Speech Transcript:

 Since the close of the last Congress the Nation has lost President
Harding. The world knew his kindness and his humanity, his greatness
and his character. He has left his mark upon history. He has made
justice more certain and peace more secure. The surpassing tribute
paid to his memory as he was borne across the continent to rest at
last at home revealed the place he held in the hearts of the American
people. But this is not the occasion for extended reference to the man
or his work. In this presence, among these who knew and loved him,
that is unnecessary. But we who were associated with him could not
resume together the functions of our office without pausing for a
moment, and in his memory reconsecrating ourselves to the service of
our country. He is gone. We remain. It is our duty, under the
inspiration of his example, to take up the burdens which he was
permitted to lay down, and to develop and support the wise principles
of government which he represented.
Foreign Affairs

For us peace reigns everywhere. We desire to perpetuate it always by
granting full justice to others and requiring of others full justice
to ourselves.

Our country has one cardinal principle to maintain in its foreign
policy. It is an American principle. It must be an American policy.
We attend to our own affairs, conserve our own strength, and protect
the interests of our own citizens; but we recognize thoroughly our
obligation to help others, reserving to the decision of our own
Judgment the time, the place, and the method. We realize the common
bond of humanity. We know the inescapable law of service.

Our country has definitely refused to adopt and ratify the covenant
of the League of Nations. We have not felt warranted in assuming the
responsibilities which its members have assumed. I am not proposing
any change in this policy; neither is the Senate. The incident, so
far as we are concerned, is closed. The League exists as a foreign
agency. We hope it will be helpful. But the United States sees no
reason to limit its own freedom and independence of action by joining
it. We shall do well to recognize this basic fact in all national
affairs and govern ourselves accordingly.
World Court

Our foreign policy has always been guided by two principles. The one
is the avoidance of permanent political alliances which would
sacrifice our proper independence. The other is the peaceful
settlement of controversies between nations. By example and by treaty
we have advocated arbitration. For nearly 25 years we have been a
member of The Hague Tribunal, and have long sought the creation of a
permanent World Court of Justice. I am in full accord with both of
these policies. I favor the establishment of such a court intended to
include the whole world. That is, and has long been, an American
policy.

Pending before the Senate is a proposal that this Government give its
support to the Permanent Court of International Justice, which is a
new and somewhat different plan. This is not a partisan question. It
should not assume an artificial importance. The court is merely a
convenient instrument of adjustment to which we could go, but to
which we could not be brought. It should be discussed with entire
candor, not by a political but by a judicial method, without pressure
and without prejudice. Partisanship has no place in our foreign
relations. As I wish to see a court established, and as the proposal
presents the only practical plan on which many nations have ever
agreed, though it may not meet every desire, I therefore commend it
to the favorable consideration of the Senate, with the proposed
reservations clearly indicating our refusal to adhere to the League
of Nations.
Russia

Our diplomatic relations, lately so largely interrupted, are now
being resumed, but Russia presents notable difficulties. We have
every desire to see that great people, who are our traditional
friends, restored to their position among the nations of the earth.
We have relieved their pitiable destitution with an enormous charity.
Our Government offers no objection to the carrying on of commerce by
our citizens with the people of Russia. Our Government does not
propose, however, to enter into relations with another regime which
refuses to recognize the sanctity of international obligations. I do
not propose to barter away for the privilege of trade any of the
cherished rights of humanity. I do not propose to make merchandise of
any American principles. These rights and principles must go wherever
the sanctions of our Government go.

