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Title: State of the Union Addresses

Author: Calvin Coolidge

Release date: February 1, 2004 [eBook #5036]
                Most recently updated: December 2, 2014

Language: English

Credits: Produced by James Linden.  HTML version by Al Haines.


*** START OF THE PROJECT GUTENBERG EBOOK STATE OF THE UNION ADDRESSES ***




Produced by James Linden.  HTML version by Al Haines.








State of the Union Addresses of Calvin Coolidge



The addresses are separated by three asterisks: ***

Dates of addresses by Calvin Coolidge in this eBook:

  December 6, 1923
  December 3, 1924
  December 8, 1925
  December 7, 1926
  December 6, 1927
  December 4, 1928



***

State of the Union Address
Calvin Coolidge
December 6, 1923

Since the close of the last Congress the Nation has lost President Harding.
The world knew his kindness and his humanity, his greatness and his
character. He has left his mark upon history. He has made justice more
certain and peace more secure. The surpassing tribute paid to his memory as
he was borne across the continent to rest at last at home revealed the
place he held in the hearts of the American people. But this is not the
occasion for extended reference to the man or his work. In this presence,
among these who knew and loved him, that is unnecessary. But we who were
associated with him could not resume together the functions of our office
without pausing for a moment, and in his memory reconsecrating ourselves to
the service of our country. He is gone. We remain. It is our duty, under
the inspiration of his example, to take up the burdens which he was
permitted to lay down, and to develop and support the wise principles of
government which he represented.

FOREIGN AFFAIRS

For us peace reigns everywhere. We desire to perpetuate it always by
granting full justice to others and requiring of others full justice to
ourselves.

Our country has one cardinal principle to maintain in its foreign policy.
It is an American principle. It must be an American policy. We attend to
our own affairs, conserve our own strength, and protect the interests of
our own citizens; but we recognize thoroughly our obligation to help
others, reserving to the decision of our own Judgment the time, the place,
and the method. We realize the common bond of humanity. We know the
inescapable law of service.

Our country has definitely refused to adopt and ratify the covenant of the
League of Nations. We have not felt warranted in assuming the
responsibilities which its members have assumed. I am not proposing any
change in this policy; neither is the Senate. The incident, so far as we
are concerned, is closed. The League exists as a foreign agency. We hope it
will be helpful. But the United States sees no reason to limit its own
freedom and independence of action by joining it. We shall do well to
recognize this basic fact in all national affairs and govern ourselves
accordingly.

WORLD COURT

Our foreign policy has always been guided by two principles. The one is the
avoidance of permanent political alliances which would sacrifice our proper
independence. The other is the peaceful settlement of controversies between
nations. By example and by treaty we have advocated arbitration. For nearly
25 years we have been a member of The Hague Tribunal, and have long sought
the creation of a permanent World Court of Justice. I am in full accord
with both of these policies. I favor the establishment of such a court
intended to include the whole world. That is, and has long been, an
American policy.

Pending before the Senate is a proposal that this Government give its
support to the Permanent Court of International Justice, which is a new and
somewhat different plan. This is not a partisan question. It should not
assume an artificial importance. The court is merely a convenient
instrument of adjustment to which we could go, but to which we could not
be brought. It should be discussed with entire candor, not by a political
but by a judicial method, without pressure and without prejudice.
Partisanship has no place in our foreign relations. As I wish to see a
court established, and as the proposal presents the only practical plan on
which many nations have ever agreed, though it may not meet every desire, I
therefore commend it to the favorable consideration of the Senate, with the
proposed reservations clearly indicating our refusal to adhere to the
League of Nations.

RUSSIA

Our diplomatic relations, lately so largely interrupted, are now being
resumed, but Russia presents notable difficulties. We have every desire to
see that great people, who are our traditional friends, restored to their
position among the nations of the earth. We have relieved their pitiable
destitution with an enormous charity. Our Government offers no objection
to the carrying on of commerce by our citizens with the people of Russia.
Our Government does not propose, however, to enter into relations with
another regime which refuses to recognize the sanctity of international
obligations. I do not propose to barter away for the privilege of trade any
of the cherished rights of humanity. I do not propose to make merchandise
of any American principles. These rights and principles must go wherever
the sanctions of our Government go.

But while the favor of America is not for sale, I am willing to make very
large concessions for the purpose of rescuing the people of Russia. Already
encouraging evidences of returning to the ancient ways of society can be
detected. But more are needed. Whenever there appears any disposition to
compensate our citizens who were despoiled, and to recognize that debt
contracted with our Government, not by the Czar, but by the newly formed
Republic of Russia; whenever the active spirit of enmity to our
institutions is abated; whenever there appear works mete for repentance;
our country ought to be the first to go to the economic and moral rescue of
Russia. We have every desire to help and no desire to injure. We hope the
time is near at hand when we can act.

DEBTS

The current debt and interest due from foreign Governments, exclusive of
the British debt of $4,600,000,000, is about $7,200,000,000. I do not favor
the cancellation of this debt, but I see no objection to adjusting it in
accordance with the principle adopted for the British debt. Our country
would not wish to assume the role of an oppressive creditor, but would
maintain the principle that financial obligations between nations are
likewise moral obligations which international faith and honor require
should be discharged.

Our Government has a liquidated claim against Germany for the expense of
the army of occupation of over $255,000,000. Besides this, the Mixed Claims
Commission have before them about 12,500 claims of American citizens,
aggregating about $1,225,000,000. These claims have already been reduced by
a recent decision, but there are valid claims reaching well toward
$500,000,000. Our thousands of citizens with credits due them of hundreds
of millions of dollars have no redress save in the action of our
Government. These are very substantial interests, which it is the duty of
our Government to protect as best it can. That course I propose to pursue.

It is for these reasons that we have a direct interest in the economic
recovery of Europe. They are enlarged by our desire for the stability of
civilization and the welfare of humanity. That we are making sacrifices to
that end none can deny. Our deferred interest alone amounts to a million
dollars every day. But recently we offered to aid with our advice and
counsel. We have reiterated our desire to see France paid and Germany
revived. We have proposed disarmament. We have earnestly sought to compose
differences and restore peace. We shall persevere in well-doing, not by
force, but by reason.

FOREIGN PAPERS

Under the law the papers pertaining to foreign relations to be printed are
transmitted as a part of this message. Other volumes of these papers will
follow.

FOREIGN SERVICE

The foreign service of our Government needs to be reorganized and
improved.

FISCAL CONDITION

Our main problems are domestic problems. Financial stability is the first
requisite of sound government. We can not escape the effect of world
conditions. We can not avoid the inevitable results of the economic
disorders which have reached all nations. But we shall diminish their harm
to us in proportion as we continue to restore our Government finances to a
secure and endurable position. This we can and must do. Upon that firm
foundation rests the only hope of progress and prosperity. From that source
must come relief for the people.

This is being, accomplished by a drastic but orderly retrenchment, which is
bringing our expenses within our means. The origin of this has been the
determination of the American people, the main support has been the courage
of those in authority, and the effective method has been the Budget System.
The result has involved real sacrifice by department heads, but it has been
made without flinching. This system is a law of the Congress. It represents
your will. It must be maintained, and ought to be strengthened by the
example of your observance. Without a Budget System there can be no fixed
responsibility and no constructive scientific economy.

This great concentration of effort by the administration and Congress has
brought the expenditures, exclusive of the self-supporting Post. Office
Department, down to three billion dollars. It is possible, in consequence,
to make a large reduction in the taxes of the people, which is the sole
object of all curtailment. This is treated at greater length in the Budget
message, and a proposed plan has been presented in detail in a statement by
the Secretary of the Treasury which has my unqualified approval. I
especially commend a decrease on earned incomes, and further abolition of
admission, message, and nuisance taxes. The amusement and educational
value of moving pictures ought not to be taxed. Diminishing charges against
moderate incomes from investment will afford immense relief, while a
revision of the surtaxes will not only provide additional money for capital
investment, thus stimulating industry and employing more but will not
greatly reduce the revenue from that source, and may in the future actually
increase it.

Being opposed to war taxes in time of peace, I am not in favor of
excess-profits taxes. A very great service could be rendered through
immediate enactment of legislation relieving the people of some of the
burden of taxation. To reduce war taxes is to give every home a better
chance.

For seven years the people have borne with uncomplaining courage the
tremendous burden of national and local taxation. These must both be
reduced. The taxes of the Nation must be reduced now as much as prudence
will permit, and expenditures must be reduced accordingly. High taxes reach
everywhere and burden everybody. They gear most heavily upon the poor. They
diminish industry and commerce. They make agriculture unprofitable. They
increase the rates on transportation. They are a charge on every necessary
of life. Of all services which the Congress can render to the country, I
have no hesitation in declaring t neglect it, to postpone it, to obstruct
it by unsound proposals, is to become unworthy of public confidence and
untrue to public trust. The country wants this measure to have the right of
way over an others.

Another reform which is urgent in our fiscal system is the abolition of the
right to issue tax-exempt securities. The existing system not only permits
a large amount of the wealth of the Notion to escape its just burden but
acts as a continual stimulant to municipal extravagance. This should be
prohibited by constitutional amendment. All the wealth of the Nation ought
to contribute its fair share to the expenses of the Nation.

TARIFF LAW

The present tariff law has accomplished its two main objects. It has
secured an abundant revenue and been productive of an abounding prosperity.
Under it the country has had a very large export and import trade. A
constant revision of the tariff by the Congress is disturbing and harmful.
The present law contains an elastic provision authorizing the President to
increase or decrease present schedules not in excess of 50 per centum to
meet the difference in cost of production at home and abroad. This does
not, to my mind, warrant a rewriting g of the whole law, but does mean, and
will be so administered, that whenever the required investigation shows
that inequalities of sufficient importance exist in any schedule, the power
to change them should and will be applied.

SHIPPING

The entire well being of our country is dependent upon transportation by
sea and land. Our Government during the war acquired a large merchant fleet
which should be transferred, as soon as possible, to private ownership and
operation under conditions which would secure two results: First, and of
prime importance, adequate means for national defense; second, adequate
service to American commerce. Until shipping conditions are such that our
fleet can be disposed of advantageously under these conditions, it will be
operated as economically as possible under such plans as may be devised
from time to time by the Shipping Board. We must have a merchant marine
which meets these requirements, and we shall have to pay the cost of its
service.

PUBLIC IMPROVEMENTS

The time has come to resume in a moderate way the opening of our
intracoastal waterways; the control of flood waters of the Mississippi and
of the Colorado Rivers; the improvement of the waterways from the Great
Lakes toward the Gulf of Mexico; and the development of the great power and
navigation project of the St. Lawrence River, for which efforts are now
being made to secure the necessary treaty with Canada. These projects can
not all be undertaken at once, but all should have the immediate
consideration of the Congress and be adopted as fast as plans can be
matured and the necessary funds become available. This is not incompatible
with economy, for their nature does not require so much a public
expenditure as a capital investment which will be reproductive, as
evidenced by the marked increase in revenue from the Panama Canal. Upon
these projects depend much future industrial and agricultural progress.
They represent the protection of large areas from flood and the addition of
a great amount of cheap power and cheap freight by use of navigation, chief
of which is the bringing of ocean-going ships to the Great Lakes.

Another problem of allied character is the superpower development of the
Northeastern States, consideration of which is growing under the direction
of the Department of Commerce by joint conference with the local
authorities.

RAILROADS

Criticism of the railroad law has been directed, first, to the section
laying down the rule by which rates are fixed, and providing for payment to
the Government and use of excess earnings; second, to the method for the
adjustment of wage scales; and third, to the authority permitting
consolidations.

It has been erroneously assumed that the act undertakes to guarantee
railroad earnings. The law requires that rates should be just and
reasonable. That has always been the rule under which rates have been
fixed. To make a rate that does not yield a fair return results in
confiscation, and confiscatory rates are of course unconstitutional. Unless
the Government adheres to the rule of making a rate that will yield a fair
return, it must abandon rate making altogether. The new and important
feature of that part of the law is the recapture and redistribution of
excess rates. The constitutionality of this method is now before the
Supreme Court for adjudication. Their decision should be awaited before
attempting further legislation on this subject. Furthermore, the importance
of this feature will not be great if consolidation goes into effect.

The settlement of railroad labor disputes is a matter of grave public
concern. The Labor Board was established to protect the public in the
enjoyment of continuous service by attempting to insure justice between the
companies and their employees. It has been a great help, but is not
altogether satisfactory to the public, the employees, or the companies. If
a substantial agreement can be reached among the groups interested, there
should be no hesitation in enacting such agreement into law. If it is not
reached, the Labor Board may very well be left for the present to protect
the public welfare.

The law for consolidations is not sufficiently effective to be expeditious.
Additional legislation is needed giving authority for voluntary
consolidations, both regional and route, and providing Government machinery
to aid and stimulate such action, always subject to the approval of the
Interstate Commerce Commission. This should authorize the commission to
appoint committees for each proposed group, representing the public and the
component roads, with power to negotiate with individual security holders
for an exchange of their securities for those of the, consolidation on such
terms and conditions as the commission may prescribe for avoiding any
confiscation and preserving fair values. Should this permissive
consolidation prove ineffective after a limited period, the authority of
the Government will have to be directly invoked.

Consolidation appears to be the only feasible method for the maintenance of
an adequate system of transportation with an opportunity so to adjust
freight rates as to meet such temporary conditions as now prevail in some
agricultural sections. Competent authorities agree that an entire
reorganization of the rate structure for freight is necessary. This should
be ordered at once by the Congress.

DEPARTMENT OF JUSTICE

As no revision of the laws of the United States has been made since 1878, a
commission or committee should be created to undertake this work. The
Judicial Council reports that two more district judges are needed in the
southern district of New York, one in the northern district of Georgia, and
two more circuit judges in the Circuit Court of Appeals of the Eighth
Circuit. Legislation should be considered for this purpose.

It is desirable to expedite the hearing and disposal of cases. A
commission of Federal judges and lawyers should be created to recommend
legislation by which the procedure in the Federal trial courts may be
simplified and regulated by rules of court, rather than by statute; such
rules to be submitted to the Congress and to be in force until annulled or
modified by the Congress. The Supreme Court needs legislation revising and
simplifying the laws governing review by that court, and enlarging the
classes of cases of too little public importance to be subject to review.
Such reforms would expedite the transaction of the business of the courts.
The administration of justice is likely to fail if it be long delayed.

The National Government has never given adequate attention to its prison
problems. It ought to provide employment in such forms of production as can
be used by the Government, though not sold to the public in competition
with private business, for all prisoners who can be placed at work, and for
which they should receive a reasonable compensation, available for their
dependents.

Two independent reformatories are needed; one for the segregation of women,
and another for the segregation of young men serving their first sentence.

The administration of justice would be facilitated greatly by including in
the Bureau of Investigation of the Department of Justice a Division of
Criminal Identification, where there would be collected this information
which is now indispensable in the suppression of crime.

PROHIBITION

The prohibition amendment to the Constitution requires the Congress. and
the President to provide adequate laws to prevent its violation. It is my
duty to enforce such laws. For that purpose a treaty is being negotiated
with Great Britain with respect to the right of search of hovering
vessels. To prevent smuggling, the Coast Card should be greatly
strengthened, and a supply of swift power boats should be provided. The
major sources of production should be rigidly regulated, and every effort
should be made to suppress interstate traffic. With this action on the part
of the National Government, and the cooperation which is usually rendered
by municipal and State authorities, prohibition should be made effective.
Free government has no greater menace than disrespect for authority and
continual violation of law. It is the duty of a citizen not only to observe
the law but to let it be known that he is opposed to its violation.

THE NEGRO

Numbered among our population are some 12,000,000 colored people. Under our
Constitution their rights are just as sacred as those of any other citizen.
It is both a public and a private duty to protect those rights. The
Congress ought to exercise all its powers of prevention and punishment
against the hideous crime of lynching, of which the negroes are by no means
the sole sufferers, but for which they furnish a majority of the victims.

Already a considerable sum is appropriated to give the negroes vocational
training in agriculture. About half a million dollars is recommended for
medical courses at Howard University to help contribute to the education of
500 colored doctors needed each year. On account of the integration of
large numbers into industrial centers, it has been proposed that a
commission be created, composed of members from both races, to formulate a
better policy for mutual understanding and confidence. Such an effort is to
be commended. Everyone would rejoice in the accomplishment of the results
which it seeks. But it is well to recognize that these difficulties are to
a large extent local problems which must be worked out by the mutual
forbearance and human kindness of each community. Such a method gives much
more promise of a real remedy than outside interference.

CIVIL SERVICE

The maintenance and extension of the classified civil service is
exceedingly important. There are nearly 550,000 persons in the executive
civil service drawing about $700,000,000 of yearly compensation.
Four-fifths of these are in the classified service. This method of
selection of the employees of the United States is especially desirable for
the Post Office Department. The Civil Service Commission has recommended
that postmasters at first, second, and third class offices be classified.
Such action, accompanied by a repeal of the four-year term of office, would
undoubtedly be an improvement. I also recommend that the field force for
prohibition enforcement be brought within the classified civil service
without covering in the present membership. The best method for selecting
public servants is the merit system.

PUBLIC BUILDINGS

Many of the departments in Washington need better housing facilities. Some
are so crowded that their work is impeded, others are so scattered that
they lose their identity. While I do not favor at this time a general
public building law, I believe it is now necessary, in accordance with
plans already sanctioned for a unified and orderly system for the
development of this city, to begin the carrying out of those plans by
authorizing the erection of three or four buildings most urgently needed by
an annual appropriation of $5,000,000.

REGULATORY LEGISLATION

Cooperation with other maritime powers is necessary for complete protection
of our coast waters from pollution. Plans for this are under way, but
await certain experiments for refuse disposal. Meantime laws prohibiting
spreading oil and oil refuse from vessels in our own territorial waters
would be most helpful against this menace and should be speedily enacted.

Laws should be passed regulating aviation.

Revision is needed of the laws regulating radio interference.

Legislation and regulations establishing load liner, to provide safe
loading of vessels leaving our ports are necessary and recodification of
our navigation laws is vital.

Revision of procedure of the Federal Trade Commission will give more
constructive purpose to this department.

If our Alaskan fisheries are to be saved from destruction, there must be
further legislation declaring a general policy and delegating the authority
to make rules and regulations to an administrative body.

ARMY AND NAVY

For several years we have been decreasing the personnel of the Army and
Navy, and reducing their power to the danger point. Further reductions
should not be made. The Army is a guarantee of the security of our citizens
at home; the Navy is a guarantee of the security of our citizens abroad.
Both of these services should be strengthened rather than weakened.
Additional planes are needed for the Army, and additional submarines for
the Navy. The defenses of Panama must be perfected. We want no more
competitive armaments. We want no more war. But we want no weakness that
invites imposition. A people who neglect their national defense are putting
in jeopardy their national honor.

INSULAR POSSESSIONS

Conditions in the insular possessions on the whole have been good. Their
business has been reviving. They are being administered according to law.
That effort has the full support of the administration. Such
recommendations as may conic from their people or their governments should
have the most considerate attention.

EDUCATION AND WELFARE

Our National Government is not doing as much as it legitimately can do to
promote the welfare of the people. Our enormous material wealth, our
institutions, our whole form of society, can not be considered fully
successful until their benefits reach the merit of every individual. This
is not a suggestion that the Government should, or could, assume for the
people the inevitable burdens of existence. There is no method by which we
can either be relieved of the results of our own folly or be guaranteed a
successful life. There is an inescapable personal responsibility for the
development of character, of industry, of thrift, and of self-control.
These do not come from the Government, but from the people themselves. But
the Government can and should always be expressive of steadfast
determination, always vigilant, to maintain conditions under which these
virtues are most likely to develop and secure recognition and reward. This
is the American policy.

It is in accordance with this principle that we have enacted laws for the
protection of the public health and have adopted prohibition in narcotic
drugs and intoxicating liquors. For purposes of national uniformity we
ought to provide, by constitutional amendment and appropriate legislation,
for a limitation of child labor, and in all cases under the exclusive
jurisdiction of the Federal Government a minimum wage law for women, which
would undoubtedly find sufficient power of enforcement in the influence of
public opinion.

Having in mind that education is peculiarly a local problem, and that it
should always be pursued with the largest freedom of choice by students and
parents, nevertheless, the Federal Government might well give the benefit
of its counsel and encouragement more freely in this direction. If anyone
doubts the need of concerted action by the States of the Nation for this
purpose, it is only necessary to consider the appalling figures of
illiteracy representing a condition which does not vary much in all parts
of the Union. I do not favor the making of appropriations from the National
Treasury to be expended directly on local education, but I do consider it a
fundamental requirement of national activity which, accompanied by allied
subjects of welfare, is worthy of a separate department and a place in the
Cabinet. The humanitarian side of government should not be repressed, but
should be cultivated.

Mere intelligence, however, is not enough. Enlightenment must be
accompanied by that moral power which is the product of the home and of
rebellion. Real education and true welfare for the people rest inevitably
on this foundation, which the Government can approve and commend, but which
the people themselves must create.

IMMIGRATION

American institutions rest solely on good citizenship. They were created by
people who had a background of self-government. New arrivals should be
limited to our capacity to absorb them into the ranks of good citizenship.
America must be kept American. For this purpose, it is necessary to
continue a policy of restricted immigration. It would be well to make such
immigration of a selective nature with some inspection at the source, and
based either on a prior census or upon the record of naturalization. Either
method would insure the admission of those with the largest capacity and
best intention of becoming citizens. I am convinced that our present
economic and social conditions warrant a limitation of those to be
admitted. We should find additional safety in a law requiring the immediate
registration of all aliens. Those who do not want to be partakers of the
American spirit ought not to settle in America.

VETERANS

No more important duty falls on the Government of the United States than
the adequate care of its veterans. Those suffering disabilities incurred in
the service must have sufficient hospital relief and compensation. Their
dependents must be supported. Rehabilitation and vocational training must
be completed. All of this service must be clean, must be prompt and
effective, and it must be administered in a spirit of the broadest and
deepest human sympathy. If investigation reveals any present defects of
administration or need Of legislation, orders will be given for the
immediate correction of administration, and recommendations for legislation
should be given the highest preference.

At present there are 9,500 vacant beds in Government hospitals, I recommend
that all hospitals be authorized at once to receive and care for, without
hospital pay, the veterans of all wars needing such care, whenever there
are vacant beds, and that immediate steps be taken to enlarge and build new
hospitals to serve all such cases.

The American Legion will present to the Congress a legislative program
too extensive for detailed discussion here. It is a carefully matured plan.
While some of it I do not favor, with much of it I am in hearty accord, and
I recommend that a most painstaking effort be made to provide remedies for
any defects in the administration of the present laws which their
experience has revealed. The attitude of the Government toward these
proposals should be one of generosity. But I do not favor the granting of a
bonus.

COAL

The cost of coal has become unbearably high. It places a great burden on
our industrial and domestic life. The public welfare requires a reduction
in the price of fuel. With the enormous deposits in existence, failure of
supply ought not to be tolerated. Those responsible for the conditions in
this industry should undertake its reform and free it from any charge of
profiteering.

The report of the Coal Commission will be before the Congress. It comprises
all the facts. It represents the mature deliberations and conclusions of
the best talent and experience that ever made a national survey of the
production and distribution of fuel. I do not favor Government ownership or
operation of coal mines. The need is for action under private ownership
that will secure greater continuity of production and greater public
protection. The Federal Government probably has no peacetime authority to
regulate wages, prices, or profits in coal at the mines or among dealers,
but by ascertaining and publishing facts it can exercise great influence.

The source of the difficulty in the bituminous coal fields is the
intermittence of operation which causes great waste of both capital and
labor. That part of the report dealing with this problem has much
significance, and is suggestive of necessary remedies. By amending, the car
rules, by encouraging greater unity of ownership, and possibly by
permitting common selling agents for limited districts on condition that
they accept adequate regulations and guarantee that competition between
districts be unlimited, distribution, storage, and continuity ought to be
improved.

The supply of coal must be constant. In case of its prospective
interruption, the President should have authority to appoint a commission
empowered to deal with whatever emergency situation might arise, to aid
conciliation and voluntary arbitration, to adjust any existing or
threatened controversy between the employer and the employee when
collective bargaining fails, and by controlling distribution to prevent
profiteering in this vital necessity. This legislation is exceedingly
urgent, and essential to the exercise of national authority for the
protection of the people. Those who undertake the responsibility of
management or employment in this industry do so with the full knowledge
that the public interest is paramount, and that to fail through any motive
of selfishness in its service is such a betrayal of duty as warrants
uncompromising action by the Government.

