Speech Transcript:

 Mr. Vice President, Mr. Speaker, Members of the Senate and the
Congress:

In Reporting on the state of the nation, I have felt it necessary on
previous occasions to advise the Congress of disturbance abroad and
of the need of putting our own house in order in the face of storm
signals from across the seas. As this Seventy-sixth Congress opens
there is need for further warning.

A war which threatened to envelop the world in flames has been
averted; but it has become increasingly clear that world peace is not
assured.

All about us rage undeclared wars--military and economic. All about
us grow more deadly armaments--military and economic. All about us
are threats of new aggression military and economic.

Storms from abroad directly challenge three institutions
indispensable to Americans, now as always. The first is religion. It
is the source of the other two--democracy and international good
faith.

Religion, by teaching man his relationship to God, gives the
individual a sense of his own dignity and teaches him to respect
himself by respecting his neighbors.

Democracy, the practice of self-government, is a covenant among free
men to respect the rights and liberties of their fellows.

International good faith, a sister of democracy, springs from the
will of civilized nations of men to respect the rights and liberties
of other nations of men.

In a modern civilization, all three--religion, democracy and
international good faith--complement and support each other.

Where freedom of religion has been attacked, the attack has come from
sources opposed to democracy. Where democracy has been overthrown, the
spirit of free worship has disappeared. And where religion and
democracy have vanished, good faith and reason in international
affairs have given way to strident ambition and brute force.

An ordering of society which relegates religion, democracy and good
faith among nations to the background can find no place within it for
the ideals of the Prince of Peace. The United States rejects such an
ordering, and retains its ancient faith.

There comes a time in the affairs of men when they must prepare to
defend, not their homes alone, but the tenets of faith and humanity
on which their churches, their governments and their very
civilization are founded. The defense of religion, of democracy and
of good faith among nations is all the same fight. To save one we
must now make up our minds to save all.

We know what might happen to us of the United States if the new
philosophies of force were to encompass the other continents and
invade our own. We, no more than other nations, can afford to be
surrounded by the enemies of our faith and our humanity. Fortunate it
is, therefore, that in this Western Hemisphere we have, under a common
ideal of democratic government, a rich diversity of resources and of
peoples functioning together in mutual respect and peace.

That Hemisphere, that peace, and that ideal we propose to do our
share in protecting against storms from any quarter. Our people and
our resources are pledged to secure that protection. From that
determination no American flinches.

This by no means implies that the American Republics disassociate
themselves from the nations of other continents. It does not mean the
Americas against the rest of the world. We as one of the Republics
reiterate our willingness to help the cause of world peace. We stand
on our historic offer to take counsel with all other nations of the
world to the end that aggression among them be terminated, that the
race of armaments cease and that commerce be renewed.

But the world has grown so small and weapons of attack so swift that
no nation can be safe in its will to peace so long as any other
powerful nation refuses to settle its grievances at the council
table.

For if any government bristling with implements of war insists on
policies of force, weapons of defense give the only safety.

In our foreign relations we have learned from the past what not to
do. From new wars we have learned what we must do.

We have learned that effective timing of defense, and the distant
points from which attacks may be launched are completely different
from what they were twenty years ago.

We have learned that survival cannot be guaranteed by arming after
the attack begins--for there is new range and speed to offense.

We have learned that long before any overt military act, aggression
begins with preliminaries of propaganda, subsidized penetration, the
loosening of ties of good will, the stirring of prejudice and the
incitement to disunion.

We have learned that God-fearing democracies of the world which
observe the sanctity of treaties and good faith in their dealings
with other nations cannot safely be indifferent to international
lawlessness anywhere. They cannot forever let pass, without effective
protest, acts of aggression against sister nations--acts which
automatically undermine all of us.

Obviously they must proceed along practical, peaceful lines. But the
mere fact that we rightly decline to intervene with arms to prevent
acts of aggression does not mean that we must act as if there were no
aggression at all. Words may be futile, but war is not the only means
of commanding a decent respect for the opinions of mankind. There are
many methods short of war, but stronger and more effective than mere
words, of bringing home to aggressor governments the aggregate
sentiments of our own people.

