Speech Transcript:

 To the Congress of the United States:

No Congress of the United States ever assembled, on surveying the
state of the Union, has met with a more pleasing prospect than that
which appears at the present time. In the domestic field there is
tranquility and contentment, harmonious relations between management
and wage earner, freedom from industrial strife, and the highest
record of years of prosperity. In the foreign field there is peace,
the good will which comes from mutual understanding, and the
knowledge that the problems which a short time ago appeared so
ominous are yielding to the touch of manifest friendship. The great
wealth created by our enterprise and industry, and saved by our
economy, has had the widest distribution among our own people, and
has gone out in a steady stream to serve the charity and the business
of the world. The requirements of existence have passed beyond the
standard of necessity into the region of luxury. Enlarging production
is consumed by an increasing demand at home and an expanding commerce
abroad. The country can regard the present with satisfaction and
anticipate the future with optimism.

The main source of these unexampled blessings lies in the integrity
and character of the American people. They have had great faith,
which they have supplemented with mighty works. They have been able
to put trust in each other and trust in their Government. Their
candor in dealing with foreign governments has commanded respect and
confidence. Yet these remarkable powers would have been exerted
almost in vain without the constant cooperation and careful
administration of the Federal Government.

We have been coming into a period which may be fairly characterized
as a conservation of our national resources. Wastefulness in public
business and private enterprise has been displaced by constructive
economy. This has been accomplished by bringing our domestic and
foreign relations more and more under a reign of law. A rule of force
has been giving way to a rule of reason. We have substituted for the
vicious circle of increasing expenditures, increasing tax rates, and
diminishing profits the charmed circle of diminishing expenditures,
diminishing tax rates, and increasing profits.

Four times we have made a drastic revision of our internal revenue
system, abolishing many taxes and substantially reducing almost all
others. Each time the resulting stimulation to business has so
increased taxable incomes and profits that a surplus has been
reduced. One-third of the national debt has been paid, while much of
the other two-thirds has been refunded at lower rates, and these
savings of interest and constant economies have enabled us to repeat
the satisfying process of more tax reductions. Under this sound and
healthful encouragement the national income has increased nearly 50
per cent, until it is estimated to stand well over $90,000,000,000.
It gas been a method which has performed the seeming miracle of
leaving a much greater percentage of earnings in the hands of the
taxpayers with scarcely any diminution of the Government revenue.
That is constructive economy in the highest degree. It is the corner
stone of prosperity. It should not fail to be continued.

This action began by the application of economy to public
expenditure. If it is to be permanent, it must be made so by the
repeated application of economy. There is no surplus on which to base
further tax revision at this time. Last June the estimates showed a
threatened deficit for the current fiscal year of $94,000,000. Under
my direction the departments began saving all they could out of their
present appropriations. The last tax reduction brought an encouraging
improvement in business, beginning early in October, which will also
increase our revenue. The combination of economy and good times now
indicates a surplus of about $37,000,000. This is a margin of less
than I percent on out, expenditures and makes it obvious that the
Treasury is in no condition to undertake increases in expenditures to
be made before June 30. It is necessary therefore during the present
session to refrain from new appropriations for immediate outlay, or
if such are absolutely required to provide for them by new revenue;
otherwise, we shall reach the end of the year with the unthinkable
result of an unbalanced budget. For the first time during my term of
office we face that contingency. I am certain that the Congress would
not pass and I should not feel warranted in approving legislation
which would involve us in that financial disgrace.

On the whole the finances of the Government are most satisfactory.
Last year the national debt was reduced about $906,000,000. The
refunding and retirement of the second and third Liberty loans have
just been brought to a successful conclusion, which will save about
$75,000,000 a year in interest. The unpaid balance has been arranged
in maturities convenient for carrying out our permanent debt-paying
Program.

The enormous savings made have not been at the expense of any
legitimate public need. The Government plant has been kept up and
many improvements are tinder way, while its service is fully manned
and the general efficiency of operation has increased. We have been
enabled to undertake many new enterprises. Among these are the
adjusted compensation of the veterans of the World War, which is
costing us $112,000,000 a year; amortizing our liability to the civil
service retirement funds, $20,000,000; increase of expenditures for
rivers and harbors including flood control, $43,000,000; public
buildings, $47,000,000. In 1928 we spent $50,000,000 in the
adjustment of war claims and alien property. These are examples of a
large list of items.

FOREIGN RELATIONS

When we turn from our domestic affairs to our foreign relations, we
likewise perceive peace and progress. The Sixth International
Conference of American States was held at Habana last winter. It
contributed to a better understanding and cooperation among the
nations'. Eleven important conventions were signed and 71 resolutions
passed. Pursuant to the plan then adopted, this Government has invited
the other 20 nations of this hemisphere to it conference on
conciliation and arbitration, which meets in Washington on December
10. All the nations have accepted and the expectation is justified
that important progress will be made in methods for resolving
international differences by means of arbitration.