But while the favor of America is not for sale, I am willing to make
very large concessions for the purpose of rescuing the people of
Russia. Already encouraging evidences of returning to the ancient
ways of society can be detected. But more are needed. Whenever there
appears any disposition to compensate our citizens who were
despoiled, and to recognize that debt contracted with our Government,
not by the Czar, but by the newly formed Republic of Russia; whenever
the active spirit of enmity to our institutions is abated; whenever
there appear works mete for repentance; our country ought to be the
first to go to the economic and moral rescue of Russia. We have every
desire to help and no desire to injure. We hope the time is near at
hand when we can act.
Debts

The current debt and interest due from foreign Governments, exclusive
of the British debt of $4,600,000,000, is about $7,200,000,000. I do
not favor the cancellation of this debt, but I see no objection to
adjusting it in accordance with the principle adopted for the British
debt. Our country would not wish to assume the role of an oppressive
creditor, but would maintain the principle that financial obligations
between nations are likewise moral obligations which international
faith and honor require should be discharged.

Our Government has a liquidated claim against Germany for the expense
of the army of occupation of over $255,000,000. Besides this, the
Mixed Claims Commission have before them about 12,500 claims of
American citizens, aggregating about $1,225,000,000. These claims
have already been reduced by a recent decision, but there are valid
claims reaching well toward $500,000,000. Our thousands of citizens
with credits due them of hundreds of millions of dollars have no
redress save in the action of our Government. These are very
substantial interests, which it is the duty of our Government to
protect as best it can. That course I propose to pursue.

It is for these reasons that we have a direct interest in the
economic recovery of Europe. They are enlarged by our desire for the
stability of civilization and the welfare of humanity. That we are
making sacrifices to that end none can deny. Our deferred interest
alone amounts to a million dollars every day. But recently we offered
to aid with our advice and counsel. We have reiterated our desire to
see France paid and Germany revived. We have proposed disarmament. We
have earnestly sought to compose differences and restore peace. We
shall persevere in well-doing, not by force, but by reason.
Foreign Papers

Under the law the papers pertaining to foreign relations to be
printed are transmitted as a part of this message. Other volumes of
these papers will follow.
Foreign Service

The foreign service of our Government needs to be reorganized and
improved.
Fiscal Condition

Our main problems are domestic problems. Financial stability is the
first requisite of sound government. We can not escape the effect of
world conditions. We can not avoid the inevitable results of the
economic disorders which have reached all nations. But we shall
diminish their harm to us in proportion as we continue to restore our
Government finances to a secure and endurable position. This we can
and must do. Upon that firm foundation rests the only hope of
progress and prosperity. From that source must come relief for the
people.

This is being, accomplished by a drastic but orderly retrenchment,
which is bringing our expenses within our means. The origin of this
has been the determination of the American people, the main support
has been the courage of those in authority, and the effective method
has been the Budget System. The result has involved real sacrifice by
department heads, but it has been made without flinching. This system
is a law of the Congress. It represents your will. It must be
maintained, and ought to be strengthened by the example of your
observance. Without a Budget System there can be no fixed
responsibility and no constructive scientific economy.

This great concentration of effort by the administration and Congress
has brought the expenditures, exclusive of the self-supporting Post.
Office Department, down to three billion dollars. It is possible, in
consequence, to make a large reduction in the taxes of the people,
which is the sole object of all curtailment. This is treated at
greater length in the Budget message, and a proposed plan has been
presented in detail in a statement by the Secretary of the Treasury
which has my unqualified approval. I especially commend a decrease on
earned incomes, and further abolition of admission, message, and
nuisance taxes. The amusement and educational value of moving
pictures ought not to be taxed. Diminishing charges against moderate
incomes from investment will afford immense relief, while a revision
of the surtaxes will not only provide additional money for capital
investment, thus stimulating industry and employing more but will not
greatly reduce the revenue from that source, and may in the future
actually increase it.

Being opposed to war taxes in time of peace, I am not in favor of
excess-profits taxes. A very great service could be rendered through
immediate enactment of legislation relieving the people of some of
the burden of taxation. To reduce war taxes is to give every home a
better chance.

