On New Year’s Day in 1930 President Hoover shook hands with 6,000 Americans.
On January 21 he told the press that the Department of Labor found
that in the previous ten days employment had increased.
In January he approved work on the Boulder Dam project using $60 million,
and he asked Congress for $500 million to construct public buildings.
Secretary of State Henry Stimson led a large contingent of diplomats
at the London Naval Conference that began on January 21.
Tentative proposals to limit naval arms were accepted by the United States
on February 6, by Britain the next day, by France on the 9th,
by Japan on the 13th, and by Italy on the 19th.
Experts worked on the technical details.
The historian Arnold Toynbee praised this as the
“great outstanding international success of the year 1930.”
On February 5 Hoover praised the private charity
Community Chest for being free of prejudice.
They continued their work, and by Thanksgiving Day in 1931
the National Association of Community Chests and
Councils had raised $45,694,387 in 131 cities.
Early in 1930 Hoover signed a bill of $160 million in tax cuts.
Small incomes received a 66% reduction and large incomes 4%.
Corporate income tax was reduced 8.33%.
Since the Federal Government was only 3% of the
Gross National Product (GNP), its influence on business activity was limited.
On 3 February 1930 Chief Justice Taft resigned
because of poor health, and he died on March 8.
Progressives wanted President Hoover to nominate Justice Harlan Stone
to be Chief Justice, and then he could name someone else to fill his place.
Hoover surprised them by appointing Charles Evans Hughes,
later saying he thought he would decline.
After criticism from the progressives George Norris and Robert La Follette,
the Senators confirmed Hughes 52 to 36.
On March 6 San Francisco’s Police Chief William Quinn
let local Communists parade with a police escort.
Mayor James Rolph declared the Communists were safe
under the American flag, and there was no riot.
On that day some people gathered outside the gate of the White House
to demonstrate with banners and speeches, and they sang the “Internationale.”
Hoover ordered the guards not to interfere unless it was necessary.
When a man began to climb over the fence, police pulled him off,
threw tear gas, and charged the crowd.
They arrested eleven men and two girls.
In several big cities and in other towns the unemployed raised their voices.
That month Boston’s Mayor James Curley rejected a three-man delegation,
and Boston had a riot.
After a survey by governmental agencies on March 7
Hoover issued this optimistic statement:
All the evidences indicate that the worst effects of the crash
upon employment will have been passed during the next
sixty days, with the amelioration of seasonal employment,
the gaining strength of other forces,
and the continued cooperation of the many agencies
actively cooperating with the government
to restore business and to relieve distress.1
Justice Edward Terry Sanford of Tennessee also died on March 8,
and Hoover then chose to replace him with another southerner,
44-year-old Federal Appeals Judge John J. Parker of North Carolina.
He was controversial. and the NAACP President Walter White objected.
The AFL labor leader William Green complained of his decision in a mining case,
and the Senate rejected Parker 41-39 on May 7.
Hoover nominated the Philadelphia lawyer Owen Roberts,
and he was confirmed as a Supreme Court Justice on June 2.
Hoover ordered the Commerce Department to do a
house-to-house census to count the unemployed, and at the end of April
they reported that about 45 million citizens were employed.
With 2,429,000 seeking a job and 755,000 having been laid off,
the unemployment was about 3,184,000.
Hoover announced that twelve states were especially suffering from unemployment.
On May 1 Hoover spoke at the Annual Dinner of the
United States Chamber of Commerce on the
“Certainty of Future Prosperity and Problems of Cooperation” saying,
On the occasion of this great storm we have
for the first time attempted a great economic experiment,
possibly one of the greatest of our history.
By cooperation between Government officials
and the entire community, business, railways,
public utilities, agriculture, labor, the press,
our financial institutions and public authorities,
we have undertaken to stabilize economic forces;
to mitigate the effects of the crash
and to shorten its destructive period.
I believe I can say with assurance that our joint undertaking
has succeeded to a remarkable degree,
and that it furnishes a basis of great tribute to our people
for unity of action in time of national emergency.
To those many business leaders present here
I know that I express the gratitude of our countrymen.…
We are not yet entirely
through the difficulties of our situation.
We have need to maintain every agency and every force
that we have placed in motion until
we are far along on the road to stable prosperity.
He would be a rash man who would state that
we can produce the economic millennium,
but there is great assurance that America is finding herself
upon the road to secure social satisfaction,
with the preservation of private industry, initiative,
and a full opportunity for the development of the individual.
It is true that these economic things
are not the objective of life itself.
If by their steady improvement
we shall yet further reduce poverty,
shall create and secure more happy homes,
we shall have served to make
better men and women and a greater nation.2
On May 8 the Congressional Record quoted President Hoover as saying,
Optimism swings to deepest pessimism;
fear of the future chokes initiative and enterprise;
monetary stringencies, security and commodity
panics in our exchanges; bankruptcies and other losses
all contribute to stifle consumption, decrease production
and finally express themselves in unemployment,
decreased wages, strikes, lockouts,
and a long period of stagnation….
I do not accept the fatalistic view that
the discovery of the means to restrain destructive
speculation is beyond the genius of the American people.3
To make the Federal Government more efficient the Congress approved
a bill that combined the Pensions Bureau, Veterans Bureau,
and Soldiers’ Homes into the Veterans Administration.
Hoover would veto Rankin’s Veterans bill because he considered it discriminatory.
Congress sustained the veto, and then they passed the President’s bill
that was more equitable and generous.
On May 28 Hoover, following the examples of Harding and Coolidge,
had vetoed a bill costing $11 million to extend disability benefits
to veterans of the Spanish-American War.
On June 2 both houses of Congress over-rode Hoover’s veto for the first time.