During the year we have signed 11 new arbitration treaties, and 22
more are tinder negotiation.

NICARAGUA

When a destructive and bloody revolution lately broke out in
Nicaragua, at the earnest and repeated entreaties of its Government I
dispatched our Marine forces there to protect the lives and interests
of our citizens. To compose the contending parties, I sent there Col.
Henry L. Stimson, former Secretary of War and now Governor General of
the Philippine Islands, who secured an agreement that warfare should
cease, a national election should be held and peace should be
restored. Both parties conscientiously carried out this agreement,
with the exception of a few bandits who later mostly surrendered or
left the country. President Diaz appointed Brig. Gen. Frank R. McCoy,
United States Army, president of the election board, which included
also one member of each political party.

A free and fair election has been held and has worked out so
successfully that both parties have joined in requesting like
cooperation from this country at the election four years hence, to
which I have refrained from making any commitments, although our
country must be gratified at such an exhibition of success and
appreciation.

Nicaragua is regaining its prosperity and has taken a long step in
the direction of peaceful self-government.

TACNA-ARICA

The long-standing differences between Chile and Peru have been
sufficiently composed so that diplomatic relations have been resumed
by the exchange of ambassadors. Negotiations are hopefully proceeding
as this is written for the final adjustment of the differences over
their disputed territory.

MEXICO

Our relations with Mexico are on a more satisfactory basis than at
any time since their revolution. Many misunderstandings have been
resolved and the most frank and friendly negotiations promise a final
adjustment of all unsettled questions. It is exceedingly gratifying
that Ambassador Morrow has been able to bring our two neighboring
countries, which have so many interests in common, to a position of
confidence in each other and of respect for mutual sovereign rights.

CHINA

The situation in China which a few months ago was so threatening as
to call for the dispatch of a large additional force has, been much
composed. The Nationalist Government has established itself over the
country and promulgated a new organic law announcing a program
intended to promote the political and economic welfare of the people.
We have recognized this Government, encouraged its progress, and have
negotiated a treaty restoring to China complete tariff autonomy and
guaranteeing our citizens against discriminations. Our trade in that
quarter is increasing and our forces are being reduced.

GREEK AND AUSTRIAN DEBTS

Pending before the Congress is a recommendation for the settlement of
the Greek debt and the Austrian debt. Both of these are comparatively
small and our country can afford to be generous. The rehabilitation
of these countries awaits their settlement. There would also be
advantages to our trade. We could scarcely afford to be the only
nation that refuses the relief which Austria seeks. The Congress has
already granted Austria a long-time moratorium, which it is
understood will be waived and immediate payments begun on her debt on
the same basis which we have extended to other countries.

PEACE TREATY

One of the most important treaties ever laid before the Senate of the
United States will be that which the 15 nations recently signed at
Paris, and to which 44 other nations have declared their intention to
adhere, renouncing war as a national policy and agreeing to resort
only to peaceful means for the adjustment of international
differences. It is the most solemn declaration against war, the most
positive adherence to peace, that it is possible for sovereign
nations to make. It does not supersede our inalienable sovereign
right and duty of national defense or undertake to commit us before
the event to any mode of action which the Congress might decide to be
wise if ever the treaty should be broken. But it is a new standard in
the world around which can rally the informed and enlightened opinion
of nations to prevent their governments from being forced into hostile
action by the temporary outbreak of international animosities. The
observance of this covenant, so simple and so straightforward,
promises more for the peace of the world than any other agreement
ever negotiated among the nations.

NATIONAL DEFENSE

The first duty of our Government to its own citizens and foreigners
within its borders is the preservation of order. Unless and until
that duty is met a government is not even eligible for recognition
among the family of nations. The advancement of world civilization
likewise is dependent upon that order among the people of different
countries which we term peace. To insure our citizens against the
infringement of their legal rights at home and abroad, to preserve
order, liberty, and peace by making the law supreme, we have an Army
and a Navy.

Both of these are organized for defensive purposes. Our Army could
not be much reduced, but does not need to be increased. Such new
housing and repairs as are necessary are tinder way and the 6-year
program in aviation is being put into effect in both branches of our
service.

Our Navy, according to generally accepted standards, is deficient in
cruisers. We have 10 comparatively new vessels, 22 that are old, and
8 to be built. It is evident that renewals and replacements must be
provided. This matter was thoroughly canvassed at the last session of
the Congress and does not need restatement. The bill before the Senate
with the elimination of the time clause should be passed. We have no
intention of competing with any other country. This building program
is for necessary replacements and to meet our needs for defense.

