Speech Transcript:

It is a pleasure to return from whence I came. You are among my oldest
friends in Washington - and this House is my oldest home. It was here,
more than 14 years ago, that I first took the oath of Federal office.
It was here, for 14 years, that I gained both knowledge and
inspiration from members of both parties in both Houses - from your
wise and generous leaders - and from the pronouncements which I can
vividly recall, sitting where you now sit - including the programs of
two great Presidents, the undimmed eloquence of Churchill, the soaring
idealism of Nehru, the steadfast words of General de Gaulle. To speak
from this same historic rostrum is a sobering experience. To be back
among so many friends is a happy one.

I am confident that that friendship will continue. Our Constitution
wisely assigns both joint and separate roles to each branch of the
government; and a President and a Congress who hold each other in
mutual respect will neither permit nor attempt any trespass. For my
part, I shall withhold from neither the Congress nor the people any
fact or report, past, present, or future, which is necessary for an
informed judgment of our conduct and hazards. I shall neither shift
the burden of executive decisions to the Congress, nor avoid
responsibility for the outcome of those decisions.

I speak today in an hour of national peril and national opportunity.
Before my term has ended, we shall have to test anew whether a nation
organized and governed such as ours can endure. The outcome is by no
means certain. The answers are by no means clear. All of us together
- this Administration, this Congress, this nation - must forge those
answers.

But today, were I to offer - after little more than a week in office
- detailed legislation to remedy every national ill, the Congress
would rightly wonder whether the desire for speed had replaced the
duty of responsibility.

My remarks, therefore, will be limited. But they will also be candid.
To state the facts frankly is not to despair the future nor indict the
past. The prudent heir takes careful inventory of his legacies, and
gives a faithful accounting to those whom he owes an obligation of
trust. And, while the occasion does not call for another recital of
our blessings and assets, we do have no greater asset than the
willingness of a free and determined people, through its elected
officials, to face all problems frankly and meet all dangers free
from panic or fear.

The present state of our economy is disturbing. We take office in the
wake of seven months of recession, three and one-half years of slack,
seven years of diminished economic growth, and nine years of falling
farm income.

Business bankruptcies have reached their highest level since the
Great Depression. Since 1951 farm income has been squeezed down by 25
percent. Save for a brief period in 1958, insured unemployment is at
the highest peak in our history. Of some five and one-half million
Americans who are without jobs, more than one million have been
searching for work for more than four months. And during each month
some 150,000 workers are exhausting their already meager jobless
benefit rights.

Nearly one-eighth of those who are without jobs live almost without
hope in nearly one hundred especially depressed and troubled areas.
The rest include new school graduates unable to use their talents,
farmers forced to give up their part-time jobs which helped balance
their family budgets, skilled and unskilled workers laid off in such
important industries as metals, machinery, automobiles and apparel.

Our recovery from the 1958 recession, moreover, was anemic and
incomplete. Our Gross National Product never regained its full
potential. Unemployment never returned to normal levels. Maximum use
of our national industrial capacity was never restored.

In short, the American economy is in trouble. The most resourceful
industrialized country on earth ranks among the last in the rate of
economic growth. Since last spring our economic growth rate has
actually receded. Business investment is in a decline. Profits have
fallen below predicted levels. Construction is off. A million unsold
automobiles are in inventory. Fewer people are working - and the
average work week has shrunk well below 40 hours. Yet prices have
continued to rise - so that now too many Americans have less to spend
for items that cost more to buy.

Economic prophecy is at best an uncertain art - as demonstrated by
the prediction one year ago from this same podium that 1960 would be,
and I quote, "the most prosperous year in our history." Nevertheless,
forecasts of continued slack and only slightly reduced unemployment
through 1961 and 1962 have been made with alarming unanimity - and
this Administration does not intend to stand helplessly by.

We cannot afford to waste idle hours and empty plants while awaiting
the end of the recession. We must show the world what a free economy
can do - to reduce unemployment, to put unused capacity to work, to
spur new productivity, and to foster higher economic growth within a
range of sound fiscal policies and relative price stability.