At the very least, we can and should avoid any action, or any lack of
action, which will encourage, assist or build up an aggressor. We have
learned that when we deliberately try to legislate neutrality, our
neutrality laws may operate unevenly and unfairly--may actually give
aid to an aggressor and deny it to the victim. The instinct of
self-preservation should warn us that we ought not to let that happen
any more.

And we have learned something else--the old, old lesson that
probability of attack is mightily decreased by the assurance of an
ever ready defense. Since 1931, nearly eight years ago, world events
of thunderous import have moved with lightning speed. During these
eight years many of our people clung to the hope that the innate
decency of mankind would protect the unprepared who showed their
innate trust in mankind. Today we are all wiser--and sadder.

Under modern conditions what we mean by "adequate defense"--a policy
subscribed to by all of us--must be divided into three elements.
First, we must have armed forces and defenses strong enough to ward
off sudden attack against strategic positions and key facilities
essential to ensure sustained resistance and ultimate victory.
Secondly, we must have the organization and location of those key
facilities so that they may be immediately utilized and rapidly
expanded to meet all needs without danger of serious interruption by
enemy attack.

In the course of a few days I shall send you a special message making
recommendations for those two essentials of defense against danger
which we cannot safely assume will not come.

If these first two essentials are reasonably provided for, we must be
able confidently to invoke the third element, the underlying strength
of citizenship--the self-confidence, the ability, the imagination and
the devotion that give the staying power to see things through.

A strong and united nation may be destroyed if it is unprepared
against sudden attack. But even a nation well armed and well
organized from a strictly military standpoint may, after a period of
time, meet defeat if it is unnerved by self-distrust, endangered by
class prejudice, by dissension between capital and labor, by false
economy and by other unsolved social problems at home.

In meeting the troubles of the world we must meet them as one
people--with a unity born of the fact that for generations those who
have come to our shores, representing many kindreds and tongues, have
been welded by common opportunity into a united patriotism. If another
form of government can present a united front in its attack on a
democracy, the attack must and will be met by a united democracy.
Such a democracy can and must exist in the United States.

A dictatorship may command the full strength of a regimented nation.
But the united strength of a democratic nation can be mustered only
when its people, educated by modern standards to know what is going
on and where they are going, have conviction that they are receiving
as large a share of opportunity for development, as large a share of
material success and of human dignity, as they have a right to
receive.

Our nation's program of social and economic reform is therefore a
part of defense, as basic as armaments themselves.

Against the background of events in Europe, in Africa and in Asia
during these recent years, the pattern of what we have accomplished
since 1933 appears in even clearer focus.

For the first time we have moved upon deep-seated problems affecting
our national strength and have forged national instruments adequate
to meet them.

Consider what the seemingly piecemeal struggles of these six years
add up to in terms of realistic national preparedness.

We are conserving and developing natural resources--land, water
power, forests.

We are trying to provide necessary food, shelter and medical care for
the health of our population.

We are putting agriculture--our system of food and fibre supply--on a
sounder basis.

We are strengthening the weakest spot in our system of industrial
supply-- its long smouldering labor difficulties.

We have cleaned up our credit system so that depositor and investor
alike may more readily and willingly make their capital available for
peace or war.

We are giving to our youth new opportunities for work and education.

We have sustained the morale of all the population by the dignified
recognition of our obligations to the aged, the helpless and the
needy.

Above all, we have made the American people conscious of their
interrelationship and their interdependence. They sense a common
destiny and a common need of each other. Differences of occupation,
geography, race and religion no longer obscure the nation's
fundamental unity in thought and in action.

We have our difficulties, true--but we are a wiser and a tougher
nation than we were in 1929, or in 1932.

Never have there been six years of such far-flung internal
preparedness in our history. And this has been done without any
dictator's power to command, without conscription of labor or
confiscation of capital, without concentration camps and without a
scratch on freedom of speech, freedom of the press or the rest of the
Bill of Rights.

We see things now that we could not see along the way. The tools of
government which we had in 1933 are outmoded. We have had to forge
new tools for a new role of government operating in a democracy--a
role of new responsibility for new needs and increased responsibility
for old needs, long neglected.

