Speech Transcript:

 To the Senate and House of Representatives:

It is my duty under the Constitution to transmit to the Congress
information on the state of the Union and to recommend for its
consideration necessary and expedient measures.

The chief influence affecting the state of the Union during the past
year has been the continued world-wide economic disturbance. Our
national concern has been to meet the emergencies it has created for
us and to lay the foundations for recovery.

If we lift our vision beyond these immediate emergencies we find
fundamental national gains even amid depression. In meeting the
problems of this difficult period, we have witnessed a remarkable
development of the sense of cooperation in the community. For the
first time in the history of our major economic depressions there has
been a notable absence of public disorders and industrial conflict.
Above all there is an enlargement of social and spiritual
responsibility among the people. The strains and stresses upon
business have resulted in closer application, in saner policies, and
in better methods. Public improvements have been carried out on a
larger scale than even in normal times. The country is richer in
physical property, in newly discovered resources, and in productive
capacity than ever before. There has been constant gain in knowledge
and education; there has been continuous advance in science and
invention; there has been distinct gain in public health. Business
depressions have been recurrent in the life of our country and are
but transitory. The Nation has emerged from each of them with
increased strength and virility because of the enlightenment they
have brought, the readjustments and the larger understanding of the
realities and obligations of life and work which come from them.

NATIONAL DEFENSE

Both our Army and Navy have been maintained in a high state of
efficiency. The ability and devotion of both officers and men sustain
the highest traditions of the service. Reductions and postponements in
expenditure of these departments to meet the present emergency are
being made without reducing existing personnel or impairing the
morale of either establishment.

The agreement between the leading naval powers for limitation of
naval armaments and establishment of their relative strength and thus
elimination of competitive building also implies for ourselves the
gradual expansion of the deficient categories in our Navy to the
parities provided in those treaties. However, none of the other
nations, parties to these agreements, is to-day maintaining the full
rate of construction which the treaty size of fleets would imply.

Although these agreements secured the maximum reduction of fleets
which it was at that time possible to attain, I am hopeful that the
naval powers, party to these agreements, will realize that
establishment of relative strength in itself offers opportunity for
further reduction without injury to any of them. This would be the
more possible if pending negotiations are successful between France
and Italy. If the world is to regain its standards of life, it must
further decrease both naval and other arms. The subject will come
before the General Disarmament Conference which meets in Geneva on
February 2.

FOREIGN AFFAIRS

We are at peace with the world. We have cooperated with other nations
to preserve peace. The rights of our citizens abroad have been
protected.

The economic depression has continued and deepened in every part of
the world during the past year. In many countries political
instability, excessive armaments, debts, governmental expenditures,
and taxes have resulted in revolutions, in unbalanced budgets and
monetary collapse and financial panics, in dumping of goods upon
world markets, and in diminished consumption of commodities.

Within two years there have been revolutions or acute social
disorders in 19 countries, embracing more than half the population of
the world. Ten countries have been unable to meet their external
obligations. In 14 countries, embracing a quarter of the world's
population, former monetary standards have been temporarily
abandoned. In a number of countries there have been acute financial
panics or compulsory restraints upon banking. These disturbances have
many roots in the dislocations from the World War. Every one of them
has reacted upon us. They have sharply affected the markets and
prices of our agricultural and industrial products. They have
increased unemployment and greatly embarrassed our financial and
credit system.

As our difficulties during the past year have plainly originated in
large degree from these sources, any effort to bring about our own
recuperation has dictated the necessity of cooperation by us with
other nations in reasonable effort to restore world confidence and
economic stability.

Cooperation of our Federal reserve system and our banks with the
central banks in foreign countries has contributed to localize and
ameliorate a number of serious financial crises or moderate the
pressures upon us and thus avert disasters which would have affected
us.