The cost of national defense is stupendous. It has increased
$118,000,000 in the past four years. The estimated expenditure for
1930 is $668,000,000. While this is made up of many items it is,
after all, mostly dependent upon numbers. Our defensive needs do not
can for any increase in the number of men in the Army or the Navy. We
have reached the limit of what we ought to expend for that purpose.

I wish to repeat again for the benefit of the timid and the
suspicious that this country is neither militaristic nor
imperialistic. Many people at home and abroad, who constantly make
this charge, are the same ones who are even more solicitous to have
us extend assistance to foreign countries. When such assistance is
granted, the inevitable result is that we have foreign interests. For
us to refuse the customary support and protection of such interests
would be in derogation of the sovereignty of this Nation. Our largest
foreign interests are in the British Empire, France, and Italy.
Because we are constantly solicitous for those interests, I doubt if
anyone would suppose that those countries feel we harbor toward them
any militaristic or imperialistic design. As for smaller countries,
we certainly do not want any of them. We are more anxious than they
are to have their sovereignty respected. Our entire influence is in
behalf of their independence. Cuba stands as a witness to our
adherence to this principle.

The position of this Government relative to the limitation of
armaments, the results already secured, and the developments up to
the present time are so well known to the Congress that they do not
require any restatement.

VETERANS

The magnitude of our present system of veterans' relief is without
precedent, and the results have been far-reaching. For years a
service pension has been granted to the Grand Army and lately to the
survivors of the Spanish-American War. At the time we entered the
World War however, Congress departed from the usual pension system
followed by our Government. Eleven years have elapsed since our laws
were first enacted, initiating a system of compensation,
rehabilitation, hospitalization, and insurance for the disabled of
the World War and their dependents. The administration of all the
laws concerning relief has been a difficult task, but it can safely
be stated that these measures have omitted nothing in their desire to
deal generously and humanely. We should continue to foster this system
and provide all the facilities necessary for adequate care. It is the
conception of our Government that the pension roll is an honor roll.
It should include all those who are justly entitled to its benefits,
but exclude all others.

Annual expenditures for all forms of veterans' relief now approximate
$765,000,000, and are increasing from year to year. It is doubtful if
the peak of expenditures will be reached even under present
legislation for sonic time yet to come. Further amendments to the
existing law will be suggested by the American Legion, the Veterans
of Foreign Wars of the United States, the Disabled American Veterans
of the World War, and other like organizations, and it may be
necessary for administrative purposes, or in order to remove some
existing inequalities in the present law, to make further changes. I
am sure that such recommendations its may be submitted to the
Congress will receive your careful consideration. But because of the
vast expenditure now being made, each year, with every assurance that
it will increase, and because of the great liberality of the existing
law, the proposal of any additional legislation dealing with this
subject should receive most searching scrutiny from the Congress.

You are familiar with the suggestion that the various public agencies
now dealing with matters of veterans' relief be consolidated in one
Government department. Some advantages to this plan seem apparent,
especially in the simplification of administration find in the
opportunity of bringing about a greater uniformity in the application
of veterans' relief. I recommend that a survey be made by the proper
committees of Congress dealing with this subject, in order to
determine whether legislation to secure this consolidation is
desirable.

AGRICULTURE

The past year has been marked by notable though not uniform
improvement in agriculture. The general purchasing power of farm
products and the volume of production have advanced. This means not
only further progress, in overcoming the price disparity into which
agriculture was plunged in 1920-21, but also increased efficiency on
the part of farmers and a well-grounded confidence in the future of
agriculture.

The livestock industry has attained the best balance for many years
and is prospering conspicuously. Dairymen, beef producers, and
poultrymen are receiving substantially larger returns than last year.
Cotton, although lower in price than at this time last year, was
produced in greater volume and the prospect for cotton incomes is
favorable. But progress is never uniform in a vast and highly
diversified agriculture or industry. Cash grains, hay, tobacco, and
potatoes will bring somewhat smaller returns this year than last.
Present indications are, however, that the gross farm income will be
somewhat larger than in the crop year 1927-28, when the total was
$12,253,000,000. The corresponding figure for 1926-27 was
$12,127,000,000, and in 1925-26, $12,670,000,000. Still better
results would have been secured this year had there not been an undue
increase in the production of certain crops. This is particularly true
of potatoes, which have sold at an unremunerative price, or at a loss,
as a direct result of overexpansion of acreage.

The present status of agriculture, although greatly improved over
that of a few years ago, bespeaks the need of further improvement
which calls for determined effort of farmers themselves, encouraged
and assisted by wise public policy. The Government has been, and must
continue to be, alive to the needs of agriculture.

In the past eight years more constructive legislation of direct
benefit to agriculture has been adopted than during any other period.
The Department of Agriculture has been broadened and reorganized to
insure greater efficiency. The department is laying greater stress on
the economic and business phases of agriculture. It is lending every
possible assistance to cooperative marketing associations. Regulatory
and research work have been segregated in order that each field may be
served more effectively.