For seven years the people have borne with uncomplaining courage the
tremendous burden of national and local taxation. These must both be
reduced. The taxes of the Nation must be reduced now as much as
prudence will permit, and expenditures must be reduced accordingly.
High taxes reach everywhere and burden everybody. They gear most
heavily upon the poor. They diminish industry and commerce. They make
agriculture unprofitable. They increase the rates on transportation.
They are a charge on every necessary of life. Of all services which
the Congress can render to the country, I have no hesitation in
declaring t neglect it, to postpone it, to obstruct it by unsound
proposals, is to become unworthy of public confidence and untrue to
public trust. The country wants this measure to have the right of way
over an others.

Another reform which is urgent in our fiscal system is the abolition
of the right to issue tax-exempt securities. The existing system not
only permits a large amount of the wealth of the Notion to escape its
just burden but acts as a continual stimulant to municipal
extravagance. This should be prohibited by constitutional amendment.
All the wealth of the Nation ought to contribute its fair share to
the expenses of the Nation.
Tariff Taw

The present tariff law has accomplished its two main objects. It has
secured an abundant revenue and been productive of an abounding
prosperity. Under it the country has had a very large export and
import trade. A constant revision of the tariff by the Congress is
disturbing and harmful. The present law contains an elastic provision
authorizing the President to increase or decrease present schedules
not in excess of 50 per centum to meet the difference in cost of
production at home and abroad. This does not, to my mind, warrant a
rewriting g of the whole law, but does mean, and will be so
administered, that whenever the required investigation shows that
inequalities of sufficient importance exist in any schedule, the
power to change them should and will be applied.
Shipping

The entire well being of our country is dependent upon transportation
by sea and land. Our Government during the war acquired a large
merchant fleet which should be transferred, as soon as possible, to
private ownership and operation under conditions which would secure
two results: First, and of prime importance, adequate means for
national defense; second, adequate service to American commerce.
Until shipping conditions are such that our fleet can be disposed of
advantageously under these conditions, it will be operated as
economically as possible under such plans as may be devised from time
to time by the Shipping Board. We must have a merchant marine which
meets these requirements, and we shall have to pay the cost of its
service.
Public Improvements

The time has come to resume in a moderate way the opening of our
intracoastal waterways; the control of flood waters of the
Mississippi and of the Colorado Rivers; the improvement of the
waterways from the Great Lakes toward the Gulf of Mexico; and the
development of the great power and navigation project of the St.
Lawrence River, for which efforts are now being made to secure the
necessary treaty with Canada. These projects can not all be
undertaken at once, but all should have the immediate consideration
of the Congress and be adopted as fast as plans can be matured and
the necessary funds become available. This is not incompatible with
economy, for their nature does not require so much a public
expenditure as a capital investment which will be reproductive, as
evidenced by the marked increase in revenue from the Panama Canal.
Upon these projects depend much future industrial and agricultural
progress. They represent the protection of large areas from flood and
the addition of a great amount of cheap power and cheap freight by use
of navigation, chief of which is the bringing of ocean-going ships to
the Great Lakes.

Another problem of allied character is the superpower development of
the Northeastern States, consideration of which is growing under the
direction of the Department of Commerce by joint conference with the
local authorities.
Railroads

Criticism of the railroad law has been directed, first, to the
section laying down the rule by which rates are fixed, and providing
for payment to the Government and use of excess earnings; second, to
the method for the adjustment of wage scales; and third, to the
authority permitting consolidations.

It has been erroneously assumed that the act undertakes to guarantee
railroad earnings. The law requires that rates should be just and
reasonable. That has always been the rule under which rates have been
fixed. To make a rate that does not yield a fair return results in
confiscation, and confiscatory rates are of course unconstitutional.
Unless the Government adheres to the rule of making a rate that will
yield a fair return, it must abandon rate making altogether. The new
and important feature of that part of the law is the recapture and
redistribution of excess rates. The constitutionality of this method
is now before the Supreme Court for adjudication. Their decision
should be awaited before attempting further legislation on this
subject. Furthermore, the importance of this feature will not be
great if consolidation goes into effect.