The economic crisis in Germany and Central Europe last June rose to
the dimensions of a general panic from which it was apparent that
without assistance these nations must collapse. Apprehensions of such
collapse had demoralized our agricultural and security markets and so
threatened other nations as to impose further dangers upon us. But of
highest importance was the necessity of cooperation on our part to
relieve the people of Germany from imminent disasters and to maintain
their important relations to progress and stability in the world. Upon
the initiative of this Government a year's postponement of reparations
and other intergovernmental debts was brought about. Upon our further
initiative an agreement was made by Germany's private creditors
providing for an extension of such credits until the German people
can develop more permanent and definite forms of relief.

We have continued our policy of withdrawing our marines from Haiti
and Nicaragua.

The difficulties between China and Japan have given us great concern,
not alone for the maintenance of the spirit of the Kellogg-Briand
Pact, but for the maintenance of the treaties to which we are a party
assuring the territorial integrity of China. It is our purpose to
assist in finding solutions sustaining the full spirit of those
treaties.

I shall deal at greater length with our foreign relations in a later
message.

THE DOMESTIC SITUATION

Many undertakings have been organized and forwarded during the past
year to meet the new and changing emergencies which have constantly
confronted us.

Broadly the community has cooperated to meet the needs of honest
distress, and to take such emergency measures as would sustain
confidence in our financial system and would cushion the violence of
liquidation in industry and commerce, thus giving time for orderly
readjustment of costs, inventories, and credits without panic and
widespread bankruptcy. These measures have served those purposes and
will promote recovery.

In these measures we have striven to mobilize and stimulate private
initiative and local and community responsibility. There has been the
least possible Government entry into the economic field, and that only
in temporary and emergency form. Our citizens and our local
governments have given a magnificent display of unity and action,
initiative and patriotism in solving a multitude of difficulties and
in cooperating with the Federal Government.

For a proper understanding of my recommendations to the Congress it
is desirable very briefly to review such activities during the past
year.

The emergencies of unemployment have been met by action in many
directions. The appropriations for the continued speeding up of the
great Federal construction program have provided direct and indirect
aid to employment upon a large scale. By organized unity of action,
the States and municipalities have also maintained large programs of
public improvement. Many industries have been prevailed upon to
anticipate and intensify construction. Industrial concerns and other
employers have been organized to spread available work amongst all
their employees, instead of discharging a portion of them. A large
majority have maintained wages at as high levels as the safe conduct
of their business would permit. This course has saved us from
industrial conflict and disorder which have characterized all
previous depressions. Immigration has been curtailed by
administrative action. Upon the basis of normal immigration the
decrease amounts to about 300,000 individuals who otherwise would
have been added to our unemployment. The expansion of Federal
employment agencies under appropriations by the Congress has proved
most effective. Through the President's organization for unemployment
relief, public and private agencies were successfully mobilized last
winter to provide employment and other measures against distress.
Similar organization gives assurance against suffering during the
coming winter. Committees of leading citizens are now active at
practically every point of unemployment. In the large majority they
have been assured the funds necessary which, together with local
government aids, will meet the situation. A few exceptional
localities will be further organized. The evidence of the Public
Health Service shows an actual decrease of sickness and infant and
general mortality below normal years. No greater proof could be
adduced that our people have been protected from hunger and cold and
that the sense of social responsibility in the Nation has responded
to the need of the unfortunate.

To meet the emergencies in agriculture the loans authorized by
Congress for rehabilitation in the drought areas have enabled farmers
to produce abundant crops in those districts. The Red Cross undertook
and magnificently administered relief for over 2,500,000 drought
sufferers last winter. It has undertaken this year to administer
relief to 100,000 sufferers in the new drought area of certain
Northwest States. The action of the Federal Farm Board in granting
credits to farm cooperatives saved many of them from bankruptcy and
increased their purpose and strength. By enabling farm cooperatives
to cushion the fall in prices of farm products in 1930 and 1931 the
Board secured higher prices to the farmer than would have been
obtained otherwise, although the benefits of this action were
partially defeated by continued world overproduction. Incident to
this action the failure of a large number of farmers and of country
banks was averted which could quite possibly have spread into a major
disaster. The banks in the South have cooperated with the Farm Board
in creation of a pool for the better marketing of accumulated cotton.
Growers have been materially assisted by this action. Constant effort
has been made to reduce overproduction in relief of agriculture and
to promote the foreign buying of agricultural products by sustaining
economic stability abroad.