Some of these tools had to be roughly shaped and still need some
machining down. Many of those who fought bitterly against the forging
of these new tools welcome their use today. The American people, as a
whole, have accepted them. The Nation looks to the Congress to
improve the new machinery which we have permanently installed,
provided that in the process the social usefulness of the machinery
is not destroyed or impaired.

All of us agree that we should simplify and improve laws if
experience and operation clearly demonstrate the need. For instance,
all of us want better provision for our older people under our social
security legislation. For the medically needy we must provide better
care.

Most of us agree that for the sake of employer and employee alike we
must find ways to end factional labor strife and employer-employee
disputes.

Most of us recognize that none of these tools can be put to maximum
effectiveness unless the executive processes of government are
revamped--reorganized, if you will--into more effective combination.
And even after such reorganization it will take time to develop
administrative personnel and experience in order to use our new tools
with a minimum of mistakes. The Congress, of course, needs no further
information on this.

With this exception of legislation to provide greater government
efficiency, and with the exception of legislation to ameliorate our
railroad and other transportation problems, the past three Congresses
have met in part or in whole the pressing needs of the new order of
things.

We have now passed the period of internal conflict in the launching
of our program of social reform. Our full energies may now be
released to invigorate the processes of recovery in order to preserve
our reforms, and to give every man and woman who wants to work a real
job at a living wage.

But time is of paramount importance. The deadline of danger from
within and from without is not within our control. The hour-glass may
be in the hands of other nations. Our own hour-glass tells us that we
are off on a race to make democracy work, so that we may be efficient
in peace and therefore secure in national defense.

This time element forces us to still greater efforts to attain the
full employment of our labor and our capital.

The first duty of our statesmanship is to bring capital and man-power
together.

Dictatorships do this by main force. By using main force they
apparently succeed at it--for the moment. However we abhor their
methods, we are compelled to admit that they have obtained
substantial utilization of all their material and human resources.
Like it or not, they have solved, for a time at least, the problem of
idle men and idle capital. Can we compete with them by boldly seeking
methods of putting idle men and idle capital together and, at the
same time, remain within our American way of life, within the Bill of
Rights, and within the bounds of what is, from our point of view,
civilization itself?

We suffer from a great unemployment of capital. Many people have the
idea that as a nation we are overburdened with debt and are spending
more than we can afford. That is not so. Despite our Federal
Government expenditures the entire debt of our national economic
system, public and private together, is no larger today than it was
in 1929, and the interest thereon is far less than it was in 1929.

The object is to put capital--private as well as public--to work.

We want to get enough capital and labor at work to give us a total
turnover of business, a total national income, of at least eighty
billion dollars a year. At that figure we shall have a substantial
reduction of unemployment; and the Federal Revenues will be
sufficient to balance the current level of cash expenditures on the
basis of the existing tax structure. That figure can be attained,
working within the framework of our traditional profit system.

The factors in attaining and maintaining that amount of national
income are many and complicated.

They include more widespread understanding among business men of many
changes which world conditions and technological improvements have
brought to our economy over the last twenty years--changes in the
interrelationship of price and volume and employment, for
example--changes of the kind in which business men are now educating
themselves through excellent opportunities like the so-called
"monopoly investigation."

They include a perfecting of our farm program to protect farmers'
income and consumers' purchasing power from alternate risks of crop
gluts and crop shortages.

They include wholehearted acceptance of new standards of honesty in
our financial markets.

They include reconcilement of enormous, antagonistic interests--some
of them long in litigation--in the railroad and general
transportation field.

They include the working out of new techniques--private, state and
federal--to protect the public interest in and to develop wider
markets for electric power.

They include a revamping of the tax relationships between federal,
state and local units of government, and consideration of relatively
small tax increases to adjust inequalities without interfering with
the aggregate income of the American people.

They include the perfecting of labor organization and a universal
ungrudging attitude by employers toward the labor movement, until
there is a minimum of interruption of production and employment
because of disputes, and acceptance by labor of the truth that the
welfare of labor itself depends on increased balanced out-put of
goods.

To be immediately practical, while proceeding with a steady evolution
in the solving of these and like problems, we must wisely use
instrumentalities, like Federal investment, which are immediately
available to us.

Here, as elsewhere, time is the deciding factor in our choice of
remedies.

