Indianapolis Times, Volume 43, Number 181, Indianapolis, Marion County, 8 December 1931 — Page 9

DEC. 8, 1931.

TEXT OF PRESIDENT HOOVER’S MESSAGE TO CONGRESS

Ru f 'nttrri Prem WASHINGTON, Dec. B.—The text of President Hoover’s annual message to congress follows in part: It la my duty under the Constitution to transmit to the congress information on the state of the Union and to recommend for its consideration necessary and expedient measures. The chief influence affecting the state of the Union during the last year has been the continued worldwide economic disturbance. Our natioal concern has been to meet the emergencies it has created for us and to lay the foundations for recovery. If we lift our vision beyond these immediate emergencies we find fundamental national gains even amid depression. In meeting the problems of this difficult period we have witnessed a remarkable development of the sense of co-operation in the community. For the first time in the history of our major economic depressions there has been a notable absence of public disorders and industrial conflict.

Sees Optimistic Points

Above all there is an enlargement of speial and spiritual responsibility among the people. The strains and stresses upon business have resulted in closer application, in saner policies, and in better methods. Public improvements have been carried out on a larger scale than even in normal times. The country is richer in physical property, in newly discovered resources, and in productive capacity than ever before. There has been constant gain in knowledge and education; there has been continuous advance in science and invention; there has been distinct gain in public health. Business depressions have been recurrent in the life of our country and are but transitory. The nation has emerged from each of them with increased strength and virility because of the enlightenment they have brought, the readjustments and the larger understanding of the realities and obligations of life and work,whicfl come from them.

Foreign Affairs

We are at peace with the world. We have co-operated with other nations to preserve peace. The rights of our citizens abroad have been protected. The economic depression has continued and deepened in every part of the world during the past year. As our difficulties during the past year plainly have originated in large degree from these sources, any effort to bring about our own recuperation has dictated the necessity of co-operation by us with other nations in reasonable effort to restore world confidence and economic stability. Co-operation of our federal reserve system and our banks with the central banks in foreign countries has contributed to localize and ameliorate a number of serious financial crises or moderate the pressures upon us and thus avert disasters which w r ould have affected us.

The Domestic Situation

The emergencies of unemployment have been met by action in many directions. The appropriations for the continued speeding up of the great federal construction program have provided direct and indirect aid to employment upon a large scale. By organized unity of action, the states and municipalities have also maintained large programs of public improvement. Many industries have been prevailed upon to anticipate and intensify construction. Industrial concerns and other employers have been organized to spread available work amongst all their employes, instead of discharging a portion of them. A large majority have maintained wages at as high levels ns the safe conduct of their business would permit. This course has saved us from industrial conflict and disorder which have characterized all previous depressions. Immigration has been curtailed by administrative action. Upon the basis of normal immigration the decrease amounts to about 300,000 individuals w’ho otherwise would have been added to our unemployment. The expansion of federal employment, agencies under the appropriations by the congress have proved most, effective. Through the President’s orgartization for unemployment relief, public and private

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agencies were successfully mobilized last winter to provide employment and other measures against distress.

Assured of Funds

Similar organization gives assurance against suffering during the coming winter. Committees of leading citizens now are active at practically every point of unemployment. In the large majority they have been assured the funds necessary which, together with local government aids, will meet the situation. A few additional localities will be organized further. To meet our domestic emergencies in credit and banking arising from the reaction to acute crisis abroad, the National Credit Association was set up by the banks with resources of $500,000,000 to sup-' port sound banks against the frightened withdrawals and hoarding. It is giving aid to reopen solvent banks which have , been closed* Federal officials have brought about many beneficial unions of banks and have employed other means which have prevented many bank closings. Asa result of these measures the hoarding withdrawals which had risen to over $250,000,000 per week after the British crisis have ceased substantially.

Further Steps

Our first step toward recovery is to re-establish confidence and thus restore the flow of credit, which is the very basis of our economic life. We must put some steel beams in the formations of our credit structure. It is our duty to apply the full strength of our government not only to the immediate phases, but to provide security against shocks and the repetition of the weaknesses which have been proven. The recommendations which I here lay before the congress are designed to meet these needs by strengthening financial, industrial and agricultural life through the medium of our existing institutions, and thus to avoid the entry of the government into competition with private business.

Government Finance

The first requirement of confidence and of economic recovery is financial stability of the United States government. I shall deal with fiscal questions at greater length in the budget message. But I must, at all time, call attention to the magnitude of the deficits which have developed and the resulting necessity for determined and courageous policies. These deficits arise in the main from the heavy decrease in tax receipts, due to the depression and to the increase in expenditure on construction in aid to employment, aids to agriculture, and upon services to veterans. N During the fiscaj year ending June 30 last we incurred a deficit of about $903,000,000, which included the statutory reduction of the debt and represented an increase of the national debt by $616,000,000. Os this, however, $153,000,000 is offset by increased cash balances. In comparison with the fiscal year 1928 there is indicated a fall in federal receipts for the present fiscal year amounting to $1,633,000,000, of which $1,034,000,000 is individual and corporate income taxes klone. During this fiscal year there will be an increased expenditure, as comnered to 1928, on veterans of $255,000,000, and an increased expenditures on construction w'ork which may reach $520,000,000. Despite large economies in other directions, we have an indicated deficit, including the ■'Statutory recrement of the debt, of $2,123,000.000, and an indicated net debt increase of about $1,711,000,000.