The settlement of railroad labor disputes is a matter of grave public
concern. The Labor Board was established to protect the public in the
enjoyment of continuous service by attempting to insure justice
between the companies and their employees. It has been a great help,
but is not altogether satisfactory to the public, the employees, or
the companies. If a substantial agreement can be reached among the
groups interested, there should be no hesitation in enacting such
agreement into law. If it is not reached, the Labor Board may very
well be left for the present to protect the public welfare.

The law for consolidations is not sufficiently effective to be
expeditious. Additional legislation is needed giving authority for
voluntary consolidations, both regional and route, and providing
Government machinery to aid and stimulate such action, always subject
to the approval of the Interstate Commerce Commission. This should
authorize the commission to appoint committees for each proposed
group, representing the public and the component roads, with power to
negotiate with individual security holders for an exchange of their
securities for those of the, consolidation on such terms and
conditions as the commission may prescribe for avoiding any
confiscation and preserving fair values. Should this permissive
consolidation prove ineffective after a limited period, the authority
of the Government will have to be directly invoked.

Consolidation appears to be the only feasible method for the
maintenance of an adequate system of transportation with an
opportunity so to adjust freight rates as to meet such temporary
conditions as now prevail in some agricultural sections. Competent
authorities agree that an entire reorganization of the rate structure
for freight is necessary. This should be ordered at once by the
Congress.
Department of Justice

As no revision of the laws of the United States has been made since
1878, a commission or committee should be created to undertake this
work. The Judicial Council reports that two more district judges are
needed in the southern district of New York, one in the northern
district of Georgia, and two more circuit judges in the Circuit Court
of Appeals of the Eighth Circuit. Legislation should be considered for
this purpose.

It is desirable to expedite the hearing and disposal of cases. A
commission of Federal judges and lawyers should be created to
recommend legislation by which the procedure in the Federal trial
courts may be simplified and regulated by rules of court, rather than
by statute; such rules to be submitted to the Congress and to be in
force until annulled or modified by the Congress. The Supreme Court
needs legislation revising and simplifying the laws governing review
by that court, and enlarging the classes of cases of too little
public importance to be subject to review. Such reforms would
expedite the transaction of the business of the courts. The
administration of justice is likely to fail if it be long delayed.

The National Government has never given adequate attention to its
prison problems. It ought to provide employment in such forms of
production as can be used by the Government, though not sold to the
public in competition with private business, for all prisoners who
can be placed at work, and for which they should receive a reasonable
compensation, available for their dependents.

Two independent reformatories are needed; one for the segregation of
women, and another for the segregation of young men serving their
first sentence.

The administration of justice would be facilitated greatly by
including in the Bureau of Investigation of the Department of Justice
a Division of Criminal Identification, where there would be collected
this information which is now indispensable in the suppression of
crime.
Prohibition

The prohibition amendment to the Constitution requires the Congress
and the President to provide adequate laws to prevent its violation.
It is my duty to enforce such laws. For that purpose a treaty is
being negotiated with Great Britain with respect to the right of
search of hovering vessels. To prevent smuggling, the Coast Card
should be greatly strengthened, and a supply of swift power boats
should be provided. The major sources of production should be rigidly
regulated, and every effort should be made to suppress interstate
traffic. With this action on the part of the National Government, and
the cooperation which is usually rendered by municipal and State
authorities, prohibition should be made effective. Free government
has no greater menace than disrespect for authority and continual
violation of law. It is the duty of a citizen not only to observe the
law but to let it be known that he is opposed to its violation.
The Negro

Numbered among our population are some 12,000,000 colored people.
Under our Constitution their rights are just as sacred as those of
any other citizen. It is both a public and a private duty to protect
those rights. The Congress ought to exercise all its powers of
prevention and punishment against the hideous crime of lynching, of
which the negroes are by no means the sole sufferers, but for which
they furnish a majority of the victims.