I will propose to the Congress within the next 14 days measures to
improve unemployment compensation through temporary increases in
duration on a self-supporting basis - to provide more food for the
families of the unemployed, and to aid their needy children - to
redevelop our areas of chronic labor surplus - to expand the services
of the U.S. Employment Offices - to stimulate housing and construction
- to secure more purchasing power for our lowest paid workers by
raising and expanding the minimum wage - to offer tax incentives for
sound plant investment - to increase the development of our natural
resources - to encourage price stability - and to take other steps
aimed at insuring a prompt recovery and paving the way for increased
long-range growth. This is not a partisan program concentrating on
our weaknesses - it is, I hope, a national program to realize our
national strength.

Efficient expansion at home, stimulating the new plant and technology
that can make our goods more competitive, is also the key to the
international balance of payments problem. Laying aside all alarmist
talk and panicky solutions, let us put that knotty problem in its
proper perspective.

It is true that, since 1958, the gap between the dollars we spend or
invest abroad and the dollars returned to us has substantially
widened. This overall deficit in our balance of payments increased by
nearly $11 billion in the 3 years - and holders of dollars abroad
converted them to gold in such a quantity as to cause a total outflow
of nearly $5 billion of gold from our reserve. The 1959 deficit was
caused in large part by the failure of our exports to penetrate
foreign markets - the result both of restrictions on our goods and
our own uncompetitive prices. The 1960 deficit, on the other hand,
was more the result of an increase in private capital outflow seeking
new opportunity, higher return or speculative advantage abroad.

Meanwhile this country has continued to bear more than its share of
the West's military and foreign aid obligations. Under existing
policies, another deficit of $2 billion is predicted for 1961 - and
individuals in those countries whose dollar position once depended on
these deficits for improvement now wonder aloud whether our gold
reserves will remain sufficient to meet our own obligations.

All this is cause for concern - but it is not cause for panic. For
our monetary and financial position remains exceedingly strong.
Including our drawing rights in the International Monetary Fund and
the gold reserve held as backing for our currency and Federal Reserve
deposits, we have some $22 billion in total gold stocks and other
international monetary reserves available - and I now pledge that
their full strength stands behind the value of the dollar for use if
needed.

Moreover, we hold large assets abroad - the total owed this nation
far exceeds the claims upon our reserves - and our exports once again
substantially exceed our imports.

In short, we need not - and we shall not - take any action to
increase the dollar price of gold from $35 an ounce - to impose
exchange controls - to reduce our anti-recession efforts - to fall
back on restrictive trade policies - or to weaken our commitments
around the world.

This Administration will not distort the value of the dollar in any
fashion. And this is a commitment.

Prudence and good sense do require, however, that new steps be taken
to ease the payments deficit and prevent any gold crisis. Our success
in world affairs has long depended in part upon foreign confidence in
our ability to pay. A series of executive orders, legislative
remedies and cooperative efforts with our allies will get underway
immediately - aimed at attracting foreign investment and travel to
this country - promoting American exports, at stable prices and with
more liberal government guarantees and financing - curbing tax and
customs loopholes that encourage undue spending of private dollars
abroad - and (through OECD, NATO and otherwise) sharing with our
allies all efforts to provide for the common defense of the free
world and the hopes for growth of the less developed lands. While the
current deficit lasts, ways will be found to ease our dollar outlays
abroad without placing the full burden on the families of men whom we
have asked to serve our Flag overseas.

In short, whatever is required will be done to back up all our
efforts abroad, and to make certain that, in the future as in the
past, the dollar is as "sound as a dollar."

But more than our exchange of international payments is out of
balance. The current Federal budget for fiscal 1961 is almost certain
to show a net deficit. The budget already submitted for fiscal 1962
will remain in balance only if the Congress enacts all the revenue
measures requested - and only if an earlier and sharper up-turn in
the economy than my economic advisers now think likely produces the
tax revenues estimated. Nevertheless, a new Administration must of
necessity build on the spending and revenue estimates already
submitted. Within that framework, barring the development of urgent
national defense needs or a worsening of the economy, it is my
current intention to advocate a program of expenditures which,
including revenues from a stimulation of the economy, will not of and
by themselves unbalance the earlier Budget.