REORGANIZATION

A special joint committee has been appointed to work out a plan for a
reorganization of the different departments and bureaus of the Government
more scientific and economical than the present system. With the exception
of the consolidation of the War and Navy Departments and some minor
details, the plan has the general sanction of the President and the
Cabinet. It is important that reorganization be enacted into law at the
present session.

AGRICULTURE

Aided by the sound principles adopted by the Government, the business of
the country has had an extraordinary revival. Looked at as a whole, the
Nation is in the enjoyment of remarkable prosperity. Industry and commerce
are thriving. For the most tart agriculture is successful, eleven staples
having risen in value from about $5,300,000,000 two years ago to about.
$7,000,000,000 for the current year. But range cattle are still low in
price, and some sections of the wheat area, notably Minnesota, North
Dakota, and on west, have many cases of actual distress. With his products
not selling on a parity with the products of industry, every sound remedy
that can be devised should be applied for the relief of the farmer. He
represents a character, a type of citizenship, and a public necessity that
must be preserved and afforded every facility for regaining prosperity.

The distress is most acute among those wholly dependent upon one crop..
Wheat acreage was greatly expanded and has not yet been sufficiently
reduced. A large amount is raised for export, which has to meet the
competition in the world market of large amounts raised on land much
cheaper and much more productive.

No complicated scheme of relief, no plan for Government fixing of prices,
no resort to the public Treasury will be of any permanent value in
establishing agriculture. Simple and direct methods put into operation by
the farmer himself are the only real sources for restoration.

Indirectly the farmer must be relieved by a reduction of national and local
taxation. He must be assisted by the reorganization of the freight-rate
structure which could reduce charges on his production. To make this fully
effective there ought to be railroad consolidations. Cheaper fertilizers
must be provided.

He must have organization. His customer with whom he exchanges products o
he farm for those of industry is organized, labor is organized, business is
organized, and there is no way for agriculture to meet this unless it, too,
is organized. The acreage of wheat is too large. Unless we can meet the
world market at a profit, we must stop raising for export. Organization
would help to reduce acreage. Systems of cooperative marketing created by
the farmers themselves, supervised by competent management, without doubt
would be of assistance, but, the can not wholly solve the problem. Our
agricultural schools ought to have thorough courses in the theory of
organization and cooperative marketing.

Diversification is necessary. Those farmers who raise their living on their
land are not greatly in distress. Such loans as are wisely needed to assist
buying stock and other materials to start in this direction should be
financed through a Government agency as a temporary and emergency
expedient.

The remaining difficulty is the disposition of exportable wheat. I do not
favor the permanent interference of the Government in this problem. That
probably would increase the trouble by increasing production. But it seems
feasible to provide Government assistance to exports, and authority should
be given the War Finance Corporation to grant, in its discretion, the most
liberal terms of payment for fats and grains exported for the direct
benefit of the farm.

MUSCLE SHOALS

The Government is undertaking to develop a great water-power project known
as Muscle Shoals, on which it has expended many million dollars. The work
is still going on. Subject to the right to retake in time of war, I
recommend that this property with a location for auxiliary steam plant and
rights of way be sold. This would end the present burden of expense and
should return to the Treasury the largest price possible to secure.

While the price is an important element, there is another consideration
even more compelling. The agriculture of the Nation needs a greater supply
and lower cost of fertilizer. This is now imported in large quantities. The
best information I can secure indicates that present methods of power
production would not be able profitably to meet the price at which these
imports can be sold. To obtain a supply from this water power would require
long and costly experimentation to perfect a process for cheap production.
Otherwise our purpose would fail completely. It seems desirable, therefore,
in order to protect and promote the public welfare, to have adequate
covenants that such experimentation be made and carried on to success. The
great advantage of low-priced nitrates must be secured for the direct
benefit of the farmers and the indirect benefit of the public in time of
peace, and of the Government in time of war. If this main object be
accomplished, the amount of money received for the property is not a
primary or major consideration.

Such a solution will involve complicated negotiations, and there is no
authority for that purpose. I therefore recommend that the Congress
appoint a small joint committee to consider offers, conduct negotiations,
and report definite recommendations.

RECLAMATION

By reason of many contributing causes, occupants of our reclamation
projects are in financial difficulties, which in some cases are acute.
Relief should be granted by definite authority of law empowering the
Secretary of the Interior in his discretion to suspend, readjust, and
reassess all charges against water users. This whole question is being
considered by experts. You will have the advantage of the facts and
conclusions which they may develop. This situation, involving a Government
investment of more than $135,000,000, and affecting more than 30,000 water
users, is serious. While relief which is necessary should be granted, yet
contracts with the Government which can be met should be met. The
established general policy of these projects should not be abandoned for
any private control.

HIGHWAYS AND FORESTS

Highways and reforestation should continue to have the interest and support
of the Government. Everyone is anxious for good highways. I have made a
liberal proposal in the Budget for the continuing payment to the States by
the Federal Government of its share for this necessary public improvement.
No expenditure of public money contributes so much to the national wealth
as for building good roads.

Reforestation has an importance far above the attention it usually secures.
A special committee of the Senate is investigating this need, and I shall
welcome a constructive policy based on their report.

It is 100 years since our country announced the Monroe doctrine. This
principle has been ever since, and is now, one of the main foundations of
our foreign relations. It must be maintained. But in maintaining it we must
not be forgetful that a great change has taken place. We are no longer a
weak Nation, thinking mainly of defense, dreading foreign imposition. We
are great and powerful. New powers bring new responsibilities. Our ditty
then was to protect ourselves. Added to that, our duty now is to help give
stability to the world. We want idealism. We want that vision which lifts
men and nations above themselves. These are virtues by reason of their own
merit. But they must not be cloistered; they must not be impractical; they
must not be ineffective.

The world has had enough of the curse of hatred and selfishness, of
destruction and war. It has had enough of the wrongful use of material
power. For the healing of the nations there must be good will and charity,
confidence and peace. The time has come for a more practical use of moral
power, and more reliance upon the principle that right makes its own might.
Our authority among the nations must be represented by justice and mercy.
It is necessary not only to have faith, but to make sacrifices for our
faith. The spiritual forces of the world make all its final determinations.
It is with these voices that America should speak. Whenever they declare a
righteous purpose there need be no doubt that they will be heard. America
has taken her place in the world as a Republic--free, independent,
powerful. The best service that can be rendered to humanity is the
assurance that this place will be maintained.

***

State of the Union Address
Calvin Coolidge
December 3, 1924

To the Congress of the United States:

The present state of the Union, upon which it is customary for the
President to report to the Congress under the provisions of the
Constitution, is such that it may be regarded with encouragement and
satisfaction by every American. Our country is almost unique in its ability
to discharge fully and promptly all its obligations at home and abroad, and
provide for all its inhabitants an increase in material resources, in
intellectual vigor and in moral power. The Nation holds a position
unsurpassed in all former human experience. This does not mean that we do
not have any problems. It is elementary that the increasing breadth of our
experience necessarily increases the problems of our national life. But it
does mean that if all will but apply ourselves industriously and honestly,
we have ample powers with which to meet our problems and provide for I heir
speedy solution. I do not profess that we can secure an era of perfection
in human existence, but we can provide an era of peace and prosperity,
attended with freedom and justice and made more and more satisfying by the
ministrations of the charities and humanities of life.

Our domestic problems are for the most part economic. We have our enormous
debt to pay, and we are paying it. We have the high cost of government to
diminish, and we are diminishing it. We have a heavy burden of taxation to
reduce, and we are reducing it. But while remarkable progress has been made
in these directions, the work is yet far from accomplished. We still owe
over $21,000,000,000, the cost of the National Government is still about
$3,500,000,000, and the national taxes still amount to about $27 for each
one of our inhabitants. There yet exists this enormous field for the
application of economy.

In my opinion the Government can do more to remedy the economic ills of the
people by a system of rigid economy in public expenditure than can be
accomplished through any other action. The costs of our national and local
governments combined now stand at a sum close to $100 for each inhabitant
of the land. A little less than one-third of this is represented by
national expenditure, and a little more than two-thirds by local
expenditure. It is an ominous fact that only the National Government is
reducing its debt. Others are increasing theirs at about $1,000,000,000
each year. The depression that overtook business, the disaster experienced
in agriculture, the lack of employment and the terrific shrinkage in all
values which our country experienced in a most acute form in 1920, resulted
in no small measure from the prohibitive taxes which were then levied on
all productive effort. The establishment of a system of drastic economy in
public expenditure, which has enabled us to pay off about one-fifth of the
national debt since 1919, and almost cut in two the national tax burden
since 1921, has been one of the main causes in reestablishing a prosperity
which has come to include within its benefits almost every one of our
inhabitants. Economy reaches everywhere. It carries a blessing to
everybody.

The fallacy of the claim that the costs of government are borne by the rich
and those who make a direct contribution to the National Treasury can not
be too often exposed. No system has been devised, I do not think any system
could be devised, under which any person living in this country could
escape being affected by the cost of our government. It has a direct effect
both upon the rate and the purchasing power of wages. It is felt in the
price of those prime necessities of existence, food, clothing, fuel and
shelter. It would appear to be elementary that the more the Government
expends the more it must require every producer to contribute out of his
production to the Public Treasury, and the less he will have for his own
benefit. The continuing costs of public administration can be met in only
one way--by the work of the people. The higher they become, the more the
people must work for the Government. The less they are, the more the people
can work for themselves.

The present estimated margin between public receipts and expenditures for
this fiscal year is very small. Perhaps the most important work that this
session of the Congress can do is to continue a policy of economy and
further reduce the cost of government, in order that we may have a
reduction of taxes for the next fiscal year. Nothing is more likely to
produce that public confidence which is the forerunner and the mainstay of
prosperity, encourage and enlarge business opportunity with ample
opportunity for employment at good wages, provide a larger market for
agricultural products, and put our country in a stronger position to be
able to meet the world competition in trade, than a continuing policy of
economy. Of course necessary costs must be met, proper functions of the
Government performed, and constant investments for capital account and
reproductive effort must be carried on by our various departments. But the
people must know that their Government is placing upon them no unnecessary
burden.

TAXES

Everyone desires a reduction of taxes, and there is a great preponderance
of sentiment in favor of taxation reform. When I approved the present tax
law, I stated publicly that I did so in spite of certain provisions which I
believed unwise and harmful. One of the most glaring of these was the
making public of the amounts assessed against different income-tax payers.
Although that damage has now been done, I believe its continuation to be
detrimental To the public welfare and bound to decrease public revenues, so
that it ought to be repealed.

Anybody can reduce taxes, but it is not so easy to stand in the gap and
resist the passage of increasing appropriation bills which would make tax
reduction impossible. It will be very easy to measure the strength of the
attachment to reduced taxation by the power with which increased
appropriations are resisted. If at the close of the present session the
Congress has kept within the budget which I propose to present, it will
then be possible to have a moderate amount of tax reduction and all the tax
reform that the Congress may wish for during the next fiscal year. The
country is now feeling the direct stimulus which came from the passage of
the last revenue bill, and under the assurance of a reasonable system of
taxation there is every prospect of an era of prosperity of unprecedented
proportions. But it would be idle to expect any such results unless
business can continue free from excess profits taxation and be accorded a
system of surtaxes at rates which have for their object not the punishment
of success or the discouragement of business, but the production of the
greatest amount of revenue from large incomes. I am convinced that the
larger incomes of the country would actually yield more revenue to the
Government if the basis of taxation were scientifically revised downward.
Moreover the effect of the present method of this taxation is to increase
the cost of interest on productive enterprise and to increase the burden
of rent. It is altogether likely that such reduction would so encourage and
stimulate investment that it would firmly establish our country in the
economic leadership of the world.

WATERWAYS

Meantime our internal development should go on. Provision should be made
for flood control of such rivers as the Mississippi and the Colorado, and
for the opening up of our inland waterways to commerce. Consideration is
due to the project of better navigation from the Great Lakes to the Gulf.
Every effort is being made to promote an agreement with Canada to build
the, St. Lawrence waterway. There are pending before the Congress bills for
further development of the Mississippi Basin, for the taking over of the
Cape Cod Canal in accordance with a moral obligation which seems to have
been incurred during the war, and for the improvement of harbors on both
the Pacific and the Atlantic coasts. While this last should be divested of
some of its projects and we must proceed slowly, these bills in general
have my approval. Such works are productive of wealth and in the long run
tend to a reduction of the tax burden.

RECLAMATION

Our country has a well defined policy of reclamation established under
statutory authority. This policy should be continued and made a
self-sustaining activity administered in a manner that will meet local
requirements and bring our and lands into a profitable state of cultivation
as fast as there is a market for their products. Legislation is pending
based on the report of the Fact Finding Commission for the proper relief of
those needing extension of time in which to meet their payments on
irrigated land, and for additional amendments and reforms of our
reclamation laws, which are all exceedingly important and should be enacted
at once.

No more important development has taken place in the last year than the
beginning of a restoration of agriculture to a prosperous condition. We
must permit no division of classes in this country, with one occupation
striving to secure advantage over another. Each must proceed under open
opportunities and with a fair prospect of economic equality. The Government
can not successfully insure prosperity or fix prices by legislative fiat.
Every business has its risk and its times of depression. It is well known
that in the long run there will be a more even prosperity and a more
satisfactory range of prices under the natural working out of economic laws
than when the Government undertakes the artificial support of markets and
industries. Still we can so order our affairs, so protect our own people
from foreign competition, so arrange our national finances, so administer
our monetary system, so provide for the extension of credits, so improve
methods of distribution, as to provide a better working machinery for the
transaction of the business of the Nation with the least possible friction
and loss. The Government has been constantly increasing its efforts in
these directions for the relief and permanent establishment of agriculture
on a sound and equal basis with other business.

It is estimated that the value of the crops for this harvest year may reach
$13,000,000,000, which is an increase of over $3,000,000,000 in three
years. It compares with $7,100,000,000 in 1913, and if we make deduction
from the figures of 1924 for the comparatively decreased value of the
dollar, the yield this year still exceeds 1913 in purchasing power by over
$1,000,000,000, and in this interval there has been no increase in the
number of farmers. Mostly by his own effort the farmer has decreased the
cost of production. A marked increase in the price of his products and some
decrease in the price of his supplies has brought him about to a parity
with the rest of the Nation. The crop area of this season is estimated at
370,000,000 acres, which is a decline of 3,000,000 acres from last year,
and 6,000,000 acres from 1919. This has been a normal and natural
application of economic laws, which has placed agriculture on a foundation
which is undeniably sound and beginning to be satisfactory.

A decrease in the world supply of wheat has resulted in a very large
increase in the price of that commodity. The position of all agricultural
products indicates a better balanced supply, but we can not yet conclude
that agriculture is recovered from the effects of the war period or that it
is permanently on a prosperous basis. The cattle industry has not yet
recovered and in some sections has been suffering from dry weather. Every
effort must be made both by Government activity and by private agencies to
restore and maintain agriculture to a complete normal relationship with
other industries.

It was on account of past depression, and in spite of present more
encouraging conditions, that I have assembled an Agricultural Conference
made up of those who are representative of this great industry in both its
operating and economic sides. Everyone knows that the great need of the
farmers is markets. The country is not suffering on the side of production.
Almost the entire difficulty is on the side of distribution. This reaches
back, of course, to unit costs and diversification, and many allied
subjects. It is exceedingly intricate, for our domestic and foreign trade,
transportation and banking, and in fact our entire economic system, are
closely related to it. In time for action at this session, I hope to report
to the Congress such legislative remedies as the conference may recommend.
An appropriation should be made to defray their necessary expenses.

MUSCLE SHOALS

The production of nitrogen for plant food in peace and explosives in war is
more and more important. It is one of the chief sustaining elements of
life. It is estimated that soil exhaustion each year is represented by
about 9,000,000 tons and replenishment by 5,450,000 tons. The deficit of
3,550,000 tons is reported to represent the impairment of 118,000,000 acres
of farm lands each year.

To meet these necessities the Government has been developing a water power
project at Muscle Shoals to be equipped to produce nitrogen for explosives
and fertilizer. It is my opinion that the support of agriculture is the
chief problem to consider in connection with this property. It could by no
means supply the present needs for nitrogen, but it would help and its
development would encourage bringing other water powers into like use.

Several offers have been made for the purchase of this property. Probably
none of them represent final terms. Much costly experimentation is
necessary to produce commercial nitrogen. For that reason it is a field
better suited to private enterprise than to Government operation. I should
favor a sale of this property, or long-time lease, tinder rigid guaranties
of commercial nitrogen production at reasonable prices for agricultural
use. There would be a surplus of power for many years over any possibility
of its application to a developing manufacture of nitrogen. It may be found
advantageous to dispose of the right to surplus power separately with such
reservations as will allow its gradual withdrawal and application to
nitrogen manufacture. A subcommittee of the Committees on Agriculture
should investigate this field and negotiate with prospective purchasers. If
no advantageous offer be made, the development should continue and the
plant should be dedicated primarily to the production of materials for the
fertilization of the soil.

RAILWAYS

The railways during the past year have made still further progress in
recuperation from the war, with large rains in efficiency and ability
expeditiously to handle the traffic of the country. We have now passed
through several periods of peak traffic without the car shortages which so
frequently in the past have brought havoc to our agriculture and
industries. The condition of many of our great freight terminals is still
one of difficulty and results in imposing, large costs on the public for
inward-bound freight, and on the railways for outward-bound freight. Owing
to the growth of our large cities and the great increase in the volume of
traffic, particularly in perishables, the problem is not only difficult of
solution, but in some cases not wholly solvable by railway action alone.

In my message last year I emphasized the necessity for further legislation
with a view to expediting the consolidation of our rail ways into larger
systems. The principle of Government control of rates and profits, now
thoroughly imbedded in our governmental attitude toward natural monopolies
such as the railways, at once eliminates the need of competition by small
units as a method of rate adjustment. Competition must be preserved as a
stimulus to service, but this will exist and can be increased tinder
enlarged systems. Consequently the consolidation of the railways into
larger units for the purpose of securing the substantial values to the
public which will come from larger operation has been the logical
conclusion of Congress in its previous enactments, and is also supported by
the best opinion in the country. Such consolidation will assure not only a
greater element of competition as to service, but it will afford economy in
operation, greater stability in railway earnings, and more economical
financing. It opens large possibilities of better equalization of rates
between different classes of traffic so as to relieve undue burdens upon
agricultural products and raw materials generally, which are now not
possible without ruin to small units owing to the lack of diversity of
traffic. It would also tend to equalize earnings in such fashion as to
reduce the importance of section 15A, at which criticism, often misapplied,
has been directed. A smaller number of units would offer less difficulties
in labor adjustments and would contribute much to the, solution of terminal
difficulties.

The consolidations need to be carried out with due regard to public
interest and to the rights and established life of various communities in
our country. It does not seem to me necessary that we endeavor to
anticipate any final plan or adhere to an artificial and unchangeable
project which shall stipulate a fixed number of systems, but rather we
ought to approach the problem with such a latitude of action that it can be
worked out step by step in accordance with a comprehensive consideration of
public interest. Whether the number of ultimate systems shall be more or
less seems to me can only be determined by time and actual experience in
the development of such consolidations.

Those portions of the present law contemplating consolidations ore not,
sufficiently effective in producing expeditious action and need
amplification of the authority of the Interstate Commerce Commission,
particularly in affording a period for voluntary proposals to the
commission and in supplying Government pressure to secure action after the
expiration of such a period.

There are other proposals before Congress for amending the transportation
acts. One of these contemplates a revision of the method of valuation for
rate-making purposes to be followed by a renewed valuation of the railways.
The valuations instituted by the Interstate Commerce Commission 10 years
ago have not yet been completed. They have cost the Government an enormous
sum, and they have imposed great expenditure upon the railways, most of
which has in effect come out of the public in increased rates. This work
should not be abandoned or supplanted until its results are known and can
be considered.

Another matter before the Congress is legislation affecting the labor
sections of the transportation act. Much criticism has been directed at the
workings of this section and experience has shown that some useful
amendment could be made to these provisions.

It would be helpful if a plan could be adopted which, while retaining the
practice of systematic collective bargaining with conciliation voluntary
arbitration of labor differences, could also provide simplicity in
relations and more direct local responsibility of employees and managers.
But such legislation will not meet the requirements of the situation unless
it recognizes the principle that t e public has a right to the
uninterrupted service of transportation, and therefore a right to be heard
when there is danger that the Nation may suffer great injury through the
interruption of operations because of labor disputes. If these elements are
not comprehended in proposed legislation, it would be better to gain
further experience with the present organization for dealing with these
questions before undertaking a change.

SHIPPING BOARD

The form of the organization of the Shipping Board was based originally on
its functions as a semi judicial body in regulation of rates. During the
war it was loaded with enormous administrative duties. It has been
demonstrated time and again that this form of organization results in
indecision, division of opinion and administrative functions, which make a
wholly inadequate foundation for the conduct of a great business
enterprise. The first principle in securing the objective set out by
Congress in building up the American merchant marine upon the great trade
routes and subsequently disposing of it into private operation can not
proceed with effectiveness until the entire functions of the board are
reorganized. The immediate requirement is to transfer into the Emergency
Fleet, Corporation the whole responsibility of operation of the fleet and
other property, leaving to the Shipping Board solely the duty of
determining certain major policies which require deliberative action.

The procedure under section 28 of the merchant marine act has created great
difficulty and threatened friction during the past 12 months. Its attempted
application developed not only great opposition from exporters,
particularly as to burdens that may be imposed upon agricultural products,
but also great anxiety in the different seaports as to the effect upon
their relative rate structures. This trouble will certainly recur if action
is attempted under this section. It is uncertain in some of its terms and
of great difficulty in interpretation.

It is my belief that action under this section should be suspended until
the Congress can reconsider the entire question in the light of the
experience that has been developed since its enactment.

NATIONAL ELECTIONS

Nothing is so fundamental to the integrity of a republican form of
government as honesty in all that relates to the conduct of elections. I am
of the opinion that the national laws governing the choice of members of
the Congress should be extended to include appropriate representation of
the respective parties at the ballot box ant equality of representation on
the various registration boards, wherever they exist.

THE JUDICIARY

The docket of the Supreme Court is becoming congested. At the opening term
last year it had 592 cases, while this year it had 687 cases. Justice long
delayed is justice refused. Unless the court be given power by preliminary
and summary consideration to determine the importance of cases, and by
disposing of those which are not of public moment reserve its time for the
more extended consideration of the remainder, the congestion of the docket
is likely to increase. It is also desirable that Supreme Court should have
power to improve and reform procedure in suits at law in the Federal courts
through the adoption of appropriate rules. The Judiciary Committee of the
Senate has reported favorably upon two bills providing for these reforms
which should have the immediate favorable consideration of the Congress.

I further recommend that provision be made for the appointment of a
commission, to consist of two or three members of the Federal judiciary and
as many members of the bar, to examine the present criminal code of
procedure and recommend to the Congress measures which may reform and
expedite court procedure in the administration and enforcement of our
criminal laws.

PRISON REFORM

Pending before the Congress is a bill which has already passed one House
providing for a reformatory to which could be committed first offenders and
young men for the purpose of segregating them from contact with banned
criminals and providing them with special training in order to reestablish
in them the power to pursue a law-abiding existence in the social and
economic life of the Nation. This is a matter of so much importance as to
warrant the early attention of the present session. Further provision
should also be made, for a like reason, for a separate reformatory for
women.

NATIONAL POLICE BUREAU

Representatives of the International Police Conference will bring to t e
attention of the Congress a proposal for the establishment of a national
police bureau. Such action would provide a central point for gathering,
compiling, and later distributing to local police authorities much
information which would be helpful in the prevention and detection of
crime. I believe this bureau is needed, and I recommend favorable
consideration of this proposal.

DISTRICT OF COLUMBIA WELFARE

The welfare work of the District of Columbia is administered by several
different boards dealing with charities and various correctional efforts.
It would be an improvement if this work were consolidated and placed under
the direction of a single commission.

FRENCH SPOLIATION CLAIMS

During the last session of the Congress legislation was introduced looking
to the payment of the remaining claims generally referred to as the French
spoliation claims. The Congress has provided for the payment of many
similar claims. Those that remain unpaid have been long pending. The
beneficiaries thereunder have every reason to expect payment. These claims
have been examined by the Court of Claims and their validity and amount
determined. The United States ought to pay its debts. I recommend action by
the Congress which will permit of the payment of these remaining claims.