I can not too strongly commend, in the field of fact finding, the
research work of the Department of Agriculture and the State
experiment stations. The department now receives annually $4,000,000
more for research than in 1921. In addition, the funds paid to the
States for experimentation purposes under the Purnell Act constitute
an annual increase in Federal payments to State agricultural
experiment stations of $2,400,000 over the amount appropriated in
1921. The program of support for research may wisely be continued and
expanded. Since 1921 we have appropriated nearly an additional
$2,000,000 for extension work, and this sum is to be increased next
year under authorization by the Capper-Ketcham Act.

THE SURPLUS PROBLEM

While these developments in fundamental research, regulation, and
dissemination of agricultural information are of distinct help to
agriculture, additional effort is needed. The surplus problem demands
attention. As emphasized in my last message, the Government should
assume no responsibility in normal times for crop surplus clearly due
to overextended acreage. The Government should, however, provide
reliable information as a guide to private effort; and in this
connection fundamental research on prospective supply and demand, as
a guide to production and marketing, should be encouraged.
Expenditure of public funds to bring in more new land should have
most searching scrutiny, so long as our farmers face unsatisfactory
prices for crops and livestock produced on land already under
cultivation.

Every proper effort should be made to put land to uses for which it
is adapted. The reforestation of land best suited for timber
production is progressing and should be encouraged, and to this end
the forest taxation inquiry was instituted to afford a practical
guide for public policy. Improvement has been made in grazing
regulation in the forest reserves, not only to protect the ranges,
but to preserve the soil from erosion. Similar action is urgently
needed to protect other public lands which are now overgrazed and
rapidly eroding.

Temporary expedients, though sometimes capable of appeasing the
demands of the moment, can not permanently solve the surplus problem
and might seriously aggravate it. Hence putting the Government
directly into business, subsidies, and price fixing, and the alluring
promises of political action as a substitute for private initiative,
should be avoided.

The Government should aid in promoting orderly marketing and in
handling surpluses clearly due to weather and seasonal conditions. As
a beginning there should be created a Federal farm board consisting of
able and experienced men empowered to advise producers' associations
in establishing central agencies or stabilization corporations to
handle surpluses, to seek wore economical means of merchandising, and
to aid the producer in securing returns according to the a14 of his
product. A revolving loan fund should be provided for the necessary
financing until these agencies shall have developed means of
financing their operations through regularly constituted credit
institutions. Such a bill should carry authority for raising the
money, by loans or otherwise, necessary to meet the expense, as the
Treasury has no surplus.

Agriculture has lagged behind industry in achieving that unity of
effort which modern economic life demands. The cooperative movement,
which is gradually building the needed organization, is in harmony
with public interest and therefore merits public encouragement.

THE RESPONSIBILITY OF THE STATES

Important phases of public policy related to agriculture lie within
the sphere of the States. While successive reductions in Federal
taxes have relieved most farmers of direct taxes to the National
Government, State and local levies have become a serious burden. This
problem needs immediate and thorough study with a view to correction
at the earliest possible moment. It will have to be made largely by
the States themselves.

COMMERCE

It is desirable that the Government continue its helpful attitude
toward American business. The activities of the Department of
Commerce have contributed largely to the present satisfactory
position in our international trade, which has reached about
$9,000,000,000 annually. There should be no slackening of effort in
that direction. It is also important that the department's assistance
to domestic commerce be continued. There is probably no way in which
the Government can aid sound economic progress more effectively than
by cooperation with our business men to reduce wastes in
distribution.

COMMERCIAL AERONAUTICS

Continued progress in civil aviation is most gratifying. Demands for
airplanes and motors have taxed both the industry and the licensing
and inspection service of the Department of Commerce to their
capacity. While the compulsory licensing provisions of the air
commerce act apply only to equipment and personnel engaged in
interstate and foreign commerce, a Federal license may be procured by
anyone possessing the necessary qualifications. State legislation,
local airport regulations, and insurance requirements make such a
license practically indispensable. This results in uniformity of
regulation and increased safety in operation, which are essential to
aeronautical development. Over 17,000 young men and women have now
applied for Federal air pilot's licenses or permits. More than 80 per
cent of them applied during the past year.

Our national airway system exceeds 14,000 miles in length and has
7,500 miles lighted for night operations. Provision has been made for
lighting 4,000 miles more during the current fiscal year and equipping
an equal mileage with radio facilities. Three-quarters of our people
are now served by these routes. With the rapid growth of air mail,
express, and passenger service, this new transportation medium is
daily becoming a more important factor in commerce. It is noteworthy
that this development has taken place without governmental subsidies.
Commercial passenger flights operating on schedule have reached 13,000
miles per day.

