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TO THE SENATE AND HOUSE OF REPRESENTATIVES:
I sincerely regret that I cannot be present at the opening of this session
of the Congress1. I am thus prevented from presenting in as direct a way as I
could wish the many questions that are pressing for solution at this time. Happily,
I have had the advantage of the advice of the heads of the several executive
departments who have kept in close touch with affairs in their detail and whose
thoughtful recommendations I earnestly second.
In the matter of the railroads and the readjustment of their affairs growing
out of Federal control, I shall take the liberty at a later date of addressing
you.
I hope that Congress will bring to a conclusion at this session legislation
looking to the establishment of a budget system. That there should be one single
authority responsible for the making of all appropriations and that appropriations
should be made not independently of each other, but with reference to one single
comprehensive plan of expenditure properly related to the nation's income, there
can be no doubt, I believe, the burden of preparing the budget must, in the nature
of the case, if the work is to be properly done and responsibility concentrated
instead of divided, rest upon the executive. The budget so prepared should be
submitted to and approved or amended by a single committee of each House of
Congress and no single appropriation should be made by the Congress, except
such as may have been included in the budget prepared by the executive or added
by the particular committee of Congress charged with the budget legislation.
Another and not less important aspect of the problem is the ascertainment
of the economy and efficiency with which the moneys appropriated are expended.
Under existing law the only audit is for the purpose of ascertaining whether
expenditures have been lawfully made within the appropriations. No one is authorized
or equipped to ascertain whether the money has been spent wisely, economically
and effectively. The auditors should be highly trained officials with permanent
tenure in the Treasury Department, free of obligations to or motives of consideration
for this or any subsequent administration, and authorized and empowered to examine
into and make report upon the methods employed and the results obtained by the
executive departments of the Government. Their reports should be made to the
Congress and to the Secretary of the Treasury.
I trust that the Congress will give its immediate consideration to the problem
of future taxation. Simplification of the income and profits taxes has become
an immediate necessity. These taxes performed indispensable service during the
war. They must, however, be simplified, not only to save the taxpayer inconvenience
and expense, but in order that his liability may be made certain and definite.
With reference to the details of the Revenue Law, the Secretary of the Treasury
and the Commissioner of Internal Revenue will lay before you for your consideration
certain amendments necessary or desirable in connection with the administration
of the law - recommendations which have my approval and support. It is of the
utmost importance that in dealing with this matter the present law should not
be disturbed so far as regards taxes for the calendar year 1920 payable in the
calendar year 1921. The Congress might well consider whether the higher rates
of income and profits taxes can in peace times be effectively productive of
revenue, and whether they may not, on the contrary, be destructive of business
activity and productive of waste and inefficiency. There is a point at which
in peace times high rates of income and profits taxes discourage energy, remove
the incentive to new enterprises, encourage extravagant expenditures and produce
industrial stagnation with consequent unemployment and other attendant evils.
The problem is not an easy one. A fundamental change has taken place with
reference to the position of America in the world's affairs. The prejudice and
passions engendered by decades of controversy between two schools of political
and economic thought, -the one believers in protection of American industries,
the other believers in tariff for revenue only, -must be sbordinated to the single
consideration of the public interest in the light of utterly changed conditions.
Before the war America was heavily the debtor of the rest of the world and the
interest payments she had to make to foreign countries on American securities
held abroad, the expenditures of American travelers abroad and the ocean freight
charges she had to pay to others, about balanced the value of her pre-war favorable
balance of trade. During the war America's exports nave been greatly stimulated,
and increased prices have increased their value. On the other hand, she has
purchased a large proportion of the American securities previously held abroad,
has loaned some $9,000,000,000 to foreign governments, and has built her own
ships. Our favorable balance of trade has thus been greatly increased and Europe
has been deprived of the means of meeting it heretofore existing. Europe can
have only three ways of meeting the favorable balance of trade in peace times:
by imports into this country of gold or of goods, or by establishing new credits.
Europe is in no position at the present time to ship gold to us nor could we
contemplate large further imports of gold into this country without concern.