THE WAGE EARNER

Two very important policies have been adopted by this country which, while
extending their benefits also in other directions, have been of the utmost
importance to the wage earners. One of these is the protective tariff,
which enables our people to live according to a better standard and receive
a better rate of compensation than any people, any time, anywhere on earth,
ever enjoyed. This saves the American market for the products of the
American workmen. The other is a policy of more recent origin and seeks to
shield our wage earners from the disastrous competition of a great influx
of foreign peoples. This has been done by the restrictive immigration law.
This saves the American job for the American workmen. I should like to see
the administrative features of this law rendered a little more humane for
the purpose of permitting those already here a greater latitude in securing
admission of members of their own families. But I believe this law in
principle is necessary and sound, and destined to increase greatly the
public welfare. We must maintain our own economic position, we must defend
our own national integrity.

It is gratifying to report that the progress of industry, the enormous
increase in individual productivity through labor-saving devices, and the
high rate of wages have all combined to furnish our people in general with
such an abundance not only of the necessaries but of the conveniences of
life that we are by a natural evolution solving our problems of economic
and social justice.

THE NEGRO

These developments have brought about a very remarkable improvement in the
condition of the negro race. Gradually, but surely, with the almost
universal sympathy of those among whom they live, the colored people are
working out their own destiny. I firmly believe that it is better for all
concerned that they should be cheerfully accorded their full constitutional
rights, that they should be protected from all of those impositions to
which, from their position, they naturally fall a prey, especially from the
crime of lynching and that they should receive every encouragement to
become full partakers in all the blessings of our common American
citizenship.

CIVIL SERVICE

The merit system has long been recognized as the correct basis for
employment in our, civil service. I believe that first second, and third
class postmasters, and without covering in the present membership the
field force of prohibition enforcement, should be brought within the
classified service by statute law. Otherwise the Executive order of one
administration is changed by the Executive order of another administration,
and little real progress is made. Whatever its defects, the merit system is
certainly to be preferred to the spoils system.

DEPARTMENTAL REORGANIZATION

One way to save public money would be to pass the pending bill for the
reorganization of the various departments. This project has been pending
for some time, and has had the most careful consideration of experts and
the thorough study of a special congressional committee. This legislation
is vital as a companion piece to the Budget law. Legal authority for a
thorough reorganization of the Federal structure with some latitude of
action to the Executive in the rearrangement of secondary functions would
make for continuing economy in the shift of government activities which
must follow every change in a developing country. Beyond this many of the
independent agencies of the Government must be placed under responsible
Cabinet officials, if we are to have safeguards of efficiency, economy, and
probity.

ARMY AND NAVY

Little has developed in relation to our national defense which needs
special attention. Progress is constantly being made in air navigation and
requires encouragement and development. Army aviators have made a
successful trip around the world, for which I recommend suitable
recognition through provisions for promotion, compensation, and retirement.
Under the direction of the Navy a new Zeppelin has been successfully
brought from Europe across the Atlantic to our own country.

Due to the efficient supervision of the Secretary of War the Army of the
United States has been organized with a small body of Regulars and a
moderate National Guard and Reserve. The defense test of September 12
demonstrated the efficiency of the operating plans. These methods and
operations are well worthy of congressional support.

Under the limitation of armaments treaty a large saving in outlay and a
considerable decrease in maintenance of the Navy has been accomplished. We
should maintain the policy of constantly working toward the full treaty
strength of the Navy. Careful investigation is being made in this
department of the relative importance of aircraft, surface and submarine
vessels, in order that we may not fail to take advantage of all modern
improvements for our national defense. A special commission also is
investigating the problem of petroleum oil for the Navy, considering the
best policy to insure the future supply of fuel oil and prevent the
threatened drainage of naval oil reserves. Legislative action is required
to carry on experiments in oil shale reduction, as large deposits of this
type have been set aside for the use of the Navy.

We have been constantly besought to engage in competitive armaments.
Frequent reports will reach us of the magnitude of the military equipment
of other, nations. We shall do well to be little impressed by such reports
or such actions. Any nation undertaking to maintain a military
establishment with aggressive and imperialistic designs will find itself
severely handicapped in the economic development of the world. I believe
thoroughly in the Army and Navy, in adequate defense and preparation. But I
am opposed to any policy of competition in building and maintaining land or
sea armaments.

Our country has definitely relinquished the old standard of dealing with
other countries by terror and force, and is definitely committed to the new
standard of dealing with them through friendship and understanding. This
new policy should be constantly kept in mind by the guiding forces of the
Army and Navy, by the. Congress and by the country at large. I believe it
holds a promise of great benefit to humanity. I shall resist any attempt to
resort to the old methods and the old standards. I am especially solicitous
that foreign nations should comprehend the candor and sincerity with which
we have adopted this position. While we propose to maintain defensive and
supplementary police forces by land and sea, and to train them through
inspections and maneuvers upon appropriate occasions in order to maintain
their efficiency, I wish every other nation to understand that this does
not express any unfriendliness or convey any hostile intent. I want the
armed forces of America to be considered by all peoples not as enemies but
as friends as the contribution which is made by this country for the
maintenance of the peace and security of the world.

VETERANS

With the authorization for general hospitalization of the veterans of all
wars provided during the present year, the care and treatment of those who
have served their country in time of peril and the attitude of the
Government toward them is not now so much one of needed legislation as one
of careful, generous and humane administration. It will ever be recognized
that their welfare is of the first concern and always entitled to the most
solicitous consideration oil the part of their fellow citizens. They are
organized in various associations, of which the chief and most
representative is the American Legion. Through its officers the Legion will
present to the Congress numerous suggestions for legislation. They cover
such a wide variety of subjects that it is impossible to discuss them
within the scope of this message. With many of the proposals I join in
hearty approval and commend them all to the sympathetic investigation and
consideration of the Congress.

FOREIGN RELATIONS

At no period in the past 12 years have our foreign relations been in such a
satisfactory condition as they are at the present time. Our actions in the
recent months have greatly strengthened the American policy of permanent
peace with independence. The attitude which our Government took and
maintained toward an adjustment of European reparations, by pointing out
that it wits not a political but a business problem, has demonstrated its
wisdom by its actual results. We desire to see Europe restored that it may
resume its productivity in the increase of industry and its support in the
advance of civilization. We look with great gratification at the hopeful
prospect of recuperation in Europe through the Dawes plan. Such assistance
as can be given through the action of the public authorities and of our
private citizens, through friendly counsel and cooperation, and through
economic and financial support, not for any warlike effort but for
reproductive enterprise, not to provide means for unsound government
financing but to establish sound business administration should be
unhesitatingly provided.

Ultimately nations, like individuals, can not depend upon each other but
must depend upon themselves. Each one must work out its own salvation. We
have every desire to help. But with all our resources we are powerless to
save unless our efforts meet with a constructive response. The situation in
our own country and all over the world is one Chat can be improved only by
bard work and self-denial. It is necessary to reduce expenditures, increase
savings and liquidate debts. It is in this direction that there lies the
greatest hope of domestic tranquility and international peace. Our own
country ought to finish the leading example in this effort. Our past
adherence to this policy, our constant refusal to maintain a military
establishment that could be thought to menace the security of others, our
honorable dealings with other nations whether great or small, has left us
in the almost constant enjoyment of peace.

It is not necessary to stress the general desire of all the people of this
country for the promotion of peace. It is the leading principle of all our
foreign relations. We have on every occasion tried to cooperate to this end
in all ways that were consistent with our proper independence and our
traditional policies. It will be my constant effort to maintain these
principles, and to reinforce them by all appropriate agreements and
treaties. While we desire always to cooperate and to help, we are equally
determined to be independent and free. Right and truth and justice and
humanitarian efforts will have the moral support of this country all over
the world. But we do not wish to become involved in the political
controversies of others. Nor is the country disposed to become a member of
the League of Nations or to assume the obligations imposed by its
covenant.

INTERNATIONAL COURT

America has been one of the foremost nations in advocating tribunals for
the settlement of international disputes of a justiciable character. Our
representatives took a leading in those conferences which resulted in the
establishment of e ague Tribunal, and later in providing for a Permanent
Court of International Justice. I believe it would be for the advantage of
this country and helpful to the stability of other nations for us to adhere
to the protocol establishing, that court upon the conditions stated in the
recommendation which is now before the Senate, and further that our country
shall not be bound by advisory opinions which may be, rendered by the court
upon questions which we have not voluntarily submitted for its judgment.
This court would provide a practical and convenient tribunal before which
we could go voluntarily, but to which we could not be summoned, for a
determination of justiciable questions when they fail to be resolved by
diplomatic negotiations.

DISARMAMENT CONFERENCE

Many times I have expressed my desire to see the work of the Washington
Conference on Limitation of Armaments appropriately supplemented by further
agreements for a further reduction M for the purpose of diminishing the
menace and waste of the competition in preparing instruments of
international war. It has been and is my expectation that we might
hopefully approach other great powers for further conference on this
subject as soon as the carrying out of the present reparation plan as the
established and settled policy of Europe has created a favorable
opportunity. But on account of proposals which have already been made by
other governments for a European conference, it will be necessary to wait
to see what the outcome of their actions may be. I should not wish to
propose or have representatives attend a conference which would contemplate
commitments opposed to the freedom of action we desire to maintain
unimpaired with respect to our purely domestic policies.

INTERNATIONAL LAW

Our country should also support efforts which are being made toward the
codification of international law. We can look more hopefully, in the first
instance, for research and studies that are likely to be productive of
results, to a cooperation among representatives of the bar and members of
international law institutes and societies, than to a conference of those
who are technically representative of their respective governments,
although, when projects have been developed, they must go to the
governments for their approval. These expert professional studies are going
on in certain quarters and should have our constant encouragement and
approval.

OUTLAW OF WAR

Much interest has of late been manifested in this country in the discussion
of various proposals to outlaw aggressive war. I look with great sympathy
upon the examination of this subject. It is in harmony with the traditional
policy of our country, which is against aggressive war and for the
maintenance of permanent and honorable peace. While, as I have said, we
must safeguard our liberty to deal according to our own judgment with our
domestic policies, we can not fail to view with sympathetic interest all
progress to this desired end or carefully to study the measures that may be
proposed to attain it.

LATIN AMERICA

While we are desirous of promoting peace in every quarter of the globe, we
have a special interest in the peace of this hemisphere. It is our constant
desire that all causes of dispute in this area may be tranquilly and
satisfactorily adjusted. Along with our desire for peace is the earnest
hope for the increased prosperity of our sister republics of Latin America,
and our constant purpose to promote cooperation with them which may be
mutually beneficial and always inspired by the most cordial friendships.

FOREIGN DEBTS

About $12,000,000,000 is due to our Government from abroad, mostly from
European Governments. Great Britain, Finland, Hungary, Lithuania and Poland
have negotiated settlements amounting close to $5,000,000,000. This
represents the funding of over 42 per cent of the debt since the creation
of the special Foreign Debt Commission. As the life of this commission is
about to expire, its term should be extended. I am opposed to the
cancellation of these debts and believe it for the best welfare of the
world that they should be liquidated and paid as fast as possible. I do not
favor oppressive measures, but unless money that is borrowed is repaid
credit can not be secured in time of necessity, and there exists besides a
moral obligation which our country can not ignore and no other country can
evade. Terms and conditions may have to conform to differences in the
financial abilities of the countries concerned, but the principle that each
country should meet its obligation admits of no differences and is of
universal application.

It is axiomatic that our country can not stand still. It would seem to be
perfectly plain from recent events that it is determined to go forward. But
it wants no pretenses, it wants no vagaries. It is determined to advance in
an orderly, sound and common-sense way. It does not propose to abandon the
theory of the Declaration that the people have inalienable rights which no
majority and no power of government can destroy. It does not propose to
abandon the practice of the Constitution that provides for the protection
of these rights. It believes that within these limitations, which are
imposed not by the fiat of man but by the law of the Creator,
self-government is just and wise. It is convinced that it will be
impossible for the people to provide their own government unless they
continue to own their own property.

These are the very foundations of America. On them has been erected a
Government of freedom and equality, of justice and mercy, of education and
charity. Living under it and supporting it the people have come into great
possessions on the material and spiritual sides of life. I want to continue
in this direction. I know that the Congress shares with me that desire. I
want our institutions to be more and more expressive of these principles. I
want the people of all the earth to see in the American flag the symbol of
a Government which intends no oppression at home and no aggression abroad,
which in the spirit of a common brotherhood provides assistance in time of
distress.

***

State of the Union Address
Calvin Coolidge
December 8, 1925

Members of the Congress:

In meeting the constitutional requirement of informing the Congress upon
the state of the Union, it is exceedingly gratifying to report that the
general condition is one of progress and prosperity. Here and there are
comparatively small and apparently temporary difficulties needing
adjustment and improved administrative methods, such as are always to be
expected, but in the fundamentals of government and business the results
demonstrate that we are going in the right direction. The country does not
appear to require radical departures from the policies already adopted so
much as it needs a further extension of these policies and the improvement
of details. The age of perfection is still in the somewhat distant future,
but it is more in danger of being retarded by mistaken Government activity
than it is from lack of legislation. We are by far the most likely to
accomplish permanent good if we proceed with moderation.

In our country the people are sovereign and independent, and must accept
the resulting responsibilities. It is their duty to support themselves and
support the Government. That is the business of the Nation, whatever the
charity of the Nation may require. The functions which the Congress are to
discharge are not those of local government but of National Government. The
greatest solicitude should be exercised to prevent any encroachment upon
the rights of the States or their various political subdivisions. Local
self-government is one of our most precious possessions. It is the greatest
contributing factor to the stability strength liberty, and progress of the
Nation. It ought not to be in ringed by assault or undermined by purchase.
It ought not to abdicate its power through weakness or resign its authority
through favor. It does not at all follow that because abuses exist it is
the concern of the Federal Government to attempt the r reform.

Society is in much more danger from encumbering the National Government
beyond its wisdom to comprehend, or its ability to administer, than from
leaving the local communities to bear their own burdens and remedy their
own evils. Our local habit and custom is so strong, our variety of race and
creed is so great the Federal authority is so tenuous, that the area within
which it can function successfully is very limited. The wiser policy is to
leave the localities, so far as we can, possessed of their own sources of
revenue and charged with their own obligations.

GOVERNMENT ECONOMY

It is a fundamental principle of our country that the people are sovereign.
While they recognize the undeniable authority of the state, they have
established as its instrument a Government of limited powers. They hold
inviolate in their own hands the jurisdiction over their own freedom and
the ownership of their own property. Neither of these can be impaired
except by due process of law. The wealth of our country is not public
wealth, but private wealth. It does not belong to the Government, it
belongs to the people. The Government has no justification in taking
private Property except for a public purpose. It is always necessary to
keep these principles in mind in the laying of taxes and in the making of
appropriations. No right exists to levy on a dollar, or to order the
expenditure of a dollar, of the money of the people, except for a necessary
public purpose duly authorized by the Constitution. The power over the
purse is the power over liberty.

That is the legal limitation within which the Congress can act, How it
will, proceed within this limitation is always a question of policy. When
the country is prosperous and free from debt, when the rate of taxation is
low, opportunity exists for assuming new burdens and undertaking new
enterprises. Such a condition now prevails only to a limited extent. All
proposals for assuming new obligations ought to be postponed, unless they
are reproductive capital investments or are such as are absolutely
necessary at this time. We still have an enormous debt of over
$20,000,000,000, on which the interest and sinking-fund requirements are
$1,320,000,000. Our appropriations for the Pension Office and the Veterans'
Bureau are $600,000,000. The War and Navy Departments call for
$642,000,000. Other requirements, exclusive of the Post Office which is
virtually self-sustaining, brought the appropriations for the current year
up to almost $3,100,060,000. This shows an expenditure of close to $30 for
every inhabitant of our country. For the average family of five it means a
tax, directly or indirectly paid, of about $150 for national purposes
alone. The local tax adds much more. These enormous expenditures ought not
to be increased, but through every possible effort they ought to be
reduced.

Only one of these great items can be ultimately extinguished. That is the
item of our war debt. Already this has been reduced to about
$6,000,000,000, which means an annual saving in interest of close to
$250,000,000. The present interest charge is about $820,000,000 yearly. It
would seem to be obvious that the sooner this debt can be retired the more
the taxpayers will save in interest and the easier it will be to secure
funds with which to prosecute needed running expenses, constructions, and
improvements. This item of $820,000,000 for interest is a heavy charge on
all the people of the country, and it seems to me that we might well
consider whether it is not greatly worth while to dispense with it as early
as possible by retiring the principal debt which it is required to serve.

It has always been our policy to retire our debts. That of the
Revolutionary War period, notwithstanding the additions made in 1812, was
paid by 1835. and the Civil War debt within 23 years. Of the amount already
paid, over $1,000,000,000 is a reduction in cash balances. That source is
exhausted. Over one and two-thirds billions of dollars was derived from
excess receipts. Tax reduction eliminates that. The sale of surplus war
materials has been another element of our income. That is practically
finished. With these eliminated, the reduction of the debt has been only
about $500,000,000 each year, not an excessive sum on so large a debt.

Proposals have been made to extend the payment over a period of 62 years.
If $1,000,000,000 is paid at the end of 20 years, the cost to the taxpayers
is the principal and, if the interest is 4% per cent, a total of
$1,850,000,000. If the same sum is paid at the end of 62 years, the cost is
$3,635,000,000, or almost double. Here is another consideration: Compared
with its purchasing power in 1913, the dollar we borrowed represented but
52 cents. As the value of our dollar increases, due to the falling prices
of commodities, the burden of our debt increases. It has now risen to 631/2
cents. The taxpayer will be required to produce nearly twice the amount of
commodities to pay his debt if the dollar returns to the 1913 value. The
more we pay while prices are high, the easier it will be.

Deflation of government after a war period is slower than deflation of
business, where curtailment is either prompt and effective or disaster
follows. There is room for further economy in the cost of the Federal
Government, but a co n of current expenditures with pre-war expenditures is
not able to the efficiency with which Government business is now being
done. The expenditures of 19161 the last pre-war year, were $742,000,000,
and in 1925 over $3,500,000,000, or nearly five times as great. If we
subtract expenditures for debt retirements and interest, veterans' relief,
increase of pensions, and other special outlays, consisting of refunds,
trust investments, and like charges, we find that the general expenditures
of the Government in 1925 were slightly more than twice as large as in
1916.

As prices in 1925 were approximately 40 per cent higher than in 1916, the
cost of the same Government must also have increased. But the Government is
not the same. It is more expensive to collect the much greater revenue
necessary and to administer our great debt. We have given enlarged and
improved services to agriculture and commerce. Above all, America has grown
in population and wealth. Government expenditures must always share in
this growth. Taking into account the factors I have mentioned, I believe
that present Federal expenses are not far out of line with pre-war
expenses. We have nearly accomplished the deflation.

This does not mean that further economies will not come. As we reduce our
debt our interest charges decline. There are many details yet to correct.
The real improvement, however, must come not from additional curtailment of
expenses, but by a more intelligent, more ordered spending. Our economy
must be constructive. While we should avoid as far as possible increases in
permanent current expenditures, oftentimes a capital outlay like internal
improvements will result in actual constructive saving. That is economy in
its best sense. It is an avoidance of waste that there may be the means for
an outlay to-day which will bring larger returns to-morrow. We should
constantly engage in scientific studies of our future requirements and
adopt an orderly program for their service. Economy is the method by which
we prepare to-day to afford the improvements of to-morrow.

A mere policy of economy without any instrumentalities for putting it into
operation would be very ineffective. The Congress has wisely set up the
Bureau of the Budget to investigate and inform the President what
recommendations he ought to make for current appropriations. This gives a
centralized authority where a general and comprehensive understanding can
be reached of the sources of income and the most equitable distribution of
expenditures. How well it has worked is indicated by the fact that the
departmental estimates for 1922, before the budget law, were $4,068,000,000
while the Budget estimates for 1927 are $3,156,000,000. This latter figure
shows the reductions in departmental estimates for the coming year made
possible by the operation of the Budget system that the Congress has
provided.

But it is evidently not enough to have care in making appropriations
without any restraint upon expenditure. The Congress has provided that
check by establishing the office of Comptroller General.

The purpose of maintaining the Budget Director and the Comptroller General
is to secure economy and efficiency in Government expenditure. No better
method has been devised for the accomplishment of that end. These offices
can not be administered in all the various details without making some
errors both of fact and of judgment. But the important consideration
remains that these are the instrumentalities of the Congress and that no
other plan has ever been adopted which was so successful in promoting
economy and efficiency. The Congress has absolute authority over the
appropriations and is free to exercise its judgment, as the evidence may
warrant, in increasing or decreasing budget recommendations. But it ought
to resist every effort to weaken or break down this most beneficial system
of supervising appropriations and expenditures. Without it all the claim of
economy would be a mere pretense.

TAXATION

The purpose of reducing expenditures is to secure a reduction in taxes.
That purpose is about to be realized. With commendable promptness the Ways
and Means Committee of the House has undertaken in advance of the meeting
of the Congress to frame a revenue act. As the bill has proceeded through
the committee it has taken on a nonpartisan character, and both Republicans
and Democrats have joined in a measure which embodies many sound principles
of tax reform. The bill will correct substantially the economic defects
injected into the revenue act of 1924, as well as many which have remained
as war-time legacies. In its present form it should provide sufficient
revenue for the Government.

The excessive surtaxes have been reduced, estate tax rates are restored to
more reasonable figures, with every prospect of withdrawing from the field
when the States have had the opportunity to correct the abuses in their own
inheritance tax laws, the gift tax and publicity section are to be repealed
many miscellaneous taxes are lowered or abandoned, and the Board of Tax
Appeals and the administrative features of the law are improved and
strengthened. I approve of the bill in principle. In so far as income-tax
exemptions are concerned, it seems, to me the committee has gone as far as
it is Safe to go and somewhat further than I should have gone. Any further
extension along these lines would, in my opinion, impair the integrity of
our income-tax system.

I am advised that the bill will be through the House by Christmas. For
this prompt action the country call thank the good sense of the Ways and
Means Committee in framing an economic measure upon economic
considerations. If this attitude continues to be reflected through the
Congress, the taxpayer will have his relief by the time his March 15th
installment of income taxes is due. Nonpartisan effort means certain, quick
action. Determination of a revenue law definitely, promptly and solely as a
revenue law, is one of the greatest gifts a legislature can bestow upon its
constituents. I commend the example of file Ways and Means Committee. If
followed, it will place sound legislation upon the books in time to give
the taxpayers the full benefit of tax reduction next year. This means that
the bill should reach me prior to March 15.

All these economic results are being sought not to benefit the rich, but to
benefit the people. They are for the purpose of encouraging industry in
order that employment may be plentiful. They seek to make business good in
order that wages may be good. They encourage prosperity in order that
poverty may be banished from the home. They, seek to lay the foundation
which, through increased production, may, give the people a more bountiful
supply of the necessaries of life, afford more leisure for the improvement
of the mind, the appreciation of the arts of music and literature,
sculpture and painting, and the beneficial enjoyment of outdoor sports and
recreation, enlarge the resources which minister to charity and by all
these means attempting to strengthen the spiritual life of the Nation.

FOREIGN RELATIONS

The policy of our foreign relations, casting aside any suggestion of force,
rests solely on the foundation of peace, good will, and good works. We have
sought, in our intercourse with other nations, better understandings
through conference and exchange of views its befits beings endowed with
reason. The results have been the gradual elimination of disputes, the
settlement of controversies, and the establishment of a firmer friendship
between America and the rest of the world that has ever existed tit any
previous time.

The example of this attitude has not been without its influence upon other
countries. Acting upon it, an adjustment was made of the difficult problem
of reparations. This was the second step toward peace in Europe. It paved
the way for the agreements which were drawn up at the Locarno Conference.
When ratified, these will represent the third step toward peace. While they
do not of themselves provide an economic rehabilitation, which is necessary
for the progress of Europe, by strengthening the guarantees of peace they
diminish the need for great armaments. If the energy which now goes into
military effort is transferred to productive endeavor it will greatly
assist economic progress.

The Locarno agreements were made by the, European countries directly
interested without any formal intervention of America, although on July 3
I publicly advocated such agreements in an address made in Massachusetts.
We have consistently refrained from intervening except when our help has
been sought and we have felt it could be effectively given, as in the
settlement of reparations and the London Conference. These recent Locarno
agreements represent the success of this policy which we have been
insisting ought to be adopted, of having European countries settle their
own political problems without involving this country. This beginning seems
to demonstrate that this policy is sound. It is exceedingly gratifying to
observe this progress, both in its method and in its result promises so
much that is beneficial to the world.