During the next fortnight this Nation will entertain the nations of
the world in a celebration of the twenty-fifth anniversary of the
first successful airplane flight. The credit for this epoch-making
achievement belongs to a citizen of our own country, Orville Wright.

CUBAN PARCEL POST

I desire to repeat my recommendation of an earlier message, that
Congress enact the legislation necessary to make permanent the Parcel
Post Convention with Cuba, both as a facility to American commerce and
as a measure of equity to Cuba in the one class of goods which that
country can send here by parcel post without detriment to our own
trade.

" MAINE" BATTLESHIP MEMORIAL

When I attended the Pan American Conference at Habana, the President
of Cuba showed me a marble statue made from the original memorial
that was overturned by a storm after it was erected on the Cuban
shore to the memory of the men who perished in the destruction of the
battleship Maine. As a testimony of friendship and appreciation of the
Cuban Government and people he most generously offered to present this
to the United States, and I assured him of my pleasure in accepting
it. There is no location in the White House for placing so large and
heavy a structure, and I therefore urge the Congress to provide by
law for some locality where it can be set up.

RAILROADS

In previous annual messages I have suggested the enactment of laws to
promote railroad consolidation with the view of increasing the
efficiency of transportation and lessening its cost to the public.
While, consolidations can and should be made under the present law
until it is changed, vet the provisions of the act of 1920 have not
been found fully adequate to meet the needs of other methods of
consolidation. Amendments designed to remedy these defects have been
considered at length by the respective committees of Congress and a
bill was reported out late in the last session which I understand has
the approval in principle of the Interstate Commerce Commission. It is
to be hoped that this legislation may be enacted at an early date.

Experience has shown that the interstate commerce law requires
definition and clarification in several other respects, some of which
have been pointed out by the Interstate Commerce Commission in its
annual reports to the Congress. It will promote the public interest
to have the Congress give early consideration to the recommendations
there made.

MERCHANT MARINE

The cost of maintaining the United States Government merchant fleet
has been steadily reduced. We have established American flag lines in
foreign trade where they had never before existed as a means of
promoting commerce and as a naval auxiliary. There have been sold to
private American capital for operation within the past few years 14
of these lines, which, under the encouragement of the recent
legislation passed by the Congress, give promise of continued
successful operation. Additional legislation from time to time may be
necessary to promote future advancement under private control.

Through the cooperation of the Post Office Department and the
Shipping Board long-term contracts are being made with American
steamship lines for carrying mail, which already promise the
construction of 15 to 20 new vessels and the gradual reestablishment
of the American merchant marine as a private enterprise. No action of
the National Government has been so beneficial to our shipping. The
cost is being absorbed to a considerable extent by the disposal of
unprofitable lines operated by the Shipping Board, for which the new
law has made a market. Meanwhile it should be our policy to maintain
necessary strategic lines under the Government operation until they
can be transferred to private capital.

INTER-AMERICAN HIGHWAY

In my message last year I expressed the view that we should lend our
encouragement for more good roads to all the principal points on this
hemisphere South of the Rio Grande. My view has not changed.

The Pan American Union has recently indorsed it. In some of the
countries to the south a great deal of progress is being made in road
building. In, Others engineering features are often exacting and
financing difficult. As those countries enter upon programs for road
building we should be ready to contribute from our abundant
experience to make their task easier of accomplishment. I prefer not
to go into civil life to accomplish this end. We already furnish
military and naval advisors, and following this precedent we could
draw competent men from these same sources and from the Department of
Agriculture.

We should provide our southern neighbors, if they request it, with
such engineer advisors for the construction of roads and bridges.
Private interests should look with favor upon all reasonable loans
sought by these countries to open main lines of travel. Such
assistance should be given especially to any project for a highway
designed to connect all the countries on this hemisphere and thus
facilitate, intercourse and closer relations among, them.

AIR MAIL SERVICE

The friendly relations and the extensive, commercial intercourse with
the Western Hemisphere to the south of us are being further cemented
by the establishment and extension of air-mail routes. We shall soon
have one from Key West, Fla., over Cuba, Haiti, and Santo Domingo to
San Juan, P. R., where it will connect with another route to
Trinidad. There will be another route from Key West to the Canal
Zone, where connection will be made with a route across the northern
coast of South America to Paramaribo. This will give us a circle
around the Caribbean under our own control. Additional connections
will be made at Colon with a route running down the west coast of
South America as far as Conception, Chile, and with the French air
mail at Paramaribo running down the eastern coast of South America.
The air service already spans our continent, with laterals running to
Mexico and Canada, and covering a daily flight of over 28,000 miles,
with an average cargo of 15 000 pounds.