The time has nearly passed for international governmental loans and it will
take time to develop in this country a market for foreign securities. Anything,
therefore, which would tend to prevent foreign countries from settling for our
exports by shipments of goods into this country could only have the effect of
preventing them from paying for our exports and therefore of preventing the
exports from being made. The productivity of the country, greatly stimulated
by the war, must find an outlet by exports to foreign countries, and any measures
taken to prevent imports will inevitably curtail exports, force curtailment
of production, load the banking machinery of the country with credits to carry
unsold products and produce industrial stagnation and unemployment. If we want
to sell, we must be prepared to buy. Whatever, therefore, may have been our
views during the period of growth of American business concerning tariff legislation,
we must now adjust our own economic life to a changed condition growing out
of the fact that American business is full grown and that America is the greatest
capitalist in the world.
No policy of isolation will satisfy the growing needs and opportunities of
America. The provincial standards and policies of the past, which have held
American business as if in a strait-jacket, must yield and give way to the needs
and exigencies of the new day in which we live, a day full of hope and promise
for American business, if we will but take advantage of the opportunities that
are ours for the asking. The recent war has ended our isolation and thrown upon
us a great duty and responsibility. The United States must share the expanding
world market. The United States desires for itself only equal opportunity with
the other nations of the world, and that through the process of friendly cooperation
and fair competition the legitimate interests of the nations concerned may be
successfully and equitably adjusted.
There are other matters of importance upon which I urged action at the last
session of Congress which are still pressing for solution. I am sure it is not
necessary for me again to remind you -that there is one immediate and very practicable
question resulting from the war which we should meet in the most liberal spirit.
It is a matter of recognition and relief to our soldiers. I can do no better
than to quote from my last message urging this very action:
"We must see to it that our returning soldiers are assisted in every practicable
way to find the places for which they are fitted in the daily work of the country.
This can be done by developing and maintaining upon an adequate scale the admirable
organization created by the Department of Labor for placing men seeking work;
and it can also be done, in at least one very great field, by creating new opportunities
for individual enterprise. The Secretary of the Interior has pointed out the
way by which returning soldiers may be helped to find and take up land in the
hitherto undeveloped regions of the country which the Federal Government has
already prepared, or can readily prepare, for cultivation and also on many of
the cutover or neglected areas which lie within the limits of the older states;
and I once more take the liberty of recommending very urgently that his plans
shall receive the immediate and substantial support of the Congress."
In the matter of tariff legislation, I beg to call your attention to the statements
contained in my last message urging legislation with reference to the establishment
of the chemical and dyestuffs industry in America:
"Among the industries to which special consideration should be given is that
of the manufacture of dyestuffs and related chemicals. Our complete dependence
upon German supplies before the war made the interruption of trade a cause of
exceptional economic disturbance. The close relation between the manufacture
of dyestuffs, on the one hand, and of explosive and poisonous gases, on the
other, moreover, has given the industry an exceptional significance and value.
Although the United States will gladly and unhesitatingly join in the programme
of international disarmament, it will, nevertheless, be a policy of obvious
prudence to make certain of the successful maintenance of many strong and well-equipped
chemical plants. The German chemical industry, with which we will be brought
into competition, was -and may well be again, a thoroughly knit monopoly capable
of exercising a competition of a peculiarly insidious and dangerous kind."
During the war the farmer performed a vital and willing service to the nation.
By materially increasing the production of his land, he supplied America and
the Allies with the increased amounts of food necessary to keep their immense
armies in the field. He indispensably helped to win the war. But there is now
scarcely less need of increasing the production in food and the necessaries
of life. I ask the Congress to consider means of encouraging effort along these
lines. The importance of doing everything possible to promote production along
economical lines, to improve marketing, and to make rural life more attractive
and healthful, is obvious. I would urge approval of the plans already proposed
to the Congress by the Secretary of Agriculture, to secure the essential facts
required for the proper study of this question, through the proposed enlarged
programmes for farm management studies and crop estimates. I would urge, also,
the continuance of Federal participation in the building of good roads, under
the terms of existing law and under the direction of present agencies; the need
of further action on the part of the States and the Federal Government to preserve
and develop our forest resources, especially through the practice of better
forestry methods on private holdings and the extension of the publicly owned
forests; better support for country schools and the more definite direction
of their courses of study along lines related to rural problems; and fuller
provision for sanitation in rural districts and the building up of needed hospital
and medical facilities in these localities. Perhaps the way might be cleared
for many of these desirable reforms by a fresh, comprehensive survey made of
rural conditions by a conference composed of representatives of the farmers
and of the agricultural agencies responsible for leadership.
