Speech Transcript:

 To the Senate and House of Representatives:

I have the honor to comply with the requirement of the Constitution
that I should lay before the Congress information as to the state of
the Union, and recommend consideration of such measures as are
necessary and expedient.

Substantial progress has been made during the year in national peace
and security; the fundamental strength of the Nation's economic life
is unimpaired; education and scientific discovery have made advances;
our country is more alive to its problems of moral and spiritual
welfare.

Economic Situation

During the past 12 months we have suffered with other Nations from
economic depression.

The origins of this depression lie to some extent within our own
borders through a speculative period which diverted capital and
energy into speculation rather than constructive enterprise. Had
overspeculation in securities been the only force operating, we
should have seen recovery many months ago, as these particular
dislocations have generally readjusted themselves.

Other deep-seated causes have been in action, however, chiefly the
world-wide overproduction beyond even the demand of prosperous times
for such important basic commodities as wheat, rubber, coffee, sugar,
copper, silver, zinc, to some extent cotton, and other raw materials.
The cumulative effects of demoralizing price falls of these important
commodities in the process of adjustment of production to world
consumption have produced financial crises in many countries and have
diminished the buying power of these countries for imported goods to a
degree which extended the difficulties farther afield by creating
unemployment in all the industrial nations. The political agitation
in Asia; revolutions in South America and political unrest in some
European States; the methods of sale by Russia of her increasing
agricultural exports to European markets; and our own drought--have
all contributed to prolong and deepen the depression.

In the larger view the major forces of the depression now lie outside
of the United States, and our recuperation has been retarded by the
unwarranted degree of fear and apprehension created by these outside
forces.

The extent of the depression is indicated by the following
approximate percentages of activity during the past three months as
compared with the highly prosperous year of 1928:

Value of department-store sales - 93% of 1928

Volume of manufacturing production - 80% of 1928

Volume of mineral production - 90% of 1928

Volume of factory employment - 84% of 1928

Total of bank deposits - 105% of 1928

Wholesale prices--all commodities - 83% of 1928

Cost of living - 94% of 1928

Various other indexes indicate total decrease of activity from 1928
of from 15 to 20 per cent.

There are many factors which give encouragement for the future. The
fact that we are holding from 80 to 85 per cent of our normal
activities and incomes; that our major financial and industrial
institutions have come through the storm unimpaired; that price
levels of major commodities have remained approximately stable for
some time; that a number of industries are showing signs of
increasing demand; that the world at large is readjusting itself to
the situation; all reflect grounds for confidence. We should remember
that these occasions have been met many times before, that they are
but temporary, that our country is to-day stronger and richer in
resources, in equipment, in skill, than ever in its history. We are
in an extraordinary degree self-sustaining, we will overcome world
influences and will lead the march of prosperity as we have always
done hitherto.

Economic depression can not be cured by legislative action or
executive pronouncement. Economic wounds must be healed by the action
of the cells of the economic body--the producers and consumers
themselves. Recovery can be expedited and its effects mitigated by
cooperative action. That cooperation requires that every individual
should sustain faith and courage; that each should maintain his
self-reliance; that each and every one should search for methods of
improving his business or service; that the vast majority whose
income is unimpaired should not hoard out of fear but should pursue
their normal living and recreations; that each should seek to assist
his neighbors who may be less fortunate; that each industry should
assist its own employees; that each community and each State should
assume its full responsibilities for organization of employment and
relief of distress with that sturdiness and independence which built
a great Nation.

Our people are responding to these impulses in remarkable degree. The
best contribution of government lies in encouragement of this
voluntary cooperation in the community. The Government, National,
State, and local, can join with the community in such programs and do
its part. A year ago I, together with other officers of the
Government, initiated extensive cooperative measures throughout the
country.

The first of these measures was an agreement of leading employers to
maintain the standards of wages and of labor leaders to use their
influence against strife. In a large sense these undertakings have
been adhered to and we have not witnessed the usual reductions of
wages which have always heretofore marked depressions. The index of
union wage scales shows them to be today fully up to the level of any
of the previous three years. In consequence the buying power of the
country has been much larger than would otherwise have been the case.
Of equal importance the Nation has had unusual peace in industry and
freedom from the public disorder which has characterized previous
depressions.

The second direction of cooperation has been that our governments,
National, State, and local, the industries and business so distribute
employment as to give work to the maximum number of employees.