WATERWAYS

Our river and harbor improvements are proceeding with vigor. In the
past few years Ave have increased the appropriation for this regular
work $28,000,000, besides what is to be expended on flood control.
The total appropriation for this year was over $91,000,000. The Ohio
River is almost ready for opening; work on the Missouri and other
rivers is under way. In accordance with the Mississippi flood law
Army engineers are making investigations and surveys on other streams
throughout the country with a view to flood control, navigation,
waterpower, and irrigation. Our barrier lines are being operated
under generous appropriations, and negotiations are developing
relative to the St. Lawrence waterway. To Secure the largest benefits
from all these waterways joint rates must be established with the
railroads, preferably by agreement, but otherwise as a result of
congressional action.

We have recently passed several river and harbor bills. The work
ordered by the Congress not, yet completed, will cost about $243,

000,000, besides the hundreds of millions to be spent on the
Mississippi flood way. Until we can see our way out of this expense
no further river and harbor legislation should be passed, as
expenditures to put it into effect would be four or five years away.

IRRIGATION OF ARID LANDS

For many years the Federal Government has been committed to the wise
policy of reclamation and irrigation. While it has met with some
failures due to unwise selection of projects and lack of thorough
soil surveys, so that they could not be placed on a sound business
basis, on the whole the service has been of such incalculable benefit
in so many States that no one would advocate its abandonment. The
program to which we are already committed, providing for the
construction of new projects authorized by Congress and the
completion of old projects, will tax the resources of the reclamation
fund over a period of years. The high cost of improving and equipping
farms adds to the difficulty of securing settlers for vacant farms on
federal projects.

Readjustments authorized by the reclamation relief act of May 25,
1926, have given more favorable terms of repayment to settlers. These
new financial arrangements and the general prosperity on irrigation
projects have resulted in increased collections by the Department of
the Interior of charges due the reclamation fund. Nevertheless, the
demand for still smaller yearly payments on some projects continues.
These conditions should have consideration in connection with any
proposed new projects.

COLORADO RIVER

For several years the Congress has considered the erection of a dam
on the Colorado River for flood-control, irrigation, and domestic
water purposes, all of which ma properly be considered as Government
functions. There would be an incidental creation of water power which
could be used for generating electricity. As private enterprise can
very well fill this field, there is no need for the Government to go
into it. It is unfortunate that the States interested in this water
have been unable to agree among themselves. Nevertheless, any
legislation should give every possible safeguard to the present and
prospective rights of each of them.

The Congress will have before it, the detailed report of a special
board appointed to consider the engineering and economic feasibility
of this project. From the short summary which I have seen of it, 11
judge they consider the engineering problems can be met at somewhat
increased cost over previous estimates. They prefer the Black Canyon
site. On the economic features they are not so clear and appear to
base their conclusions on many conditions which can not be
established with certainty. So far as I can judge, however, from the
summary, their conclusions appear sufficiently favorable, so that I
feel warranted in recommending a measure which will protect the
rights of the States, discharge the necessary Government functions,
and leave the electrical field to private enterprise.

MUSCLE SHOALS

The development of other methods of producing nitrates will probably
render this plant less important for that purpose than formerly. But
we have it, and I am told it still provides a practical method of
making nitrates for national defense and farm fertilizers. By
dividing the property into its two component parts of power and
nitrate plants it would be possible to dispose of the power,
reserving the right to any concern that wished to make nitrates to
use any power that might be needed for that purpose. Such a
disposition of the power plant can be made that will return in rental
about $2,000,000 per year. If the Congress would giant the Secretary
of War authority to lease the nitrate plant on such terms as would
insure the largest production of nitrates, the entire property could
begin to function. Such a division, I am aware, has never seemed to
appeal to the Congress. I should also gladly approve a bill granting
authority to lease the entire property for the production of
nitrates.

I wish to avoid building another dam at public expense. Future
operators should provide for that themselves. But if they were to be
required to repay the cost of such dam with the prevailing commercial
rates for interest, this difficulty will be considerably lessened. Nor
do I think this property should be made a vehicle for putting the
United States Government indiscriminately into the private and retail
field of power distribution and nitrate sales.

CONSERVATION

The practical application of economy to the resources of the country
calls for conservation. This does not mean that every resource should
not be developed to its full degree, but it means that none of them
should be wasted. We have a conservation board working on our oil
problem. This is of the utmost importance to the future well-being of
our people in this age of oil-burning engines and the general
application of gasoline to transportation. The Secretary of the
Interior should not be compelled to lease oil lands of the Osage
Indians when the market is depressed and the future supply is in
jeopardy.

While the area of lands remaining in public ownership is small,
compared with the vast area in private ownership, the natural
resources of those in public ownership are of immense present and
future value. This is particularly trite as to minerals and water
power. The proper bureaus have been classifying these resources to
the end that they may be conserved. Appropriate estimates are being
submitted, in the Budget, for the further prosecution of this
important work.