Then the Senate introduced a $102 million bill for more pensions and bonuses.
On June 25 Congress passed the bill over Hoover’s second veto.
Hoover had designed a $70 million bill, and he signed it the next day.
Former Congressman James MacLafferty of California
came and advised Hoover as an unpaid political consultant.
The New York Times in the spring wrote of Hoover,
“No one in his place could have done more.
Very few of his predecessors could have done as much.”4
The US Senate had passed the Smoot-Hawley tariff bill on March 25,
and the House-Senate conference put back the President’s flexibility provision
that he wanted, and they took out the agricultural debenture.
Hoover announced his intention to sign the bill and
explained his reasons for doing so, saying among other things,
The Tariff Law is like all other tariff legislation, whether
framed primarily upon a protective or a revenue basis.
It contains many compromises between
sectional interests and between different industries.
No tariff bill has ever been enacted or ever will be enacted
under the present system, that will be perfect.
A large portion of the items are always adjusted
with good judgment, but it is bound to contain
some inequalities and inequitable compromises.
There are items upon which duties will prove too high
and others upon which duties will prove to be too low.5
On June 16 Hoover at the Dedication of the Harding Memorial Service
and Tragedy in the Life of Warren Harding at Marion, Ohio
gave an address reviewing some of Harding's accomplishments.
The Washington Arms Conference for the reduction
and limitation of battleships identified his administration
with the first step in history
toward the disarmament of the world.
That step was accompanied by the momentous treaties
which restored good will among the nations
bordering upon the Pacific Ocean and gave to all the world
inestimable blessings of peace and security.
The new and changing problems of later years
have not obscured the many
other constructive acts of his administration.
The reorganization and reduction of the public debt,
the reduction in taxation, the creation of the budget system,
the better organization of industry and employment,
new services to agriculture,
the establishment of a permanent system of care
for disabled veterans and their dependents—
are but some of the enlightened measures
which he inspired and advanced.6
On June 17 President Hoover did not want to reject the work of the Congress,
and he signed the Hawley-Smoot Tariff that raised rates on 887 items.
Criticism of Hoover’s relations with Congress were increasing,
and Walter Lippman wrote “The Peculiar Weakness of Mr. Hoover,”
accusing him of surrendering his leadership of the Republican Party.
Expectations of Hoover had been high because of his work
feeding millions of people during the World War.
He had been a great businessman and Commerce Secretary,
and now his political skill was being challenged.
Hoover would double federal work projects in the next three years.
In 1930 there were 26,355 failed businesses, and the GNP fell by 12.6%.
The unemployed had been about 2.7 million in 1929,
and by the middle of 1930 they would be estimated at four million.
The National Bureau of Economic Research found that eleven nations
fell into a depression before the United States did,
and eight countries were stabilized at about the same time.
In the 1920-22 recession in the United States unemployment peaked at 5 million.
Hoover’s plan for public works stimulated munificent budgets
in 1930 by local government and private industries.
That public works program was more than $1 billion above normal
and was called the largest public works program in history.
During the Hoover Administration the Federal construction cost $2.4 billion.
From 1930 to 1931 the federal highway budget was doubled,
and that nearly tripled employment.
Workers were also employed in national parks and forests.
Hoover had the Interstate Commerce Commission reduce
rail rates for water and food to help farmers.
He created more work on waterways than any president.
The US Congress declined to pass his plan for a Department of Public Works.
The Democratic Senator Robert Wagner of New York supported
Hoover’s legislation such as improving the statistics on unemployment.
Wagner also sponsored a bill to provide $150 million for public works which passed.
Hoover signed it in July, and for the first time
the Census asked questions about employment.
In the first half of 1930 the stock market went up 16%.
Foreign lending had recovered, and industrial production was increasing.
The Federal Reserve discount rate had been lowered to 3%.
On July 7 President Hoover sent a rather long message to the
United States Senate explaining why they should ratify the London Naval Treaty.
He had signed the treaty on April 22.
Ratification by the Senate made the United States a party to it
when it became effective on October 27.
The Republican National Committee Chairman Claudius Huston of Tennessee
had assisted Hoover when he was Commerce Secretary.
Huston was accused of corruption and resigned on August 7.
The hot summer of 1930 especially affected twenty states,
and Hoover summoned a national conference of governors in Washington.
He appointed a committee led by Secretary of Agriculture Arthur Hyde.
The Red Cross spent $10 million to help sustain 2.5 million people.
Hoover negotiated a 50% rate reduction with the railroads in the affected states.
The Federal Farm Board loaned $47 million to distressed farmers,
and this saved livestock from being slaughtered
and farm cooperatives from bankruptcy.
Congress approved $122 million for a highway in the area.
Hoover expedited work on waterways, dams, and flood control.
On August 5 with a major drought threatening the farm states
Hoover ordered the Department of Agriculture
to begin a comprehensive investigation.
He arranged agreements with the railroads to reduce by 50%
the rates on feed to drought sufferers, and he directed the
Agriculture Department to administer those agreements.
On the 8th at a press conference he released the conference’s
“Survey of the Drought Situation,” and his
announcement to the state governors concluded,
The situation is one to cause a great deal of concern,
but it must be borne in mind that
the drought has mainly affected animal feed,
the bulk of the human food production
of the country being abundantly in hand.
Nevertheless, there will be a great deal of privation
among families in the drought areas due to the loss
of income and the financial difficulties imposed upon them
to carry their animals over the winter.
The American people will proudly take care of the
necessities of their countrymen in time of stress or difficulty.
Our first duty is to assure our suffering countrymen
that this will be done,
that their courage and spirit shall be maintained,
and our second duty is to assure
an effective organization for its consummation.7
Hoover summoned the drought-state governors
to Washington for a meeting on August 14.