The third direction of cooperation has been to maintain and even
extend construction work and betterments in anticipation of the
future. It has been the universal experience in previous depressions
that public works and private construction have fallen off rapidly
with the general tide of depression. On this occasion, however, the
increased authorization and generous appropriations by the Congress
and the action of States and municipalities have resulted in the
expansion of public construction to an amount even above that in the
most prosperous years. In addition the cooperation of public
utilities, railways, and other large organizations has been
generously given in construction and betterment work in anticipation
of future need. The Department of Commerce advises me that as a
result, the volume of this type of construction work, which amounted
to roughly $6,300,000,000 in 1929, instead of decreasing will show a
total of about $7,000,000,000 for 1930. There has, of course, been a
substantial decrease in the types of construction which could not be
undertaken in advance of need.

The fourth direction of cooperation was the organization in such
States and municipalities, as was deemed necessary, of committees to
organize local employment, to provide for employment agencies, and to
effect relief of distress.

The result of magnificent cooperation throughout the country has been
that actual suffering has been kept to a minimum during the past 12
months, and our unemployment has been far less in proportion than in
other large industrial countries. Some time ago it became evident
that unemployment would continue over the winter and would
necessarily be added to from seasonal causes and that the savings of
workpeople would be more largely depleted. We have as a Nation a
definite duty to see that no deserving person in our country suffers
from hunger or cold. I therefore set up a more extensive organization
to stimulate more intensive cooperation throughout the country. There
has been a most gratifying degree of response, from governors,
mayors, and other public officials, from welfare organizations, and
from employers in concerns both large and small. The local
communities through their voluntary agencies have assumed the duty of
relieving individual distress and are being generously supported by
the public.

The number of those wholly out of employment seeking for work was
accurately determined by the census last April as about 2,500,000.
The Department of Labor index of employment in the larger trades
shows some decrease in employment since that time. The problem from a
relief point of view is somewhat less than the published estimates of
the number of unemployed would indicate. The intensive community and
individual efforts in providing special employment outside the listed
industries are not reflected in the statistical indexes and tend to
reduce such published figures. Moreover, there is estimated to be a
constant figure at all times of nearly 1,000,000 unemployed who are
not without annual income but temporarily idle in the shift from one
job to another. We have an average of about three breadwinners to
each two families, so that every person unemployed does not represent
a family without income. The view that the relief problems are less
than the gross numbers would indicate is confirmed by the experience
of several cities, which shows that the number of families in
distress represents from 10 to 20 per cent of the number of the
calculated unemployed. This is not said to minimize the very real
problem which exists but to weigh its actual proportions.

As a contribution to the situation the Federal Government is engaged
upon the greatest program of waterway, harbor, flood control, public
building, highway, and airway improvement in all our history. This,
together with loans to merchant shipbuilders, improvement of the Navy
and in military aviation, and other construction work of the
Government will exceed $520,000,000 for this fiscal year. This
compares with $253,000,000 in the fiscal year 1928. The construction
works already authorized and the continuation of policies in
Government aid will require a continual expenditure upwards of half a
billion dollars annually.

I favor still further temporary expansion of these activities in aid
to unemployment during this winter. The Congress will, however, have
presented to it numbers of projects, some of them under the guise of,
rather than the reality of, their usefulness in the increase of
employment during the depression. There are certain commonsense
limitations upon any expansions of construction work. The Government
must not undertake works that are not of sound economic purpose and
that have not been subject to searching technical investigation, and
which have not been given adequate consideration by the Congress. The
volume of construction work in the Government is already at the
maximum limit warranted by financial prudence as a continuing policy.
To increase taxation for purposes of construction work defeats its own
purpose, as such taxes directly diminish employment in private
industry. Again any kind of construction requires, after its
authorization, a considerable time before labor can be employed in
which to make engineering, architectural, and legal preparations. Our
immediate problem is the increase of employment for the next six
months, and new plans which do not produce such immediate result or
which extend commitments beyond this period are not warranted.

The enlarged rivers and harbors, public building, and highway plans
authorized by the Congress last session, however, offer an
opportunity for assistance by the temporary acceleration of
construction of these programs even faster than originally planned,
especially if the technical requirements of the laws which entail
great delays could be amended in such fashion as to speed up
acquirements of land and the letting of contracts.