To meet our domestic emergencies in credit and banking arising from
the reaction to acute crisis abroad the National Credit Association
was set up by the banks with resources of $500,000,000 to support
sound banks against the frightened withdrawals and hoarding. It is
giving aid to reopen solvent banks which have been closed. Federal
officials have brought about many beneficial unions of banks and have
employed other means which have prevented many bank closings. As a
result of these measures the hoarding withdrawals which had risen to
over $250,000,000 per week after the British crisis have
substantially ceased.

FURTHER MEASURES

The major economic forces and weaknesses at home and abroad have now
been exposed and can be appraised, and the time is ripe for forward
action to expedite our recovery.

Although some of the causes of our depression are due to speculation,
inflation of securities and real estate, unsound foreign investments,
and mismanagement of financial institutions, yet our self-contained
national economy, with its matchless strength and resources, would
have enabled us to recover long since but for the continued
dislocations, shocks, and setbacks from abroad.

Whatever the causes may be, the vast liquidation and readjustments
which have taken place have left us with a large degree of credit
paralysis, which together with the situation in our railways and the
conditions abroad, are now the outstanding obstacles to recuperation.
If we can put our financial resources to work and can ameliorate the
financial situation in the railways, I am confident we can make a
large measure of recovery independent of the rest of the world. A
strong America is the highest contribution to world stability.

One phase of the credit situation is indicated in the banks. During
the past year banks, representing 3 per cent of our total deposits
have been closed. A large part of these failures have been caused by
withdrawals for hoarding, as distinguished from the failures early in
the depression where weakness due to mismanagement was the larger
cause of failure. Despite their closing, many of them will pay in
full. Although such withdrawals have practically ceased, yet
$1,100,000,000 of currency was previously withdrawn which has still
to return to circulation. This represents a large reduction of the
ability of our banks to extend credit which would otherwise fertilize
industry and agriculture. Furthermore, many of our bankers, in order
to prepare themselves to meet possible withdrawals, have felt
compelled to call in loans, to refuse new credits, and to realize
upon securities, which in turn has demoralized the markets. The
paralysis has been further augmented by the steady increase in recent
years of the proportion of bank assets invested in long-term
securities, such as mortgages and bonds. These securities tend to
lose their liquidity in depression or temporarily to fall in value so
that the ability of the banks to meet the shock of sudden withdrawal
is greatly lessened and the restriction of all kinds of credit is
thereby increased. The continuing credit paralysis has operated to
accentuate the deflation and liquidation of commodities, real estate,
and securities below any reasonable basis of values.

All of this tends to stifle business, especially the smaller units,
and finally expresses itself in further depression of prices and
values, in restriction on new enterprise, and in increased
unemployment.

The situation largely arises from an unjustified lack of confidence.
We have enormous volumes of idle money in the banks and in hoarding.
We do not require more money or working capital--we need to put what
we have to work.

The fundamental difficulties which have brought about financial
strains in foreign countries do not exist in the United States. No
external drain on our resources can threaten our position, because
the balance of international payments is in our favor; we owe less to
foreign countries than they owe to us; our industries are efficiently
organized; our currency and bank deposits are protected by the
greatest gold reserve in history.

Our first step toward recovery is to reestablish confidence and thus
restore the flow of credit which is the very basis of our economic
life. We must put some steel beams in the foundations of our credit
structure. It is our duty to apply the full strength of our
Government not only to the immediate phases, but to provide security
against shocks and the repetition of the weaknesses which have been
proven.

The recommendations which I here lay before the Congress are designed
to meet these needs by strengthening financial, industrial, and
agricultural life through the medium of our existing institutions,
and thus to avoid the entry of the Government into competition with
private business.