Already a considerable sum is appropriated to give the negroes
vocational training in agriculture. About half a million dollars is
recommended for medical courses at Howard University to help
contribute to the education of 500 colored doctors needed each year.
On account of the integration of large numbers into industrial
centers, it has been proposed that a commission be created, composed
of members from both races, to formulate a better policy for mutual
understanding and confidence. Such an effort is to be commended.
Everyone would rejoice in the accomplishment of the results which it
seeks. But it is well to recognize that these difficulties are to a
large extent local problems which must be worked out by the mutual
forbearance and human kindness of each community. Such a method gives
much more promise of a real remedy than outside interference.
Civil Service

The maintenance and extension of the classified civil service is
exceedingly important. There are nearly 550,000 persons in the
executive civil service drawing about $700,000,000 of yearly
compensation. Four-fifths of these are in the classified service.
This method of selection of the employees of the United States is
especially desirable for the Post Office Department. The Civil
Service Commission has recommended that postmasters at first, second,
and third class offices be classified. Such action, accompanied by a
repeal of the four-year term of office, would undoubtedly be an
improvement. I also recommend that the field force for prohibition
enforcement be brought within the classified civil service without
covering in the present membership. The best method for selecting
public servants is the merit system.
Public Buildings

Many of the departments in Washington need better housing facilities.
Some are so crowded that their work is impeded, others are so
scattered that they lose their identity. While I do not favor at this
time a general public building law, I believe it is now necessary, in
accordance with plans already sanctioned for a unified and orderly
system for the development of this city, to begin the carrying out of
those plans by authorizing the erection of three or four buildings
most urgently needed by an annual appropriation of $5,000,000.
Regulatory Legislation

Cooperation with other maritime powers is necessary for complete
protection of our coast waters from pollution. Plans for this are
under way, but await certain experiments for refuse disposal.
Meantime laws prohibiting spreading oil and oil refuse from vessels
in our own territorial waters would be most helpful against this
menace and should be speedily enacted.

Laws should be passed regulating aviation.

Revision is needed of the laws regulating radio interference.

Legislation and regulations establishing load liner, to provide safe
loading of vessels leaving our ports are necessary and recodification
of our navigation laws is vital.

Revision of procedure of the Federal Trade Commission will give more
constructive purpose to this department.

If our Alaskan fisheries are to be saved from destruction, there must
be further legislation declaring a general policy and delegating the
authority to make rules and regulations to an administrative body.
Army and Navy

For several years we have been decreasing the personnel of the Army
and Navy, and reducing their power to the danger point. Further
reductions should not be made. The Army is a guarantee of the
security of our citizens at home; the Navy is a guarantee of the
security of our citizens abroad. Both of these services should be
strengthened rather than weakened. Additional planes are needed for
the Army, and additional submarines for the Navy. The defenses of
Panama must be perfected. We want no more competitive armaments. We
want no more war. But we want no weakness that invites imposition. A
people who neglect their national defense are putting in jeopardy
their national honor.
Insular Possessions

Conditions in the insular possessions on the whole have been good.
Their business has been reviving. They are being administered
according to law. That effort has the full support of the
administration. Such recommendations as may conic from their people
or their governments should have the most considerate attention.
Education and Welfare

Our National Government is not doing as much as it legitimately can
do to promote the welfare of the people. Our enormous material
wealth, our institutions, our whole form of society, can not be
considered fully successful until their benefits reach the merit of
every individual. This is not a suggestion that the Government
should, or could, assume for the people the inevitable burdens of
existence. There is no method by which we can either be relieved of
the results of our own folly or be guaranteed a successful life.
There is an inescapable personal responsibility for the development
of character, of industry, of thrift, and of self-control. These do
not come from the Government, but from the people themselves. But the
Government can and should always be expressive of steadfast
determination, always vigilant, to maintain conditions under which
these virtues are most likely to develop and secure recognition and
reward. This is the American policy.