Therefore, it does not seem logical to me, at the moment we seek to
increase production and consumption, for the Federal Government to
consider a drastic curtailment of its own investments.

The whole subject of government investing and government income is
one which may be approached in two different ways.

The first calls for the elimination of enough activities of
government to bring the expenses of government immediately into
balance with income of government. This school of thought maintains
that because our national income this year is only sixty billion
dollars, ours is only a sixty billion dollar country; that government
must treat it as such; and that without the help of government, it may
some day, somehow, happen to become an eighty billion dollar country.

If the Congress decides to accept this point of view, it will
logically have to reduce the present functions or activities of
government by one-third. Not only will the Congress have to accept
the responsibility for such reduction; but the Congress will have to
determine which activities are to be reduced.

Certain expenditures we cannot possibly reduce at this session, such
as the interest on the public debt. A few million dollars saved here
or there in the normal or in curtailed work of the old departments
and commissions will make no great saving in the Federal budget.
Therefore, the Congress would have to reduce drastically some of
certain large items, very large items, such as aids to agriculture
and soil conservation, veterans' pensions, flood control, highways,
waterways and other public works, grants for social and health
security, Civilian Conservation Corps activities, relief for the
unemployed, or national defense itself.

The Congress alone has the power to do all this, as it is the
appropriating branch of the government.

The other approach to the question of government spending takes the
position that this Nation ought not to be and need not be only a
sixty billion dollar nation; that at this moment it has the men and
the resources sufficient to make it at least an eighty billion dollar
nation. This school of thought does not believe that it can become an
eighty billion dollar nation in the near future if government cuts
its operations by one-third. It is convinced that if we were to try
it, we would invite disaster--and that we would not long remain even
a sixty billion dollar nation. There are many complicated factors
with which we have to deal, but we have learned that it is unsafe to
make abrupt reductions at any time in our net expenditure program.

By our common sense action of resuming government activities last
spring, we have reversed a recession and started the new rising tide
of prosperity and national income which we are now just beginning to
enjoy.

If government activities are fully maintained, there is a good
prospect of our becoming an eighty billion dollar country in a very
short time. With such a national income, present tax laws will yield
enough each year to balance each year's expenses.

It is my conviction that down in their hearts the American
public--industry, agriculture, finance--want this Congress to do
whatever needs to be done to raise our national income to eighty
billion dollars a year.

Investing soundly must preclude spending wastefully. To guard against
opportunist appropriations, I have on several occasions addressed the
Congress on the importance of permanent long-range planning. I hope,
therefore, that following my recommendation of last year, a permanent
agency will be set up and authorized to report on the urgency and
desirability of the various types of government investment.

Investment for prosperity can be made in a democracy.

I hear some people say, "This is all so complicated. There are
certain advantages in a dictatorship. It gets rid of labor trouble,
of unemployment, of wasted motion and of having to do your own
thinking."

My answer is, "Yes, but it also gets rid of some other things which
we Americans intend very definitely to keep--and we still intend to
do our own thinking."

It will cost us taxes and the voluntary risk of capital to attain
some of the practical advantages which other forms of government have
acquired.

Dictatorship, however, involves costs which the American people will
never pay: The cost of our spiritual values. The cost of the blessed
right of being able to say what we please. The cost of freedom of
religion. The cost of seeing our capital confiscated. The cost of
being cast into a concentration camp. The cost of being afraid to
walk down the street with the wrong neighbor. The cost of having our
children brought up, not as free and dignified human beings, but as
pawns molded and enslaved by a machine.

If the avoidance of these costs means taxes on my income; if avoiding
these costs means taxes on my estate at death, I would bear those
taxes willingly as the price of my breathing and my children
breathing the free air of a free country, as the price of a living
and not a dead world.

Events abroad have made it increasingly clear to the American people
that dangers within are less to be feared than dangers from without.
If, therefore, a solution of this problem of idle men and idle
capital is the price of preserving our liberty, no formless selfish
fears can stand in the way.

Once I prophesied that this generation of Americans had a rendezvous
with destiny. That prophecy comes true. To us much is given; more is
expected.

This generation will "nobly save or meanly lose the last best hope of
earth. . . . The way is plain, peaceful, generous, just--a way which
if followed the world will forever applaud and God must forever
bless."