With view, however, to the possible need for acceleration, we,
immediately upon receiving those authorities from the Congress five
months ago, began the necessary technical work in preparation for
such possible eventuality. I have canvassed the departments of the
Government as to the maximum amount that can be properly added to our
present expenditure to accelerate all construction during the next six
months, and I feel warranted in asking the Congress for an
appropriation of from $100,000,000 to $150,000,000 to provide such
further employment in this emergency. In connection therewith we need
some authority to make enlarged temporary advances of Federal-highway
aid to the States.

I recommend that this appropriation be made distributable to the
different departments upon recommendation of a committee of the
Cabinet and approval by the President. Its application to works
already authorized by the Congress assures its use in directions of
economic importance and to public welfare. Such action will imply an
expenditure upon construction of all kinds of over $650,000,000
during the next twelve months.

Agriculture

The world-wide depression has affected agriculture in common with all
other industries. The average price of farm produce has fallen to
about 80 per cent of the levels of 1928. This average is, however,
greatly affected by wheat and cotton, which have participated in
world-wide overproduction and have fallen to about 60 per cent of the
average price of the year 1928. Excluding these commodities, the
prices of all other agricultural products are about 84 per cent of
those of 1928. The average wholesale prices of other primary goods,
such as nonferrous metals, have fallen to 76 per cent of 1928.

The price levels of our major agricultural commodities are, in fact,
higher than those in other principal producing countries, due to the
combined result of the tariff and the operations of the Farm Board.
For instance, wheat prices at Minneapolis are about 30 per cent
higher than at Winnipeg, and at Chicago they are about 20 per cent
higher than at Buenos Aires. Corn prices at Chicago are over twice as
high as at Buenos Aires. Wool prices average more than 80 per cent
higher in this country than abroad, and butter is 30 per cent higher
in New York City than in Copenhagen.

Aside from the misfortune to agriculture of the world-wide depression
we have had the most severe drought. It has affected particularly the
States bordering on the Potomac, Ohio, and Lower Mississippi Rivers,
with some areas in Montana, Kansas, Oklahoma, and Texas. It has found
its major expression in the shortage of pasturage and a shrinkage in
the corn crop from an average of about 2,800,000,000 bushels to about
2,090,000,000 bushels.

On August 14 I called a conference of the governors of the most
acutely affected States, and as a result of its conclusions I
appointed a national committee comprising the heads of the important
Federal agencies under the chairmanship of the Secretary of
Agriculture. The governors in turn have appointed State committees
representative of the farmers, bankers, business men, and the Red
Cross, and subsidiary committees have been established in most of the
acutely affected counties. Railway rates were reduced on feed and
livestock in and out of the drought areas, and over 50,000 cars of
such products have been transported under these reduced rates. The
Red Cross established a preliminary fund of $5,000,000 for distress
relief purposes and established agencies for its administration in
each county. Of this fund less than $500,000 has been called for up
to this time as the need will appear more largely during the winter.
The Federal Farm Loan Board has extended its credit facilities, and
the Federal Farm Board has given financial assistance to all affected
cooperatives.

In order that the Government may meet its full obligation toward our
countrymen in distress through no fault of their own, I recommend
that an appropriation should be made to the Department of Agriculture
to be loaned for the purpose of seed and feed for animals. Its
application should as hitherto in such loans be limited to a gross
amount to any one individual, and secured upon the crop.

The Red Cross can relieve the cases of individual distress by the
sympathetic assistance of our people.

Finances of the Government

I shall submit the detailed financial position of the Government with
recommendations in the usual Budget message. I will at this time,
however, mention that the Budget estimates of receipts and
expenditures for the current year were formulated by the Treasury and
the Budget Bureau at a time when it was impossible to forecast the
severity of the business depression and have been most seriously
affected by it. At that time a surplus of about $123,000,000 was
estimated for this fiscal year and tax reduction which affected the
fiscal year to the extent of $75,000,000 was authorized by the
Congress, thus reducing the estimated surplus to about $48,000,000.
Closely revised estimates now made by the Treasury and the Bureau of
the Budget of the tax, postal, and other receipts for the current
fiscal year indicate a decrease of about $430,000,000 from the
estimate of a year ago, of which about $75,000,000 is due to tax
reduction, leaving about $355,000,000 due to the depression.
Moreover, legislation enacted by Congress subsequent to the
submission of the Budget enlarging Federal construction work to
expand employment and for increase in veterans' services and other
items, have increased expenditures during the current fiscal year by
about $225,000,000.