He ordered the Federal Land Bank and the Farm Board to provide more credit,
and his appeal to the Red Cross led to a grant of $5 million.
He also extended federal highway construction to provide more jobs.
He announced on August 12 that the San Francisco Bay bridge would be built.
On September 1, which was Labor day, Hoover hosted
Farm Board members at his Rapidan Camp retreat.
The presidential car was speeding very fast on the road, and a reporter
and his wife following them wrecked their car and were seriously injured.
At the camp the Board members hiked, fished, and had discussions.
On September 9 President Hoover declared his determination
to stop all immigration into the United States because of unemployment.
He asked for a law that would exclude those likely to become public charges.
This would prevent adding several hundred thousand
unemployed people in the next three years.
On September 16 he reported that a Commerce Department study
found
that US foreign trade had recovered to more than 80% of its normal condition.
Hoover on October 2 at the Annual Convention of the
American Bankers’ Association in Cleveland spoke extensively to 24,000 people
and more on radio on the “Causes of the Present Depression and
Possible Contribution of the Bankers toward a Solution of the Problem.”
He noted that the Depression was worldwide,
and this was the last part of his speech,
It appears from the press that
someone suggested in your discussion that
our American standards of living should be lowered.
To that I emphatically disagree.
I do not believe it represents the views of this association.
Not only do I not accept such a theory, but on the contrary,
the whole purpose and ideal of this economic system
which is distinctive of our country,
is to increase the standard of living by the adoption
and the constantly widening diffusion of invention
and discovery amongst the whole of our people.
Any retreat from our American philosophy
of constantly increasing standards of living
becomes a retreat into perpetual unemployment
and the acceptance of a cesspool of poverty
for some large part of our people.
Our economic system is but an instrument
of the social advancement of the American people.
It is an instrument by which we add to the security
and richness of life of every individual.
It by no means comprises the whole purpose of life,
but it is the foundation upon which
can be built the finer things of the spirit.
Increase in enrichment must be
the objective of the Nation, not decrease.
In conclusion, I would again profess
my own undaunted faith in those mighty spiritual
and intellectual forces of liberty, self-government,
initiative, invention, and courage, which have
throughout our whole national life motivated our progress,
and driven us ever forward.
These forces, which express the true genius of our people,
are undiminished.
They have already shown their ability
to resist this immediate shock.
Any recession in American business is
but a temporary halt in the prosperity of a great people.8
On October 13 Hoover summoned the officials of the
New York Stock Exchange and advised them that if they
did not reform their rules and conduct to eliminate manipulation
and enforce the rules, attempts would be made to change its
regulation from New York State to the Federal Government.
He said he would not make a public statement then so that
they would have time to correct the situation.
Hoover on October 17 issued a statement on the formation of
the President’s Emergency Committee for Employment (PECE) in which
he asked six members of his Cabinet (Lamont, Davis, Wilbur, Hurley, Hyde,
and Mellon) and one governor (Meyer) on the Federal Reserve Board
to formulate plans to strengthen the organization of government activities
to increase employment in the winter.
He recommended,
cooperation with the governors and employment
organizations of the states and local communities,
development of methods with the national industries,
and direct Federal employment in public works.9
Unemployment reached 5 million in the fall, and Hoover
appointed Col. Arthur Woods the chairman of PECE.
On one day Hoover telephoned governors of 45 states.
Woods wanted to ask Congress to grant $750 million to states.
Hoover told him to ask for $150 million,
and the Congress approved $117 million.
PECE began functioning in October.
On October 22 President Hoover proclaimed
“Prohibiting Exportation of Arms and Munitions of War to Brazil”
based on the resolution by Congress on 31 January 1922 which provided,
That whenever the President finds that
in any American country, or in any country in which
the United States exercises extraterritorial jurisdiction,
conditions of domestic violence exist, which are or may be
promoted by the use of arms or munitions of war procured
from the United States, and makes proclamation thereof,
it shall be unlawful to export, except under such limitations
and exceptions as the President prescribes,
any arms or munitions of war from any place
in the United States to such country
until otherwise ordered by the President or by Congress.10
They urged state and local governments to provide charity,
and New York’s
spending increased from $9 million in 1930 to $58 million in 1932.
In the same period private charities expanded
their work from $4.5 million to $21 million.
Hoover asked reporters in the depression to be less critical.
The President continued his twice weekly press conferences to fewer journalists,
and he spent more time confiding with his friends Mark Sullivan and William Hard.
On October 31 the public works including ships
in progress were estimated at $1 billion.
Shortly before the elections the New York World bought a false story
for $12,000 from a frustrated employee of Interior Secretary Wilbur
accusing him of mishandling valueless oil shale land.
Wilbur provided documents that exonerated him just before the election.
In the elections on November 4 the Republicans lost 8 seats in the Senate
reducing them to 48 which was exactly half.
Democrats had 47 seats, and there was one senator from the Farm-Labor Party.
In the House of Representatives the Democrats took 52 seats away
from the
Republicans who were left with a 218-216 majority with one Farm-Labor person.
In the governors’ races the Republicans lost 9 as the
Democrats gained 7 giving them 25 states to 21 Republican governors.
Gov. Franklin D. Roosevelt of New York was re-elected by about 250,000 votes.
On December 2 Hoover gave his Second Annual Message to Congress
with “Information of the State of the Union.”
In 13 pages he mostly discussed the “Economic Situation” and then went
into Agriculture, Government Finances, National Defense, Legislation,
Electric Power, Railways, Antitrust Laws, Capital-Gains Tax, Immigration,
Deportation of Alien Criminals, Post Office, Veterans, Social Service,
General issues, and Foreign Relations.