I would call your attention to the widespread condition of political restlessness
in our body politic. The causes of this unrest, while various and complicated,
are superficial rather than deep-seated. Broadly, they arise from or are connected
with the failure on the part of our Government to arrive speedily at a just
and permanent peace permitting return to normal conditions, from the transfusion
of radical theories from seething European centers pending such delay, from
heartless profiteering resulting in the increase of the cost of living, and
lastly from the machinations of passionate and malevolent agitators. With the
return to normal conditions, this unrest will rapidly disappear. In the meantime,
it does much evil. It seems to me that in dealing with this situation Congress should not be impatient or
drastic but should seek rather to remove the causes.
It should endeavor to bring our country back speedily to a peace basis, with
ameliorated living conditions under the minimum of restrictions upon personal
liberty that is consistent with our reconstruction problems. And it should arm
the Federal Government with power to deal in its criminal courts with those
persons who by violent methods would abrogate our time-tested institutions.
With the free expression of opinion and with the advocacy of orderly political
change, however fundamental, there must be no interference, but towards passion
and malevolence tendine to incite crime and insurrection under guise of political
evolution there should be no leniency. Legislation to this end has been recommended
by the Attorney General and should be enacted. In this direct connection, I
would call your attention to my recommendations on August 8th, pointing out
legislative measures which would be effective in controlling and bringing down
the present cost of living, which contributes so largely to this unrest. On
only one of these recommendations has the Congress acted. If the Government's
campaign is to be effective, it is necessary that the other steps suggested
should be acted on at once.
I renew and strongly urge the necessity of the extension of the present Food
Control Act as to the period of time in which it shall remain in operation.
The Attorney General has submitted a bill providing for an extension of this Act for a period of six
months. As it now stands, it is limited in operation
to the period of the war and becomes inoperative upon the formal proclamation
of peace. It is imperative that it should be extended at once. The Department
of Justice has built up extensive machinery for the purpose of enforcing its
provisions; all of which must be abandoned upon the conclusion of peace unless
the provisions of this Act are extended.
During this period the Congress will have an opportunity to make similar permanent
provisions and regulations with regard to all goods destined for interstate commerce and to
exclude them from interstate shipment, if the requirements of the law are not compiled with. Some such regulation is
imperatively necessary. The abuses that have grown up in the manipulation of prices by the withholding
of foodstuffs and other necessaries of life cannot otherwise be effectively
prevented. There can be no doubt of either the necessity of the legitimacy of
such measures.
As I pointed out in my last message, publicity can accomplish a great deal
in this campaign. The aims of the Government must be clearly brought to the
attention of the consuming public, civic organizations and state officials,
who are in a position to lend their assistance to our efforts. You have made
available funds with which to carry on this campaign, but there is no provision
in the law authorizing their expenditure for the purpose of making the public
fully informed about the efforts of the Government. Specific recommendation
has been made by the Attorney General in this regard. I would strongly urge
upon you its immediate adoption, as it constitutes one of the preliminary steps
to this campaign.
I also renew my recommendation that the Congress pass a law regulating cold
storage as it is regulated, for example, by the laws of the State of New Jersey,
which limit the time during which goods may be kept in storage, prescribe the
method of disposing of them if kept beyond the permitted period, and require
that goods released from storage shall in all cases bear the date of their receipt.
It would materially add to the serviceability of the law, for the purpose we
now have in view, if it were also prescribed that all goods released from storage
for interstate shipment should have plainly marked upon each package the selling
or market price at which they went into storage. By this means the purchaser
would always be able to learn what profits stood between him and the producer
or the wholesale dealer.
I would also renew my recommendation that all goods destined for interstate
commerce should in every case, where their form or package makes it possible,
be plainly marked with the price at which they left the hands of the producer.
