Speech Transcript:

 TO THE SENATE AND HOUSE OF REPRESENTATIVES:

I sincerely regret that I cannot be present at the opening of this
session of the Congress. 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 subordinated 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 have 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 tending 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 Notions. 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 states
men 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 standpatism 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.