Here is the entire document:
To the Senate and House of Representatives:
I have the honor to comply with the requirement
of the Constitution that I should lay before the
Congress information as to the state of the Union,
and recommend consideration of such
measures as are necessary and expedient.
Substantial progress has been made during the year in
national peace and security; the fundamental strength
of the Nation's economic life is unimpaired; education and
scientific discovery have made advances; our country is
more alive to its problems of moral and spiritual welfare.ECONOMIC SITUATION
During the past 12 months we have suffered
with other Nations from economic depression.
The origins of this depression lie to some extent
within our own borders through a speculative period
which diverted capital and energy into speculation
rather than constructive enterprise.
Had over-speculation in securities been the only
force operating, we should have seen recovery
many months ago, as these particular dislocations
have generally readjusted themselves.
Other deep-seated causes have been in action, however,
chiefly the world-wide overproduction beyond even the
demand of prosperous times for such important basic
commodities as wheat, rubber, coffee, sugar, copper, silver,
zinc, to some extent cotton, and other raw materials.
The cumulative effects of demoralizing price falls of these
important commodities in the process of adjustment of
production to world consumption have produced financial
crises in many countries and have diminished the buying
power of these countries for imported goods to a degree
which extended the difficulties farther afield by creating
unemployment in all the industrial nations.
The political agitation in Asia; revolutions in South America
and political unrest in some European States; the methods of
sale by Russia of her increasing agricultural exports to
European markets; and our own drought—have all
contributed to prolong and deepen the depression.
In the larger view the major forces of the depression now
lie outside of the United States, and our recuperation has
been retarded by the unwarranted degree of fear and
apprehension created by these outside forces.
The extent of the depression is indicated by the
following approximate percentages of activity
during the past three months as compared
with the highly prosperous year of 1928:
Value of department-store sales 93% of 1928
Volume of manufacturing production 80% of 1928
Volume of mineral production 90% of 1928
Volume of factory employment 84% of 1928
Total of bank deposits 105% of 1928
Wholesale prices—all commodities 83% of 1928
Cost of living 94% of 1928
Various other indexes indicate total decrease of
activity from 1928 of from 15 to 20 per cent.
There are many factors which give
encouragement for the future.
The fact that we are holding from 80 to 85 per cent of our
normal activities and incomes; that our major financial and
industrial institutions have come through the storm
unimpaired; that price levels of major commodities have
remained approximately stable for some time; that a
number of industries are showing signs of increasing
demand; that the world at large is readjusting itself
to the situation; all reflect grounds for confidence.
We should remember that these occasions have been
met many times before, that they are but temporary,
that our country is to-day stronger and richer in resources,
in equipment, in skill, than ever in its history.
We are in an extraordinary degree self-sustaining,
we will overcome world influences and will lead the
march of prosperity as we have always done hitherto.
Economic depression cannot be cured by
legislative action or executive pronouncement.
Economic wounds must be healed by the action
of the cells of the economic body—the producers
and consumers themselves.
Recovery can be expedited and its effects
mitigated by cooperative action.
That cooperation requires that every individual should
sustain faith and courage; that each should maintain his
self-reliance; that each and every one should search for
methods of improving his business or service; that the
vast majority whose income is unimpaired should not
hoard out of fear but should pursue their normal living and
recreations; that each should seek to assist his neighbors
who may be less fortunate; that each industry should assist
its own employees; that each community and each State
should assume its full responsibilities for organization of
employment and relief of distress with that sturdiness and
independence which built a great Nation.
Our people are responding to these impulses
in remarkable degree.
The best contribution of government lies in encouragement
of this voluntary cooperation in the community.
The Government, National, State, and local, can join
with the community in such programs and do its part.
A year ago I, together with other officers of the
Government, initiated extensive cooperative
measures throughout the country.
The first of these measures was an agreement of leading
employers to maintain the standards of wages and of
labor leaders to use their influence against strife.
In a large sense these undertakings have been adhered to
and we have not witnessed the usual reductions of wages
which have always heretofore marked depressions.
The index of union wage scales shows them to be today
fully up to the level of any of the previous three years.
In consequence the buying power of the country has been
much larger than would otherwise have been the case.
Of equal importance the Nation has had unusual peace
in industry and freedom from the public disorder
which has characterized previous depressions.
The second direction of cooperation has been that our
governments, National, State, and local, the industries
and business so distribute employment as to give
work to the maximum number of employees.
The third direction of cooperation has been to
maintain and even extend construction work
and betterments in anticipation of the future.
It has been the universal experience in previous
depressions that public works and private construction
have fallen off rapidly with the general tide of depression.
On this occasion, however, the increased authorization
and generous appropriations by the Congress and the
action of States and municipalities have resulted in the
expansion of public construction to an amount even
above that in the most prosperous years.
In addition the cooperation of public utilities, railways,
and other large organizations has been generously
given in construction and betterment work in
anticipation of future need.
The Department of Commerce advises me
that as a result, the volume of this type of
construction work, which amounted to roughly
$6,300,000,000 in 1929, instead of decreasing
will show a total of about $7,000,000,000 for 1930.
There has, of course, been a substantial
decrease in the types of construction which
could not be undertaken in advance of need.
The fourth direction of cooperation was the organization in
such States and municipalities, as was deemed necessary,
of committees to organize local employment, to provide
for employment agencies, and to effect relief of distress.
The result of magnificent cooperation throughout the country
has been that actual suffering has been kept to a minimum
during the past 12 months, and our unemployment has been
far less in proportion than in other large industrial countries.
Some time ago it became evident that unemployment
would continue over the winter and would necessarily
be added to from seasonal causes and that the savings
of workpeople would be more largely depleted.