IMMIGRATION

The policy of restrictive immigration should be maintained. Authority
should be granted the Secretary of Labor to give immediate preference
to learned professions and experts essential to new industries. The
reuniting of families should be expedited. Our immigration and
naturalization laws might well be codified.

WAGE EARNER

In its economic life our country has rejected the long accepted law
of a limitation of the wage fund, which led to pessimism and despair
because it was the doctrine of perpetual poverty, and has substituted
for it the American conception that the only limit to profits and
wages is production, which is the doctrine of optimism and hope
because it leads to prosperity. Here and there the councils of labor
are still darkened by the theory that only by limiting individual
production can there be any assurance of permanent employment for
increasing numbers, but in general, management and wage earner alike
have become emancipated from this doom and have entered a new era in
industrial thought which has unleashed the productive capacity of the
individual worker with an increasing scale of wages and profits, the
end of which is not yet. The application of this theory accounts for
our widening distribution of wealth. No discovery ever did more to
increase the happiness and prosperity of the people.

Since 1922 increasing production has increased wages in general 12.9
per cent, while in certain selected trades they have run as high as
34.9 per cent and 38 per cent. Even in the boot and shoe shops the
increase is over 5 per cent and in woolen mills 8.4 per cent,
although these industries have not prospered like others. As the rise
in living costs in this period is negligible, these figures represent
real wage increases.

The cause of constructive economy requires that the Government should
cooperate with private interests to eliminate the waste arising from
industrial accidents. This item, with all that has been done to
reduce it, still reaches enormous proportions with great suffering to
the workman and great loss to the country.

WOMEN AND CHILDREN

The Federal Government should continue its solicitous care for the
8,500,000 women wage earners and its efforts in behalf of public
health, which is reducing infant mortality and improving the bodily
and mental condition of our citizens.

CIVIL SERVICE

The most marked change made in the civil service of the Government in
the past eight years relates to the increase in salaries. The Board of
Actuaries on the retirement act shows by its report, that July 1, 1921
the average salary of the 330,047 employees subject to the act was
$1,307, while on June 30, 1927, the average salary of the
corresponding 405,263 was $1,969. This was an increase in six years
of nearly 53 per cent. On top of this was the generous increase made
at the last session of the Congress generally applicable to Federal
employees and another bill increasing the pay in certain branches of
the Postal Service beyond the large increase which was made three
years ago. This raised the average level from $1,969 to $2,092,
making an increase in seven years of over 63 per cent. While it is
well known that in the upper brackets the pay in the Federal service
is much smaller than in private employment, in the lower brackets,
ranging well up over $3,000, it is much higher. It is higher not only
in actual money paid, but in privileges granted, a vacation of 30
actual working days, or 5 weeks each year, with additional time
running in some departments as high as 30 days for sick leave and the
generous provisions of the retirement act. No other body of public
servants ever occupied such a fortunate position.

EDUCATION

Through the Bureau of Education of the Department of the Interior the
Federal Government, acting in an informative and advisory capacity,
has rendered valuable service. While this province belongs peculiarly
to the States, yet the promotion of education and efficiency in
educational methods is a general responsibility of the Federal
Government. A survey of negro colleges and universities in the United
States has just been completed by the Bureau of Education through
funds provided by the institutions themselves and through private
sources. The present status of negro higher education was determined
and recommendations were made for its advancement. This was one of
the numerous cooperative undertakings of the bureau. Following the
invitation of the Association of Land Grant Colleges and
Universities, he Bureau of Education now has under way the survey of
agricultural colleges, authorized by Congress. The purpose of the
survey is to ascertain the accomplishments, the status, and the
future objectives of this type of educational training. It is now
proposed to undertake a survey of secondary schools, which educators
insist is timely and essential.

PUBLIC BUILDINGS

We, have laid out a public building program for the District of
Columbia and the country at large running into hundreds of millions
of dollars. Three important structures and one annex are already,
under way and one addition has been completed in the City of
Washington. in the country sites have been acquired, many buildings
are in course of construction, and some are already completed. Plans
for all this work are being prepared in order that it may be carried
forward as rapidly as possible. This is the greatest building program
ever assumed by this Nation. It contemplates structures of utility and
of beauty. When it reaches completion the people will be well served
and the Federal city will be supplied with the most beautiful and
stately public buildings which adorn any capital in the world.

THE AMERICAN INDIAN

The administration of Indian affairs has been receiving intensive
study for several years. The Department of the Interior has been able
to provide better supervision of health, education, and industrial
advancement of this native race through additional funds provided by
the Congress. The present cooperative arrangement existing between
the Bureau of Indian Affairs and the Public Health Service should be
extended. The Government's responsibility to the American Indian has
been acknowledged by annual increases in appropriations to fulfill
its obligations to them and to hasten the time when Federal
supervision of their affairs may be properly and safely terminated.
The movement in Congress and in some of the State legislatures for
extending responsibility in Indian affairs to States should be
encouraged. A complete participation by the Indian in our economic
life is the end to be desired.