However, we will do what must be done. For our national household is
cluttered with unfinished and neglected tasks. Our cities are being
engulfed in squalor. Twelve long years after Congress declared our
goal to be "a decent home and a suitable environment for every
American family," we still have 25 million Americans living in
substandard homes. A new housing program under a new Housing and
Urban Affairs Department will be needed this year.

Our classrooms contain 2 million more children than they can properly
have room for, taught by 90,000 teachers not properly qualified to
teach. One third of our most promising high school graduates are
financially unable to continue the development of their talents. The
war babies of the 1940's, who overcrowded our schools in the 1950's,
are now descending in 1960 upon our colleges - with two college
students for every one, ten years from now - and our colleges are ill
prepared. We lack the scientists, the engineers and the teachers our
world obligations require. We have neglected oceanography, saline
water conversion, and the basic research that lies at the root of all
progress. Federal grants for both higher and public school education
can no longer be delayed.

Medical research has achieved new wonders - but these wonders are too
often beyond the reach of too many people, owing to a lack of income
(particularly among the aged), a lack of hospital beds, a lack of
nursing homes and a lack of doctors and dentists. Measures to provide
health care for the aged under Social Security, and to increase the
supply of both facilities and personnel, must be undertaken this
year.

Our supply of clean water is dwindling. Organized and juvenile crimes
cost the taxpayers millions of dollars each year, making it essential
that we have improved enforcement and new legislative safeguards. The
denial of constitutional rights to some of our fellow Americans on
account of race - at the ballot box and elsewhere - disturbs the
national conscience, and subjects us to the charge of world opinion
that our democracy is not equal to the high promise of our heritage.
Morality in private business has not been sufficiently spurred by
morality in public business. A host of problems and projects in all
50 States, though not possible to include in this Message, deserves -
and will receive - the attention of both the Congress and the
Executive Branch. On most of these matters, Messages will be sent to
the Congress within the next two weeks.

But all these problems pale when placed beside those which confront
us around the world. No man entering upon this office, regardless of
his party, regardless of his previous service in Washington, could
fail to be staggered upon learning - even in this brief 10 day period
- the harsh enormity of the trials through which we must pass in the
next four years. Each day the crises multiply. Each day their
solution grows more difficult. Each day we draw nearer the hour of
maximum danger, as weapons spread and hostile forces grow stronger. I
feel I must inform the Congress that our analyses over the last ten
days make it clear that - in each of the principal areas of crisis -
the tide of events has been running out and time has not been our
friend.

In Asia, the relentless pressures of the Chinese Communists menace
the security of the entire area - from the borders of India and South
Viet Nam to the jungles of Laos, struggling to protect its newly-won
independence. We seek in Laos what we seek in all Asia, and, indeed,
in all of the world - freedom for the people and independence for the
government. And this Nation shall persevere in our pursuit of these
objectives.

In Africa, the Congo has been brutally torn by civil strife,
political unrest and public disorder. We shall continue to support
the heroic efforts of the United Nations to restore peace and order -
efforts which are now endangered by mounting tensions, unsolved
problems, and decreasing support from many member states.

In Latin America, Communist agents seeking to exploit that region's
peaceful revolution of hope have established a base on Cuba, only 90
miles from our shores. Our objection with Cuba is not over the
people's drive for a better life. Our objection is to their
domination by foreign and domestic tyrannies. Cuban social and
economic reform should be encouraged. Questions of economic and trade
policy can always be negotiated. But Communist domination in this
Hemisphere can never be negotiated.

We are pledged to work with our sister republics to free the Americas
of all such foreign domination and all tyranny, working toward the
goal of a free hemisphere of free governments, extending from Cape
Horn to the Arctic Circle.

In Europe our alliances are unfulfilled and in some disarray. The
unity of NATO has been weakened by economic rivalry and partially
eroded by national interest. It has not yet fully mobilized its
resources nor fully achieved a common outlook. Yet no Atlantic power
can meet on its own the mutual problems now facing us in defense,
foreign aid, monetary reserves, and a host of other areas; and our
close ties with those whose hopes and interests we share are among
this Nation's most powerful assets.