Urges Tax Increase

The budget for the fiscal year beginning July 1 next, after alkrwing for some increase of taxes under the present laws and after allow 7 - ing for drastic reduction in expenditures. still indicates a deficit of $1,417,000,000. After offsetting the statutory debt retirements this would indicate an increase in the national debt for the fiscal year 1933 of about $921,000,000. Several conclusions are inevitable. We must have insistent and determined reduction in government expenses. We must face a temporary increase in taxes. Such increase should not cover the whole of these deficits or it will retard recovery. We must partially finance the deficit by borrowing.

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It is my view that the amount of taxation should be fixed so as to balance the budget for 1933, except for the statutory debt retirement. Such government receipts would assure the balance of the following year’s budget, including debt retirement. It is my further view thta the additional taxation should be imposed solely as an emergency measure, terminating definitely two years from July 1 next. Such a basis will give confidence in the determination of the government to stabilize its finance and will assure taxpayers of its temporary character.

Home Loan Banks

I recommend the establishment of a system of home loan discount banks as the necessary companion in our financial structure of the federal reserve banks and our federal land banks. Such action will relieve present distressing pressure against home and farm property owners. It will relieve pressure upon and give added strength to building and loan as-

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sociations, savings banks and deposit banks, engaged in extending such credits. Such action would further decentralize our credit structure. It would revive residential construction and employment. It would enable such loaning institutions more effectually to promote home ownership. In order that the public may be absolutely assured and that the government may be in position to meet any public necessity, I recommend that an emergency reconstruction corporation of the nature of the former War Flnanje Corporation should be established. It mzy not be necessary to use such an instrumentality very extensively. The very existence of such a bulwark will strengthen confidence. The treasury should be authorized to subscribe a reasonable capital to it. and it should be given authority to issue its own debentures. It should be placed in liquidation at the end of two years. Its purpose is that by strengthening the weak spots to thus liberate the

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full strength of the nation’s resources. It should be in position to facilitate exports by American agencies; make advances to agricultural credit agencies where r"-ssary to protect and aid the agricultural industry; to make temporary advances upon proper securities to established industries, railways and financial institutions which can not otherwise secure credit, and where such advances will protect the credit structure and stimulate employment. Its functions would not overlap those of the National Credit Corporation.

Railways Big Problem

The railways present one of our immediate and pressing problems. They are aid must remain the backbone of our transportation system. The well-maintained and successful operation and the stability of railway finances are of primary importance to economic recovery. They

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should have more effective opportunity to reduce operating costs by proper consolidation. As their rates must be regulated in public interest, so also approximate regulation should be applied to competing services by some authority. The methods of their regulations should be revised. The interstate commerce commision has made important and far-reaching recommendations upon the whole subject, which I commend to the early consideration of the congress.

Unemployment

As an aid to unemployment the federal government is engaged in the greatest program of publicbuilding, harbor, flood-control, highway, waterway, aviation, merchant and naval ship construction in all history. Our expenditures on these works during this calendar year will reach about $780,000,000, compared with $260,000,000 in 1928. Through this

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increased construction, through the maintenance of a full complement of federal employes, and through services to veterans it is estimated that the federal taxpayer now is directly contributing to the livelihood of 10,000,000 of our citizens. “We must avoid burdens upon the government which will create more unemployment in private industry than can be gained by further expansion of employment by the federal government. We now can stimulate employment and agriculture more effectually and speedily through the voluntary measures in progress, through the thawing out of credit, through the building up of stability abroad, through the home loan discount banks, through an emergency finance corporation and the rehabilitation of the railways and other such directions. I am opposed to any direct or indirect government dole. The breakdown and increased unemployment in Europe is due in part to such practices. Our people are providing against distress from unemployment in true American fashion by

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PAGE 9

a magnificent response to public appeal and by action of the local governments.

The Tariff

Wages and standards of living abroad have been lowered materially during the last year. The temporary abandonment of the gold standard by certain countries also has reduced their production costs compared to ours. Fortunately any increases in the tariff which may be necessary to protect agriculture and industry from these lowered foreign costs, or decreases in items which may prove to be excessive, may be undertaken at any time by the tariff commission under authority which it possesses by virtue of the tariff act of 1930. This procedure presents an orderly method for correcting inequalities. I am opposed to any general congressional revision of the tariff. Such action would disturb industry, business and agriculture. It would prolong the depression.