It is in accordance with this principle that we have enacted laws for
the protection of the public health and have adopted prohibition in
narcotic drugs and intoxicating liquors. For purposes of national
uniformity we ought to provide, by constitutional amendment and
appropriate legislation, for a limitation of child labor, and in all
cases under the exclusive jurisdiction of the Federal Government a
minimum wage law for women, which would undoubtedly find sufficient
power of enforcement in the influence of public opinion.

Having in mind that education is peculiarly a local problem, and that
it should always be pursued with the largest freedom of choice by
students and parents, nevertheless, the Federal Government might well
give the benefit of its counsel and encouragement more freely in this
direction. If anyone doubts the need of concerted action by the
States of the Nation for this purpose, it is only necessary to
consider the appalling figures of illiteracy representing a condition
which does not vary much in all parts of the Union. I do not favor the
making of appropriations from the National Treasury to be expended
directly on local education, but I do consider it a fundamental
requirement of national activity which, accompanied by allied
subjects of welfare, is worthy of a separate department and a place
in the Cabinet. The humanitarian side of government should not be
repressed, but should be cultivated.

Mere intelligence, however, is not enough. Enlightenment must be
accompanied by that moral power which is the product of the home and
of rebellion. Real education and true welfare for the people rest
inevitably on this foundation, which the Government can approve and
commend, but which the people themselves must create.
Immigration

American institutions rest solely on good citizenship. They were
created by people who had a background of self-government. New
arrivals should be limited to our capacity to absorb them into the
ranks of good citizenship. America must be kept American. For this
purpose, it is necessary to continue a policy of restricted
immigration. It would be well to make such immigration of a selective
nature with some inspection at the source, and based either on a prior
census or upon the record of naturalization. Either method would
insure the admission of those with the largest capacity and best
intention of becoming citizens. I am convinced that our present
economic and social conditions warrant a limitation of those to be
admitted. We should find additional safety in a law requiring the
immediate registration of all aliens. Those who do not want to be
partakers of the American spirit ought not to settle in America.
Veterans

No more important duty falls on the Government of the United States
than the adequate care of its veterans. Those suffering disabilities
incurred in the service must have sufficient hospital relief and
compensation. Their dependents must be supported. Rehabilitation and
vocational training must be completed. All of this service must be
clean, must be prompt and effective, and it must be administered in a
spirit of the broadest and deepest human sympathy. If investigation
reveals any present defects of administration or need Of legislation,
orders will be given for the immediate correction of administration,
and recommendations for legislation should be given the highest
preference.

At present there are 9,500 vacant beds in Government hospitals, I
recommend that all hospitals be authorized at once to receive and
care for, without hospital pay, the veterans of all wars needing such
care, whenever there are vacant beds, and that immediate steps be
taken to enlarge and build new hospitals to serve all such cases.

The American Legion will present to the Congress a legislative
program too extensive for detailed discussion here. It is a carefully
matured plan. While some of it I do not favor, with much of it I am in
hearty accord, and I recommend that a most painstaking effort be made
to provide remedies for any defects in the administration of the
present laws which their experience has revealed. The attitude of the
Government toward these proposals should be one of generosity. But I
do not favor the granting of a bonus.
Coal

The cost of coal has become unbearably high. It places a great burden
on our industrial and domestic life. The public welfare requires a
reduction in the price of fuel. With the enormous deposits in
existence, failure of supply ought not to be tolerated. Those
responsible for the conditions in this industry should undertake its
reform and free it from any charge of profiteering.

The report of the Coal Commission will be before the Congress. It
comprises all the facts. It represents the mature deliberations and
conclusions of the best talent and experience that ever made a
national survey of the production and distribution of fuel. I do not
favor Government ownership or operation of coal mines. The need is
for action under private ownership that will secure greater
continuity of production and greater public protection. The Federal
Government probably has no peacetime authority to regulate wages,
prices, or profits in coal at the mines or among dealers, but by
ascertaining and publishing facts it can exercise great influence.