Our greatest challenge is still the world that lies beyond the Cold
War - but the first great obstacle is still our relations with the
Soviet Union and Communist China. We must never be lulled into
believing that either power has yielded its ambitions for world
domination - ambitions which they forcefully restated only a short
time ago. On the contrary, our task is to convince them that
aggression and subversion will not be profitable routes to pursue
these ends. Open and peaceful competition - for prestige, for
markets, for scientific achievement, even for men's minds - is
something else again. For if Freedom and Communism were to compete
for man's allegiance in a world at peace, I would look to the future
with ever increasing confidence.

To meet this array of challenges - to fulfill the role we cannot
avoid on the world scene - we must reexamine and revise our whole
arsenal of tools: military, economic and political.

One must not overshadow the other. On the Presidential Coat of Arms,
the American eagle holds in his right talon the olive branch, while
in his left he holds a bundle of arrows. We intend to give equal
attention to both.

First, we must strengthen our military tools. We are moving into a
period of uncertain risk and great commitment in which both the
military and diplomatic possibilities require a Free World force so
powerful as to make any aggression clearly futile. Yet in the past,
lack of a consistent, coherent military strategy, the absence of
basic assumptions about our national requirements and the faulty
estimates and duplication arising from inter-service rivalries have
all made it difficult to assess accurately how adequate - or
inadequate - our defenses really are.

I have, therefore, instructed the Secretary of Defense to reappraise
our entire defense strategy - our ability to fulfill our commitments
- the effectiveness, vulnerability, and dispersal of our strategic
bases, forces and warning systems - the efficiency and economy of our
operation and organization - the elimination of obsolete bases and
installations - and the adequacy, modernization and mobility of our
present conventional and nuclear forces and weapons systems in the
light of present and future dangers. I have asked for preliminary
conclusions by the end of February - and I then shall recommend
whatever legislative, budgetary or executive action is needed in the
light of these conclusions.

In the meantime, I have asked the Defense Secretary to initiate
immediately three new steps most clearly needed now:

   1. First, I have directed prompt attention to increase our
air-lift capacity. Obtaining additional air transport mobility - and
obtaining it now - will better assure the ability of our conventional
forces to respond, with discrimination and speed, to any problem at
any spot on the globe at any moment's notice. In particular it will
enable us to meet any deliberate effort to avoid or divert our forces
by starting limited wars in widely scattered parts of the globe.
   2. I have directed prompt action to step up our Polaris submarine
program. Using unobligated ship-building funds now (to let contracts
originally scheduled for the next fiscal year) will build and place
on station - at least nine months earlier than planned -
substantially more units of a crucial deterrent - a fleet that will
never attack first, but possess sufficient powers of retaliation,
concealed beneath the seas, to discourage any aggressor from
launching an attack upon our security.
   3. I have directed prompt action to accelerate our entire missile
program. Until the Secretary of Defense's reappraisal is completed,
the emphasis here will be largely on improved organization and
decision-making - on cutting down the wasteful duplications and the
time-lag that have handicapped our whole family of missiles. If we
are to keep the peace, we need an invulnerable missile force powerful
enough to deter any aggressor from even threatening an attack that he
would know could not destroy enough of our force to prevent his own
destruction. For as I said upon taking the oath of office: " Only
when our arms are sufficient beyond doubt can we be certain beyond
doubt that they will never be employed."

Secondly, we must improve our economic tools. Our role is essential
and unavoidable in the construction of a sound and expanding economy
for the entire non-communist world, helping other nations build the
strength to meet their own problems, to satisfy their own aspirations
- to surmount their own dangers. The problems in achieving this goal
are towering and unprecedented - the response must be towering and
unprecedented as well, much as Lend-Lease and the Marshall Plan were
in earlier years, which brought such fruitful results.