We should formulate a law requiring a Federal license of all corporations
engaged in interstate commerce and embodying in the license or in the conditions
under which it is to be issued, specific regulations designed to secure competitive
selling and prevent unconscionable profits in the method of marketing. Such
a law would afford a welcome opportunity to effect other much needed reforms
in the business of interstate shipment and in the methods of corporations which
are engaged in it; but for the moment I confine my recommendations to the object
immediately in hand, which is to lower the cost of living.
No one who has observed the march of events in the last year can fail to note
the absolute need of a definite programme to bring about an improvement in the
conditions of labor. There can be no settled conditions leading to increased
production and a reduction in the cost of living if labor and capital are to
be antagonists instead of partners. Sound thinking and an honest desire to serve
the interests of the whole nation, as distinguished from the interests of a
class, must be applied to the solution of this great and pressing problem. The
failure of other nations to consider this matter in a vigorous way has produced
bitterness and jealousies and antagonisms, the food of radicalism. The only
way to keep men from agitating against grievances is to remove the grievances.
An unwillingness even to discuss these matters produces only dissatisfaction
and gives comfort to the extreme elements in our country which endeavor to stir
up disturbances in order to provoke governments to embark upon a course of retaliation
and repression. The seed of revolution is repression. The remedy for these things
must not be negative in character. It must be constructive. It must comprehend
the general interest. The real antidote for the unrest which manifests itself
is not suppression, but a deep consideration of the wrongs that beset our national
life and the application of a remedy.
Congress has already shown its willingness to deal with these industrial wrongs
by establishing the eight-hour day as the standard in every field of labor.
It has sought to find a way to prevent child labor. It has served the whole
country by leading the way in developing the means of preserving and safeguarding
lives and health in dangerous industries. It must now help in the difficult
task of finding a method that will bring about a genuine democratization of
industry, based upon the full recognition of the right of those who work, in
whatever rank, to participate in some organic way in every decision which directly
affects their welfare. It is with this purpose in mind that I called a conference
to meet in Washington on December 1st, to consider these problems in all their
broad aspects, with the idea of bringing about a better understanding between
these two interests.
The great unrest throughout the world, out of which has emerged a demand for
an immediate consideration of the difficulties between capital and labor, bids
us put our own house in order. Frankly, there can be no permanent and lasting
settlements between capital and labor which do not recognize the fundamental
concepts for which labor has been struggling through the years. The whole world
gave its recognition and endorsement to these fundamental purposes in the League
of Nations. The statesmen gathered at Versailles recognized the fact that world
stability could not be had by reverting to industrial standards and conditions
against which the average workman of the world had revolted. It is, therefore,
the task of the statesmen of this new day of change and readjustment to recognize
world conditions and to seek to bring about, through legislation, conditions
that will mean the ending of age-long antagonisms between capital and labor
and that will hopefully lead to the building up of a comradeship which will
result not only in greater contentment among the mass of workmen but also bring
about a greater production and a greater prosperity to business itself.
To analyze the particulars in the demands of labor is to admit the justice
of their complaint in many matters that lie at their basis. The workman demands
an adequate wage, sufficient to permit him to live in comfort, unhampered by
the fear of poverty and want in his old age. He demands the right to live and
the right to work amidst sanitary surroundings, both in home and in workshop,
surroundings that develop and do not retard his own health and wellbeing; and
the right to provide for his children's wants in the matter of health and education.
In other words, it is his desire to make the conditions of his life and the
lives of those dear to him tolerable and easy to bear.
The establishment of the principles regarding labor laid down ill the covenant
of the League of Nations offers us the way to industrial peace and conciliation.
No other road lies open to us. Not to pursue this one is longer to invite enmities,
bitterness, and antagonisms which in the end only lead to industrial and social
disaster. The unwilling workman is not a profitable servant. An employee whose
industrial life is hedged about by hard and unjust conditions, which he did
not create and over which he has no control, lacks that fine spirit of enthusiasm
and volunteer effort which are the necessary ingredients of a great producing
entity. Let us be frank about this solemn matter. The evidences of world-wide
unrest which manifest themselves in violence throughout the world bid us pause
and consider the means to be found to stop the spread of this contagious thing
before it saps the very vitality of the nation itself. Do we gain strength by
withholding the remedy? Or is it not the business of statesmen to treat these
manifestations of unrest which meet us on every hand as evidences of an economic
disorder and to apply constructive remedies wherever necessary, being sure that
in the application of the remedy we touch not the vital tissues of our industrial
and economic life? There can be no recession of the tide of unrest until constructive
instrumentalities are set up to stem that tide.