FEDERAL GOVERNMENT FINANCE

The first requirement of confidence and of economic recovery is
financial stability of the United States Government. I shall deal
with fiscal questions at greater length in the Budget message. But I
must at this time call attention to the magnitude of the deficits
which have developed and the resulting necessity for determined and
courageous policies. These deficits arise in the main from the heavy
decrease in tax receipts due to the depression and to the increase in
expenditure on construction in aid to unemployment, aids to
agriculture, and upon services to veterans.

During the fiscal year ending June 30 last we incurred a deficit of
about $903,000,000, which included the statutory reduction of the
debt and represented an increase of the national debt by
$616,000,000. Of this, however, $153,000,000 is offset by increased
cash balances.

In comparison with the fiscal year 1928 there is indicated a fall in
Federal receipts for the present fiscal year amounting to
$1,683,000,000, of which $1,034,000,000 is in individual and
corporate income taxes alone. During this fiscal year there will be
an increased expenditure, as compared to 1928, on veterans of
$255,000,000, and an increased expenditure on construction work which
may reach $520,000,000. Despite large economies in other directions,
we have an indicated deficit, including the statutory retirement of
the debt, of $2,123,000,000, and an indicated net debt increase of
about $1,711,000,000.

The Budget for the fiscal year beginning July 1 next, after allowing
for some increase of taxes under the present laws and after allowing
for drastic reduction in expenditures, still indicates a deficit of
$1,417,000,000. After offsetting the statutory debt retirements this
would indicate an increase in the national debt for the fiscal year
1933 of about $921,000,000.

Several conclusions are inevitable. We must have insistent and
determined reduction in Government expenses. We must face a temporary
increase in taxes. Such increase should not cover the whole of these
deficits or it will retard recovery. We must partially finance the
deficit by borrowing. It is my view that the amount of taxation
should be fixed so as to balance the Budget for 1933 except for the
statutory debt retirement. Such Government receipts would assure the
balance of the following year's budget including debt retirement. It
is my further view that the additional taxation should be imposed
solely as an emergency measure terminating definitely two years from
July 1 next. Such a basis will give confidence in the determination
of the Government to stabilize its finance and will assure taxpayers
of its temporary character. Even with increased taxation, the
Government will reach the utmost safe limit of its borrowing capacity
by the expenditures for which we are already obligated and the
recommendations here proposed. To go further than these limits in
either expenditures, taxes, or borrowing will destroy confidence,
denude commerce and industry of its resources, jeopardize the
financial system, and actually extend unemployment and demoralize
agriculture rather than relieve it.

FEDERAL LAND BANKS

I recommend that the Congress authorize the subscription by the
Treasury of further capital to the Federal land banks to be retired
as provided in the original act, or when funds are available, and
that repayments of such capital be treated as a fund available for
further subscriptions in the same manner. It is urgent that the banks
be supported so as to stabilize the market values of their bonds and
thus secure capital for the farmers at low rates, that they may
continue their services to agriculture and that they may meet the
present situation with consideration to the farmers.

DEPOSITS IN CLOSED BANKS

A method should be devised to make available quickly to depositors
some portion of their deposits in closed banks as the assets of such
banks may warrant. Such provision would go far to relieve distress in
a multitude of families, would stabilize values in many communities,
and would liberate working capital to thousands of concerns. I
recommend that measures be enacted promptly to accomplish these
results and I suggest that the Congress should consider the
development of such a plan through the Federal Reserve Banks.

HOME-LOAN DISCOUNT BANKS

I recommend the establishment of a system of home-loan discount banks
as the necessary companion in our financial structure of the Federal
Reserve Banks and our Federal Land Banks. Such action will relieve
present distressing pressures against home and farm property owners.
It will relieve pressures upon and give added strength to building
and loan associations, savings banks, and deposit banks, engaged in
extending such credits. Such action would further decentralize our
credit structure. It would revive residential construction and
employment. It would enable such loaning institutions more
effectually to promote home ownership. I discussed this plan at some
length in a statement made public November 14, last. This plan has
been warmly indorsed by the recent National Conference upon Home
Ownership and Housing, whose members were designated by the governors
of the States and the groups interested.