We have as a Nation a definite duty to see that no deserving
person in our country suffers from hunger or cold.
I therefore set up a more extensive organization to stimulate
more intensive cooperation throughout the country.
There has been a most gratifying degree of response,
from governors, mayors, and other public officials,
from welfare organizations, and from employers
in concerns both large and small.
The local communities through their voluntary agencies
have assumed the duty of relieving individual distress
and are being generously supported by the public.
The number of those wholly out of employment
seeking for work was accurately determined
by the census last April as about 2,500,000.
The Department of Labor index of employment in the larger
trades shows some decrease in employment since that time.
The problem from a relief point of view is somewhat
less than the published estimates of the number
of unemployed would indicate.
The intensive community and individual efforts in
providing special employment outside the listed
industries are not reflected in the statistical indexes
and tend to reduce such published figures.
Moreover, there is estimated to be a constant figure
at all times of nearly 1,000,000 unemployed who
are not without annual income but temporarily
idle in the shift from one job to another.
We have an average of about three breadwinners
to each two families, so that every person unemployed
does not represent a family without income.
The view that the relief problems are less than the gross
numbers would indicate is confirmed by the experience
of several cities, which shows that the number of families
in distress represents from 10 to 20 per cent of the
number of the calculated unemployed.
This is not said to minimize the very real problem
which exists but to weigh its actual proportions.
As a contribution to the situation the Federal Government
is engaged upon the greatest program of waterway,
harbor, flood control, public building, highway,
and airway improvement in all our history.
This, together with loans to merchant shipbuilders,
improvement of the Navy and in military aviation,
and other construction work of the Government
will exceed $520,000,000 for this fiscal year.
This compares with $253,000,000 in the fiscal year 1928.
The construction works already authorized
and the continuation of policies in Government
aid will require a continual expenditure
upwards of half a billion dollars annually.
I favor still further temporary expansion of these
activities in aid to unemployment during this winter.
The Congress will, however, have presented to it
numbers of projects, some of them under the guise of,
rather than the reality of, their usefulness in the
increase of employment during the depression.
There are certain commonsense limitations
upon any expansions of construction work.
The Government must not undertake works that are not
of sound economic purpose and that have not been subject
to searching technical investigation, and which have not
been given adequate consideration by the Congress.
The volume of construction work in the Government
is already at the maximum limit warranted by
financial prudence as a continuing policy.
To increase taxation for purposes of construction
work defeats its own purpose, as such taxes
directly diminish employment in private industry.
Again any kind of construction requires, after its
authorization, a considerable time before labor
can be employed in which to make engineering,
architectural, and legal preparations.
Our immediate problem is the increase of employment
for the next six months, and new plans which do not
produce such immediate result or which extend
commitments beyond this period are not warranted.
The enlarged rivers and harbors, public building, and
highway plans authorized by the Congress last session,
however, offer an opportunity for assistance by the
temporary acceleration of construction of these programs
even faster than originally planned, especially if the
technical requirements of the laws which entail great
delays could be amended in such fashion as to speed
up acquirements of land and the letting of contracts.
With view, however, to the possible need for acceleration,
we, immediately upon receiving those authorities from the
Congress five months ago, began the necessary technical
work in preparation for such possible eventuality.
I have canvassed the departments of the Government as to
the maximum amount that can be properly added to our
present expenditure to accelerate all construction during the
next six months, and I feel warranted in asking the Congress
for an appropriation of from $100,000,000 to $150,000,000
to provide such further employment in this emergency.
In connection therewith we need some authority
to make enlarged temporary advances of
Federal-highway aid to the States.
I recommend that this appropriation be made distributable
to the different departments upon recommendation of a
committee of the Cabinet and approval by the President.
Its application to works already authorized by the
Congress assures its use in directions of economic
importance and to public welfare.
Such action will imply an expenditure upon construction of all
kinds of over $650,000,000 during the next twelve months.AGRICULTURE
The world-wide depression has affected agriculture
in common with all other industries.
The average price of farm produce has fallen
to about 80 per cent of the levels of 1928.
This average is, however, greatly affected by wheat
and cotton, which have participated in world-wide
overproduction and have fallen to about 60 percent
of the average price of the year 1928.
Excluding these commodities, the prices of all other
agricultural products are about 84 percent of those of 1928.
The average wholesale prices of other primary goods, such
as nonferrous metals, have fallen to 76 per cent of 1928.
The price levels of our major agricultural commodities are,
in fact, higher than those in other principal producing
countries, due to the combined result of the tariff
and the operations of the Farm Board.
For instance, wheat prices at Minneapolis are about
30 percent higher than at Winnipeg, and at Chicago
they are about 20 percent higher than at Buenos Aires.
Corn prices at Chicago are over twice as high
as at Buenos Aires.
Wool prices average more than 80 per cent higher in this
country than abroad, and butter is 30 percent higher
in New York City than in Copenhagen.
Aside from the misfortune to agriculture of the world-wide
depression we have had the most severe drought.
It has affected particularly the States bordering on the
Potomac, Ohio, and Lower Mississippi Rivers, with
some areas in Montana, Kansas, Oklahoma, and Texas.
It has found its major expression in the shortage
of pasturage and a shrinkage in the corn crop
from an average of about 2,800,000,000 bushels
to about 2,090,000,000 bushels.
On August 14 I called a conference of the governors
of the most acutely affected States, and as a result
of its conclusions I appointed a national committee
comprising the heads of the important Federal agencies
under the chairmanship of the Secretary of Agriculture.
The governors in turn have appointed State committees
representative of the farmers, bankers, business men,
and the Red Cross, and subsidiary committees have
been established in most of the acutely affected counties.