Governments must recognize the right of men collectively to bargain for humane
objects that have at their base the mutual protection and welfare of those engaged
in all industries. Labor must not be longer treated as a commodity. It must
be regarded as the activity of human beings, possessed of deep yearnings and
desires. The business man gives his best thought to the repair and replenishment
of his machinery, so that its usefulness will not be impaired and its power
to produce may always be at its height and kept in full vigor and motion. No
less regard ought to be paid to the human machine, which after all propels the
machinery of the world and is the great dynamic force that lies back of all
industry and progress. Return to the old standards of wage and industry in employment
are unthinkable. The terrible tragedy of war which has just ended and which
has brought the world to the verge of chaos and disaster would be in vain if
there should ensue a return to the conditions of the past. Europe itself, whence
has come the unrest which now holds the world at bay, is an example of stand-patism
in these vital human matters which America might well accept as an example,
not to be followed but studiously to be avoided. Europe made labor the differential,
and the price of it all is enmity and antagonism and prostrated industry, The
right of labor to live in peace and comfort must be recognized by governments
and America should be the first to lay the foundation stones upon which industrial
peace shall be built.
Labor not only is entitled to an adequate wage, but capital should receive
a reasonable return upon its investment and is entitled to protection at the
hands of the Government in every emergency. No Government worthy of the name
can "play" these elements against each other, for there is a mutuality of interest
between them which the Government must seek to express and to safeguard at all
cost.
The right of individuals to strike is inviolate and ought not to be interfered
with by any process of Government, but there is a predominant right and that
is the right of the Government to protect all of its people and to assert its
power and majesty against the challenge of any class. The Government, when it
asserts that right, seeks not to antagonize a class but simply to defend the
right of the whole people as against the irreparable harm and injury that might
be done by the attempt by any class to usurp a power that only Government itself
has a right to exercise as a protection to all.
In the matter of international disputes which have led to war, statesmen have
sought to set up as a remedy arbitration for war. Does this not point the way
for the settlement of industrial disputes, by the establishment of a tribunal,
fair and just alike to all, which will settle industrial disputes which in the
past have led to war and disaster? America, witnessing the evil consequences
which have followed out of such disputes between these contending forces, must
not admit itself impotent to deal with these matters by means of peaceful processes.
Surely, there must be some method of bringing together in a council of peace
and amity these two great interests, out of which will come a happier day of
peace and cooperation, a day that will make men more hopeful and enthusiastic
in their various tasks, that will make for more comfort and happiness in living
and a more tolerable condition among all classes of men. Certainly human intelligence
can devise some acceptable tribunal for adjusting the differences between capital
and labor.
This is the hour of test and trial for America. By her prowess and strength,
and the indomitable courage of her soldiers, she demonstrated her power to vindicate
on foreign battlefields her conceptions of liberty and justice. Let not her
influence as a mediator between capital and labor be weakened and her own failure
to settle matters of purely domestic concern be proclaimed to the world. There
are those in this country who threaten direct action to force their will, upon
a majority. Russia today, with its blood and terror, is a painful object lesson
of the power of minorities. It makes little difference what minority it is;
whether capital or labor, or any other class; no sort of privilege will ever
be permitted to dominate this country. We are a partnership or nothing that
is worth while. We are a democracy, where the majority are the masters, or all
the hopes and purposes of the men who founded this government have been defeated
and forgotten. In America there is but one way by which great reforms can be
accomplished and the relief sought by classes obtained, and that is through
the orderly processes of representative government. Those who would propose
any other method of reform are enemies of this country. America will not be
daunted by threats nor lose her composure or calmness in these distressing times.
We can afford, in the midst of this day of passion and unrest, to be self -
contained and sure. The instrument of all reform in America is the ballot. The
road to economic and social reform in America is the straight road of justice
to all classes and conditions of men. Men have but to follow this road to realize
the full fruition of their objects and purposes. Let those beware who would
take the shorter road of disorder and revolution. The right road is the road
of justice and orderly process.