When these agreements are finally adopted, they will provide guarantees of
peace that make the present prime reliance upon force in some parts of
Europe very much less necessary. The natural corollary to these treaties
should be further international contracts for the limitation of armaments.
This work was successfully begun at the Washington Conference. Nothing was
done at that time concerning land forces because of European objection. Our
standing army has been reduced to around 118,000, about the necessary
police force for 115,000,000 people. We are not proposing to increase it,
nor is it supposable that any foreign country looks with the slightest
misapprehension upon our land forces. They do not menace anybody. They are
rather a protection to everybody.

The question of disarming upon land is so peculiarly European in its
practical aspects that our country would look with particular gratitude
upon any action which those countries might take to reduce their own
military forces. This is in accordance with our policy of not intervening
unless the European powers are unable to agree and make request for our
assistance. Whenever they are able to agree of their own accord it is
especially gratifying to its, and such agreements may be sure of our
sympathetic support.

It seems clear that it is the reduction of armies rather than of navies
that is of the first importance to the world at the present time. We shall
look with great satisfaction upon that effort and give it our approbation
and encouragement. If that can be settled, we may more easily consider
further reduction and limitation of naval armaments. For that purpose our
country has constantly through its Executive, and through repeated acts of
Congress, indicated its willingness to call such a conference. Under
congressional sanction it would seem to be wise to participate in any
conference of the great powers for naval limitation of armament proposed
upon such conditions that it would hold a fair promise of being effective.
The general policy of our country is for disarmament, and it ought not to
hesitate to adopt any practical plan that might reasonably be expected to
succeed. But it would not care to attend a conference which from its
location or constituency would in all probability prove futile.

In the further pursuit, of strengthening the bonds of peace and good will
we have joined with other nations in an international conference held at
Geneva and signed an agreement which will be laid before the Senate for
ratification providing suitable measures for control and for publicity in
international trade in arms, ammunition, and implements of war, and also
executed a protocol providing for a prohibition of the use of poison gas in
war, in accordance with the principles of Article 5 of the treaty relating
thereto signed at the Washington Conference. We are supporting the Pan
American efforts that are being made toward the codification of
international law, and looking with sympathy oil the investigations
conducted under philanthropic auspices of the proposal to agreements
outlawing war. In accordance with promises made at the Washington
Conference, we have urged the calling of and are now represented at the
Chinese Customs Conference and on the Commission on Extraterritoriality,
where it will be our policy so far as possible to meet the, aspirations of
China in all ways consistent with the interests of the countries involved.

COURT OF INTERNATIONAL JUSTICE

Pending before the Senate for nearly three years is the proposal to adhere
to the protocol establishing the Permanent Court of International Justice.
A well-established line of precedents mark America's effort to effect the
establishment of it court of this nature.. We took a leading part in laying
the foundation on which it rests in the establishment of The Hague Court of
Arbitration. It is that tribunal which nominates the judges who are elected
by the Council and Assembly of the League of Nations.

The proposal submitted to the Senate was made dependent upon four
conditions, the first of which is that by supporting the court we do not
assume any obligations under the league; second, that we may participate
upon an equality with other States in the election of judges; third, that
the Congress shall determine what part of the expenses we shall bear;
fourth, that the statute creating the court shall not be amended without
out consent; and to these I have proposed an additional condition to the
effect that we are not to be bound by advisory opinions rendered without
our consent.

The court appears to be independent of the league. It is true the judges
are elected by the Assembly and Council, but they are nominated by the
Court of Arbitration, which we assisted to create and of which we are a
part. The court was created by it statute, so-called, which is really a
treaty made among some forty-eight different countries, that might properly
be called a constitution of the court. This statute provides a method by
which the judges are chosen so that when the Court of Arbitration
nominates them and the Assembly and Council of the League elect them, they
are not acting as instruments of the Court of Arbitration or instruments of
the league, but as instruments of the statute.

This will be even more apparent if our representatives sit with the members
of the council and assembly in electing the judges. It is true they are
paid through the league though not by the league, but by the countries
which are members of the league and by our country if we accept the
protocol. The judges are paid by the league only in the same sense that it
could be said United States judges are paid by the Congress. The court
derives all its authority from the statute and is so completely independent
of the league that it could go on functioning if the league were disbanded,
at least until the terms of the judges expired.

The most careful provisions are made in the statute as to the
qualifications of judges. Those who make the nominations are recommended to
consult with their highest court of justice, their law schools and
academies. The judges must be persons of high moral character, qualified to
hold the highest judicial offices in that country, or be jurisconsults of
recognized competence in international law. It must be assumed that these
requirements will continue to be carefully met, and with America joining
the countries already concerned it is difficult to comprehend how human
ingenuity could better provide for the establishment of a court which would
maintain its independence. It has to be recognized that independence is to
a considerable extent a matter of ability, character, and personality. Some
effort was made in the early beginnings to interfere with the independence
of our Supreme Court. It did not succeed because of the quality of the men
who made up that tribunal.

It does not seem that the authority to give advisory opinions interferes
with the independence of the court. Advisory opinions in and of themselves
are not harmful, but may be used in such a way as to be very beneficial
because they undertake to prevent injury rather than merely afford a remedy
after the injury has been done. As a principle that only implies that the
court shall function when proper application is made to it. Deciding the
question involved upon issues submitted for an advisory opinion does not
differ materially from deciding the question involved upon issues submitted
by contending parties. Up to the present time the court has given an
advisory opinion when it judged it had jurisdiction, and refused to give
one when it judged it did not have jurisdiction. Nothing in the work of the
court has yet been an indication that this is an impairment of its
independence or that its practice differs materially from the giving of
like opinions under the authority of the constitutions of several of our
States.

No provision of the statute seems to me to give this court any authority to
be a political rather than a judicial court. We have brought cases in this
country before our courts which, when they have been adjudged to be
political, have been thereby dismissed. It is not improbable that political
questions will be submitted to this court, but again up to the present time
the court has refused to pass on political questions and our support would
undoubtedly have a tendency to strengthen it in that refusal.

We are not proposing to subject ourselves to any compulsory jurisdiction.
If we support the court, we can never be obliged to submit any case which
involves our interests for its decision. Our appearance before it would
always be voluntary, for the purpose of presenting a case which we had
agreed might be presented. There is no more danger that others might bring
cases before the court involving our interests which we did not wish to
have brought, after we have adhered, and probably not so much, than there
would be of bringing such cases if we do not adhere. I think that we would
have the same legal or moral right to disregard such a finding in the one
case that we would in the other.

If we are going to support any court, it will not be one that we have set
up alone or which reflects only our ideals. Other nations have their
customs and their institutions, their thoughts and their methods of life.
If a court is going to be international, its composition will have to yield
to what is good in all these various elements. Neither will it be possible
to support a court which is exactly perfect, or under which we assume
absolutely no obligations. If we are seeking that opportunity, we might as
well declare that we are opposed to supporting any court. If any agreement
is made, it will be because it undertakes to set up a tribunal which can do
some of the things that other nations wish to have done. We shall not find
ourselves bearing a disproportionate share of the world's burdens by our
adherence, and we may as well remember that there is absolutely no escape
for our country from bearing its share of the world's burdens in any case.
We shall do far better service to ourselves and to others if we admit this
and discharge our duties voluntarily, than if we deny it and are forced to
meet the same obligations unwillingly.

It is difficult to imagine anything that would be more helpful to the world
than stability, tranquility and international justice. We may say that we
are contributing to these factors independently, but others less
fortunately located do not and can not make a like contribution except
through mutual cooperation. The old balance of power, mutual alliances, and
great military forces were not brought bout by any mutual dislike for
independence, but resulted from the domination of circumstances. Ultimately
they were forced on us. Like all others engaged in the war whatever we said
as a matter of fact we joined an alliance, we became a military power, we
impaired our independence. We have more at stake than any one else in
avoiding a repetition of that calamity. Wars do not, spring into existence.
They arise from small incidents and trifling irritations which can be
adjusted by an international court. We can contribute greatly to the
advancement of our ideals by joining with other nations in maintaining such
a tribunal.

FOREIGN DEBTS

Gradually, settlements have been made which provide for the liquidation of
debts due to our Government from foreign governments. Those made with Great
Britain, Finland, Hungary Lithuania, and Poland have already been approved
by the Congress. Since the adjournment, further agreements have been
entered into with Belgium, Czechoslovakia, Latvia, Estonia, Italy, and
Rumania. These 11 nations, which have already made settlements, represent
$6,419,528,641 of the original principal of the loans. The principal sums
without interest, still pending, are the debt of France, of $3,340,000,000;
Greece, $15,000,000; Yugoslavia, $.51,000,000; Liberia, $26,000; Russia,
$192,000,000, which those at present in control have undertaken, openly to
repudiate; Nicaragua, $84,000, which is being paid currently; and Austria,
$24,000,000, on which by act of Congress a moratorium of 20 years has been
granted. The only remaining sum is $12,000,000, due from Armenia, which has
now ceased to exist as an independent nation.

In accordance with the settlements made, the amount of principal and
interest which is to be paid to the United States under these agreements
aggregate $15,200,688,253.93. It is obvious that the remaining settlements,
which will undoubtedly be made, will bring this sum up to an amount which
will more than equal the principal due on our present national debt. While
these settlements are very large in the aggregate, it has been felt that
the terms granted were in all cases very generous. They impose no undue
burden and are mutually beneficial in the observance of international faith
and the improvement of international credit.

Every reasonable effort will be made to secure agreements for liquidation
with the remaining countries, whenever they are in such condition that they
can be made. Those which have already been negotiated under the bipartisan
commission established by the Congress have been made only after the most
thoroughgoing and painstaking investigation, continued for a long time
before meeting with the representatives of the countries concerned. It is
believed that they represent in each instance the best that can be done and
the wisest settlement that can be secured. One very important result is the
stabilization of foreign currency, making exchange assist rather than
embarrass our trade. Wherever sacrifices have been made of money, it will
be more than amply returned in better understanding and friendship, while
in so far as these adjustments will contribute to the financial stability
of the debtor countries, to their good order, prosperity, and progress,
they represent hope of improved trade relations and mutual contributions to
the civilization of the world.

ALIEN PROBLEM

Negotiations are progressing among the interested parties in relation to
the final distribution of the assets in the hands of the Alien Property
Custodian. Our Government and people are interested as creditors; the
German Government and people are interested as debtors and owners of the
seized property. Pending the outcome of these negotiations, I do not
recommend any affirmative legislation. For the present we should continue
in possession of this property which we hold as security for the settlement
of claims due to our people and our Government.

IMMIGRATION

While not enough time has elapsed to afford a conclusive demonstration,
such results as have been secured indicate that our immigration law is on
the whole beneficial. It is undoubtedly a protection to the wage earners of
this country. The situation should however, be carefully surveyed, in order
to ascertain whether it is working a needless hardship upon our own
inhabitants. If it deprives them of the comfort and society of those bound
to them by close family ties, such modifications should be adopted as will
afford relief, always in accordance with the principle that our Government
owes its first duty to our own people and that no alien, inhabitant of
another country, has any legal rights whatever under our Constitution and
laws. It is only through treaty, or through residence here that such rights
accrue. But we should not, however, be forgetful of the obligations of a
common humanity.

While our country numbers among its best citizens many of those of foreign
birth, yet those who now enter in violation of our laws by that very act
thereby place themselves in a class of undesirables. Investigation
reveals that any considerable number are coming here in defiance of our
immigration restrictions, it will undoubtedly create the necessity for the
registration of all aliens. We ought to have no prejudice against an alien
because he is an alien. The standard which we apply to our inhabitants is
that of manhood, not place of birth. Restrictive immigration is to a large
degree for economic purposes. It is applied in order that we may not have a
larger annual increment of good people within our borders than we can weave
into our economic fabric in such a way as to supply their needs without
undue injury to ourselves.

NATIONAL DEFENSE

Never before in time of peace has our country maintained so large and
effective a military force as it now has. The Army, Navy, Marine Corps,
National Guard, and Organized Reserves represent a strength of about
558,400 men. These forces are well trained, well equipped, and high in
morale.

A sound selective service act giving broad authority for the mobilization
in time of peril of all the resources of the country, both persons and
materials, is needed to perfect our defense policy in accordance with our
ideals of equality. The provision for more suitable housing to be paid for
out of funds derived from the sale of excess lands, pending before the last
Congress, ought to be brought forward and passed. Reasonable replacements
ought to be made to maintain a sufficient ammunition reserve.

The Navy has the full treaty tonnage of capital ships. Work is going
forward in modernizing the older ones, building aircraft carriers,
additional fleet submarines, and fast scout cruisers, but we are carefully
avoiding anything that might be construed as a competition in armaments
with other nations. The joint Army and Navy maneuvers at Hawaii, followed
by the cruise of a full Battle Fleet to Australia and New Zealand, were
successfully carried out. These demonstrations revealed a most satisfactory
condition of the ships and the men engaged.

Last year at my suggestion the General Board of the Navy made an
investigation and report on the relation of aircraft to warships. As a
result authorizations and appropriations were made for more scout cruisers
and fleet submarines and for completing aircraft carriers and equipping
them with necessary planes. Additional training in aviation was begun at
the Military and Naval Academies. A method of coordination and cooperation
of the Army and Navy and the principal aircraft builders is being
perfected. At the suggestion of the Secretaries of War and Navy I appointed
a special board to make a further study of the problem of aircraft.

The report of the Air Board ought to be reassuring to the country,
gratifying to the service and satisfactory to the Congress. It is
thoroughly complete and represents the mature thought of the best talent in
the country. No radical change in organization of the service seems
necessary. The Departments of War, Navy, and Commerce should each be
provided with an additional assistant secretary, not necessarily with
statutory duties but who would be available under the direction of the
Secretary to give especial attention to air navigation. We must have an air
strength worthy of America. Provision should be made for two additional
brigadier generals for the Army Air Service. Temporary rank corresponding
to their duties should be awarded to active flying officers in both Army
and Navy.

Aviation is of great importance both for national defense and commercial
development. We ought to proceed in its improvement by the necessary
experiment and investigation. Our country is not behind in this art. It has
made records for speed and for the excellence of its planes. It ought to go
on maintaining its manufacturing plants capable of rapid production, giving
national assistance to the la in out of airways, equipping itself with a
moderate number of planes and keeping an air force trained to the highest
efficiency.

While I am a thorough believer in national defense and entirely committed
to the policy of adequate preparation, I am just as thoroughly opposed to
instigating or participating in a policy of competitive armaments. Nor does
preparation mean a policy of militarizing. Our people and industries are
solicitous for the cause of 0111, country, and have great respect for the
Army and Navy and foil the uniform worn by the men who stand ready at all
times for our protection to encounter the dangers and perils necessary to
military service, but all of these activities are to be taken not in behalf
of aggression but in behalf of peace. They are the instruments by which we
undertake to do our part to promote good will and support stability among
all peoples.

VETERANS

If any one desires to estimate the esteem in which the veterans of America
are held by their fellow citizens, it is but necessary to remember that the
current budget calls for an expenditure of about $650,000.000 in their
behalf. This is nearly the amount of the total cost of the National
Government, exclusive of the post office, before we entered the last war.

At the two previous sessions of Congress legislation affecting veterans'
relief was enacted and the law liberalized. This legislation brought into
being a number of new provisions tending more nearly to meet the needs of
our veterans, as well as afford the necessary authority to perfect the
administration of these laws.

Experience with the new legislation so far has clearly demonstrated its
constructive nature. It has increased the benefits received by many and has
made eligible for benefits many others. Direct disbursements to the veteran
or his dependents exceeding $21,000,000 have resulted, which otherwise
would not have been made. The degree of utilization of our hospitals has
increased through making facilities available to the incapacitated veteran
regardless of service origin of the disability. This new legislation also
has brought about a marked improvement of service to the veteran.

The organizations of ex-service men have proposed additional legislative
changes which you will consider, but until the new law and the
modifications made at the last session of Congress are given a more
thorough test further changes in the basic law should be few and made only
after careful though sympathetic consideration.

The principal work now before the Veterans' Bureau is the perfection of its
organization and further improvements in service. Some minor legislative
changes are deemed necessary to enable the bureau to retain that high grade
of professional talent essential in handling the problems of the bureau.
Such changes as tend toward the improvement of service and the carrying
forward to completion of the hospital construction program are recommended
for the consideration of the proper committees of Congress.

With the enormous outlay that is now being made in behalf of the veterans
and their dependents, with a tremendous war debt still requiring great
annual expenditure, with the still high rate of taxation, while every
provision should be made for the relief of the disabled and the necessary
care of dependents, the Congress may well consider whether the financial
condition of the Government is not such that further bounty through the
enlargement of general pensions and other emoluments ought not to be
postponed.

AGRICULTURE

No doubt the position of agriculture as a whole has very much improved
since the depression of three and four years ago. But there are many
localities and many groups of individuals, apparently through no fault of
their own, sometimes due to climatic conditions and sometimes to the
prevailing price of a certain crop, still in a distressing condition. This
is probably temporary, but it is none the less acute. National Government
agencies, the Departments of Agriculture and Commerce, the Farm Loan Board,
the intermediate credit banks, and the Federal Reserve Board are all
cooperating to be of assistance and relief. On the other hand, there are
localities and individuals who have had one of their most prosperous years.
The general price level is fair, but here again there are exceptions both
ways, some items being poor while others are excellent. In spite of a
lessened production the farm income for this year will be about the same as
last year and much above the three preceding years.

Agriculture is a very complex industry. It does not consist of one problem,
but of several. They can not be solved at one stroke. They have to be met
in different ways, and small gains are not to be despised.

It has appeared from all the investigations that I have been able to make
that the farmers as a whole are determined to maintain the independence of
their business. They do not wish to have meddling on the part of the
Government or to be placed under the inevitable restrictions involved in
any system of direct or indirect price-fixing, which would result from
permitting the Government to operate in the agricultural markets. They are
showing a very commendable skill in organizing themselves to transact their
own business through cooperative marketing, which will this year turn over
about $2,500,000,000, or nearly one-fifth of the total agricultural
business. In this they are receiving help from the Government. The
Department of Agriculture should be strengthened in this facility, in order
to be able to respond when these marketing associations want help. While
it ought not to undertake undue regulation, it should be equipped to give
prompt information on crop prospects, supply, demand, current receipts,
imports, exports, and prices.

A bill embodying these principles, which has been drafted under the advice
and with the approval of substantially all the leaders and managers in the
cooperative movement, will be presented to the Congress for its enactment.
Legislation should also be considered to provide for leasing the
unappropriated public domain for grazing purposes and adopting a uniform
policy relative to grazing on the public lands and in the national
forests.

A more intimate relation should be established between agriculture and the
other business activities of the Nation. They are mutually dependent and
can each advance their own prosperity most by advancing the prosperity of
the other. Meantime the Government will continue those activities which
have resulted in an unprecedented amount of legislation and the pouring out
of great sums of money during the last five years. The work for good roads,
better land and water transportation, increased support for agricultural
education, extension of credit facilities through the Farm Loan Boards and
the intermediate credit banks, the encouragement of orderly marketing and a
repression of wasteful speculation, will all be continued.

Following every other depression, after a short period the price of farm
produce has taken and maintained the lead in the advance. This advance had
reached a climax before the war. Everyone will recall the discussion that
went on for four or five years prior to 1914 concerning the high cost of
living. This history is apparently beginning to repeat itself. While
wholesale prices of other commodities have been declining, farm prices have
been increasing. There is every reason to suppose that a new era in
agricultural prosperity lies just before us, which will probably be
unprecedented.

MUSCLE SHOALS

The problem of Muscle Shoals seems to me to have assumed a place all out of
proportion with its real importance. It probably does not represent in
market value much more than a first-class battleship, yet it has been
discussed in the Congress over a period of years and for months at a time.
It ought to be developed for the production of nitrates primarily, and
incidentally for power purposes. This would serve defensive, agricultural,
and industrial purposes. I am in favor of disposing of this property to
meet these purposes. The findings of the special commission will be
transmitted to the Congress for their information. I am convinced that the
best possible disposition can be made by direct authorization of the
Congress. As a means of negotiation I recommend the immediate appointment
of a small joint special committee chosen from the appropriate general
standing committees of the House and Senate to receive bids, which when
made should be reported with recommendations as to acceptance, upon which a
law should be enacted, effecting a sale to the highest bidder who will
agree to carry out these purposes.

If anything were needed to demonstrate the almost utter incapacity of the
National Government to deal directly with an industrial and commercial
problem, it has been provided by our experience with this property. We have
expended vast fortunes, we have taxed everybody, but we are unable to
secure results, which benefit anybody. This property ought, to be
transferred to private management under conditions which will dedicate it
to the public purpose for which it was conceived.

RECLAMATION

The National Government is committed to a policy of reclamation and
irrigation which it desires to establish on a sound basis and continue in
the interest of the localities concerned. Exhaustive studies have recently
been made of Federal reclamation, which have resulted in improving the
projects and adjusting many difficulties. About one third of the projects
is in good financial condition, another third can probably be made
profitable, while the other third is under unfavorable conditions. The
Congress has already provided for a survey which will soon be embodied in a
report. That ought to suggest a method of relief which will make
unnecessary further appeals to the Congress. Unless this can be done,
Federal reclamation will be considerably retarded. With the greatly
increased cost of construction and operation, it has become necessary to
plan in advance, by community organization and selective agriculture,
methods sufficient to repay these increasing outlays.

The human and economic interests of the farmer citizens suggest that the
States should be required to exert some effort and assume some
responsibility, especially in the intimate, detailed, and difficult work of
securing settlers and developing farms which directly profit them, but only
indirectly and remotely can reimburse the Nation. It is believed that the
Federal Government should continue to be the agency for planning and
constructing the great undertakings needed to regulate and bring into use
the rivers the West, many of which are interstate in character, but the
detailed work of creating agricultural communities and a rural civilization
on the land made ready for reclamation ought to be either transferred to
the State in its entirety or made a cooperative effort of the State and
Federal Government.

SHIPPING

The maintenance of a merchant marine is of the utmost importance for
national defense and the service of our commerce. We have a large number of
ships engaged in that service. We also have a surplus supply, costly to
care for, which ought to be sold. All the investigations that have been
made under my direction, and those which have been prosecuted
independently, have reached the conclusion that the fleet should be under
the direct control of a single executive head, while the Shipping Board
should exercise its judicial and regulatory functions in Accordance with
its original conception. The report of Henry G. Dalton, a business man of
broad experience, with a knowledge of shipping, made to me after careful
investigation, will be transmitted for the information of the Congress, the
studies pursued under the direction of the United States Chamber of
Commerce will also be accessible, and added to these will be the report of
the special committee of the House.

I do not advocate the elimination of regional considerations, but it has
become apparent that without centralized executive action the management of
this great business, like the management of any other great business, will
flounder in incapacity and languish under a division of council. A plain
and unmistakable reassertion of this principle of unified control, which I
have always been advised was the intention of the Congress to apply, is
necessary to increase the efficiency of our merchant fleet.

COAL

The perennial conflict in the coal industry is still going on to the great
detriment of the wage earners, the owners, and especially to the public.
With deposits of coal in this country capable of supplying its needs for
hundreds of years, inability to manage and control this great resource for
the benefit of all concerned is very close to a national economic failure.
It has been the subject of repeated investigation and reiterated
recommendation. Yet the industry seems never to have accepted modern
methods of adjusting differences between employers and employees. The
industry could serve the public much better and become subject to a much
more effective method of control if regional consolidations and more
freedom in the formation of marketing associations, under the supervision
of the Department of Commerce, were permitted.

At the present time the National Government has little or no authority to
deal with this vital necessity of the life of the country. It has permitted
itself to remain so powerless that its only attitude must be humble
supplication. Authority should be lodged with the President and the
Departments of Commerce and Labor, giving them power to deal with an
emergency. They should be able to appoint temporary boards with authority
to call for witnesses and documents, conciliate differences, encourage
arbitration, and in case of threatened scarcity exercise control over
distribution. Making the facts public under these circumstances through a
statement from an authoritative source would be of great public benefit.
The report of the last coal commission should be brought forward,
reconsidered, and acted upon.