I intend to ask the Congress for authority to establish a new and
more effective program for assisting the economic, educational and
social development of other countries and continents. That program
must stimulate and take more effectively into account the
contributions of our allies, and provide central policy direction for
all our own programs that now so often overlap, conflict or diffuse
our energies and resources. Such a program, compared to past
programs, will require

   1. more flexibility for short run emergencies
   2. more commitment to long term development
   3. new attention to education at all levels
   4. greater emphasis on the recipient nation's role, their effort,
their purpose, with greater social justice for their people, broader
distribution and participation by their people and more efficient
public administration and more efficient tax systems of their own
   5. and orderly planning for national and regional development
instead of a piecemeal approach.

I hope the Senate will take early action approving the Convention
establishing the Organization for Economic Cooperation and
Development. This will be an important instrument in sharing with our
allies this development effort - working toward the time when each
nation will contribute in proportion to its ability to pay. For,
while we are prepared to assume our full share of these huge burdens,
we cannot and must not be expected to bear them alone.

To our sister republics to the south, we have pledged a new alliance
for progress - alianza para progreso. Our goal is a free and
prosperous Latin America, realizing for all its states and all its
citizens a degree of economic and social progress that matches their
historic contributions of culture, intellect and liberty. To start
this nation's role at this time in that alliance of neighbors, I am
recommending the following:

   1. That the Congress appropriate in full the $500 million fund
pledged by the Act of Bogota, to be used not as an instrument of the
Cold War, but as a first step in the sound development of the
Americas.
   2. That a new Inter-Departmental Task Force be established under
the leadership of the Department of State, to coordinate at the
highest level all policies and programs of concern to the Americas.
   3. That our delegates to the OAS, working with those of other
members, strengthen that body as an instrument to preserve the peace
and to prevent foreign domination anywhere in the Hemisphere.
   4. That, in cooperation with other nations, we launch a new
hemispheric attack on illiteracy and inadequate educational
opportunities to all levels; and, finally,
   5. That a Food-for-Peace mission be sent immediately to Latin
America to explore ways in which our vast food abundance can be used
to help end hunger and malnutrition in certain areas of suffering in
our own hemisphere.
   6. This Administration is expanding its Food-for-Peace Program in
every possible way. The product of our abundance must be used more
effectively to relieve hunger and help economic growth in all corners
of the globe. And I have asked the Director of this Program to
recommend additional ways in which these surpluses can advance the
interests of world peace - including the establishment of world food
reserves. 

An even more valuable national asset is our reservoir of dedicated
men and women - not only on our college campuses but in every age
group - who have indicated their desire to contribute their skills,
their efforts, and a part of their lives to the fight for world
order. We can mobilize this talent through the formation of a
National Peace Corps, enlisting the services of all those with the
desire and capacity to help foreign lands meet their urgent needs for
trained personnel.

Finally, while our attention is centered on the development of the
noncommunist world, we must never forget our hopes for the ultimate
freedom and welfare of the Eastern European peoples. In order to be
prepared to help re-establish historic ties of friendship, I am
asking the Congress for increased discretion to use economic tools in
this area whenever this is found to be clearly in the national
interest. This will require amendment of the Mutual Defense
Assistance Control Act along the lines I proposed as a member of the
Senate, and upon which the Senate voted last summer. Meanwhile, I
hope to explore with the Polish government the possibility of using
our frozen Polish funds on projects of peace that will demonstrate
our abiding friendship for and interest in the people of Poland.

Third, we must sharpen our political and diplomatic tools - the means
of cooperation and agreement on which an enforceable world order must
ultimately rest.

I have already taken steps to coordinate and expand our disarmament
effort - to increase our programs of research and study - and to make
arms control a central goal of our national policy under my direction.
The deadly arms race, and the huge resources it absorbs, have too long
overshadowed all else we must do. We must prevent that arms race from
spreading to new nations, to new nuclear powers and to the reaches of
outer space. We must make certain that our negotiators are better
informed and better prepared - to formulate workable proposals of our
own and to make sound judgments about the proposals of others.

I have asked the other governments concerned to agree to a reasonable
delay in the talks on a nuclear test ban - and it is our intention to
resume negotiations prepared to reach a final agreement with any
nation that is equally willing to agree to an effective and
enforceable treaty.