The source of the difficulty in the bituminous coal fields is the
intermittence of operation which causes great waste of both capital
and labor. That part of the report dealing with this problem has much
significance, and is suggestive of necessary remedies. By amending,
the car rules, by encouraging greater unity of ownership, and
possibly by permitting common selling agents for limited districts on
condition that they accept adequate regulations and guarantee that
competition between districts be unlimited, distribution, storage,
and continuity ought to be improved.

The supply of coal must be constant. In case of its prospective
interruption, the President should have authority to appoint a
commission empowered to deal with whatever emergency situation might
arise, to aid conciliation and voluntary arbitration, to adjust any
existing or threatened controversy between the employer and the
employee when collective bargaining fails, and by controlling
distribution to prevent profiteering in this vital necessity. This
legislation is exceedingly urgent, and essential to the exercise of
national authority for the protection of the people. Those who
undertake the responsibility of management or employment in this
industry do so with the full knowledge that the public interest is
paramount, and that to fail through any motive of selfishness in its
service is such a betrayal of duty as warrants uncompromising action
by the Government.
Reorganization

A special joint committee has been appointed to work out a plan for a
reorganization of the different departments and bureaus of the
Government more scientific and economical than the present system.
With the exception of the consolidation of the War and Navy
Departments and some minor details, the plan has the general sanction
of the President and the Cabinet. It is important that reorganization
be enacted into law at the present session.
Agriculture

Aided by the sound principles adopted by the Government, the business
of the country has had an extraordinary revival. Looked at as a whole,
the Nation is in the enjoyment of remarkable prosperity. Industry and
commerce are thriving. For the most tart agriculture is successful,
eleven staples having risen in value from about $5,300,000,000 two
years ago to about. $7,000,000,000 for the current year. But range
cattle are still low in price, and some sections of the wheat area,
notably Minnesota, North Dakota, and on west, have many cases of
actual distress. With his products not selling on a parity with the
products of industry, every sound remedy that can be devised should
be applied for the relief of the farmer. He represents a character, a
type of citizenship, and a public necessity that must be preserved and
afforded every facility for regaining prosperity.

The distress is most acute among those wholly dependent upon one
crop.. Wheat acreage was greatly expanded and has not yet been
sufficiently reduced. A large amount is raised for export, which has
to meet the competition in the world market of large amounts raised
on land much cheaper and much more productive.

No complicated scheme of relief, no plan for Government fixing of
prices, no resort to the public Treasury will be of any permanent
value in establishing agriculture. Simple and direct methods put into
operation by the farmer himself are the only real sources for
restoration.

Indirectly the farmer must be relieved by a reduction of national and
local taxation. He must be assisted by the reorganization of the
freight-rate structure which could reduce charges on his production.
To make this fully effective there ought to be railroad
consolidations. Cheaper fertilizers must be provided.

He must have organization. His customer with whom he exchanges
products o he farm for those of industry is organized, labor is
organized, business is organized, and there is no way for agriculture
to meet this unless it, too, is organized. The acreage of wheat is too
large. Unless we can meet the world market at a profit, we must stop
raising for export. Organization would help to reduce acreage.
Systems of cooperative marketing created by the farmers themselves,
supervised by competent management, without doubt would be of
assistance, but, the can not wholly solve the problem. Our
agricultural schools ought to have thorough courses in the theory of
organization and cooperative marketing.

Diversification is necessary. Those farmers who raise their living on
their land are not greatly in distress. Such loans as are wisely
needed to assist buying stock and other materials to start in this
direction should be financed through a Government agency as a
temporary and emergency expedient.