PROHIBITION

Under the orderly processes of our fundamental institutions the
Constitution was lately amended providing for national prohibition. The
Congress passed an act for its enforcement, and similar acts have been
provided by most of the States. It is the law of the land. It is the duty
of all who come under its, jurisdiction to observe the spirit of that law,
and it is the duty of the Department of Justice and the Treasury Department
to enforce it. Action to prevent smuggling, illegal transportation in
interstate commerce, abuse in the use of permits, and existence of sources
of supply for illegal traffic is almost entirely imposed upon the Federal
Government.

Through treaties with foreign governments and increased activities of the
Coast Guard, revenue agents, district attorneys and enforcement agents
effort is being made to prevent these violations. But the Constitution also
puts a concurrent duty on the States. We need their active and energetic
cooperation, the vigilant action of their police, and the jurisdiction of
their courts to assist in enforcement. I request of the people observance,
of the public officers continuing efforts for enforcement, and of the
Congress favorable action on the budget recommendation for the prosecution
of this work.

WATERWAY DEVELOPMENT

For many years our country has been employed in plans and M for the
development of our intracoastal and inland waterways. This work along our
coast is an important adjunct to our commerce. It will be carried on,
together with the further opening up of our harbors, as our resources
permit. The Government made an agreement during the war to take over the
Cape Cod Canal, under which the owners made valuable concessions. This
pledged faith of the Government ought to be redeemed.

Two other main fields are under consideration. One is the Great Lakes and
St. Lawrence, including the Erie Canal. This includes stabilizing the lake
level, and is both a waterway and power project. A joint commission of the
United States and Canada is working on plans and surveys which will not be
completed until next April. No final determination can be made, apparently,
except under treaty as to the participation of both countries. The other is
the Mississippi River stem. This is almost entirely devoted to navigation.
Work on the Ohio River will be completed in about three years. A modern
channel connecting Chicago, New Orleans, Kansas City, and Pittsburgh should
be laid out and work on the tributaries prosecuted. Some work is being done
of a preparatory nature along the Missouri, and large expenditures are
being made yearly in the lower reaches of the Mississippi and its
tributaries which contribute both to flood control and navigation.
Preliminary measures are being taken on the Colorado River project, which
is exceedingly important for flood control, irrigation, power development,
and water supply to the area concerned. It would seem to be very doubtful,
however, whether it is practical to secure affirmative action of the
Congress, except under a Joint agreement of the several States.

The Government has already expended large sums upon scientific research and
engineering investigation in promotion of this Colorado River project. The
actual progress has been retarded for many years by differences among the
seven States in the basin over their relative water rights and among
different groups as to methods. In an attempt to settle the primary
difficulty of the water rights, Congress authorized the Colorado River
Commission which agreed on November 24, 1922, upon an interstate compact to
settle these rights, subject to the ratification of the State legislatures
and Congress. All seven States except Arizona at one time ratified, the
Arizona Legislature making certain reservations which failed to meet the
approval of the governor. Subsequently an attempt was made to establish the
compact upon a six-State basis, but in this case California imposed
reservations. There appears to be no division of opinion upon the major
principles of the compact, but difficulty in separating contentions to
methods of development from the discussion of it. It is imperative that
flood control be undertaken for California and Arizona. preparation made
for irrigation, for power, and for domestic water.

Some or all of these questions are combined in every proposed development.
The Federal Government is interested in some of these phases, State
governments and municipalities and irrigation districts in others, and
private corporations in still others. Because of all this difference of
view it is most desirable that Congress should consider the creation of
some agency that will be able to determine methods of improvement solely
upon economic and engineering facts, that would be authorized to negotiate
and settle, subject to the approval of Congress, the participation, rights,
and obligations of each group in any particular works. Only by some such
method can early construction be secured.

WATER POWER

Along with the development of navigation should go every possible
encouragement for the development of our water power. While steam still
plays a dominant part, this is more and more becoming an era of
electricity. Once installed, the cost is moderate, has not tended greatly
to increase, and is entirely free from the unavoidable dirt and
disagreeable features attendant upon the burning of coal. Every facility
should be extended for the connection of the various units into a
superpower plant, capable at all times of a current increasing uniformity
over the entire system.

RAILROADS

The railroads throughout the country are in a fair state of prosperity.
Their service is good and their supply of cars is abundant. Their condition
would be improved and the public better served by a system of
consolidations. I recommend that the Congress authorize such consolidations
tinder the supervision of the Interstate Commerce Commission, with power to
approve or disapprove when proposed parts are excluded or new parts added.
I am informed that the railroad managers and their employees have reached a
substantial agreement as to what legislation is necessary to regulate and
improve their relationship. Whenever they bring forward such proposals,
which seem sufficient also to protect the interests of the public, they
should be enacted into law.

It is gratifying to report that both the railroad managers and railroad
employees are providing boards for the mutual adjustment of differences in
harmony with the principles of conference, conciliation, and arbitration.
The solution of their problems ought to be an example to all other
industries. Those who ask the protections of civilization should be ready
to use the methods of civilization.

A strike in modern industry has many of the aspects of war in the modern
world. It injures labor and it injures capital. If the industry involved is
a basic one, it reduces the necessary economic surplus and, increasing the
cost of living, it injures the economic welfare and general comfort of the
whole people. It also involves a deeper cost. It tends to embitter and
divide the community into warring classes and thus weakens the unity and
power of our national life.

Labor can make no permanent gains at the cost of the general welfare. All
the victories won by organized labor in the past generation have been won
through the support of public opinion. The manifest inclination of the
managers and employees of the railroads to adopt a policy of action in
harmony with these principles marks a new epoch in our industrial life.

OUTLYING POSSESSIONS

The time has come for careful investigation of the expenditures and success
of the laws by which we have undertaken to administer our outlying
possessions. A very large amount of money is being expended for
administration in Alaska. It appears so far out of proportion to the number
of inhabitants and the amount of production as to indicate cause for
thorough investigation. Likewise consideration should be given to the
experience under the law which governs the Philippines. From such reports
as reach me there are indications that more authority should be given to
the Governor General, so that he will not be so dependent upon the local
legislative body to render effective our efforts to set an example of the,
sound administration and good government, which is so necessary for the
preparation of the Philippine people for self-government under ultimate
independence. If they are to be trained in these arts, it is our duty to
provide for them the best that there is.

RETIREMENT OF JUDGES

The act of March 3, 1911, ought to be amended so that the term of years of
service of judges of any court of the United States requisite for
retirement with pay shall be computed to include not only continuous but
aggregate service.

MOTHERS' AID

The Government ought always to be alert on the side of the humanities. It
Ought to encourage provisions for economic justice for the defenseless. It
ought to extend its relief through its national and local agencies, as may
be appropriate in each case, to the suffering and the needy. It ought to be
charitable.

Although more than 40 of our States have enacted measures in aid of
motherhood, the District of Columbia is still without such a law. A
carefully considered bill will be presented, which ought to have most
thoughtful consideration in order that the Congress may adopt a measure
which will be hereafter a model for all parts of the Union.

CIVIL SERVICE

In 1883 the Congress passed the civil service act, which from a modest
beginning of 14,000 employees has grown until there are now 425,000 in the
classified service. This has removed the clerical force of the Nation from
the wasteful effects of the spoils system and made it more stable and
efficient. The time has come to consider classifying all postmasters,
collectors of customs, collectors of internal revenue, and prohibition
agents, by an act covering in those at present in office, except when
otherwise provided by Executive order.

The necessary statistics are now being gathered to form the basis of a
valuation of the civil service retirement fund based on current conditions
of the service. It is confidently expected that this valuation will be
completed in time to be made available to the Congress during the present
session. It will afford definite knowledge of existing, and future
liabilities under the present law and determination OF liabilities under
any proposed change in the present law. We should have this information
before creating further obligations for retirement annuities which will
become liabilities to be met in the future from the money of the taxpayer.

The classification act of 1923, with the subsequent legislative action
providing for adjustment of the compensation of field service positions,
has operated materially to improve employment conditions in the Federal
service. The administration of the act is in the hands of an impartial
board, functioning without the necessity of a direct appropriation. It
would be inadvisable at this time to place in other hands the
administration of this act.

FEDERAL TRADE COMMISSION

The proper function of the Federal Trade Commission is to supervise and
correct those practices in commerce which are detrimental to fair
competition. In this it performs a useful function and should be continued
and supported. It was designed also to be a help to honest business. In my
message to the Sixty-eighth Congress I recommended that changes in the
procedure then existing be made. Since then the commission by its own
action has reformed its rules, giving greater speed and economy in the
disposal of its cases and full opportunity for those accused to be heard.
These changes are improvements and, if necessary, provision should be made
for their permanency.

REORGANIZATION

No final action has yet been taken on the measure providing for the
reorganization of the various departments. I therefore suggest that this
measure, which will be of great benefit to the efficient and economical
administration of the business of the Government, be brought forward and
passed.

THE NEGRO

Nearly one-tenth of our population consists of the Negro race. The progress
which they have made in all the arts of civilization in the last 60 years
is almost beyond belief. Our country has no more loyal citizens. But they
do still need sympathy, kindness, and helpfulness. They need reassurance
that the requirements of the Government and society to deal out to them
even-handed justice will be met. They should be protected from all violence
and supported in the peaceable enjoyment of the fruits of their labor.
Those who do violence to them should be punished for their crimes. No other
course of action is worthy of the American people.

Our country has many elements in its population, many different modes of
thinking and living, all of which are striving in their own way to be loyal
to the high ideals worthy of the crown of American citizenship. It is
fundamental of our institutions that they seek to guarantee to all our
inhabitants the right to live their own lives under the protection of the
public law. This does not include any license to injure others materially,
physically, morally, to Incite revolution, or to violate the established
customs which have long had the sanction of enlightened society.

But it does mean the full right to liberty and equality before the law
without distinction of race or creed. This condition can not be granted to
others, or enjoyed by ourselves, except by the application of the principle
of broadest tolerance. Bigotry is only another name for slavery. It reduces
to serfdom not only those against whom it is directed, but also those who
seek to apply it. An enlarged freedom can only be secured by the
application of the golden rule. No other utterance ever presented such a
practical rule of life.

CONCLUSION

It is apparent that we are reaching into an era of great general
prosperity. It will continue only so long as we shall use it properly.
After all, there is but a fixed quantity of wealth in this country at any
fixed time. The only way that we can all secure more of it is to create
more. The element of time enters into production, If the people have
sufficient moderation and contentment to be willing to improve their
condition by the process of enlarging production, eliminating waste, and
distributing equitably, a prosperity almost without limit lies before its.
If the people are to be dominated by selfishness, seeking immediate riches
by nonproductive speculation and by wasteful quarreling over the returns
from industry, they will be confronted by the inevitable results of
depression and privation. If they will continue industrious and thrifty,
contented with fair wages and moderate profits, and the returns which
accrue from the development of oar natural resources, our prosperity will
extend itself indefinitely.

In all your deliberations you should remember that the purpose of
legislation is to translate principles into action. It is an effort to have
our country be better by doing better. Because the thoughts and ways of
people are firmly fixed and not easily changed, the field within which
immediate improvement can be secured is very narrow. Legislation can
provide opportunity. Whether it is taken advantage of or not depends upon
the people themselves. The Government of the United States has been created
by the people. It is solely responsible to them. It will be most successful
if it is conducted solely for their benefit. All its efforts would be of
little avail unless they brought more justice, more enlightenment, more
happiness and prosperity into the home. This means an opportunity to
observe religion, secure education, and earn a living under a reign of law
and order. It is the growth and improvement of the material and spiritual
life of the Nation. We shall not be able to gain these ends merely by our
own action. If they come at all, it will be because we have been willing to
work in harmony with the abiding purpose of a Divine Providence.

***

State of the Union Address
Calvin Coolidge
December 7, 1926

Members of the Congress:

In reporting to the Congress the state of the Union, I find it impossible
to characterize it other than one of general peace and prosperity. In some
quarters our diplomacy is vexed with difficult and as yet unsolved
problems, but nowhere are we met with armed conflict. If some occupations
and areas are not flourishing, in none does there remain any acute chronic
depression. What the country requires is not so much new policies as a
steady continuation of those which are already being crowned with such
abundant success. It can not be too often repeated that in common with all
the world we are engaged in liquidating the war.

In the present short session no great amount of new legislation is
possible, but in order to comprehend what is most desirable some survey of
our general situation is necessary. A large amount of time is consumed in
the passage of appropriation bills. If each Congress in its opening session
would make appropriations to continue for two years, very much time would
be saved which could either be devoted to a consideration of the general
needs of the country or would result in decreasing the work of legislation.
ECONOMY

Our present state of prosperity has been greatly promoted by three
important causes, one of which is economy, resulting in reduction and
reform in national taxation. Another is the elimination of many kinds of
waste. The third is a general raising of the standards of efficiency. This
combination has brought the perfectly astonishing result of a reduction in
the index price of commodities and an increase in the index rate of wages.
We have secured a lowering of the cost to produce and a raising of the
ability to consume. Prosperity resulting from these causes rests on the
securest of all foundations. It gathers strength from its own progress.

In promoting this progress the chief part which the National Government
plays lies in the field of economy. Whatever doubts may have been
entertained as to the necessity of this policy and the beneficial results
which would accrue from it to all the people of the Nation, its wisdom must
now be considered thoroughly demonstrated. It may not have appeared to be a
novel or perhaps brilliant conception, but it has turned out to be
preeminently sound. It has not failed to work. It has surely brought
results. It does not have to be excused as a temporary expedient adopted as
the lesser evil to remedy some abuse, it is not a palliative seeking to
treat symptoms, but a major operation for the, eradication at the source of
a large number of social diseases.

Nothing is easier than the expenditure of public money. It does not appear
to belong to anybody. The temptation is overwhelming to bestow it on
somebody. But the results of extravagance are ruinous. The property of the
country, like the freedom of the country, belongs to the people of the
country. They have not empowered their Government to take a dollar of it
except for a necessary public purpose. But if the Constitution conferred
such right, sound economics would forbid it. Nothing is more, destructive
of the progress of the Nation than government extravagance. It means an
increase in the burden of taxation, dissipation of the returns from
enterprise, a decrease in the real value of wages, with ultimate stagnation
and decay. The whole theory of our institutions is based on the liberty and
independence of the individual. He is dependent on himself for support and
therefore entitled to the rewards of his own industry. He is not to be
deprived of what he earns that others may be benefited by what they do not
earn. What he saves through his private effort is not to be wasted by
Government extravagance.

Our national activities have become so vast that it is necessary to
scrutinize each item of public expenditure if we are to apply the principle
of economy. At the last session we made an immediate increase in the annual
budget of more than $100,000,000 in benefits conferred on the veterans of
three wars, public buildings, and river and harbor improvement. Many
projects are being broached requiring further large outlays. I am convinced
that it would be greatly for the welfare of the country if we avoid at the
present session all commitments except those of the most pressing nature.
From a reduction of the debt and taxes will accrue a wider benefit to all
the people of this country than from embarking on any new enterprise. When
our war debt is decreased we shall have resources for expansion. Until that
is accomplished we should confine ourselves to expenditures of the most
urgent necessity.

The Department of Commerce has performed a most important function in
making plans and securing support of all kinds of national enterprise for
the elimination of waste. Efficiency has been greatly promoted through good
management and the constantly increasing cooperation of the wage earners
throughout the whole realm of private business. It is my opinion that this
whole development has been predicated on the foundation of a protective
tariff.

TAX REDUCTION

As a result of economy of administration by the Executive and of
appropriation by the Congress, the end of this fiscal year will leave a
surplus in the Treasury estimated at $383,000,000. Unless otherwise
ordered, such surplus is used for the retirement of the war debt. A bond
which can be retired today for 100 cents will cost the people 104 1/4
cents to retire a year from now. While I favor a speedy reduction of the
debt as already required by law and in accordance with the promises made to
the holders of our Liberty bonds when they were issued, there is no reason
why a balanced portion of surplus revenue should not be applied to a
reduction of taxation. It can not be repeated too often that the enormous
revenues of this Nation could not be collected without becoming a charge on
all the people whether or not they directly pay taxes. Everyone who is
paying or the bare necessities of fool and shelter and clothing, without
considering the better things of life, is indirectly paying a national tax.
The nearly 20,000,000 owners of securities, the additional scores of
millions of holders of insurance policies and depositors in savings banks,
are all paying a national tax. Millions of individuals and corporations are
making a direct contribution to the National Treasury which runs from 11/2
to 25 per cent of their income, besides a number of special requirements,
like automobile and admission taxes. Whenever the state of the Treasury
will permit, I believe in a reduction of taxation. I think the taxpayers
are entitled to it. But I am not advocating tax reduction merely for the
benefit of the taxpayer; I am advocating it for the benefit of the
country.

If it appeared feasible, I should welcome permanent tax reduction at this
time. The estimated surplus, however, for June 30, 1928, is not much larger
than is required in a going business of nearly $4,000,000,000. We have had
but a few months' experience under the present revenue act and shall need
to know what is developed by the returns of income produced under it, which
are not required t o be made until about the time this session terminates,
and what the economic probabilities of the country are in the latter part
of 1927, before we can reach any justifiable conclusion as to permanent tax
reduction. Moreover the present surplus results from many nonrecurrent
items. Meantime, it is possible to grant some real relief by a simple
measure making reductions in the payments which accrue on the 15th of March
and June, 1927. I am very strongly of the conviction that this is so much a
purely business matter that it ought not to be dealt with in a partisan
spirit. The Congress has already set the notable example of treating tax
problems without much reference to party, which might well be continued.
What I desire to advocate most earnestly is relief for the country from
unnecessary tax burdens. We can not secure that if we stop to engage in a
partisan controversy. As I do not think any change in the special taxes, or
tiny permanent reduction is practical, I therefore urge both parties of the
House Ways and Means Committee to agree on a bill granting the temporary
relief which I have indicated. Such a reduction would directly affect
millions of taxpayers, release large sums for investment in new enterprise,
stimulating industrial production and agricultural consumption, and
indirectly benefiting every family in the whole country. These are my
convictions stated with full knowledge that it is for the Congress to
decide whether they judge it best to make such a reduction or leave the
surplus for the present year to be applied to retirement of the war debt.
That also is eventually tax reduction.

PROTECTIVE TARIFF

It is estimated that customs receipts for the present fiscal year will
exceed $615,000,000, the largest which were ever secured from that source.
The value of our imports for the last fiscal year was $4,466,000,000, an
increase of more than 71 per cent since the present tariff law went into
effect. Of these imports about 65 per cent, or, roughly, $2,900,000,000,
came in free of duty, which means that the United States affords a
duty-free market to other countries almost equal in value to the total
imports of Germany and greatly exceeding the total imports of France. We
have admitted a greater volume of free imports than any other country
except England.

We are, therefore, levying duties on about $1,550,000,000 of imports.
Nearly half of this, or $700,000,000, is subject to duties for the
protection of agriculture and have their origin in countries other than
Europe. They substantially increased the prices received by our farmers for
their produce. About $300,000.000 more is represented by luxuries such as
costly rugs, furs, precious stones, etc. This leaves only about
$550,000,000 of our imports under a schedule of duties which is in general
under consideration when there is discussion of lowering the tariff. While
the duties on this small portion, representing only about 12 per cent of
our imports, undoubtedly represent the difference between a fair degree of
prosperity or marked depression to many of our industries and the
difference between good pay and steady work or wide unemployment to many of
our wage earners, it is impossible to conceive how other countries or our
own importers could be greatly benefited if these duties are reduced. Those
who are starting an agitation for a reduction of tariff duties, partly at
least for the benefit of those to whom money has been lent abroad, ought to
know that there does not seem to be a very large field within the area of
our imports in which probable reductions would be advantageous to foreign
goods. Those who wish to benefit foreign producers are much more likely to
secure that result by continuing the present enormous purchasing power
which comes from our prosperity that increased our imports over 71
per cent in four years than from any advantages that are likely to accrue
from a general tariff reduction.

AGRICULTURE

The important place which agriculture holds in the economic and social life
of the Nation can not be overestimated. The National Government is
justified in putting forth every effort to make the open country a
desirable place to live. No condition meets this requirement which fails to
supply a fair return on labor expended and capital invested. While some
localities and some particular crops furnish exceptions, in general
agriculture is continuing to make progress in recovering from the
depression of 1921 and 1922. Animal products and food products are in a
more encouraging position, while cotton, due to the high prices of past
years supplemented by ideal weather conditions, has been stimulated to a
point of temporary over production. Acting on the request of the cotton
growing interests, appointed a committee to assist in carrying out their
plans. As it result of this cooperation sufficient funds have been pledged
to finance the storage and carrying of 4,000,000 bales of cotton. Whether
those who own the cotton are willing to put a part of their stock into this
plan depends on themselves. The Federal Government has cooperated in
providing ample facilities. No method of meeting the situation would be
adequate which does not contemplate a reduction of about one-third in the
acreage for the coming year. The responsibility for making the plan
effective lies with those who own and finance cotton and cotton lands.

The Department of Agriculture estimates the net income of agriculture for
the year 1920-21 at only $375,000,000; for 1924-25, $2,656,000,000; for
1925-26, $2,757,000,000. This increase has been brought about in part by
the method already referred to, of Federal tax reduction, the elimination
of waste, and increased efficiency in industry. The wide gap that existed a
few years ago between the index price of agricultural products and the
index price of other products has been gradually closing up, though the
recent depression in cotton has somewhat enlarged it. Agriculture had on
the whole been going higher while industry had been growing lower.
Industrial and commercial activities, being carried on for the most part by
corporations, are taxed at a much higher rate than farming, which is
carried on by individuals. This will inevitably make industrial commodity
costs high while war taxation lasts. It is because of this circumstance
that national tax reduction has a very large indirect benefit upon the
farmer, though it can not relieve him from the very great burden of the
local taxes which he pays directly. We have practically relieved the farmer
of any Federal income tax.

There is agreement on all sides that some portions of our agricultural
industry have lagged behind other industries in recovery from the war and
that further improvement in methods of marketing of agricultural products
is most desirable. There is belief also that the Federal Government can
further contribute to these ends beyond the many helpful measures taken
during the last five years through the different acts of Congress for
advancing the interests of the farmers.

The packers and stockyards act,

Establishing of the intermediate credit banks for agricultural purposes,

The Purnell Act for agricultural research,

The Capper-Volstead Cooperative Marketing Act,

The cooperative marketing act of 1926,

Amendments to the warehousing act,

The enlargement of the activities of the Department of Agriculture,

Enlargement of the scope of loans by the Farm Loan Board,

The tariff on agricultural products,

The large Federal expenditure in improvement of waterways and highways,

The reduction of Federal taxes, in all comprise a great series of
governmental actions in the advancement of the special interest of
agriculture.

In determination of what further measures may be undertaken it seems to me
there are certain pitfalls which must be avoided and our test in avoiding
them should be to avoid disaster to the farmer himself.

Acting upon my recommendation, the Congress has ordered the interstate
Commerce Commission to investigate the freight-rate structure, directing
that such changes shall be made in freight rates as will promote freedom of
movement of agricultural products. Railroad consolidation which I am
advocating would also result in a situation where rates could be made more
advantageous for farm produce, as has recently been done in the revision of
rates on fertilizers in the South. Additional benefit will accrue from the
development of our inland waterways. The Mississippi River system carries a
commerce of over 50,000,000 tons at a saving of nearly $18,000,000
annually. The Inland Waterways Corporation operates boats on 2,500 miles of
navigable streams and through its relation with 165 railroads carries
freight into and out of 45 States of the Union. During the past six months
it has handled over 1,000,000 bushels of grain monthly and by its lower
freight rates has raised the price of such grain to the farmer probably
21/2 cents to 3 cents a bushel. The highway system on which the Federal
Government expends about $85,000,000 a year is of vital importance to the
rural regions.

The advantages to be derived from a more comprehensive and less expensive
system of transportation for agriculture ought to be supplemented by
provision for an adequate supply of fertilizer at a lower cost than it is
at present obtainable. This advantage we are attempting to secure by the
proposed development at Muscle Shoals, and there are promising experiments
being made in synthetic chemistry for the production of nitrates.

A survey should be made of the relation of Government grazing lands to the
livestock industry. Additional legislation is desirable more definitely to
establish the place of grazing in the administration of the national
forests, properly subordinated to their functions of producing timber and
conserving the water supply. Over 180,000,000 acres of grazing lands are
still pastured as commons in the public domain with little or no
regulation. This has made their use so uncertain that it has contributed
greatly to the instability of the livestock industry. Very little of this
land is suited to settlement or private ownership. Some plan ought to be
adopted for its use in grazing, corresponding broadly to that already
successfully applied to the national forests.

