f a sound solution of a permanent nature can be found for this problem, the Congress ought not Failure to support the Constitution and to observe the We are strong enough so that no one can charge us with weakness if we are slow to anger. America is not and must not be a country without ideals. They are useless if they are only visionary; they are only can he translated into terms of the home. D. C. TUESDAY, DE Underlying Causes of U. S. two years, very much time ther be devoted to considera- the country or would result nsume. Prosperity resulting estimated surplus, hpwever, reductions in the payments of June 15, 1927. by public opinion. Especially e taken their oath to support be most scrupulous in its v be followed in daily life and tion cannot bs increased. Ite stor- age on the higher reaches of streams, to meet growing needs, to be used re- peatedly as it flows toward the seas, is @ practical and prudent business policy. The United States promises to fol- low the course of older irrigation countries, where recent important ir- rigation developments have been car- ried out as national undertakings. It is gratifying, therefore, that condi- tions on Federal reclamation projects have hecome satisfactory. The gross value of crops grown with water from project works in- creased from $110,000,000 in 1924 to $131,000,000 in 1925. The adjustments made last year by Congress relfeved irrigators from payving construction costs on unprofitable land, and by so doing Inspired new hope and confi- dence in ability to meet the payments required. Construction payments by water userslast vear were the larg- est in the history of the bureau. The anticipated reclamation fund will be fully absorbed for a number of vears in the completion of old projects and the construction of | projects inaugurated in the past three vears. We should, however, continue to investigate and study the possibili- ties of a carefully planned develop- ment of promising projects, logically of governmental concern because of their physical magnitude, immense cost, and the interstate and interna- tional problems involved. Only in this way may we be fully prepared to meet intelligently the needs of our fast-growing population in the years to come. Tt would be difficult to conceive of any modern activity which con- tributes more to the necessities and conveniences of life than transporta- tion. Without it our present agricul- tural production and practically all of our commerce would be completely prostrated. One of the large contributing causes to the present highly satisfactory state of our economic condition is the prompt and dependable service, sur- passing all our previous records, rendered by the rallroads. This power has been fostered by the spirit of co-operation between Federal and State regulatory commissions. To render this service more efficient and effective and to promote a more scien- tific regulation, the process of valu- ing raflroad properties should be simplified and the primary valuations should be completed as rapidly as possible. ‘The problem of rate reduction would he much simplified by a process of railroad consolidations. This principle has already been adopted as Federal law. Experience has shown that a more effective method must be pro- vided. Studies have already bheen made and legislation introduced seek- ing to promote this end. It would be cf great advantage if it could be taken up at once and speedily en- acted. The railroad systems of the country and the convenience of all the people are waliting on this im- portant decision. It is axiomatic that no agricultural and industrial country can get the full benefit of its own advantages without a merchant marine. We have heen proceeding under the act of Congress that contemplates the establishment of trade routes te he ultimately transferred to private | ownership and operation. Due to temporary conditions abroad and at home, we have a large demand just now for certain types of freight vessels. Some suggestion has been made for new construction. I do not feel that we are yet warranted in entering that field. Such: ships as we might bulld could not be sold after they are launched for anywhere near what they would cost. We have expended over $250,000,000 out of the public Treasury in recent yvears to make up the losses of operation, not counting depreciation or any cost whatever of our capital investment. The great need of our merchant marine is not for more ships, but for more freight. Our merchants are altogether too indifferent about using American ships for the transportation of goods which they send abroad or bring home. Some of our vessels neces- sarily need repairs, which should be made. I do not belleve that the op- eration of our fleet is as economical and efficient as it could be made if placed under a single responsible head, leaving the Shipping Board free to deal with general matters of policy and regulation. The Department of Commerce has for some years urgently presented the necessity for further legislation in order to protect radio listeners from interference between broadcasting stations and to carry out other regu- latory functions. Both branches of Congress at the last session passed enactments intended ‘to effect such regulation, but the two bills yet re- main_to be brought into agreement and final passage. Due to. decisions of the courts, the | operation. EMBER 17, - 1926 C authority of the department under the law of 1912 has broken down: ‘many more stations have been operat- ing than can be accommodated with- in the limited number of wave lengths available; further stations are in course of construction; many stations have departed from the scheme of allocation set down by the depart- ment, and the whole service of this most important public function has drifted into such chaos as seems likely, if not remedied, to destroy its great value. T most urgently recom- mend that this legislation should be speedily enacted. I do not believe it is desirable to set up further independent agencies in the Government. Rather 1 belfeve it advisable to entrust the important