The remaining difficulty is the disposition of exportable wheat. I do
not favor the permanent interference of the Government in this
problem. That probably would increase the trouble by increasing
production. But it seems feasible to provide Government assistance to
exports, and authority should be given the War Finance Corporation to
grant, in its discretion, the most liberal terms of payment for fats
and grains exported for the direct benefit of the farm.
Muscle Shoals

The Government is undertaking to develop a great water-power project
known as Muscle Shoals, on which it has expended many million
dollars. The work is still going on. Subject to the right to retake
in time of war, I recommend that this property with a location for
auxiliary steam plant and rights of way be sold. This would end the
present burden of expense and should return to the Treasury the
largest price possible to secure.

While the price is an important element, there is another
consideration even more compelling. The agriculture of the Nation
needs a greater supply and lower cost of fertilizer. This is now
imported in large quantities. The best information I can secure
indicates that present methods of power production would not be able
profitably to meet the price at which these imports can be sold. To
obtain a supply from this water power would require long and costly
experimentation to perfect a process for cheap production. Otherwise
our purpose would fail completely. It seems desirable, therefore, in
order to protect and promote the public welfare, to have adequate
covenants that such experimentation be made and carried on to
success. The great advantage of low-priced nitrates must be secured
for the direct benefit of the farmers and the indirect benefit of the
public in time of peace, and of the Government in time of war. If this
main object be accomplished, the amount of money received for the
property is not a primary or major consideration.

Such a solution will involve complicated negotiations, and there is
no authority for that purpose. I therefore recommend that the
Congress appoint a small joint committee to consider offers, conduct
negotiations, and report definite recommendations.
Reclamation

By reason of many contributing causes, occupants of our reclamation
projects are in financial difficulties, which in some cases are
acute. Relief should be granted by definite authority of law
empowering the Secretary of the Interior in his discretion to
suspend, readjust, and reassess all charges against water users. This
whole question is being considered by experts. You will have the
advantage of the facts and conclusions which they may develop. This
situation, involving a Government investment of more than
$135,000,000, and affecting more than 30,000 water users, is serious.
While relief which is necessary should be granted, yet contracts with
the Government which can be met should be met. The established
general policy of these projects should not be abandoned for any
private control.
Highways and forests

Highways and reforestation should continue to have the interest and
support of the Government. Everyone is anxious for good highways. I
have made a liberal proposal in the Budget for the continuing payment
to the States by the Federal Government of its share for this
necessary public improvement. No expenditure of public money
contributes so much to the national wealth as for building good
roads.

Reforestation has an importance far above the attention it usually
secures. A special committee of the Senate is investigating this
need, and I shall welcome a constructive policy based on their
report.

It is 100 years since our country announced the Monroe doctrine. This
principle has been ever since, and is now, one of the main foundations
of our foreign relations. It must be maintained. But in maintaining it
we must not be forgetful that a great change has taken place. We are
no longer a weak Nation, thinking mainly of defense, dreading foreign
imposition. We are great and powerful. New powers bring new
responsibilities. Our ditty then was to protect ourselves. Added to
that, our duty now is to help give stability to the world. We want
idealism. We want that vision which lifts men and nations above
themselves. These are virtues by reason of their own merit. But they
must not be cloistered; they must not be impractical; they must not
be ineffective.

The world has had enough of the curse of hatred and selfishness, of
destruction and war. It has had enough of the wrongful use of
material power. For the healing of the nations there must be good
will and charity, confidence and peace. The time has come for a more
practical use of moral power, and more reliance upon the principle
that right makes its own might. Our authority among the nations must
be represented by justice and mercy. It is necessary not only to have
faith, but to make sacrifices for our faith. The spiritual forces of
the world make all its final determinations. It is with these voices
that America should speak. Whenever they declare a righteous purpose
there need be no doubt that they will be heard. America has taken her
place in the world as a Republic--free, independent, powerful. The
best service that can be rendered to humanity is the assurance that
this place will be maintained.