The development of sound and strong cooperative associations is of
fundamental importance to our agriculture. It is encouraging to note,
therefore, that a vigorous and healthy growth in the cooperative movement
is continuing. Cooperative associations reporting to the Department of
Agriculture at the end of 1925 had on their membership rolls a total of
2,700,000 producers. Their total business in 1925 amounted to approximately
$2,400,000,000, compared with $635,800,000 in 1915. Legislative action to
assist cooperative associations and supplement their efforts was passed at
the last session of Congress. Important credit measures were also provided
by Congress in 1923 which have been of inestimable value to the cooperative
associations. Although the Federal credit agencies have served agriculture
well, I think it may be possible to broaden and strengthen the service of
these institutions.

Attention is again directed to the surplus problem of agriculture by the
present cotton situation. Surpluses often affect prices of various farm
commodities in a disastrous manner, and the problem urgently demands a
solution. Discussions both in and out of Congress during the past few years
have given us a better understanding of the subject, and it is my hope that
out of the various proposals made the basis will be found for a sound and
effective solution upon which agreement can be reached. In my opinion
cooperative marketing associations will be important aids to the ultimate
solution of the problem. It may well be, however, that additional measures
will be needed to supplement their efforts. I believe all will agree that
such measures should not conflict with the best interests of the
cooperatives, but rather assist and strengthen them. In working out this
problem to any sound conclusion it is necessary to avoid putting the
Government into the business of production or marketing or attempting to
enact legislation for the purpose of price fixing. The farmer does not
favor any attempted remedies that partake of these elements. He has a
sincere and candid desire for assistance. If matched by an equally sincere
and candid consideration of the different remedies proposed a sound
measure of relief ought to result. It is unfortunate that no general
agreement has been reached by the various agricultural interests upon any
of the proposed remedies. Out of the discussion of various proposals which
can be had before the Committees of Agriculture some measure ought to be
perfected which would be generally satisfactory.

Due to the emergency arising from a heavy tropical storm in southern
Florida, I authorized the Secretary of Agriculture to use certain funds in
anticipation of legislation to enable the farmers in that region to plant
their crops. The department will present a bill ratifying the loans which
were made for this purpose.

Federal legislation has been adopted authorizing the cooperation of the
Government with States and private owners in the protection of forest lands
from fire. This preventive measure is of such great importance that I have
recommended for it an increased appropriation.

Another preventive measure of great economic and sanitary importance is the
eradication of tuberculosis in cattle. Active work is now in progress in
one-fourth of the counties of the United States to secure this result. Over
12,000,000 cattle have been under treatment, and the average degree of
infection has fallen from 4.9 per cent to 2.8 per cent. he Federal
Government is making substantial expenditures for this purpose.

Serious damage is threatened to the corn crop by the European corn borer.
Since 1917 it has spread from eastern New England westward into Indiana and
now covers about 100,000 square miles. It is one of the most formidable
pests because it spreads rapidly and is exceedingly difficult of control.
It has assumed a menace that is of national magnitude and warrants the
Federal Government in extending its cooperation to the State and local
agencies which are attempting to prevent its further spread and secure its
eradication.

The whole question of agriculture needs most careful consideration. In the
past few years the Government has given this subject more attention than
any other and has held more consultations in relation to it than on any
other subject. While the Government is not to be blamed for failure to
perform the impossible, the agricultural regions are entitled to know that
they have its constant solicitude and sympathy. Many of the farmers are
burdened with debts and taxes which they are unable to carry. We are
expending in this country many millions of dollars each year to increase
farm production. We ought now to put more emphasis on the question of farm
marketing. If a sound solution of a permanent nature can be found for this
problem, the Congress ought not to hesitate to adopt it.

DEVELOPMENT OF WATER RESOURCES

In previous messages I have referred to the national importance of the
proper development of our water resources. The great projects of extension
of the Mississippi system, the protection an development of the lower
Colorado River, are before Congress, and I have previously commented upon
them. I favor the necessary legislation to expedite these projects.
Engineering studies are being made for connecting the Great Lakes with the
North Atlantic either through an all-American canal or by way of the St.
Lawrence River. These reports will undoubtedly be before the Congress
during its present session. It is unnecessary to dwell upon the great
importance of such a waterway not only to our mid-continental basin but to
the commerce and development of practically the whole Nation. Our river and
harbor improvement should be continued in accordance with the present
policy. Expenditure of this character is compatible with economy; it is in
the nature of capital investment. Work should proceed on the basic trunk
lines if this work is to be a success. If the country will be content to be
moderate and patient and permit improvements to be made where they will do
the greatest general good, rather than insisting on expenditures at this
time on secondary projects, our internal Waterways can be made a success.
If proposes legislation results in a gross manifestation of local
jealousies and selfishness, this program can not be carried out. Ultimately
we can take care of extensions, but our first effort should be confined to
the main arteries.

Our inland commerce has been put to great inconvenience and expense by
reason of the lowering of the water level of the Great Lakes. This is an
international problem on which competent engineers are making reports. Out
of their study it is expected that a feasible method will be developed for
raising the level to provide relief for our commerce and supply water for
drainage. Whenever a practical plan is presented it ought to be speedily
adopted.

RECLAMATION

It is increasingly evident that the Federal Government must in the future
take a leading part in the impounding of water for conservation with
incidental power for the development of the irrigable lands of the and
region. The unused waters of the West are found mainly in large rivers.
Works to store and distribute these have such magnitude and cost that they
are not attractive to private enterprise. Water is the irreplaceable
natural resource. Its precipitation can not be increased. Its storage on
the higher reaches of streams, to meet growing needs, to be used repeatedly
as it flows toward the seas, is a practical and prudent business policy.

The United States promises to follow the course of older irrigation
countries, where recent important irrigation developments have been carried
out as national undertakings. It is gratifying, therefore, that conditions
on Federal reclamation projects have become satisfactory. The gross value
of crop, grown with water from project works increased from $110,000,000
in 1924 to $131,000,000 in 1925. The adjustments made last year by Congress
relieved irrigators from paying construction costs on unprofitable land,
and by so doing inspired new hope and confidence in ability to meet the
payments required. Construction payments by water users last year were the
largest in the history of the bureau.

The anticipated reclamation fund will be fully absorbed for a number of
years in the completion of old projects and the construction of projects
inaugurated in the past three years. We should, however, continue to
investigate and study the possibilities of a carefully planned development
of promising projects, logically of governmental concern because of their
physical magnitude, immense cost, and the interstate and international
problems involved. Only in this way may we be fully prepared to meet
intelligently the needs of our fast-growing population in the years to
come.

TRANSPORTATION

It would be difficult to conceive of any modern activity which contributes
more to the necessities and conveniences of life than transportation.
Without it our present agricultural production and practically all of our
commerce would be completely prostrated. One of the large contributing
causes to the present highly satisfactory state of our economic condition
is the prompt and dependable service, surpassing all our previous records,
rendered by the railroads. This power has been fostered by the spirit of
cooperation between Federal and State regulatory commissions. To render
this service more efficient and effective and to promote a more scientific
regulation, the process of valuing railroad properties should be simplified
and the primary valuations should be completed as rapidly as possible. The
problem of rate reduction would be much simplified by a process of railroad
consolidations. This principle has already been adopted as Federal law.
Experience has shown that a more effective method must be provided. Studies
have already been made and legislation introduced seeking to promote this
end. It would be of great advantage if it could be taken up at once and
speedily enacted. The railroad systems of the country and the convenience
of all the people are waiting on this important decision.

MERCHANT MARINE

It is axiomatic that no agricultural and industrial country can get the
full benefit of its own advantages without a merchant marine. We have been
proceeding under the act of Congress that contemplates the establishment of
trade routes to be ultimately transferred to private ownership and
operation. Due to temporary conditions abroad and at home we have a large
demand just now for certain types of freight vessels. Some suggestion has
been made for new construction. I do not feel that we are yet warranted in
entering, that field. Such ships as we might build could not be sold after
they are launched for anywhere near what they would cost. We have expended
over $250,000,000 out of the public Treasury in recent years to make up the
losses of operation, not counting the depreciation or any cost whatever of
our capital investment. The great need of our merchant marine is not for
more ships but for more freight.

Our merchants are altogether too indifferent about using American ships for
the transportation of goods which they send abroad or bring home. Some of
our vessels necessarily need repairs, which should be made. I do not
believe that the operation of our fleet is as economical and efficient as
it could be made if placed under a single responsible head, leaving the
Shipping Board free to deal with general matters of policy and regulation.

RADIO LEGISLATION

The Department of Commerce has for some years urgently presented the
necessity for further legislation in order to protect radio listeners from
interference between broadcasting stations and to carry out other
regulatory functions. Both branches of Congress at the last session passed
enactments intended to effect such regulation, but the two bills yet remain
to be brought into agreement and final passage.

Due to decisions of the courts, the authority of the department under the
law of 1912 has broken down; many more stations have been operating than
can be accommodated within the limited number of wave lengths available;
further stations are in course of construction; many stations have departed
from the scheme of allocation set down by the department, and the whole
service of this most important public function has drifted into such chaos
as seems likely, if not remedied, to destroy its great value. I most
urgently recommend that this legislation should be speedily enacted.

I do not believe it is desirable to set up further independent agencies in
the Government. Rather I believe it advisable to entrust the important
functions of deciding who shall exercise the privilege of radio
transmission and under what conditions, the assigning of wave lengths and
determination of power, to a board to be assembled whenever action on such
questions becomes necessary. There should be right of appeal to the courts
from the decisions of such board. The administration of the decisions of
the board and the other features of regulation and promotion of radio in
the public interest, together with scientific research, should remain in
the Department of Commerce. Such an arrangement makes for more expert, more
efficient, and more economical administration that an independent agency or
board, whose duties, after initial stages, require but little attention, in
which administrative functions are confused with semijudicial functions and
from which of necessity there must be greatly increased personnel and
expenditure.

THE WAGE EARNER

The great body of our people are made up of wage earners. Several hundred
thousands of them are on the pay rolls of the United States Government.
Their condition very largely is fixed by legislation. We have recently
provided increases in compensation under a method of reclassification and
given them the advantage of a liberal retirement system as a support for
their declining years. Most of them are under the merit system, which is a
guaranty of their intelligence, and the efficiency of their service is a
demonstration of their loyalty. The Federal Government should continue to
set a good example for all other employers.

In the industries the condition of the wage earner has steadily improved.
The 12-hour day is almost entirely unknown. Skilled labor is well
compensated. But there are unfortunately a multitude of workers who have
not yet come to share in the general prosperity of the Nation. Both the
public authorities and private enterprise should be solicitous to advance
the welfare of this class. The Federal Government has been seeking to
secure this end through a protective tariff, through restrictive
immigration, through requiring safety devices for the prevention of
accidents, through the granting of workman's compensation, through civilian
vocational rehabilitation and education, through employment information
bureaus, and through such humanitarian relief as was provided in the
maternity and infancy legislation. It is a satisfaction to report that a
more general condition of contentment exists among wage earners and the
country is more free from labor disputes than it has been for years. While
restrictive immigration has been adopted in part for the benefit of the
wage earner, and in its entirety for the benefit of the country, it ought
not to cause a needless separation of families and dependents from their
natural source of support contrary to the dictates of humanity.

BITUMINOUS COAL

No progress appears to have been made within large areas of the bituminous
coal industry toward creation of voluntary machinery by which greater
assurance can be given to the public of peaceful adjustment of wage
difficulties such as has been accomplished in the anthracite industry. This
bituminous industry is one of primary necessity and bears a great
responsibility to the Nation for continuity of supplies. As the wage
agreements in the unionized section of the industry expire on April 1 next,
and as conflicts may result which may imperil public interest, and have for
many years often called for action of the Executive in protection of the
public, I again recommend the passage of such legislation as will assist
the Executive in dealing with such emergencies through a special temporary
board of conciliation and mediation and through administrative agencies for
the purpose of distribution of coal and protection of the consumers of coal
from profiteering. At present the Executive is not only without authority
to act but is actually prohibited by law from making any expenditure to
meet the emergency of a coal famine.

JUDICIARY

The Federal courts hold a high position in the administration of justice in
the world. While individual judicial officers have sometimes been subjected
to just criticism, the courts as a whole have maintained an exceedingly
high standard. The Congress may well consider the question of supplying
fair salaries and conferring upon the Supreme Court the same rule-making
power on the law side of the district courts that they have always
possessed on the equity side. A bill is also pending providing for
retirement after a certain number of years of service, although they have
not been consecutive, which should have your favorable consideration. These
faithful servants of the Government are about the last that remain to be
provided for in the postwar readjustments.

BANKING

There has been pending in Congress for nearly three years banking
legislation to clarify the national bank act and reasonably to increase the
powers of the national banks. I believe that within the limitation of sound
banking principles Congress should now and for the future place the
national banks upon a fair equality with their competitors, the State
banks, and I trust that means may be found so that the differences on
branch-banking legislation between the Senate and the House of
Representatives may be settled along sound lines and the legislation
promptly enacted.

It would be difficult to overestimate the service which the Federal reserve
system has already rendered to the country. It is necessary only to recall
the chaotic condition of our banking organization at the time the Federal
reserve system was put into operation. The old system consisted of a vast
number of independent banking units, with scattered bank reserves which
never could be mobilized in times of greatest need. In spite of vast
banking resources, there was no coordination of reserves or any credit
elasticity. As a consequence, a strain was felt even during crop-moving
periods and when it was necessary to meet other seasonal and regularly
recurring needs.

The Federal reserve system is not a panacea for all economic or financial
ills. It can not prevent depression in certain industries which are
experiencing overexpansion of production or contraction of their markets.
Its business is to furnish adequate credit and currency facilities. This it
has succeeded in doing, both during the war and in the more difficult
period of deflation and readjustment which followed. It enables us to look
to the future with confidence and to make plans far ahead, based on the
belief that the Federal reserve system will exercise a steadying influence
on credit conditions and thereby prevent tiny sudden or severe reactions
from the period of prosperity which we are now enjoying. In order that
these plans may go forward, action should be taken at the present session
on the question of renewing the banks' charters and thereby insuring a
continuation of the policies and present usefulness of the Federal reserve
system.

FEDERAL REGULATION

I am in favor of reducing, rather than expanding, Government bureaus which
seek to regulate and control the business activities of the people.
Everyone is aware that abuses exist and will exist so long as we are
limited by human imperfections. Unfortunately, human nature can not be
changed by an act of the legislature. When practically the sole remedy for
many evils lies in the necessity of the people looking out for themselves
and reforming their own abuses, they will find that they are relying on a
false security if the Government assumes to hold out the promise that it is
looking out for them and providing reforms for them. This principle is
preeminently applicable to the National Government. It is too much assumed
that because an abuse exists it is the business of the National Government
to provide a remedy. The presumption should be that it is the business of
local and State governments. Such national action results in encroaching
upon the salutary independence of the States and by undertaking to
supersede their natural authority fills the land with bureaus and
departments which are undertaking to do what it is impossible for them to
accomplish and brings our whole system of government into disrespect and
disfavor. We ought to maintain high standards. We ought to punish
wrongdoing. Society has not only the privilege but the absolute duty of
protecting itself and its individuals. But we can not accomplish this end
by adopting a wrong method. Permanent success lies in local, rather than
national action. Unless the locality rises to its own requirements, there
is an almost irresistible impulse for the National Government to intervene.
The States and the Nation should both realize that such action is to be
adopted only as a last resort.

THE NEGRO

The social well-being of our country requires our constant effort for the
amelioration of race prejudice and the extension to all elements of equal
opportunity and equal protection under the laws which are guaranteed by
the. Constitution. The Federal Government especially is charged with this
obligation in behalf of the colored people of the Nation. Not only their
remarkable progress, their devotion and their loyalty, but, our duty to
ourselves under our claim that we are an enlightened people requires us to
use all our power to protect them from the crime of lynching. Although
violence of this kind has very much decreased, while any of it remains we
can not justify neglecting to make every effort to eradicate it by law.

The education of the colored race under Government encouragement is
proceeding successfully and ought to have continuing support. An increasing
need exists for properly educated and trained medical skill to be devoted
to the service of this race.

INSULAR POSSESSIONS

This Government holds in sacred trusteeship islands which it has acquired
in the East and West Indies. In all of them the people are more prosperous
than at any previous time. A system of good roads, education, and general
development is in progress. The people are better governed than ever before
and generally content.

In the Philippine Islands Maj. Gen. Leonard Wood has been Governor General
for five years and has administered his office with tact and ability
greatly to the success of the Filipino people. These are a proud and
sensitive race, who are making such progress with our cooperation that we
can view the results of this experiment with great satisfaction. As we are
attempting to assist this race toward self-government, we should look upon
their wishes with great respect, granting their requests immediately when
they are right, yet maintaining a frank firmness in refusing when they are
wrong. We shall measure their progress in no small part by their acceptance
of the terms of the organic law under which the islands are governed and
their faithful observance of its provisions. Need exists for clarifying the
duties of the auditor and declaring them to be what everyone had supposed
they were. We have placed our own expenditures under the supervision of the
Comptroller General. It is not likely that the expenditures in the
Philippine Islands need less supervision than our own. The Governor General
is hampered in his selection of subordinates by the necessity of securing a
confirmation, which has oftentimes driven him to the expediency of using
Army officers in work for which civilian experts would be much better
fitted. Means should be provided for this and such other purposes as he may
require out of the revenue which this Government now turns back to the
Philippine treasury.

In order that these possessions might stiffer no seeming neglect, I have
recently sent Col. Carmi A. Thompson to the islands to make a survey in
cooperation with the Governor General to suggest what might be done to
improve conditions. Later, I may make a more extended report including
recommendations. The economic development of the islands is very important.
They ought not to be turned back to the people until they are both
politically fitted for self-government and economically independent. Large
areas are adaptable to the production of rubber. No one contemplates any
time in the future either under the present or a more independent form of
government when we should not assume some responsibility for their defense.
For their economic advantage, for the employment of their people, and as a
contribution to our power of defense which could not be carried on without
rubber, I believe this industry should be encouraged. It is especially
adapted to the Filipino people themselves, who might cultivate it
individually on a small acreage. It could be carried on extensively by
American capital in a way to furnish employment at good wages. I am opposed
to the promotion of any policy that does not provide for absolute freedom
on the part of the wage earners and do not think we should undertake to
give power for large holdings of land in the islands against the opposition
of the people of the locality. Any development of the islands must be
solely with the first object of benefiting the people of the islands. At an
early day, these possessions should be taken out from under all military
control and administered entirely on the civil side of government.

NATIONAL DEFENSE

Our policy of national defense is not one of making war, but of insuring
peace. The land and sea force of America, both in its domestic and foreign
implications, is distinctly a peace force. It is an arm of the police power
to guarantee order and the execution of the law at home and security to our
citizens abroad. No self-respecting nation would neglect to provide an army
and navy proportionate to its population, the extent of its territory, and
the dignity of the place which it occupies in the world. When it is
considered that no navy in the world, with one exception, approaches ours
and none surpasses it, that our Regular Army of about 115,000 men is the
equal of any other like number of troops, that our entire permanent and
reserve land and sea force trained and training consists of a personnel of
about 610,000, and that our annual appropriations are about $680,000,000 a
year, expended under the direction of an exceedingly competent staff, it
can not be said that our country is neglecting its national defense. It is
true that a cult of disparagement exists, but that candid examination made
by the Congress through its various committees has always reassured the
country and demonstrated that it is maintaining the most adequate defensive
forces in these present years that it has ever supported in time of peace.

This general policy should be kept in effect. Here and there temporary
changes may be made in personnel to meet requirements in other directions.
Attention should be given to submarines, cruisers, and air forces.
Particular points may need strengthening, but as a whole our military power
is sufficient.

The one weak place in the whole line is our still stupendous war debt. In
any modern campaign the dollars are the shock troops. With a depleted
treasury in the rear, no army can maintain itself in the field. A country
loaded with debt is a country devoid of the first line of defense. Economy
is the handmaid of preparedness. If we wish to be able to defend ourselves
to the full extent of our power in the future, we shall discharge as soon
as possible the financial burden of the last war. Otherwise we would face a
crisis with a part of our capital resources already expended.

The amount and kind of our military equipment is preeminently a question
for the decision of the Congress, after giving due consideration to the
advice of military experts and the available public revenue. Nothing is
more laudable than the cooperation of the agricultural and industrial
resources of the country for the purpose of supplying the needs of national
defense. In time of peril the people employed in these interests
volunteered in a most self-sacrificing way, often at the nominal charge of
a dollar a year. But the Army and Navy are not supported for the benefit of
supply concerns; supply concerns are supported for the benefit of the Army
and Navy. The distribution of orders on what is needed from different
concerns for the purpose of keeping up equipment and organization is
perfectly justified, but any attempt to prevail upon the Government to
purchase beyond its needs ought not to be tolerated. It is eminently fair
that those who deal with the Government should do so at a reasonable
profit. However, public money is expended not that some one may profit by
it, but in order to serve a public purpose.

While our policy of national defense will proceed in order that we may be
independent and self-sufficient, I am opposed to engaging in any attempt at
competitive armaments. No matter how much or how little some other country
may feel constrained to provide, we can well afford to set the example, not
of being dictated to by others, but of adopting our own standards. We are
strong enough to pursue that method, which will be a most wholesome model
for the rest of the world. We are eminently peaceful, but we are by no
means weak. While we submit our differences with others, not to the
adjudication of force, but of reason, it is not because we are unable to
defend our rights. While we are doing our best to eliminate all resort to
war for the purpose of settling disputes, we can not but remember that the
peace we now enjoy had to be won by the sword and that if the rights of our
country are to be defended we can not rely for that purpose upon anyone but
ourselves. We can not shirk the responsibility, which is the first
requisite of all government, of preserving its own integrity and
maintaining the rights of its own citizens. It is only in accordance with
these principles that we can establish any lasting foundations for an
honorable and permanent peace.

It is for these reasons that our country, like any other country, proposes
to provide itself with an army and navy supported by a merchant marine. Yet
these are not for competition with any other power. For years we have
besought nations to disarm. We have recently expressed our willingness at
Geneva to enter into treaties for the limitation of all types of warships
according to the ratio adopted at the Washington Conference. This offer is
still pending. While we are and shall continue to be armed it is not as a
menace, but rather a common assurance of tranquility to all the peaceloving
people of the world. For us to do any less would be to disregard our
obligations, evade our responsibilities, and jeopardize our national honor.

VETERANS

This country, not only because it is bound by honor but because of the
satisfaction derived from it, has always lavished its bounty upon its
veterans. For years a service pension has been bestowed upon the Grand Army
on reaching a certain age. Like provision has been made for the survivors
of the Spanish War. A liberal future compensation has been granted to all
the veterans of the World War. But it is in the case of the, disabled and
the dependents that the Government exhibits its greatest solicitude. This
work is being well administered by the Veterans' Bureau. The main
unfinished feature is that of hospitalization. This requirement is being
rapidly met. Various veteran bodies will present to you recommendations
which should have your careful consideration. At the last session we
increased our annual expenditure for pensions and relief on account of the
veterans of three wars. While I approve of proper relief for all suffering,
I do not favor any further extension of our pension system at this time.

ALIEN PROPERTY

We still have in the possession of the Government the alien property. It
has always been the policy of America to hold that private enemy property
should not be confiscated in time of war. This principle we have
scrupulously observed. As this property is security for the claims of our
citizens and our Government, we can not relinquish it without adequate
provision for their reimbursement. Legislation for the return of this
property, accompanied by suitable provisions for the liquidation of the
claims of our citizens and our Treasury, should be adopted. If our
Government releases to foreigners the security which it holds for
Americans, it must at the same time provide satisfactory safeguards for
meeting American claims.

PROHIBITION

The duly authorized public authorities of this country have made
prohibition the law of the land. Acting under the Constitution the Congress
and the legislatures of practically all the, States have adopted
legislation for its enforcement. Some abuses have arisen which require
reform. Under the law the National Government has entrusted to the Treasury
Department the especial duty of regulation and enforcement. Such
supplementary legislation as it requires to meet existing conditions should
be carefully and speedily enacted. Failure to support the Constitution and
observe the law ought not to be tolerated by public opinion. Especially
those in public places, who have taken their oath to support the
Constitution, ought to be most scrupulous in its observance. Officers of
the Department of Justice throughout the country should be vigilant in
enforcing the law, but local authorities, which had always been mainly
responsible for the enforcement of law in relation to intoxicating liquor,
ought not to seek evasion by attempting to shift the burden wholly upon the
Federal agencies. Under the Constitution the States are jointly charged
with the Nation in providing for the enforcement of the prohibition
amendment. Some people do not like the amendment, some do not like other
parts of the Constitution, some do not like any of it. Those who entertain
such sentiments have a perfect right to seek through legal methods for a
change. But for any of our inhabitants to observe such parts of the
Constitution as they like, while disregarding others, is a doctrine that
would break down all protection of life and property and destroy the
American system of ordered liberty.