Railway rates were reduced on feed and livestock in and
out of the drought areas, and over 50,000 cars of such
products have been transported under these reduced rates.
The Red Cross established a preliminary fund of
$5,000,000 for distress relief purposes and established
agencies for its administration in each county.
Of this fund less than $500,000 has been called for up to this
time as the need will appear more largely during the winter.
The Federal Farm Loan Board has extended its credit
facilities, and the Federal Farm Board has given
financial assistance to all affected cooperatives.
In order that the Government may meet its full
obligation toward our countrymen in distress through
no fault of their own, I recommend that an appropriation
should be made to the Department of Agriculture to be
loaned for the purpose of seed and feed for animals.
Its application should as hitherto in such loans be
limited to a gross amount to any one individual,
and secured upon the crop.
The Red Cross can relieve the cases of individual
distress by the sympathetic assistance of our people.FINANCES OF THE GOVERNMENT
I shall submit the detailed financial position
of the Government with recommendations
in the usual Budget message.
I will at this time, however, mention that the Budget
estimates of receipts and expenditures for the current
year were formulated by the Treasury and the Budget
Bureau at a time when it was impossible to forecast
the severity of the business depression and have
been most seriously affected by it.
At that time a surplus of about $123,000,000 was
estimated for this fiscal year and tax reduction which
affected the fiscal year to the extent of $75,000,000
was authorized by the Congress, thus reducing
the estimated surplus to about $48,000,000.
Closely revised estimates now made by the Treasury
and the Bureau of the Budget of the tax, postal, and
other receipts for the current fiscal year indicate a decrease
of about $430,000,000 from the estimate of a year ago,
of which about $75,000,000 is due to tax reduction,
leaving about $355,000,000 due to the depression.
Moreover, legislation enacted by Congress subsequent to
the submission of the Budget enlarging Federal construction
work to expand employment and for increase in veterans'
services and other items, have increased expenditures
during the current fiscal year by about $225,000,000.
Thus the decrease of $430,000,000 in revenue and the
increase of $225,000,000 in expenditure adversely change
the original Budget situation by about $655,000,000.
This large sum is offset by the original estimated surplus
a year ago of about $123,000,000, by the application of
$185,000,000 of interest payments upon the foreign debt to
current expenditures, by arrangements of the Farm Board
through repayments, etc., in consequence of which
they reduced their net cash demands upon the Treasury
by $100,000,000 in this period, and by about $67,000,000
economies and deferments brought about in the
Government, thus reducing the practical effect of the
change in the situation to an estimated deficit of about
$180,000,000 for the present fiscal year.
I shall make suggestions for handling the present-year
deficit in the Budget message, but I do not favor
encroachment upon the statutory reduction
of the public debt.
While it will be necessary in public interest to further
increase expenditures during the current fiscal year in aid
to unemployment by speeding up construction work and
aid to the farmers affected by the drought, I cannot
emphasize too strongly the absolute necessity to defer
any other plans for increase of Government expenditures.
The Budget for 1932 fiscal year indicates estimated
expenditure of about $4,054,000,000, including postal deficit.
The receipts are estimated at about $4,085,000,000 if the
temporary tax reduction of last year be discontinued,
leaving a surplus of only about $30,000,000.
Most rigid economy is therefore necessary
to avoid increase in taxes.NATIONAL DEFENSE
Our Army and Navy are being maintained at a high state of
efficiency, under officers of high training and intelligence,
supported by a devoted personnel of the rank and file.
The London naval treaty has brought important
economies in the conduct of the Navy.
The Navy Department will lay before the committees
of the Congress recommendations for a program of
authorization of new construction which should be
initiated in the fiscal year of 1932.LEGISLATION
This is the last session of the Seventy-first Congress.
During its previous sittings it has completed a very
large amount of important legislation, notably:
The establishment of the Federal Farm Board; fixing
congressional reapportionment; revision of the tariff,
including the flexible provisions and a reorganization of the
Tariff Commission; reorganization of the Radio Commission;
reorganization of the Federal Power Commission; expansion
of Federal prisons; reorganization of parole and probation
system in Federal prisons; expansion of veterans' hospitals;
establishment of disability allowances to veterans;
consolidation of veteran activities; consolidation and
strengthening of prohibition enforcement activities in the
Department of Justice; organization of a Narcotics Bureau;
large expansion of rivers and harbors improvements;
substantial increase in Federal highways; enlargement
of public buildings construction program; and the
ratification of the London naval treaty.
The Congress has before it legislation partially completed
in the last sitting in respect to Muscle Shoals, bus regulation,
relief of congestion in the courts, reorganization of border
patrol in prevention of smuggling, law enforcement
in the District of Columbia, and other subjects.
It is desirable that these measures should be completed.
The short session does not permit of extensive legislative
programs, but there are a number of questions which,
if time does not permit action, I recommend should be
placed in consideration by the Congress, perhaps through
committees cooperating in some instances with the Federal
departments, with view to preparation for subsequent
action.
Among them are the following subjects:ELECTRICAL POWER
I have in a previous message recommended
effective regulation of interstate electrical power.
Such regulation should preserve the independence
and responsibility of the States.RAILWAYS
We have determined upon a national policy of consolidation
of the railways as a necessity of more stable and
more economically operated transportation.
Further legislation is necessary
to facilitate such consolidation.
In the public interest we should strengthen the
railways that they may meet our future needs.ANTITRUST LAWS
I recommend that the Congress institute an inquiry into
some aspects of the economic working of these laws.
I do not favor repeal of the Sherman Act.
The prevention of monopolies is of most
vital public importance.
Competition is not only the basis of protection to
the consumer but is the incentive to progress.