functions of deciding who shall ex- ercise the privilege of radio trans- mission and under what conditions, the assigning of wave lengths and de- tegmination of power, to a board to be assembled whenever action on such questions becomes necessary. There should be right of appeal to the courts from the decisions of such board. The administration of the decisions of the hoard and the other features of regulation and promotion of radio in the public interest, together with scientific research, should remain in the Department of Commerce. Such an arrangement makes for more ex- pert, more efficient, and more eco- nomical administration than an in- dependent agency or board, whose duties, after initial stages, require but little attention, in which administra- tive functions are confused with semijudicial functions and from which in- of necessity there must be greatly creased personnel and expendit The Wa, ner. The* great body of our people are made up of wage earne Several hundred thousands of them are on the pay rolls of the United States Govern. ment. Their condition very largely is fixed hy legislation. We have recently provided increase¢ in compensation under a method of reclassification and given them the advantage of a liberal retirement system as a_support for their declining years. are under the merit stem, i8 a guaranty of their intelligence, and the efficiency -of their service is a demonstration of their loyalty The Federal Government should continue to set a good example for all other employers, In the industries, the wage earner has proved. The 12-hour ds entirely unknown. ‘well compensated. the condition of steadily im- v is alm who have not yet come to share in the genera! prosperity of the Nation. Both the public_authorities and pri- vate enterprise should be solicitous to advance the welfare of this class. The Federal Government. has been seeking to secure this end through a protec- tive tariff, through restrictive immi- gration, through requiring safety de- vices for the prevention of accidents, through the granting of workman's compensation, through civilian voca- tional rehabilitation and education, through employment information bu- reaus, and through such humanita. rian relief as was provided in the ma- ternity and infancy legislation. It is a satisfaction to report that a more general condition of contentment exists among wage earners and the country is more free from labor dis- putes than it has been for While restrictive immigration has been adopted in part for the benefit of the wage earner, and in its en- tirety for the benefit of the country, it ought not to cause a needless sepa- ration of families and dependents from their natural source of support contrary to the dictates of humanity. No progress appears to have been made within large areas of the bitumi- nous coal industry toward creation of voluntary machinery by which greater assurance can be given to the public of peaceful adjustment of wage difficulties such as has been accom- plished in the anthracite industry. This bituminous industry is one of primary necessity and bears a great responsibility to the Nation for con- tinuity of supplies. As the wage agreements in the unionized section of the industry ex pire on April 1 next, and as conflicts may result which may imperil public interest, and have for many years often called for action of the execu- tive in protection of the public, I again recommend the passage of such legis- lation as will assist the Executive in dealing with such emergencies through a special temporary board of conclli- ation and mediation and through ad- ministrative agencies for the purpose of distribution of coal and protection of the consumers of coal from profi- teering. At present the Executive is not only without authority to act but is ac- tually prohibited by law from making any expenditure to meet the emer- gency of a coal famine. The Federal courts hold a high posi- tion in the administration of justice in the world. While individual judi- clal officers have sometimes been ‘sub- jected to just criticism, the courts as a whole have maintained an exceed- ingly high standard. The Congress may well consider the question of supplying fair salaries and conferring upon the Supreme Courty the same rule-making power on the law side of the district courts that they have always possessed on the equity side. A bill is also pending providing for retirement after a cer- tain number of vears of service, al- though they have not been consecu- tive, which should have your favor- able consideration. These faithful servants of the Government are about the last to remain to be provided for in the post-war readjustments. There has been pending in Congress for nearly three vears banking legis- lation to clarify the national bank act and reasonably to increase the powers of the national banks. I believe that within the limitation of sound bank- ing principles Congress should now and for the future place the national banks upon a fair equality with their competitors, the State banks, and I trust that means may be found so that the differences on branch-making legislation between the Senate and the House of, Representatives may be set- tled alonk sound lines and the legisla- tion promptly enacted. It would be difficult to overestimate the service which the Federal Reserve stem has already rendered to the antry. It is necessary only to re- call the chaotic condition of our bank- ing organization at the time the Fed- eral Reserve System was put into The old system consisted of a vast number of independent bank- ing units. with scattered bank re- serves which never could be mobilized in times of greatest need. In spite of vast banking resources, there was no co-ordination of reserves or any credit | elasticity. As a consequence, a strain was felt even during crop-m-ving pe- riods and when it was necessary to meet other seasonal and regularly re- curring needs. The Federal Reserve System is not a panacea for all economic or finan- clal fils. It cannot prevent depression in certain industries which are expe- Most of them | which | vears. | riencing overexpansion of production or contraction of their markets. Its business is to furnish adequate credit and currency facilities. This it has succeeded in doing, both during the war and in the more dificult period of deflation and readjustment which followed. It enables us to look to the future with confidence and to make plans far ahead. hased on the belief that the Federal Reserve Svstem will exercise a steadying influence on credit conditions and thereby prevent any sudden or severe reactions from the period of pr ity which we are now enjoying. Tn order that these plans may forward, action should be t the present session on the qu venewing the banks' charte policles and present usefulness of the Federal Reserve System. I am in favor of reducing, rather than expanding, (lovernment bureaus which seek to regulate and control the business activities of the people. Every one is aware that abuses exist and will exist so long #s we are limit ed by human imperfections. Unfor- tunately, human nature cannot be changed by an act of the legislature. TWhen practically the sole remedy for many evlls lies in the necessity of the people looking out for themselves and reforming their own ahuses, they will find that they are relying on a false | security if the Government assumes to hold out the promise that it is looking out for them and providing reforms for them. This principle is pre-eminently ap. plicable to the National Government. It is too much assumed that because |an abuse exists it s the business of | | the National Government to provide a | remedy. The presumption should be | that it is the business of local and State governments. Such national ac Skilled labor is|tfon results in encroaching upon the|& Ye But there are un-|galutary independence of the States | ©f an exce fortunately a multitude of workers|and by undertaking to supersede their | CAnnot be said t | natural authority fills the land with | bureaus and departments which | undertaking to do what it is fmpo | for them to accomplish and brings our | whole system of government into dis respect and disfavor. We ought to maintain high stand. ards. We ought to punish wrongdoing. Society has not only the privilege, but the absolute duty of protecting itself and its individuals. But we cannot accomplish this end by adopting a wrong method. FPermanent success les in local, rather than national ac- | tion. Unless the locality rises to its own requirements, there is an almost | irresistible impulse for the National | Government to intervene. The States and the Nation should both realize that such action is to be adopted only as a last resort. l The Neg: I The soclal well being of our country requires our constant effort for the amelioration of race prejudice and the extension to all elements of equal op- portunity and equal protection under the laws which are guaranteed by the Constitution. The Federal Government especially is charged with this obligation in be- half of the colored people of the Na- tion. Not only their remarkable prog- ress, their devotion and their loyalty, but our duty to ourselves under our claim that we are an enlightened peo- ple requires us to use all our power to protect them from the crime of Ivnching. Although violence of this kind has very much decreased, while any of it remains we cannot justify neglecting to make every effort to eradicate it by law. The education of the colored race under Government encouragement fs proceeding successfully and ought to have continuing support. An increas- ing need exists for properly educated and trained medical skill to be devoted to the service of this race. In n This Government holds in sacred trusteeship islands which it has nac- quired in the East and West Indies. In all of them the people are more prosperous than at any previous time. A system of good roads, education and general development is in prog- ress. The people are better governed than ever before and generally con- tent. i In the Philippine Islands Maj. Gen. Leonard Wood has been governor general for five years and has ad- ministered his office with tact and ability, greatly to the success of the Filipino peopie. ~These are a proud and sensitive race, who are making such progress with our co-operation that we can view the results of this experiment with great satisfaction. As we are attempting to assist this race toward self-government, e should look upon their wishes with immediately when they are right, yet maintaining a frank firmness in re fusing when they are wrong. We Ishall ‘measure their progress in no small part by their acceptance of the terms of the organic law under which the islands are governed and the faithful observance of its provision Need exists for clarifying the du- ties of the auditor and declaring them they were. We have placed our own | expenditures under the supervision of the controller general. It is not likely that the expenditures in the Philippine Islands need less supervi- sion than our own. The governor general Is hampered in his selection | of subordinates by the necessity of se. jcuring a confirmation, which has oftentimes driven him to the expedi- ency of using Army officers in work for which civilian experts would be much better fitted. Means should he provided for this and such other pu poses as he may require out of the revenue which this Government now turnyback to the Philippine treasitry, Thempson's Survey. In order that these possessions might suffer no, seeming neglect, have recently sent Col. Carmi A. Thompson to the islands to make a survey in co.operation with the gov ernor general to suggest what might be done to improve conditions. Later, 1 may make a more extended repor including recommendations. nomic development of the islande is very important. They ought not to be ‘turned back to the people until they are hoth politically fitted for self-government and economically in- dependent. Large areas a 1 able to the production of rubber. No one contemplates any time in the future either under the present or & more independent form of gov- ernment when we should not assume some