THE NEGRO

For 65 years now our negro Population has been under the peculiar
care and solicitude of the National Government. The progress which
they have made in education and the professions, in wealth and in the
arts of civilization, affords one of the most remarkable incidents in
this period of world history. They have demonstrated their ability to
partake of the advantages of our institutions and to benefit by a free
and more and more independent existence. Whatever doubt there may have
been of their capacity to assume, the status granted to them by the
Constitution of this Union is being rapidly dissipated. Their
cooperation in the life of the Nation is constantly enlarging.

Exploiting the Negro problem for political ends is being abandoned
and their protection is being increased by those States in which
their percentage of population is largest. Every encouragement should
be extended for t le development of the race. The colored people have
been the victims of the crime of lynching, which has in late years
somewhat decreased. Some parts of the South already have wholesome
laws for its restraint and punishment. Their example might well be
followed by other States, and by such immediate remedial legislation
as the Federal Government can extend under the Constitution.

PHILIPPINE ISLANDS

Under the guidance of Governor General Stimson the economic and
political conditions of the Philippine Islands have been raised to a
standard never before surpassed. The cooperation between his
administration and the people of the islands is complete and
harmonious. It would be an advantage if relief from double taxation
could be granted by the Congress to our citizens doing business in
the islands.

PORTO RICO

Due to the terrific storm that swept Porto Rico last September, the
people of that island suffered large losses. The Red Cross and the
War Department went to their rescue. The property loss is being,
retrieved. Sugar, tobacco, citrus fruit, and coffee, all suffered
damage. The first three can largely look after themselves. The coffee
growers will need some assistance, which should be extended strictly
on a business basis, and only after most careful investigation. The
people of Porto Rico are not asking for charity.

DEPARTMENT OF JUSTICE

It is desirable that all the legal activities of the Government be
consolidated under the supervision of the Attorney General. In 1870
it was felt necessary to create the Department of Justice for this
purpose. During the intervening period, either through legislation
creating law officers or departmental action, additional legal
positions not under the supervision of the Attorney General have been
provided until there are now over 900. Such a condition is as harmful
to the interest of the Government now as it was in 1870, and should
be corrected by appropriate legislation.

SPECIAL GOVERNMENT COUNSEL

In order to prosecute the oil cases, I suggested and the Congress
enacted a law providing for the appointment of two special counsel.
They have pursued their work with signal ability, recovering all the
leased lands besides nearly $30,000,000 in money, and nearly
$17,000,000 in other property. They find themselves hampered by a
statute, which the Attorney General construes as applying to them,
prohibiting their appearing for private clients before any
department. For this reason, one has been compelled to resign. No
good result is secured by the application of this rule to these
counsel, and as Mr. Roberts has consented to take reappointment if
the rule is abrogated I recommend the passage of an amendment to the
law creating their office exempting them from the general rule
against taking other cases involving the Government.

PROHIBITION

The country has duly adopted the eighteenth amendment. Those who
object to it have the right to advocate its modification or repeal.
Meantime, it is binding upon the National and State Governments and
all our inhabitants. The Federal enforcement bureau is making every
effort to prevent violations, especially through smuggling,
manufacture, and transportation, and to prosecute generally all
violations for which it can secure evidence. It is bound to continue
this policy. Under the terms of the Constitution, however, the
obligation is equally on the States to exercise the power which they
have through the executive, legislative, judicial, and police
branches of their governments in behalf of enforcement. The Federal
Government is doing and will continue to do all it can in this
direction and is entitled to the active cooperation of the States.

CONCLUSION

The country is in the midst of an era of prosperity more extensive
and of peace more permanent than it has ever before experienced. But,
having reached this position, we should not fail to comprehend that it
can easily be lost. It needs more effort for its support than the less
exalted places of the world. We shall not be permitted to take our
case, but shall continue to be required to spend our days in
unremitting toil. The actions of the Government must command the
confidence of the country. Without this, our prosperity would be
lost. We must extend to other countries the largest measure of
generosity, moderation, and patience. In addition to dealing justly,
we can well afford to walk humbly.

The end of government is to keep open the opportunity for a more
abundant life. Peace and prosperity are not finalities; they are only
methods. It is too easy under their influence for a nation to become
selfish and degenerate. This test has come to the United States. Our
country has been provided with the resources with which it can
enlarge its intellectual, moral, and spiritual life. The issue is in
the hands of the people. Our faith in man and God is the
justification for the belief in our continuing success.