However, the interpretation of these laws by the courts, the
changes in business, especially in the economic effects upon
those enterprises closely related to the use of the natural
resources of the country, make such an inquiry advisable.
The producers of these materials assert that certain
unfortunate results of wasteful and destructive use of
these natural resources together with a destructive
competition which impoverishes both operator and
worker cannot be remedied because of the prohibitive
interpretation of the antitrust laws.
The well-known condition of the bituminous
coal industry is an illustration.
The people have a vital interest in the conservation of their
natural resources; in the prevention of wasteful practices;
in conditions of destructive competition which may
impoverish the producer and the wage earner; and they
have an equal interest in maintaining adequate competition.
I therefore suggest that an inquiry be directed especially to
the effect of the workings of the antitrust laws in these
particular fields to determine if these evils can be remedied
without sacrifice of the fundamental purpose of these laws.CAPITAL-GAINS TAX
It is urged by many thoughtful citizens that the peculiar
economic effect of the income tax on so-called capital gains
at the present rate is to enhance speculative inflation
and likewise impede business recovery.
I believe this to be the case, and I recommend that a study
be made of the economic effects of this tax and of its
relation to the general structure of our income tax law.IMMIGRATION
There is need for revision of our immigration laws
upon a more limited and more selective basis,
flexible to the needs of the country.
Under conditions of current unemployment it is obvious that
persons coming to the United States seeking work would
likely become either a direct or indirect public charge.
As a temporary measure the officers issuing visas to
immigrants have been, in pursuance of the law, instructed
to refuse visas to applicants likely to fall into this class.
As a result the visas issued have decreased from an
average of about 24,000 per month prior to restrictions
to a rate of about 7,000 during the last month.
These are largely preferred persons under the law.
Visas from Mexico are about 250 per month compared
to about 4,000 previous to restrictions.
The whole subject requires exhaustive reconsideration.DEPORTATION OF ALIEN CRIMINALS
I urge the strengthening of our deportation laws
so as to more fully rid ourselves of criminal aliens.
Furthermore, thousands of persons have entered
the country in violation of the immigration laws.
The very method of their entry indicates their
objectionable character, and our law-abiding
foreign-born residents suffer in consequence.
I recommend that the Congress provide methods of
strengthening the Government to correct this abuse.POST OFFICE
Due to deferment of Government building over many years,
previous administrations had been compelled to enter upon
types of leases for secondary facilities in large cities,
some of which were objectionable as representing
too high a return upon the value of the property.
To prevent the occasion for further uneconomic
leasing I recommend that the Congress authorize
the building by the Government of its own facilities.VETERANS
The Nation has generously expanded its care for veterans.
The consolidation of all veterans' activities
into the Veterans' Administration has produced
substantial administrative economies.
The consolidation also brings emphasis to
the inequalities in service and allowances.
The whole subject is under study by the administrator,
and I recommend it should also be examined
by the committees of the Congress.SOCIAL SERVICE
I urge further consideration by the Congress of the
recommendations I made a year ago looking to the
development through temporary Federal aid of adequate
State and local services for the health of children
and the further stamping out of communicable disease,
particularly in the rural sections.
The advance of scientific discovery, methods, and
social thought imposes a new vision in these matters.
The drain upon the Federal Treasury is comparatively small.
The results both economic and moral
are of the utmost importance.GENERAL
It is my belief that after the passing of this depression,
when we can examine it in retrospect, we shall need to
consider a number of other questions as to what action
may be taken by the Government to remove Possible
governmental influences which make for instability and
to better organize mitigation of the effect of depression.
It is as yet too soon to constructively
formulate such measures.
There are many administrative subjects, such as
departmental reorganization, extension of the civil service,
readjustment of the postal rates, etc., which at some
appropriate time require the attention of the Congress.FOREIGN RELATIONS
Our relations with foreign countries have been maintained
upon a high basis of cordiality and good will.
During the past year the London naval pact was completed,
approved by the Senate, and ratified
by the governments concerned.
By this treaty we have abolished competition in the building
of warships, have established the basis of parity of the
United States with the strongest of foreign powers, and
have accomplished a substantial reduction in war vessels.
During the year there has been an
extended political unrest in the world.
Asia continues in disturbed condition, and revolutions
have taken place in Brazil, Argentina, Peru, and Bolivia.
Despite the jeopardy to our citizens and their property
which naturally arises in such circumstances, we have,
with the cooperation of the governments concerned,
been able to meet all such instances without friction.
We have resumed normal relations with the new
Governments of Brazil, Argentina, Peru, and Bolivia
immediately upon evidence that they were able to give
protection to our citizens and their property, and that
they recognized their international obligations.
A commission which was supported by the Congress
has completed its investigation and reported upon our
future policies in respect to Haiti and proved of
high value in securing the acceptance of these policies.
An election has been held
and a new government established.
We have replaced our high commissioner by a minister
and have begun the gradual withdrawal of our activities
with view to complete retirement at the expiration
of the present treaty in 1935.
A number of arbitration and conciliation treaties
have been completed or negotiated during the year,
and will be presented for approval by the Senate.
I shall, in a special message, lay before the Senate
the protocols covering the statutes of the World Court
which have been revised to accord with the sense
of previous Senate reservations.11
In December some major banks such as the Federal Reserve Banks
of Atlanta and New York failed, and then the failure of the
Bank of the United States was the worst in American history.
Hoover criticized seven Senators for advocating government relief which
he and others considered an unpopular “dole,”
and it was also denounced by Franklin Roosevelt.
On December 19 Hoover shared with the press a report on seven methods
of relief that included farmers, highway construction, waterways and harbors,
public buildings, extended credit for agriculture,
reduced railroad rates, and the Red Cross.