FOREIGN RELATIONS

The foreign policy of this Government is well known. It is one of peace
based on that mutual respect that arises from mutual regard for
international rights and the discharge of international obligations. It is
our purpose to promote understanding and good will between ourselves and
all other people. The American people are altogether lacking in an
appreciation of the tremendous good fortune that surrounds their
international position. We have no traditional enemies. We are not
embarrassed over any disputed territory. We have no possessions that are
coveted by others; they have none that are coveted by us. Our borders are
unfortified. We fear no one; no one fears us. All the world knows that the
whole extent of our influence is against war and in favor of peace, against
the use of force and in favor of negotiation, arbitration, and adjudication
as a method of adjusting international differences. We look with disfavor
upon all aggressive warfare. We are strong enough so that no one can charge
us with weakness if we are slow to anger. Our place is sufficiently
established so that we need not be sensitive over trifles. Our resources,
are large enough so that we can afford to be generous. At the same time we
are a nation among nations and recognize a responsibility not only to
ourselves, but in the interests of a stable and enlightened civilization,
to protect and defend the international rights of our Government and our
citizens.

It is because of our historical detachment and the generations of
comparative indifference toward it by other nations that our public is
inclined to consider altogether too seriously the reports that we are
criticized abroad. We never had a larger foreign trade than at the present
time. Our good offices were never more sought and the necessity for our
assistance and cooperation was never more universally declared in any time
of peace. We know that the sentiments which we entertain toward all other
nations are those of the most sincere friendship and good will and of all
unbounded desire to help, which we are perfectly willing to have judged by
their fruits. In our efforts to adjust our international obligations we
have met with a response which, when everything is considered, I believe
history will record as a most remarkable and gratifying demonstration of
the sanctity with which civilized nations undertake to discharge their
mutual obligations. Debt settlements have been negotiated with practically
all of those who owed us and all finally adjusted but two, which are, in
process of ratification. When we consider the real sacrifice that will be
necessary on the part of other nations, considering all their
circumstances, to meet their agreed payments, we ought to hold them in
increased admiration and respect. It is true that we have extended to them
very generous treatment, but it is also true that they have agreed to repay
its all that we loaned to them and some interest.

A special conference on the Chinese customs tariff provided for by the
treaty between the nine powers relating to the Chinese customs tariff
signed at Washington on February 6, 1922, was called by the Chinese
Government to meet at Peking, on October 26, 1925. We participated in this
conference through fully empowered delegates and, with good will,
endeavored to cooperate with the other participating powers with a view to
putting into effect promises made to China at the Washington conference,
and considering any reasonable proposal that might be made by the Chinese
Government for the revision of the treaties on the subject of China's
tariff. With these aims in view the American delegation at the outset of
the conference proposed to put into effect the surtaxes provided for by the
Washington treaty and to proceed immediately to the negotiation of a
treaty, which, among other things, was to make provision for the abolition
of taxes collected on goods in transit, remove the tariff restrictions in
existing treaties, and put into effect the national tariff law of China.

Early in April of the present year the central Chinese Government was
ousted from power by opposing warring factions. It became impossible under
the circumstances to continue the negotiations. Finally, on July 3, the
delegates of the foreign powers, including those of the United States,
issued a statement expressing their unanimous and earnest desire to proceed
with the work of the conference at the earliest possible moment when the
delegates of the Chinese Government are in a position to resume discussions
with the foreign delegates of the problems before the conference. We are
prepared to resume the negotiations thus interrupted whenever a Government
representing the Chinese people and acting on their behalf presents itself.
The fact that constant warfare between contending Chinese factions has
rendered it impossible to bring these negotiations to a successful
conclusion is a matter of deep regret. Throughout these conflicts we have
maintained a position of the most careful neutrality. Our naval vessels in
Asiatic waters, pursuant to treaty rights, have been used only for the
protection of American citizens.

Silas H. Strawn, Esq., was sent to China as American commissioner to
cooperate with commissioners of the other powers in the establishment of a
commission to inquire into the present practice of extraterritorial
jurisdiction in China, with a view to reporting to the Governments of the
several powers their findings of fact in regard to these matters. The
commission commenced its work in January, 1926, and agreed upon a joint
report which was signed on September 16, 1926. The commission's report has
been received and is being studied with a view to determining our future
policy in regard to the question of extraterritorial privileges under
treaties between the United States and China.

The Preparatory Commission for the Disarmament Conference met at Geneva on
May 18 and its work has been proceeding almost continuously since that
date. It would be premature to attempt to form a judgment as to the
progress that has been made. The commission has had before it a
comprehensive list of questions touching upon all aspects of the question
of the limitation of armament. In the commission's discussions many
differences of opinion have developed. However, I am hopeful that at least
some measure of agreement will be reached as the discussions continue. The
American representation on the commission has consistently tried to be
helpful, and has kept before it the practical objective to which the
commission is working, namely, actual agreements for the limitation of
armaments. Our representatives will continue their work in that direction.

One of the most encouraging features of the commission's work thus far has
been the agreement in principle among the naval experts of a majority of
the powers parties to the Washington treaty limiting naval armament upon
methods and standards for the comparison and further limitation of naval
armament. It is needless to say that at the proper time I shall be prepared
to proceed along practical lines to the conclusion of agreements carrying
further the work begun at the Washington Conference in 1921.

DEPARTMENT REPORTS

Many important subjects which it is impossible even to mention in the short
space of an annual message you will find fully discussed in the
departmental reports. A failure to include them here is not to be taken as
indicating any lack of interest, but only a disinclination to state
inadequately what has been much better done in other documents.

THE CAPITAL CITY

We are embarking on an ambitious building program for the city of
Washington. The Memorial Bridge is under way with all that it holds for use
and beauty. New buildings are soon contemplated. This program should
represent the best that exists in the art and science of architecture. Into
these structures which must be considered as of a permanent nature ought to
go the aspirations of the Nation, its ideals expressed in forms of beauty.
If our country wishes to compete with others, let it not be in the support
of armaments but in the making of a beautiful capital city. Let it express
the soul of America. Whenever an American is at the seat of his Government,
however traveled and cultured he may be, he ought to find a city of stately
proportion, symmetrically laid out and adorned with the best that there is
in architecture, which would arouse his imagination and stir his patriotic
pride. In the coming years Washington should be not only the art center of
our own country but the art center of the world. Around it should center
all that is best in science, in learning, in letters, and in art. These are
the results that justify the creation of those national resources with
which we have been favored.

AMERICAN IDEALS

America is not and must not be a country without ideals. They are useless
if they are only visionary; they are only valuable if they are practical. A
nation can not dwell constantly on the mountain tops. It has to be
replenished and sustained through the ceaseless toil of the less inspiring
valleys. But its face ought always to be turned upward, its vision ought
always to be fixed on high.

We need ideals that can be followed in daily life, that can be translated
into terms of the home. We can not expect to be relieved from toil, but we
do expect to divest it of degrading conditions. Work is honorable; it is
entitled to an honorable recompense. We must strive mightily, but having
striven there is a defect in our political and social system if we are not
in general rewarded with success. To relieve the land of the burdens that
came from the war, to release to the individual more of the fruits of his
own industry, to increase his earning capacity and decrease his hours of
labor, to enlarge the circle of his vision through good roads and better
transportation, to lace before him the opportunity for education both in
science and in art, to leave him free to receive the inspiration of
religion, all these are ideals which deliver him from the servitude of the
body and exalt him to the service of the soul. Through this emancipation
from the things that are material, we broaden our dominion over the things
that are spiritual.

***

State of the Union Address
Calvin Coolidge
December 6, 1927

Members of the Congress:

It is gratifying to report that for the fourth consecutive year the state
of the Union in general is good. We are at peace. The country as a whole
has had a prosperity never exceeded. Wages are at their highest range,
employment is plentiful. Some parts of agriculture and industry have
lagged; some localities have suffered from storm and flood. But such losses
have been absorbed without serious detriment to our great economic
structure. Stocks of goods are moderate and a wholesome caution is
prevalent. Rates of interest for industry, agriculture, and government have
been reduced. Savers and investors are providing capital for new
construction in industry and public works. The purchasing power of
agriculture has increased. If the people maintain that confidence which
they are entitled to have in themselves, in each other, and in America, a
comfortable prosperity will continue.

CONSTRUCTIVE ECONOMY

Without constructive economy in Government expenditures we should not now
be enjoying these results or these prospects. Because we are not now
physically at war, some people are disposed to forget that our war debt
still remains. The Nation must make financial sacrifices, accompanied by a
stern self-denial in public expenditures, until we have conquered the
disabilities of our public finance. While our obligation to veterans and
dependents is large and continuing, the heavier burden of the national debt
is being steadily eliminated. At the end of this fiscal year it will be
reduced from about $26,600,000,000 to about $17,975,000,000. Annual
interest, including war savings, will have been reduced from $1,055,000,000
to $670,0001,000. The sacrifices of the people, the economy of the
Government, are showing remarkable results. They should be continued for
the purpose of relieving the Nation of the burden of interest and debt and
releasing revenue for internal improvements and national development.

Not only the amount, but the rate, of Government interest has been reduced.
Callable bonds have been refunded and paid, so that during this year the
average rate of interest on the present public debt for the first time fell
below 4 per cent. Keeping the credit of the Nation high is a tremendously
profitable operation.

TAX REDUCTION

The immediate fruit of economy and the retirement of the public debt is tax
reduction. The annual saving in interest between 1925 and 1929 is
$212,000,000. Without this no bill to relieve the taxpayers would be worth
proposing. The three measures already enacted leave our Government revenues
where they are not oppressive. Exemptions, have been increased until
115,000,000 people make but 2,500,000 individual taxable returns, so that
further reduction should be mainly for the purpose of removing
inequalities. The Secretary of the Treasury has recommended a measure which
would give us a much better balanced system of taxation and without
oppression produce sufficient revenue. It has my complete support.

Unforeseen contingencies requiring money are always arising. Our probable
surplus for June 30, 1929, is small. A slight depression in business would
greatly reduce our revenue because of our present method of taxation. The
people ought to take no selfish attitude of pressing for removing moderate
and fair taxes which might produce a deficit. We must keep our budget
balanced for each year. That is the corner stone of our national credit,
the trifling price we pay to command the lowest rate of interest of any
great power in the world. Any surplus can be applied to debt reduction, and
debt reduction is tax reduction. Under the present circumstances it would
be far better to leave the rates as they are than to enact a bill carrying
the peril of a deficit. This is not a problem to be approached in a narrow
or partisan spirit. All of those who participate in finding a reasonable
solution will be entitled to participate in any credit that accrues from it
without regard to party. The Congress has already demonstrated that tax
legislation can be removed from purely political consideration into the
realm of patriotic business principles.

Any bill for tax reduction should be written by those who are responsible
for raising, managing, and expending the finances of the Government. If
special interests, too often selfish, always uninformed of the national
needs as a whole, with hired agents using their proposed beneficiaries as
engines of propaganda, are permitted to influence the withdrawal of their
property from taxation, we shall have a law that is unbalanced and unjust,
bad for business, bad for the country, probably resulting in a deficit,
with disastrous financial Consequences. The Constitution has given the
Members of the Congress sole authority to decide what tax measures shall be
presented for approval. While welcoming information from any quarter, the
Congress should continue to exercise its own judgment in a matter so vital
and important to all the interests of the country as taxation.

NATIONAL DEFENSE

Being a nation relying not on force, but on fair dealing and good will, to
maintain peace with others, we have provided a moderate military force in a
form adapted solely to defense. It should be continued with a very generous
supply of officers and with the present base of personnel, subject to
fluctuations which may be temporarily desirable.

The five-year program for our air forces is in keeping with this same
policy and commensurate with the notable contributions of America to the
science of aeronautics. The provisions of the law lately enacted are being
executed as fast as the practical difficulties of an orderly and stable
development permit.

While our Army is small, prudence requires that it should be kept in a high
state of efficiency and provided with such supplies as would permit of its
immediate expansion. The garrison ration has lately been increased.
Recommendations for an appropriation of $6,166,000 for new housing made to
the previous Congress failed to pass. While most of the Army is well
housed, some of it which is quartered in wartime training camps is becoming
poorly housed. In the past three years $12,533,000 have been appropriated
for reconstruction and repairs, and an authorization has been approved of
$22,301,000 for new housing, under which $8,070,000 has already been
appropriated. A law has also been passed, complying with the request of the
War Department, allocating funds received from the sale of buildings and
land for housing purposes. The work, however, is not completed, so that
other appropriations are being recommended.

Our Navy is likewise a weapon of defense. We have a foreign commerce and
ocean lines of trade unsurpassed by any other country. We have outlying
territory in the two great oceans and long stretches of seacoast studded
with the richest cities in the world. We are responsible for the protection
of a large population and the greatest treasure ever bestowed upon any
people. We are charged with an international duty of defending the Panama
Canal. To meet these responsibilities we need a very substantial sea
armament. It needs aircraft development, which is being provided under the
five-year program. It needs submarines as soon as the department decides
upon the best type of construction. It needs airplane carriers and a
material addition to its force of cruisers. We can plan for the future and
begin a moderate building program.

This country has put away the Old World policy of competitive armaments. It
can never be relieved of the responsibility of adequate national defense.
We have one treaty secured by an unprecedented attitude of generosity on
our part for a limitation in naval armament. After most careful
preparation, extending over months, we recently made every effort to secure
a three-power treaty to the same end. We were granted much cooperation by
Japan, but we were unable to come to an agreement with Great Britain. While
the results of the conference were of considerable value, they were mostly
of a negative character. We know now that no agreement can be reached which
will be inconsistent with a considerable building program on our part. We
are ready and willing to continue the preparatory investigations on the
general subject of limitation of armaments which have been started under
the auspices of the League of Nations.

We have a considerable cruiser tonnage, but a part of it is obsolete.
Everyone knew that had a three-power agreement been reached it would have
left us with the necessity of continuing our building program. The failure
to agree should not cause us to build either more or less than we otherwise
should. Any future treaty of limitation will call on us for more ships. We
should enter on no competition. We should refrain from no needful program.
It should be made clear to all the world that lacking a definite agreement,
the attitude of any other country is not to be permitted to alter our own
policy. It should especially be demonstrated that propaganda will not cause
us to change our course. Where there is no treaty limitation, the size of
the Navy which America is to have will be solely for America to determine.
No outside influence should enlarge it or diminish it. But it should be
known to all that our military power holds no threat of aggrandizement. It
is a guaranty of peace and security at home, and when it goes abroad it is
an instrument for the protection of the legal rights of our citizens under
international law, a refuge in time of disorder, and always the servant of
world peace. Wherever our flag goes the rights of humanity increase.

MERCHANT MARINE

The United States Government fleet is transporting a large amount of
freight and reducing its drain on the Treasury. The Shipping Board is
constantly under pressure, to which it too often yields, to protect private
interests, rather than serve the public welfare. More attention should be
given to merchant ships as an auxiliary of the Navy. The possibility of
including their masters and crews in the Naval Reserve, with some
reasonable compensation, should be thoroughly explored as a method of
encouraging private operation of shipping. Public operation is not a
success. No investigation, of which I have caused several to be made, has
failed to report that it could not succeed or to recommend speedy transfer
to private ownership. Our exporters and importers are both indifferent
about using American ships. It should be our policy to keep our present
vessels in repair and dispose of them as rapidly as possible, rather than
undertake any new construction. Their operation is a burden on the National
Treasury, for which we are not receiving sufficient benefits.

COMMERCIAL AVIATION

A rapid growth is taking place in aeronautics. The Department of Commerce
has charge of the inspection and licensing system and the construction of
national airways. Almost 8,000 miles are already completed and about 4,000
miles more contemplated. Nearly 4,400 miles are now equipped and over 3,000
miles more will have lighting and emergency landing fields by next July.
Air mail contracts are expected to cover 24 of these lines. Daily airway
flying is nearly 15,000 miles and is expected to reach 25,000 miles early
next year.

Flights for other purposes exceed 22,000 miles each day. Over 900 airports,
completed and uncompleted, have been laid out. The demand for aircraft has
greatly increased. The policy already adopted by the Congress is producing
the sound development of this coming industry.

WESTERN HEMISPHERE AIR MAIL

Private enterprise is showing much interest in opening up aviation service
to Mexico and Central and South America. We are particularly solicitous to
have the United States take a leading part in this development. It is
understood that the governments of our sister countries would be willing to
cooperate. Their physical features, the undeveloped state of their
transportation, make an air service especially adaptable to their usage.
The Post Office Department should be granted power to make liberal
long-term contracts for carrying our mail, and authority should be given to
the Army and the Navy to detail aviators and planes to cooperate with
private enterprise in establishing such mail service with the consent of
the countries concerned. A committee of the Cabinet will later present a
report on this subject.

GOOD ROADS

The importance and benefit of good roads is more and more coming to be
appreciated. The National Government has been making liberal contributions
to encourage their construction. The results and benefits have been very
gratifying. National participation, however, should be confined to
trunk-line systems. The national tax on automobiles is now nearly
sufficient to meet this outlay. This tax is very small, and on low-priced
cars is not more than $2 or $3 each year.

While the advantage of having good roads is very large, the desire for
improved highways is not limited to our own country. It should and does
include all the Western Hemisphere. The principal points in Canada are
already accessible. We ought to lend our encouragement in any way we can
for more good roads to all the principal points in this hemisphere south of
the Rio Grande. It has been our practice to supply these countries with
military and naval advisers, when they have requested it, to assist them in
national defense. The arts of peace are even more important to them and to
us. Authority should be given by law to provide them at their request with
engineering advisers for the construction of roads and bridges. In some of
these countries already wonderful progress is being made in road building,
but the engineering features are often very exacting and the financing
difficult. Private interests should look with favor on all reasonable loans
sought by these countries to open such main lines of travel.

This general subject has been promoted by the Pan American Congress of
Highways, which will convene again at Rio de Janeiro in July, 1928. It is
desirable that the Congress should provide for the appointment of delegates
to represent the Government of the United States.

CUBAN PARCEL POST

We have a temporary parcel-post convention with Cuba. The advantage of it
is all on our side. During 1926 we shipped twelve times as many parcels,
weighing twenty-four times as much, as we received. This convention was
made on the understanding that we would repeal an old law prohibiting the
importation of cigars and cigarettes in quantities less than 3,000 enacted
in 1866 to discourage smuggling, for which it has long been unnecessary.
This law unjustly discriminates against an important industry of Cuba. Its
repeal has been recommended by the Treasury and Post Office Departments.
Unless this is done our merchants and railroads will find themselves
deprived of this large parcel-post business after the 1st of next March,
the date of the expiration of the convention, which has been extended upon
the specific understanding that it would expire at that time unless this
legislation was enacted. We purchase large quantities of tobacco made in
Cuba. It is not probable that our purchases would be any larger if this law
was repealed, while it would be an advantage to many other industries in
the United States.

INSULAR POSSESSIONS

Conditions in the Philippine Islands have been steadily improved.
Contentment and good order prevail. Roads, irrigation works, harbor
improvements, and public buildings are being constructed. Public education
and sanitation have been advanced. The Government is in a sound financial
condition. These immediate results were especially due to the
administration of Gov. Gen. Leonard Wood. The six years of his governorship
marked a distinct improvement in the islands and rank as one of the
outstanding accomplishments of this distinguished man. His death is a loss
to the Nation and the islands.

Greater progress could be made, more efficiency could be put into
administration, if the Congress would undertake to expend, through its
appropriating power, all or a part of the customs revenues which are now
turned over to the Philippine treasury. The powers of the auditor of the
islands also need revision and clarification. The government of the islands
is about 98 per cent in the hands of the Filipinos. An extension of the
policy of self-government will be hastened by the demonstration on their
part of their desire and their ability to carry out cordially and
efficiently the provisions of the organic law enacted by the Congress for
the government of the islands. It would be well for a committee of the
Congress to visit the islands every two years.

A fair degree of progress is being made in Porto Rico. Its agricultural
products are increasing; its treasury position, which has given much
concern, shows improvement. I am advised by the governor that educational
facilities are still lacking. Roads are being constructed, which he
represents are the first requisite for building schoolhouses. The loyalty
of the island to the United States is exceedingly gratifying. A memorial
will be presented to you requesting authority to have the governor elected
by the people of Porto Rico. This was never done in the case of our own
Territories. It is admitted that education outside of the towns is as yet
very deficient. Until it has progressed further the efficiency of the
government and the happiness of the people may need the guiding hand of an
appointed governor. As it is not contemplated that any change should be
made immediately, the general subject may well have the thoughtful study of
the Congress.

PANAMA CANAL

The number of commercial ships passing through the Panama Canal has
increased from 3,967 in 1923 to 5,475 in 1927. The total amount of tolls
turned into the Treasury is over $166,000,000, while all the operations of
the canal have yielded a surplus of about $80,000,000. In order to provide
additional storage of water and give some control over the floods of the
Chagres River, it is proposed to erect a dam to cost about $12,000,000 at
Alhajuela. It will take some five years to complete this work.

AGRICULTURE

The past year has seen a marked improvement in the general condition of
agriculture. Production is better balanced and without acute shortage or
heavy surplus. Costs have been reduced and the average output of the worker
increased. The level of farm prices has risen while others have fallen, so
that the purchasing power of the farmer is approaching a normal figure. The
individual farmer is entitled to great credit for the progress made since
1921. He has adjusted his production and through cooperative organizations
and other methods improved his marketing. He is using authenticated facts
and employing sound methods which other industries are obliged to use to
secure stability and prosperity. The old-fashioned haphazard system is
being abandoned, economics are being applied to ascertain the best adapted
unit of land, diversification is being promoted, and scientific methods are
being used in production, and business principles in marketing.

Agriculture has not fully recovered from postwar depression. The fact is
that economic progress never marches forward in a straight line. It goes in
waves. One part goes ahead, while another halts and another recedes.
Everybody wishes agriculture to prosper. Any sound and workable proposal to
help the farmer will have the earnest support of the Government. Their
interests are not all identical. Legislation should assist as many
producers in as many regions as possible. It should be the aim to assist
the farmer to work out his own salvation socially and economically. No plan
will be of any permanent value to him which does not leave him standing on
his own foundation.

In the past the Government has spent vast sums to bring land under
cultivation. It is apparent that this has reached temporarily the
saturation point. We have had a surplus of production and a poor market for
land, which has only lately shown signs of improvement. The main problem
which is presented for solution is one of dealing with a surplus of
production. It is useless to propose a temporary expedient. What is needed
is permanency and stability. Government price fixing is known to be unsound
and bound to result in disaster. A Government subsidy would work out in the
same way. It can not be sound for all of the people to hire some of the
people to produce a crop which neither the producers nor the rest of the
people want.

Price fixing and subsidy will both increase the surplus, instead of
diminishing it. Putting the Government directly into business is merely a
combination of subsidy and price fixing aggravated by political pressure.
These expedients would lead logically to telling the farmer by law what and
how much he should plant and where he should plant it, and what and how
much he should sell and where he should sell it. The most effective means
of dealing with surplus crops is to reduce the surplus acreage. While this
can not be done by the individual farmer, it can be done through the
organizations already in existence, through the information published by
the Department of Agriculture, and especially through banks and others who
supply credit refusing to finance an acreage manifestly too large.

It is impossible to provide by law for an assured success and prosperity
for all those who engage in farming. If acreage becomes overextended, the
Government can not assume responsibility for it. The Government can,
however, assist cooperative associations and other organizations in orderly
marketing and handling a surplus clearly due to weather and seasonal
conditions, in order to save the producer from preventable loss. While it
is probably impossible to secure this result at a single step, and much
will have to be worked out by trial and rejection, a beginning could be
made by setting up a Federal board or commission of able and experienced
men in marketing, granting equal advantages under this board to the various
agricultural commodities and sections of the country, giving encouragement
to the cooperative movement in agriculture, and providing a revolving loan
fund at a moderate rate of interest for the necessary financing. Such
legislation would lay the foundation for a permanent solution of the
surplus problem.