responsibility for their defense. For their economic advantage, for the employment of their people and s thereby insuring a continuation of the | great respect, granting their requests | to be what every one had supposed | 1) The eco- | Prosperity ’DIPLOMACVY‘ FACES PROBLEMS, BUT ARMED CONFLICTS ABSENT Not New_ policies.. VB:t -Steady Continua~ tion of Those Already Proven Successful Advocated. as a contribution to our power of de | feise which could not be carrled on | without tut I helieve this indus ilr\' should he encouraged. It is espe | cially adapted to the Filipino peop: | themselves, who might cultivate it | individually on a small acreage. It | could be carried on extensively by | 4 an capital fn n way ment at good wa 1 1 to the promotion of any t does not provide | freadom the part L eary nd do not t} | under to give ! holdings of land in the he opposition of the | locatity Anv islands must he ohject of henef islands. At an sions shonlil under all mil istered entire government rs, ik powe v se: be taken the onal D, Our policy of na one of making w e S domestic eign implicatfons, s distinetly a pea force. It isan arm of the palice § to guarantee order and the excen of the law at home and seeur citizens abroad self-rospe tion would negleet to provide a and navy propertionate to it tion, tha extent of its territe the ‘dignity of the place which cupies in the world. When it 13 cn sidered that no navy in the wor with one exception, approaches ou and none surpasses it, that our Regi lar Army of wout 115,000 men is t al of ny other like number . that an? Tand and nd training, consists of a personnet | of ahout 610,060, and that our annuat appropriation: re about 680,000 . expended under the dircetion dingly competent staff our neglecting its national defense | true that 'a cult of disparage but that candid exami made by the Cong s through | rious committees has alway sured the country and demonstr that it is maintalning the most quate defensive forces in these present years that it has ever supported in time of peac This gene in effect. IHere and there tempo changes mav be made in personnel to meet requirements in other directions. Attention should be given to eubma rines, crulsers and air forces. Partfe lar points may need strengthening | but as a whole our military power sufficient. War Debt Weak Spot. The one weak place in the whale line is our still stupendous war debt. In any modern campaign the dollars are the shock troops. With a depleted treasury in the rear, no arm | maintain itself in the fleld. A cc loaded with debt is a countr | of the first line of defense. |18 the handmaid of preparedness. | we wish to be able to defend ourselves to the full extent of our power in the future, we shall discharge as soon as ible the financial burden of the war. Otherwise we would face crisis with a_part of our capital re sources alr expended. The amount and kind of our mil tary equipmeny is pre-eminently question for the decision of the Cor gress, giving due consideration of military experts and the available public revenue. Noth ing is more laudable than the co-oper ation of the agricultural and indus resources of the country for urpose of supplying the needs national defense. In time of peril th people employed in these interests volunteered in a most self-@crificing way, often at the nominal charge dollar a vear. Rut the Army Navy are not supported fo of supply concerns; are supported f its is and th supply_coneerns the henefit of the Army and N The distribution of orders on what is needed from differ- ent concerns for the purpose of keep ing up equipment and organization perfectly justified, but any attempt 1o prevail upon the Government to p ond its needs ought neot to | be tolerated. It is eminently fair that those who"deal with the Government should do =0 at a rea able profit However, public mof expended not that some one may profit by i, but In order to serve a publie purpo Opposes Competitive Armaments. While our pelicy of national d fense will proceed in order that we may be independent and self-suff Jefent, T am opposed to engaging !n any ‘attempt at competitive arn ments. No matter how much or how little some other country may constrained to provide, we can e afford to set the example, ing dictated to by other |adopting our own standards !strong enough to pursue t !which will be a most model for the rest of the world. e [are eminently peaceful, but we ard by no means wenk. While we sl | mit our differences with others, no {to the adjudication of force, but of reason, it is not hecause we are ur able to defend our rights. While | are doing our best to eliminate all re | sort to war for the purpose of sett disputes, we cannot but remen | that the peace we now enjoy had t be won by the sword and that if tif | rights of our country are to be d jfended we cannot rely for that pur pose upon any one but ourselves. We |cannot shirk the responaibility | which 1s the first requisite of all go\ ernment, of preserving its awn ir tegrity and maintaining the rights of its own citizens. It is only in cordance with thesa principles th we can establish any lasting found i tions for an hono peace. It is for these rea | country, llke any other T poses 1o provide itself with an arm nd navy supported by a merchan I marine. Yet these are not for com | petition’ with any other power. | vears we have besought nations disarm. We have recently expressed our willingness at Geneva to enter into treaties for the limitation of all | types of warships according to the io adopted the \Washington | Conference. This offer is still pend g. While we are and shall continue to be armed it is not as a menace, | but rather a common assurance of | tranquillity to all the peace-loving | people of the world. For us to do any | less would he to disregard our obliga Itions, evade our responsibilities and | jeopardize our national hon l Veterans. I Thi: ¢, ot only because it 15 bound by honor but Lecauss of the satisfaction derived from it, has " (Continued on Page Thirtyfive) mathod wholesome to furnish . 1l policy should he kept * henefit 8 |