RECONSTRUCTION FINANCE CORPORATION

In order that the public may be absolutely assured and that the
Government may be in position to meet any public necessity, I
recommend that an emergency Reconstruction Corporation of the nature
of the former War Finance Corporation should be established. It may
not be necessary to use such an instrumentality very extensively. The
very existence of such a bulwark will strengthen confidence. The
Treasury should be authorized to subscribe a reasonable capital to
it, and it should be given authority to issue its own debentures. It
should be placed in liquidation at the end of two years. Its purpose
is that by strengthening the weak spots to thus liberate the full
strength of the Nation's resources. It should be in position to
facilitate exports by American agencies; make advances to
agricultural credit agencies where necessary to protect and aid the
agricultural industry; to make temporary advances upon proper
securities to established industries, railways, and financial
institutions which can not otherwise secure credit, and where such
advances will protect the credit structure and stimulate employment.
Its functions would not overlap those of the National Credit
Corporation.

FEDERAL RESERVE ELIGIBILITY

On October 6th I issued a statement that I should recommend to the
Congress an extension during emergencies of the eligibility
provisions in the Federal reserve act. This statement was approved by
a representative gathering of the Members of both Houses of the
Congress, including members of the appropriate committees. It was
approved by the officials of the Treasury Department, and I
understand such an extension has been approved by a majority of the
governors of the Federal reserve banks. Nothing should be done which
would lower the safeguards of the system.

The establishment of the mortgage-discount banks herein referred to
will also contribute to further reserve strength in the banks without
inflation.

BANKING LAWS

Our people have a right to a banking system in which their deposits
shall be safeguarded and the flow of credit less subject to storms.
The need of a sounder system is plainly shown by the extent of bank
failures. I recommend the prompt improvement of the banking laws.
Changed financial conditions and commercial practices must be met.
The Congress should investigate the need for separation between
different kinds of banking; an enlargement of branch banking under
proper restrictions; and the methods by which enlarged membership in
the Federal reserve system may be brought about.

POSTAL SAVINGS BANKS

The Postal Savings deposits have increased from about $200,000,000 to
about $550,000,000 during the past year. This experience has raised
important practical questions in relation to deposits and investments
which should receive the attention of the Congress.

RAILWAYS

The railways present one of our immediate and pressing problems. They
are and must remain the backbone of our transportation system. Their
prosperity is interrelated with the prosperity of all industries.
Their fundamental service in transportation, the volume of their
employment, their buying power for supplies from other industries,
the enormous investment in their securities, particularly their
bonds, by insurance companies, savings banks, benevolent and other
trusts, all reflect their partnership in the whole economic fabric.
Through these institutions the railway bonds are in a large sense the
investment of every family. The well-maintained and successful
operation and the stability of railway finances are of primary
importance to economic recovery. They should have more effective
opportunity to reduce operating costs by proper consolidation. As
their rates must be regulated in public interest, so also approximate
regulation should be applied to competing services by some authority.
The methods of their regulation should be revised. The Interstate
Commerce Commission has made important and far-reaching
recommendations upon the whole subject, which I commend to the early
consideration of the Congress.

ANTITRUST LAWS

In my message of a year ago I commented on the necessity of
congressional inquiry into the economic action of the antitrust laws.
There is wide conviction that some change should be made especially in
the procedure under these laws. I do not favor their repeal. Such
action would open wide the door to price fixing, monopoly, and
destruction of healthy competition. Particular attention should be
given to the industries rounded upon natural resources, especially
where destructive competition produces great wastes of these
resources and brings great hardships upon operators, employees, and
the public. In recent years there has been continued demoralization
in the bituminous coal, oil, and lumber industries. I again commend
the matter to the consideration of the Congress.