Thus the decrease of $430,000,000 in revenue and the increase of
$225,000,000 in expenditure adversely change the original Budget
situation by about $655,000,000. This large sum is offset by the
original estimated surplus a year ago of about $123,000,000, by the
application of $185,000,000 of interest payments upon the foreign
debt to current expenditures, by arrangements of the Farm Board
through repayments, etc., in consequence of which they reduced their
net cash demands upon the Treasury by $100,000,000 in this period,
and by about $67,000,000 economies and deferments brought about in
the Government, thus reducing the practical effect of the change in
the situation to an estimated deficit of about $180,000,000 for the
present fiscal year. I shall make suggestions for handling the
present-year deficit in the Budget message, but I do not favor
encroachment upon the statutory reduction of the public debt.

While it will be necessary in public interest to further increase
expenditures during the current fiscal year in aid to unemployment by
speeding up construction work and aid to the farmers affected by the
drought, I can not emphasize too strongly the absolute necessity to
defer any other plans for increase of Government expenditures. The
Budget for 1932 fiscal year indicates estimated expenditure of about
$4,054,000,000, including postal deficit. The receipts are estimated
at about $4,085,000,000 if the temporary tax reduction of last year
be discontinued, leaving a surplus of only about $30,000,000. Most
rigid economy is therefore necessary to avoid increase in taxes.

National Defense

Our Army and Navy are being maintained at a high state of efficiency,
under officers of high training and intelligence, supported by a
devoted personnel of the rank and file. The London naval treaty has
brought important economies in the conduct of the Navy. The Navy
Department will lay before the committees of the Congress
recommendations for a program of authorization of new construction
which should be initiated in the fiscal year of 1932.

Legislation

This is the last session of the Seventy-first Congress. During its
previous sittings it has completed a very large amount of important
legislation, notably: The establishment of the Federal Farm Board;
fixing congressional reapportionment; revision of the tariff,
including the flexible provisions and a reorganization of the Tariff
Commission; reorganization of the Radio Commission; reorganization of
the Federal Power Commission; expansion of Federal prisons;
reorganization of parole and probation system in Federal prisons;
expansion of veterans' hospitals; establishment of disability
allowances to veterans; consolidation of veteran activities;
consolidation and strengthening of prohibition enforcement activities
in the Department of Justice; organization of a Narcotics Bureau;
large expansion of rivers and harbors improvements; substantial
increase in Federal highways; enlargement of public buildings
construction program; and the ratification of the London naval
treaty.

The Congress has before it legislation partially completed in the
last sitting in respect to Muscle Shoals, bus regulation, relief of
congestion in the courts, reorganization of border patrol in
prevention of smuggling, law enforcement in the District of Columbia,
and other subjects.

It is desirable that these measures should be completed.

The short session does not permit of extensive legislative programs,
but there are a number of questions which, if time does not permit
action, I recommend should be placed in consideration by the
Congress, perhaps through committees cooperating in some instances
with the Federal departments, with view to preparation for subsequent
action. Among them are the following subjects:

Electrical Power

I have in a previous message recommended effective regulation of
interstate electrical power. Such regulation should preserve the
independence and responsibility of the States.

Railways

We have determined upon a national policy of consolidation of the
railways as a necessity of more stable and more economically operated
transportation. Further legislation is necessary to facilitate such
consolidation. In the public interest we should strengthen the
railways that they may meet our future needs.

Antitrust Laws

I recommend that the Congress institute an inquiry into some aspects
of the economic working of these laws. I do not favor repeal of the
Sherman Act. The prevention of monopolies is of most vital public
importance. Competition is not only the basis of protection to the
consumer but is the incentive to progress. However, the
interpretation of these laws by the courts, the changes in business,
especially in the economic effects upon those enterprises closely
related to the use of the natural resources of the country, make such
an inquiry advisable. The producers of these materials assert that
certain unfortunate results of wasteful and destructive use of these
natural resources together with a destructive competition which
impoverishes both operator and worker can not be remedied because of
the prohibitive interpretation of the antitrust laws. The well-known
condition of the bituminous coal industry is an illustration. The
people have a vital interest in the conservation of their natural
resources; in the prevention of wasteful practices; in conditions of
destructive competition which may impoverish the producer and the
wage earner; and they have an equal interest in maintaining adequate
competition. I therefore suggest that an inquiry be directed
especially to the effect of the workings of the antitrust laws in
these particular fields to determine if these evils can be remedied
without sacrifice of the fundamental purpose of these laws.