This is not a proposal to lend more money to the farmer, who is already
fairly well financed, but to lend money temporarily to experimental
marketing associations which will no doubt ultimately be financed by the
regularly established banks, as were the temporary operations of the War
Finance Corporation. Cooperative marketing especially would be provided
with means of buying or building physical properties.

The National Government has almost entirely relieved the farmer from income
taxes by successive tax reductions, but State and local taxes have
increased, putting on him a grievous burden. A policy of rigid economy
should be applied to State and local expenditures. This is clearly within
the legislative domain of the States. The Federal Government has also
improved our banking structure and system of agricultural credits. The
farmer will be greatly benefited by similar action in many States. The
Department of Agriculture is undergoing changes in organization in order
more completely to separate the research and regulatory divisions, that
each may be better administered. More emphasis is being placed on the
research program, not only by enlarging the appropriations for State
experiment stations but by providing funds for expanding the research work
of the department. It is in this direction that much future progress can be
expected.

THE PROTECTIVE TARIFF

The present tariff rates supply the National Treasury with well over
$600,000,000 of annual revenue. Yet, about 65 per cent of our imports come
in duty free. Of the remaining 35 per cent of imports on which duties are
laid about 23 per cent consists of luxuries and agricultural products, and
the balance of about 12 per cent, amounting, to around $560,000,000 is made
up of manufactures and merchandise. As no one is advocating any material
reduction in the rates on agriculture or luxuries, it is only the
comparatively small amount of about $560,000,000 of other imports that are
really considered in any discussion of reducing tariff rates. While this
amount, duty free, would be large enough seriously to depress many lines of
business in our own country, it is of small importance when spread over the
rest of the world.

It is often stated that a reduction of tariff rates on industry would
benefit agriculture. It would be interesting to know to what commodities it
is thought this could be applied. Everything the farmer uses in farming is
already on the free list. Nearly everything he sells is protected. It would
seem to be obvious that it is better for the country to have the farmer
raise food to supply the domestic manufacturer than the foreign
manufacturer. In one case our country would have only the farmer; in the
other it would have the farmer and the manufacturer. Assuming that Europe
would have more money if it sold us larger amounts of merchandise, it is
not certain it would consume more food, or, if it did, that its purchases
would be made in this country. Undoubtedly it would resort to the cheapest
market, which is by no means ours. The largest and best and most profitable
market for the farmer in the world is our own domestic market. Any great
increase in manufactured imports means the closing of our own plants.
Nothing would be worse for agriculture.

Probably no one expects a material reduction in the rates on manufactures
while maintaining the rates on agriculture. A material reduction in either
would be disastrous to the farmer. It would mean a general shrinkage of
values, a deflation of prices, a reduction of wages, a general depression
carrying our people down to the low standard of living in our competing
countries. It is obvious that this would not improve but destroy our market
for imports, which is best served by maintaining our present high
purchasing power under which in the past five years imports have increased
63 per cent.

FARM LOAN SYSTEM

It is exceedingly important that the Federal land and joint-stock land
banks should furnish the best possible service for agriculture. Certain
joint-stock banks have fallen into improper and unsound practices,
resulting in the indictment of the officials of three of them. More money
has been provided for examinations, and at the instance of the Treasury
rules and regulations of the Federal Farm Board have been revised. Early
last May three of its members resigned. Their places were filled with men
connected with the War Finance Corporation. Eugene Meyer being designated
as Farm Loan Commissioner. The new members have demonstrated their ability
in the field of agricultural finance in the extensive operations of he War
Finance Corporation. Three joint-stock banks have gone into receivership.
It is necessary to preserve the public confidence in this system in order
to find a market for their bonds. A recent flotation was made at a record
low rate of 4 per cent. Careful supervision is absolutely necessary to
protect the investor and enable these banks to exercise their chief
function in serving agriculture.

MUSCLE SHOALS

The last year has seen considerable changes in the problem of Muscle
Shoals. Development of other methods show that nitrates can probably be
produced at less cost than by the use of hydroelectric power. Extensive
investigation made by the Department of War indicates that the nitrate
plants on this project are of little value for national defense and can
probably be disposed of within two years. The oxidation part of the plants,
however, should be retained indefinitely. This leaves this project mostly
concerned with power. It should, nevertheless, continue to be dedicated to
agriculture. It is probable that this desire can be best served by
disposing of the plant and applying the revenues received from it to
research for methods of more economical production of concentrated
fertilizer and to demonstrations and other methods of stimulating its use
on the farm. But in disposing of the property preference should be given to
proposals to use all or part of it for nitrate production and fertilizer
manufacturing.

FLOOD CONTROL

For many years the Federal Government has been building a system of dikes
along the Mississippi River for protection against high water. During the
past season the lower States were overcome by a most disastrous flood. Many
thousands of square miles were inundated a great many lives were lost, much
livestock was drowned, and a very heavy destruction of property was
inflicted upon the inhabitants. The American Red Cross at once went to the
relief of the stricken communities. Appeals for contributions have brought
in over $17,000,000. The Federal Government has provided services,
equipment, and supplies probably amounting to about $7,000,000 more.
Between $5,000,000 and $10,000,000 in addition have been provided by local
railroads, the States, and their political units. Credits have been
arranged by the Farm Loan Board, and three emergency finance corporations
with a total capital of $3,000,000 have insured additional resources to the
extent of $12,000,000. Through these means the 700,000 people in the
flooded areas have been adequately supported. Provision has been made to
care for those in need until after the 1st of January.

The Engineering Corps of the Army has contracted to close all breaks in the
dike system before the next season of high water. A most thorough and
elaborate survey of the whole situation has been made and embodied in a
report with recommendations for future flood control, which will be
presented to the Congress. The carrying out of their plans will necessarily
extend over a series of years. They will call for a raising and
strengthening of the dike system with provision for emergency spillway's
and improvements for the benefit of navigation.

Under the present law the land adjacent to the dikes has paid one-third of
the cost of their construction. This has been a most extraordinary
concession from the plan adopted in relation to irrigation, where the
general rule has been that the land benefited should bear the entire
expense. It is true, of course, that the troublesome waters do not
originate on the land to be reclaimed, but it is also true that such waters
have a right of way through that section of the country and the land there
is charged with that easement. It is the land of this region that is to be
benefited. To say that it is unable to bear any expense of reclamation is
the same thing as saying that it is not worth reclaiming. Because of
expenses incurred and charges already held against this land, it seems
probable that some revision will have to be made concerning the proportion
of cost which it should bear. But it is extremely important that it should
pay enough so that those requesting improvements will be charged with some
responsibility for their cost, and the neighborhood where works are
constructed have a pecuniary interest in preventing waste and extravagance
and securing a wise and economical expenditure of public funds.

It is necessary to look upon this emergency as a national disaster. It has
been so treated from its inception. Our whole people have provided with
great generosity for its relief. Most of the departments of the Federal
Government have been engaged in the same effort. The governments of the
afflicted areas, both State and municipal, can not be given too high praise
for the courageous and helpful way in which they have come to the rescue of
the people. If the sources directly chargeable can not meet the demand, the
National Government should not fail to provide generous relief. This,
however, does not mean restoration. The Government is not an insurer of its
citizens against the hazard of the elements. We shall always have flood and
drought, heat and cold, earthquake and wind, lightning and tidal wave,
which are all too constant in their afflictions. The Government does not
undertake to reimburse its citizens for loss and damage incurred under such
circumstances. It is chargeable, however, with the rebuilding of public
works and the humanitarian duty of relieving its citizens from distress.

The people in the flooded area and their representatives have approached
this problem in the most generous and broad-minded way. They should be met
with a like spirit on the part of the National government. This is all one
country. The public needs of each part must be provided for by the public
at large. No required relief should be refused. An adequate plan should be
adopted to prevent a recurrence of this disaster in order that the people
may restore to productivity and comfort their fields and their towns.

Legislation by this Congress should be confined to our principal and most
pressing problem, the lower Mississippi, considering tributaries only so
far as they materially affect the main flood problem. A definite Federal
program relating to our waterways was proposed when the last Congress
authorized a comprehensive survey of all the important streams of the
country in order to provide for their improvement, including flood control,
navigation, power, and irrigation. Other legislation should wait pending a
report on this survey. The recognized needs of the Mississippi should not
be made a vehicle for carrying other projects. All proposals for
development should stand on their own merits. Any other method would result
in ill-advised conclusions, great waste of money, and instead of promoting
would delay the orderly and certain utilization of our water resources.

Very recently several of the New England States have suffered somewhat
similarly from heavy rainfall and high water. No reliable estimate of
damage has yet been computed, but it is very large to private and public
property. The Red Cross is generously undertaking what is needed for
immediate relief, repair and reconstruction of houses, restocking of
domestic animals, and food, clothing, and shelter. A considerable sum of
money will be available through the regular channels in the Department of
Agriculture for reconstruction of highways. It may be necessary to grant
special aid for this purpose. Complete reports of what is required will
undoubtedly be available early in the session.

INLAND NAVIGATION

The Congress in its last session authorized the general improvements
necessary to provide the Mississippi waterway system with better
transportation. Stabilization of the levels of the Great Lakes and their
opening to the sea by an effective shipway remain to be considered. Since
the last session the Board of Engineers of the War Department has made a
report on the proposal for a canal through the State of New York, and the
Joint Board of Engineers, representing Canada and the United States, has
finished a report on the St. Lawrence River. Both of these boards conclude
that the St. Lawrence project is cheaper, affords a more expeditious method
of placing western products in European markets, and will cost less to
operate. The State Department has requested the Canadian Government to
negotiate treaties necessary to provide for this improvement. It will also
be necessary to secure an agreement with Canada to put in works necessary
to prevent fluctuation in the levels of the Great Lakes.

Legislation is desirable for the construction of a dam at Boulder Canyon on
the Colorado River, primarily as a method of flood control and irrigation.
A secondary result would be a considerable power development and a source
of domestic water supply for southern California. Flood control is clearly
a national problem, and water supply is a Government problem, but every
other possibility should be exhausted before the Federal Government becomes
engaged in the power business. The States which are interested ought to
reach mutual agreement. This project is in reality their work. If they wish
the Federal Government to undertake it, they should not hesitate to make
the necessary concessions to each other. This subject is fully discussed in
the annual report of the Secretary of the Interior. The Columbia River
Basin project is being studied and will be one to be considered at some
future time.

The Inland Waterways Corporation is proving successful and especially
beneficial to agriculture. A survey is being made to determine its future
needs. It has never been contemplated that if inland rivers were opened to
navigation it would then be necessary for the Federal Government to provide
the navigation. Such a request is very nearly the equivalent of a
declaration that their navigation is not profitable, that the commodities
which they are to carry can be taken at a cheaper rate by some other
method, in which case the hundreds of millions of dollars proposed to be
expended for opening rivers to navigation would be not only wasted, but
would entail further constant expenditures to carry the commodities of
private persons for less than cost.

The policy is well established that the Government should open public
highways on land and on water, but for use of the public in their private
capacity. It has put on some demonstration barge lines, but always with the
expectation that if they prove profitable they would pass into private
hands and if they do not prove profitable they will be withdrawn. The
problems of transportation over inland waterways should be taken up by
private enterprise, so that the public will have the advantage of
competition in service. It is expected that some of our lines can be sold,
some more demonstration work done, and that with the completion of the Ohio
project a policy of private operation can be fully developed.

PROHIBITION

After more than two generations of constant debate, our country adopted a
system of national prohibition under all the solemnities involved in an
amendment to the Federal Constitution. In obedience to this mandate the
Congress and the States, with one or two notable exceptions, have passed
required laws for its administration and enforcement. This imposes upon the
citizenship of the country, and especially on all public officers, not only
the duty to enforce, but the obligation to observe the sanctions of this
constitutional provision and its resulting laws. If this condition could be
secured, all question concerning prohibition would cease. The Federal
Government is making every effort to accomplish these results through
careful organization, large appropriations, and administrative effort.
Smuggling has been greatly cut down, the larger sources of supply for
illegal sale have been checked, and by means of injunction and criminal
prosecution the process of enforcement is being applied. The same vigilance
on the part of local governments would render these efforts much more
successful. The Federal authorities propose to discharge their obligation
for enforcement to the full extent of their ability.

THE NEGRO

History does not anywhere record so much progress made in the same length
of time as that which has been accomplished by the Negro race in the United
States since the Emancipation Proclamation. They have come up from slavery
to be prominent in education, the professions, art, science, agriculture,
banking, and commerce. It is estimated that 50,000 of them are on the
Government pay rolls, drawing about $50,000,000 each year. They have been
the recipients of presidential appointments and their professional ability
has arisen to a sufficiently high plane so that they have been intrusted
with the entire management and control of the great veterans hospital at
Tuskegee, where their conduct has taken high rank. They have shown that
they have been worthy of all the encouragement which they have received.
Nevertheless, they are too often subjected to thoughtless and inconsiderate
treatment, unworthy alike of the white or colored races. They have
especially been made the target of the foul crime of lynching. For several
years these acts of unlawful violence had been diminishing. In the last
year they have shown an increase. Every principle of order and law and
liberty is opposed to this crime. The Congress should enact any legislation
it can under the Constitution to provide for its elimination.

AMERICAN INDIAN

The condition of the American Indian has much improved in recent years.
Full citizenship was bestowed upon them on June 2, 1924, and appropriations
for their care and advancement have been increased. Still there remains
much to be done.

Notable increases in appropriations for the several major functions
performed by the Department of the Interior on behalf of the Indians have
marked the last five years. In that time, successive annual increases in
appropriations for their education total $1,804,325; for medical care,
$578,000; and for industrial advancement, $205,000; or $2,582,325 more than
would have been spent in the same period on the basis of appropriations for
1923 and the preceding years.

The needs along health, educational, industrial and social lines however,
are great, and the Budget estimates for 1929 include still further
increases for Indian administration.

To advance the time when the Indians may become self-sustaining, it is my
belief that the Federal Government should continue to improve the
facilities for their care, and as rapidly as possible turn its
responsibility over to the States.

COAL

Legislation authorizing a system of fuel administration and the appointment
by the President of a Board of Mediation and Conciliation in case of actual
or threatened interruption of production is needed. The miners themselves
are now seeking information and action from the Government, which could
readily be secured through such a board. It is believed that a thorough
investigation and reconsideration of this proposed policy by the Congress
will demonstrate that this recommendation is sound and should be adopted.

PETROLEUM CONSERVATION

The National Government is undertaking to join in the formation of a
cooperative committee of lawyers, engineers, and public officers, to
consider what legislation by the States or by the Congress can be adopted
for the preservation and conservation of our supply of petroleum. This has
come to be one of the main dependencies for transportation and power so
necessary to our agricultural and industrial life. It is expected the
report of this committee will be available for later congressional action.
Meantime, the requirement that the Secretary of the Interior should make
certain leases of land belonging to the Osage Indians, in accordance with
the act of March 3, 1921, should be repealed. The authority to lease should
be discretionary, in order that the property of the Indians way not be
wasted and the public suffer a future lack of supply.

ALIEN PROPERTY

Under treaty the property held by the Alien Property Custodian was to be
retained until suitable provision had been made for the satisfaction of
American claims. While still protecting the American claimants, in order to
afford every possible accommodation to the nationals of the countries whose
property was held, the Congress has made liberal provision for the return
of a larger part of the property. All trusts under $10,000 were returned in
full, and partial returns were made on the others. The total returned was
approximately $350,000,000.

There is still retained, however, about $250,000,000. The Mixed Claims
Commission has made such progress in the adjudication of claims that
legislation can now be enacted providing for the return of the property,
which should be done under conditions which will protect our Government and
our claimants. Such a measure will be proposed, and I recommend its
enactment.

RAILROAD CONSOLIDATION

In order to increase the efficiency of transportation and decrease its cost
to the shipper, railroad consolidation must be secured. Legislation is
needed to simplify the necessary procedure to secure such agreements and
arrangements for consolidation, always under the control and with the
approval of the Interstate Commerce Commission. Pending this, no adequate
or permanent reorganization can be made of the freight-rate structure.
Meantime, both agriculture and industry are compelled to wait for needed
relief. This is purely a business question, which should be stripped of all
local and partisan bias and decided on broad principles and its merits in
order to promote the public welfare. A large amount of new construction and
equipment, which will furnish employment for labor and markets for
commodities of both factory and farm, wait on the decision of this
important question. Delay is holding back the progress of our country.

Many of the same arguments are applicable to the consolidation of the
Washington traction companies.

VETERANS

The care which this country has lavished on its veterans is known of all
men. The yearly outlay for this purpose is about $750,000,000, or about the
cost of running the Federal Government, outside of the Post Office
Department, before the World War. The Congress will have before it
recommendations of the American Legion, the Veterans of Foreign Wars, and
other like organizations, which should receive candid consideration. We
should continue to foster our system of compensation and rehabilitation,
and provide hospitals and insurance. The magnitude of the undertaking is
already so large that all requests calling for further expenditure should
have the most searching scrutiny. Our present system of pensions is already
sufficiently liberal. It was increased by the last Congress for Civil and
Spanish War veterans and widows and for some dependents.

It has been suggested that the various governmental agencies now dealing
with veterans' relief be consolidated. This would bring many advantages. It
is recommended that the proper committees of the Congress make a thorough
survey of this subject, in order to determine if legislation to secure such
consolidation is desirable.

EDUCATION

For many years it has been the policy of the Federal Government to
encourage and foster the cause of education. Large sums of money are
annually appropriated to carry on vocational training. Many millions go
into agricultural schools. The general subject is under the immediate
direction of a Commissioner of Education. While this subject is strictly a
State and local function, it should continue to have the encouragement of
the National Government. I am still of the opinion that much good could be
accomplished through the establishment of a Department of Education and
Relief, into which would be gathered all of these functions under one
directing member of the Cabinet.

DEPARTMENT OF LABOR

Industrial relations have never been more peaceful. In recent months they
have suffered from only one serious controversy. In all others difficulties
have been adjusted, both management and labor wishing to settle
controversies by friendly agreement rather than by compulsion. The welfare
of women and children is being especially guarded by our Department of
Labor. Its Children's Bureau is in cooperation with 26 State boards and 80
juvenile courts.

Through its Bureau of Immigration it has been found that medical
examination abroad has saved prospective immigrants from much hardship.
Some further legislation to provide for reuniting families when either the
husband or the wife is in this country, and granting more freedom for the
migration of the North American Indian tribes is desirable.

The United States Employment Service has enabled about 2,000,000 men and
women to gain paying positions in the last fiscal year. Particular
attention has been given to assisting men past middle life and in providing
field labor for harvesting agricultural crops. This has been made possible
in part through the service of the Federal Board for Vocational Education,
which is cooperating with the States in a program to increase the technical
knowledge and skill of the wage earner.

PUBLIC BUILDINGS

Construction is under way in the country and ground has been broken for
carrying out a public-building program for Washington. We have reached a
time when not only the conveniences but the architectural beauty of the
public buildings of the Capital City should be given much attention. It
will be necessary to purchase further land and provide the required
continuing appropriations.

HISTORICAL CELEBRATIONS

Provision is being made to commemorate the two hundredth anniversary of the
birth of George Washington. Suggestion has been made for the construction
of a memorial road leading from the Capital to Mount Vernon, which may well
have the consideration of the Congress, and the commission intrusted with
preparations for the celebration will undoubtedly recommend publication of
the complete writings of Washington and a series of writings by different
authors relating to him.

February 25, 1929. is the one hundred and fiftieth anniversary of the
capture of Fort Sackville, at Vincennes, in the State of Indiana. This
eventually brought into the Union what was known as the Northwest
Territory, embracing the region north of the Ohio River between the
Alleghenies and the Mississippi River. This expedition was led by George
Rogers Clark. His heroic character and the importance of his victory are
too little known and understood. They gave us not only this Northwest
Territory but by means of that the prospect of reaching the Pacific. The
State of Indiana is proposing to dedicate the site of Fort Sackville as a
national shrine. The Federal Government may well make some provision for
the erection under its own management of a fitting memorial at that point.

FOREIGN RELATIONS

It is the policy of the United States to promote peace. We are a peaceful
people and committed to the settling of disputes by amicable adjustment
rather than by force. We have believed that peace can best be secured by a
faithful observance on our part of the principles of international law,
accompanied by patience and conciliation, and requiring of others a like
treatment for ourselves. We have lately had some difference with Mexico
relative to the injuries inflicted upon our nationals and their property
within that country. A firm adherence to our rights and a scrupulous
respect for the sovereignty of Mexico, both in accordance with the law of
nations, coupled with patience and forbearance, it is hoped will resolve
all our differences without interfering with the friendly relationship
between the two Governments.

We have been compelled to send naval and marine forces to China to protect
the lives and property of our citizens. Fortunately their simple presence
there has been sufficient to prevent any material loss of life. But there
has been considerable loss of property. That unhappy country is torn by
factions and revolutions which bid fair to last for an indefinite period.
Meanwhile we are protecting our citizens and stand ready to cooperate with
any government which may emerge in promoting the welfare of the people of
China. They have always had our friendship, and they should especially
merit our consideration in these days of their distraction and distress.

We were confronted by similar condition on a small scale in Nicaragua. Our
marine and naval forces protected our citizens and their property and
prevented a heavy sacrifice of life and the destruction of that country by
a reversion to a state of revolution. Henry L. Stimson, former Secretary of
War, was sent there to cooperate with our diplomatic and military officers
in effecting a settlement between the contending parties. This was done on
the assurance that we would cooperate in restoring a state of peace where
our rights would be protected by giving our assistance in the conduct of
the next presidential election, which occurs in a few months. With this
assurance the population returned to their peacetime pursuits, with the
exception of some small roving bands of outlaws.

In general, our relations with other countries can be said to have improved
within the year. While having a due regard for our own affairs, the
protection of our own rights, and the advancement of our own people, we can
afford to be liberal toward others. Our example has become of great
importance in the world. It is recognized that we are independent,
detached, and can and do take a disinterested position in relation to
international affairs. Our charity embraces the earth. Our trade is far
flung. Our financial favors are widespread. Those who are peaceful and
law-abiding realize that not only have they nothing to fear from us, but
that they can rely on our moral support. Proposals for promoting the peace
of the world will have careful consideration. But we are not a people who
are always seeking for a sign. We know that peace comes from honesty and
fair dealing, from moderation, and a generous regard for the rights of
others. The heart of the Nation is more important than treaties. A spirit
of generous consideration is a more certain defense than great armaments.
We should continue to promote peace by our example, and fortify it by such
international covenants against war as we are permitted under our
Constitution to make.

AMERICAN PROGRESS

Our country has made much progress. But it has taken, and will continue to
take, much effort. Competition will be keen, the temptation to selfishness
and arrogance will be severe, the provocations to deal harshly with weaker
peoples will be many. All of these are embraced in the opportunity for true
greatness. They will be overbalanced by cooperation by generosity, and a
spirit of neighborly kindness. The forces of the universe are taking
humanity in that direction. In doing good, in walking humbly, in sustaining
its own people in ministering to other nations, America will work out its
own mighty destiny.

***

State of the Union Address
Calvin Coolidge
December 4, 1928

To the Congress of the United States:

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

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

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

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

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

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

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

FOREIGN RELATIONS

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

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

NICARAGUA

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

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

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

TACNA-ARICA

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

MEXICO

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

CHINA

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

GREEK AND AUSTRIAN DEBTS

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

PEACE TREATY

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

NATIONAL DEFENSE

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

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

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

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

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

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

VETERANS

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

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

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

AGRICULTURE

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

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

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

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

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

THE SURPLUS PROBLEM

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

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

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

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

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

THE RESPONSIBILITY OF THE STATES

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

COMMERCE

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

COMMERCIAL AERONAUTICS

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

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

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

CUBAN PARCEL POST

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

"MAINE" BATTLESHIP MEMORIAL

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

RAILROADS

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

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

MERCHANT MARINE

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

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

INTER-AMERICAN HIGHWAY

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

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

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

AIR MAIL SERVICE

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

WATERWAYS

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

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

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

IRRIGATION OF ARID LANDS

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

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

COLORADO RIVER

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

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

MUSCLE SHOALS

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

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

CONSERVATION

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

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

IMMIGRATION

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

WAGE EARNER

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

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

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

WOMEN AND CHILDREN

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

CIVIL SERVICE

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

EDUCATION

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

PUBLIC BUILDINGS

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

THE AMERICAN INDIAN

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

THE NEGRO

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

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

PHILIPPINE ISLANDS

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

PORTO RICO

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

DEPARTMENT OF JUSTICE

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

SPECIAL GOVERNMENT COUNSEL

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

PROHIBITION

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

CONCLUSION

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

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












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