UNEMPLOYMENT

As an aid to unemployment the Federal Government is engaged in the
greatest program of public-building, harbor, flood-control, highway,
waterway, aviation, merchant and naval ship construction in all
history. Our expenditures on these works during this calendar year
will reach about $780,000,000 compared with $260,000,000 in 1928.
Through this increased construction, through the maintenance of a
full complement of Federal employees, and through services to
veterans it is estimated that the Federal taxpayer is now directly
contributing to the livelihood of 10,000,000 of our citizens.

We must avoid burdens upon the Government which will create more
unemployment in private industry than can be gained by further
expansion of employment by the Federal Government. We can now
stimulate employment and agriculture more effectually and speedily
through the voluntary measures in progress, through the thawing out
of credit, through the building up of stability abroad, through the
home loan discount banks, through an emergency finance corporation
and the rehabilitation of the railways and other such directions.

I am opposed to any direct or indirect Government dole. The breakdown
and increased unemployment in Europe is due in part to such practices.
Our people are providing against distress from unemployment in true
American fashion by a magnificent response to public appeal and by
action of the local governments.

GENERAL LEGISLATION

There are many other subjects requiring legislative action at this
session of the Congress. I may list the following among them:

VETERANS' SERVICES

The law enacted last March authorizing loans of 50 per cent upon
adjusted-service certificates has, together with the loans made under
previous laws, resulted in payments of about $1,260,000,000.
Appropriations have been exhausted. The Administrator of Veterans'
Affairs advises that a further appropriation of $200,000,000 is
required at once to meet the obligations made necessary by existing
legislation.

There will be demands for further veterans' legislation; there are
inequalities in our system of veterans' relief; it is our national
duty to meet our obligations to those who have served the Nation. But
our present expenditure upon these services now exceeds $1,000,000,000
per annum. I am opposed to any extension of these expenditures until
the country has recovered from the present situation.

ELECTRICAL-POWER REGULATION

I have recommended in previous messages the effective regulation of
interstate electrical power as the essential function of the
reorganized Federal Power Commission. I renew the recommendation. It
is urgently needed in public protection.

MUSCLE SHOALS

At my suggestion, the Governors and Legislatures of Alabama and
Tennessee selected three members each for service on a committee to
which I appointed a representative of the farm organizations and two
representatives of the War Department for the purpose of recommending
a plan for the disposal of these properties which would be in the
interest of the people of those States and the agricultural industry
throughout the country. I shall transmit the recommendations to the
Congress.

REORGANIZATION OF FEDERAL DEPARTMENTS

I have referred in previous messages to the profound need of further
reorganization and consolidation of Federal administrative functions
to eliminate overlap and waste, and to enable coordination and
definition of Government policies now wholly impossible in scattered
and conflicting agencies which deal with parts of the same major
function. I shall lay before the Congress further recommendations
upon this subject, particularly in relation to the Department of the
Interior. There are two directions of such reorganization, however,
which have an important bearing upon the emergency problems with
which we are confronted.

SHIPPING BOARD

At present the Shipping Board exercises large administrative
functions independent of the Executive. These administrative
functions should be transferred to the Department of Commerce, in
keeping with that single responsibility which has been the basis of
our governmental structure since its foundation. There should be
created in that department a position of Assistant Secretary for
Merchant Marine, under whom this work and the several bureaus having
to do with merchant marine may be grouped.

The Shipping Board should be made a regulatory body acting also in
advisory capacity on loans and policies, in keeping with its original
conception. Its regulatory powers should be amended to include
regulation of coastwise shipping so as to assure stability and better
service. It is also worthy of consideration that the regulation of
rates and services upon the inland waterways should be assigned to
such a reorganized board.

REORGANIZATION OF PUBLIC WORKS ADMINISTRATION

I recommend that all building and construction activities of the
Government now carried on by many departments be consolidated into an
independent establishment under the President to be known as the
"Public Works Administration" directed by a Public Works
Administrator. This agency should undertake all construction work in
service to the different departments of the Government (except naval
and military work). The services of the Corps of Army Engineers
should be delegated in rotation for military duty to this
administration in continuation of their supervision of river and
harbor work. Great economies, sounder policies, more effective
coordination to employment, and expedition in all construction work
would result from this consolidation.