We must increase our support of the United Nations as an instrument
to end the Cold War instead of an arena in which to fight it. In
recognition of its increasing importance and the doubling of its
membership

   1. we are enlarging and strengthening our own mission to the U.N.
   2. we shall help insure that it is properly financed.
   3. we shall work to see that the integrity of the office of the
Secretary-General is maintained.
   4. And I would address a special plea to the smaller nations of
the world - to join with us in strengthening this organization, which
is far more essential to their security than it is to ours - the only
body in the world where no nation need be powerful to be secure,
where every nation has an equal voice, and where any nation can exert
influence not according to the strength of its armies but according to
the strength of its ideas. It deserves the support of all. 

Finally, this Administration intends to explore promptly all possible
areas of cooperation with the Soviet Union and other nations "to
invoke the wonders of science instead of its terrors." Specifically,
I now invite all nations - including the Soviet Union - to join with
us in developing a weather prediction program, in a new
communications satellite program and in preparation for probing the
distant planets of Mars and Venus, probes which may someday unlock
the deepest secrets of the universe.

Today this country is ahead in the science and technology of space,
while the Soviet Union is ahead in the capacity to lift large
vehicles into orbit. Both nations would help themselves as well as
other nations by removing these endeavors from the bitter and
wasteful competition of the Cold War. The United States would be
willing to join with the Soviet Union and the scientists of all
nations in a greater effort to make the fruits of this new knowledge
available to all - and, beyond that, in an effort to extend farm
technology to hungry nations - to wipe out disease - to increase the
exchanges of scientists and their knowledge - and to make our own
laboratories available to technicians of other lands who lack the
facilities to pursue their own work. Where nature makes natural
allies of us all, we can demonstrate that beneficial relations are
possible even with those with whom we most deeply disagree - and this
must someday be the basis of world peace and world law.

I have commented on the state of the domestic economy, our balance of
payments, our Federal and social budget and the state of the world. I
would like to conclude with a few remarks about the state of the
Executive branch. We have found it full of honest and useful public
servants - but their capacity to act decisively at the exact time
action is needed has too often been muffled in the morass of
committees, timidities and fictitious theories which have created a
growing gap between decision and execution, between planning and
reality. In a time of rapidly deteriorating situations at home and
abroad, this is bad for the public service and particularly bad for
the country; and we mean to make a change.

I have pledged myself and my colleagues in the cabinet to a
continuous encouragement of initiative, responsibility and energy in
serving the public interest. Let every public servant know, whether
his post is high or low, that a man's rank and reputation in this
Administration will be determined by the size of the job he does, and
not by the size of his staff, his office or his budget. Let it be
clear that this Administration recognizes the value of dissent and
daring - that we greet healthy controversy as the hallmark of healthy
change. Let the public service be a proud and lively career. And let
every man and woman who works in any area of our national government,
in any branch, at any level, be able to say with pride and with honor
in future years:"I served the United States government in that hour
of our nation's need."

For only with complete dedication by us all to the national interest
can we bring our country through the troubled years that lie ahead.
Our problems are critical. The tide is unfavorable. The news will be
worse before it is better. And while hoping and working for the best,
we should prepare ourselves now for the worst.

We cannot escape our dangers - neither must we let them drive us into
panic or narrow isolation. In many areas of the world where the
balance of power already rests with our adversaries, the forces of
freedom are sharply divided. It is one of the ironies of our time
that the techniques of a harsh and repressive system should be able
to instill discipline and ardor in its servants - while the blessings
of liberty have too often stood for privilege, materialism and a life
of ease.

But I have a different view of liberty.

Life in 1961 will not be easy. Wishing it, predicting it, even asking
for it, will not make it so. There will be further setbacks before the
tide is turned. But turn it we must. The hopes of all mankind rest
upon us - not simply upon those of us in this chamber, but upon the
peasant in Laos, the fisherman in Nigeria, the exile from Cuba, the
spirit that moves every man and Nation who shares our hopes for
freedom and the future. And in the final analysis, they rest most of
all upon the pride and perseverance of our fellow citizens of the
great Republic.

In the words of a great President, whose birthday we honor today,
closing his final State of the Union Message sixteen years ago, "We
pray that we may be worthy of the unlimited opportunities that God
has given us."