Capital-gains Tax

It is urged by many thoughtful citizens that the peculiar economic
effect of the income tax on so-called capital gains at the present
rate is to enhance speculative inflation and likewise impede business
recovery. I believe this to be the case and I recommend that a study
be made of the economic effects of this tax and of its relation to
the general structure of our income tax law.

Immigration

There is need for revision of our immigration laws upon a more
limited and more selective basis, flexible to the needs of the
country.

Under conditions of current unemployment it is obvious that persons
coming to the United States seeking work would likely become either a
direct or indirect public charge. As a temporary measure the officers
issuing visas to immigrants have been, in pursuance of the law,
instructed to refuse visas to applicants likely to fall into this
class. As a result the visas issued have decreased from an average of
about 24,000 per month prior to restrictions to a rate of about 7,000
during the last month. These are largely preferred persons under the
law. Visas from Mexico are about 250 per month compared to about
4,000 previous to restrictions. The whole subject requires exhaustive
reconsideration.

Deportation of Alien Criminals

I urge the strengthening of our deportation laws so as to more fully
rid ourselves of criminal aliens. Furthermore, thousands of persons
have entered the country in violation of the immigration laws. The
very method of their entry indicates their objectionable character,
and our law-abiding foreign-born residents suffer in consequence. I
recommend that the Congress provide methods of strengthening the
Government to correct this abuse.

Post Office

Due to deferment of Government building over many years, previous
administrations had been compelled to enter upon types of leases for
secondary facilities in large cities, some of which were
objectionable as representing too high a return upon the value of the
property. To prevent the occasion for further uneconomic leasing I
recommend that the Congress authorize the building by the Government
of its own facilities.

Veterans

The Nation has generously expanded its care for veterans. The
consolidation of all veterans' activities into the Veterans'
Administration has produced substantial administrative economies. The
consolidation also brings emphasis to the inequalities in service and
allowances. The whole subject is under study by the administrator,
and I recommend it should also be examined by the committees of the
Congress.

Social Service

I urge further consideration by the Congress of the recommendations I
made a year ago looking to the development through temporary Federal
aid of adequate State and local services for the health of children
and the further stamping out of communicable disease, particularly in
the rural sections. The advance of scientific discovery, methods, and
social thought imposes a new vision in these matters. The drain upon
the Federal Treasury is comparatively small. The results both
economic and moral are of the utmost importance.

General

It is my belief that after the passing of this depression, when we
can examine it in retrospect, we shall need to consider a number of
other questions as to what action may be taken by the Government to
remove Possible governmental influences which make for instability
and to better organize mitigation of the effect of depression. It is
as yet too soon to constructively formulate such measures.

There are many administrative subjects, such as departmental
reorganization, extension of the civil service, readjustment of the
postal rates, etc., which at some appropriate time require the
attention of the Congress.

Foreign Relations

Our relations with foreign countries have been maintained upon a high
basis of cordiality and good will.

During the past year the London naval pact was completed, approved by
the Senate, and ratified by the governments concerned. By this treaty
we have abolished competition in the building of warships, have
established the basis of parity of the United States with the
strongest of foreign powers, and have accomplished a substantial
reduction in war vessels.

During the year there has been an extended political unrest in the
world. Asia continues in disturbed condition, and revolutions have
taken place in Brazil, Argentina, Peru, and Bolivia. Despite the
jeopardy to our citizens and their property which naturally arises in
such circumstances, we have, with the cooperation of the governments
concerned, been able to meet all such instances without friction.

We have resumed normal relations with the new Governments of Brazil,
Argentina, Peru, and Bolivia immediately upon evidence that they were
able to give protection to our citizens and their property, and that
they recognized their international obligations.

A commission which was supported by the Congress has completed its
investigation and reported upon our future policies in respect to
Haiti and proved of high value in securing the acceptance of these
policies. An election has been held and a new government established.
We have replaced our high commissioner by a minister and have begun
the gradual withdrawal of our activities with view to complete
retirement at the expiration of the present treaty in 1935.

A number of arbitration and conciliation treaties have been completed
or negotiated during the year, and will be presented for approval by
the Senate.

I shall, in a special message, lay before the Senate the protocols
covering the statutes of the World Court which have been revised to
accord with the sense of previous Senate reservations.

The White House,

December 2, 1930