LAW ENFORCEMENT

I shall present some recommendations in a special message looking to
the strengthening of criminal-law enforcement and improvement in
judicial procedure connected therewith.

INLAND WATERWAY AND HARBOR IMPROVEMENT

These improvements are now proceeding upon an unprecedented scale.
Some indication of the volume of work in progress is conveyed by the
fact that during the current year over 380,000,000 cubic yards of
material have been moved--an amount equal to the entire removal in
the construction of the Panama Canal. The Mississippi waterway
system, connecting Chicago, Kansas City, Pittsburgh, and New Orleans,
will be in full operation during 1933. Substantial progress is being
made upon the projects of the upper Missouri, upper Mississippi,
etc.

Negotiations are now in progress with Canada for the construction of
the St. Lawrence Waterway.

THE TARIFF

Wages and standards of living abroad have been materially lowered
during the past year. The temporary abandonment of the gold standard
by certain countries has also reduced their production costs compared
to ours. Fortunately any increases in the tariff which may be
necessary to protect agriculture and industry from these lowered
foreign costs, or decreases in items which may prove to be excessive,
may be undertaken at any time by the Tariff Commission under authority
which it possesses by virtue of the tariff act of 1930. The commission
during the past year has reviewed the rates upon over 254 items
subject to tariff. As a result of vigorous and industrious action, it
is up to date in the consideration of pending references and is
prepared to give prompt attention to any further applications. This
procedure presents an orderly method for correcting inequalities. I
am opposed to any general congressional revision of the tariff. Such
action would disturb industry, business, and agriculture. It would
prolong the depression.

IMMIGRATION AND DEPORTATION

I recommend that immigration restriction now in force under
administrative action be placed upon a more definite basis by law.
The deportation laws should be strengthened. Aliens lawfully in the
country should be protected by the issuance of a certificate of
residence.

PUBLIC HEALTH

I again call attention to my previous recommendations upon this
subject, particularly in its relation to children. The moral results
are of the utmost importance.

CONCLUSION

It is inevitable that in these times much of the legislation proposed
to the Congress and many of the recommendations of the Executive must
be designed to meet emergencies. In reaching solutions we must not
jeopardize those principles which we have found to be the basis of
the growth of the Nation. The Federal Government must not encroach
upon nor permit local communities to abandon that precious possession
of local initiative and responsibility. Again, just as the largest
measure of responsibility in the government of the Nation rests upon
local self-government, so does the largest measure of social
responsibility in our country rest upon the individual. If the
individual surrenders his own initiative and responsibilities, he is
surrendering his own freedom and his own liberty. It is the duty of
the National Government to insist that both the local governments and
the individual shall assume and bear these responsibilities as a
fundamental of preserving the very basis of our freedom.

Many vital changes and movements of vast proportions are taking place
in the economic world. The effect of these changes upon the future can
not be seen clearly as yet. Of this, however, we are sure: Our system,
based upon the ideals of individual initiative and of equality of
opportunity, is not an artificial thing. Rather it is the outgrowth
of the experience of America, and expresses the faith and spirit of
our people. It has carried us in a century and a half to leadership
of the economic world. If our economic system does not match our
highest expectations at all times, it does not require revolutionary
action to bring it into accord with any necessity that experience may
prove. It has successfully adjusted itself to changing conditions in
the past. It will do so again. The mobility of our institutions, the
richness of our resources, and the abilities of our people enable us
to meet them unafraid. It is a distressful time for many of our
people, but they have shown qualities as high in fortitude, courage,
and resourcefulness as ever in our history. With that spirit, I have
faith that out of it will come a sounder life, a truer standard of
values, a greater recognition of the results of honest effort, and a
healthier atmosphere in which to rear our children. Ours must be a
country of such stability and security as can not fail to carry
forward and enlarge among all the people that abundant life of
material and spiritual opportunity which it has represented among all
nations since its beginning.

The White House,

December 8, 1931