While the United States Congress was meeting from early December 1930
to 4 March 1931 Democratic leaders including three former candidates
for President agreed to work with Hoover who asked for $100 million
beyond the $500 million appropriated for public works
and $30 million for drought relief.
The depression was destabilizing regimes in Asia, Europe, and Latin America.
Hoover explained that an economic depression could not be solved
by legislation and government action alone.
Instead in his recent Annual Message he had argued,
Economic depression can not be cured
by legislative action or executive pronouncement.
Economic wounds must be healed
by the action of the cells of the economic body—
the producers and consumers themselves.12
He also noted, “Our unemployment has been far less in proportion
than in other large industrial countries.”13
On 7 January 1931 George Wickersham’s National Commission
on Law Observance and Enforcement released its report on Prohibition
enforcement that divided the Republican Party.
This moral experiment was causing many criminal problems that
often happen when government attempts to control the moral choices
that are best left to individual freedom as long as they do not harm others.
In England, Arkansas on 4 January 1931 about 300 people,
who were desperate to get food for children after a family
was turned away by the Red Cross, took food in the town.
The Democratic Senator Thaddeus Caraway from Arkansas proposed
a bill to provide $15 million for food aid.
Red Cross Chairman John Barton Payne testified to a Senate committee
and said only a little of the $5 million in the drought reserve had been spent.
Payne met with Hoover in the White House on January 10.
Hoover became the honorary president of the Red Cross,
and he said the Red Cross was the nation’s only agency for emergency relief.
On the 10th he also promised a campaign to raise $10 million
for the Red Cross to relieve the drought.
Hoover said, “It is essential that we should maintain the sound
American tradition and spirit of voluntary aid in such emergency
and should not undermine that spirit.”14
Joseph T. Robinson of Arkansas proposed a bill for direct food aid,
and Hoover got the House of Representatives to vote against that because
he opposed a government dole as President Grover Cleveland had in 1893.
On February 2 Senator Borah changed his mind and demanded that
the government provide aid for the drought area and for the unemployed.
On February 3 Hoover gave a statement to the press in response
to the Congress which threatened to hold an extra session
to appropriate money for charitable purposes.
He said,
This is not an issue as to whether
the people are going hungry or cold in the United States.
It is solely a question of the best method by which
hunger and cold can be prevented.
It is a question as to whether the American people
on the one hand will maintain the spirit of charity
and of mutual self-help through voluntary giving
and the responsibility of local government as distinguished
on the other hand from appropriations
out of the Federal Treasury for such purposes.
My own conviction is strongly that
if we break down this sense of responsibility,
of individual generosity to individual, and mutual self-help
in the country in times of national difficulty
and if we start appropriations of this character
we have not only impaired something infinitely valuable
in the life of the American people
but have struck at the roots of self-government.
Once this has happened it is not the cost of a few score
millions, but we are faced with the abyss of reliance in
future upon Government charity in some form or other.
The money involved is indeed the least of the costs to
American ideals and American institutions.
President Cleveland, in 1887,
confronted with a similar issue stated in part,…“The friendliness and charity of our countrymen can always
be relied upon to relieve their fellow citizens in misfortune.
This has been repeatedly and quite lately demonstrated.
Federal aid in such cases encourages the expectation
of paternal care on the part of the Government
and weakens the sturdiness of our national character,
while it prevents the indulgence among our people
of that kindly sentiment and conduct
which strengthens the bonds of a common brotherhood.”And there is a practical problem in all this.
The help being daily extended by neighbors,
by local and national agencies, by municipalities,
by industry, and a great multitude of organizations
throughout the country today
is many times any appropriation yet proposed.
The opening of the doors of the Federal Treasury is likely
to stifle this giving and thus destroy far more resources
than the proposed charity from the Federal Government.
The basis of successful relief in national distress
is to mobilize and organize the infinite number
of agencies of self-help in the community.
That has been the American way of relieving distress
among our own people, and the country is successfully
meeting its problem in the American way today.
We have two entirely separate
and distinct situations in the country;
the first is the drought area;
the second is the unemployment
in our large industrial centers—
for both of which these appropriations
attempt to make charitable contributions.
Immediately upon the appearance of the drought
last August, I convoked a meeting of the Governors,
the Red Cross and the railways,
the bankers and other agencies in the country
and laid the foundations of organization and the resources
to stimulate every degree of self-help to meet the situation
which it was then obvious would develop.
The result of this action was to attack
the drought problem in a number of directions.
The Red Cross established committees
in every drought county,
comprising the leading citizens of those counties,
with instructions to them that they were
to prevent starvation among their neighbors, and,
if the problem went beyond local resources,
the Red Cross would support them.
The organization has stretched
throughout the area of suffering.
The people are being cared for today through the hands
and with sympathetic understanding
and upon the responsibility of their neighbors
who are being supported in turn by the fine spirit
of mutual assistance of the American people.
The Red Cross officials, whose long devoted service
and experience is unchallenged,
inform me this morning that, except for the minor incidents
of any emergency organization,
no one is going hungry and no one need go hungry or cold.
To reinforce this work, at the opening of Congress
I recommended large appropriations for loans
to rehabilitate agriculture from the drought
and provision of further large sums for public works
and construction in the drought territory which would
give employment in further relief to the whole situation.
These Federal activities provide for an expenditure
of upward of $100 million in this area,
and it is in progress today.
The Red Cross has always met the situations
which it has undertaken.
After careful survey and after actual experience
of several months with their part of the problem,
they have announced firmly that they can command
the resources with which to meet any call for human relief
in prevention of hunger and suffering in drought areas
and that they accept this responsibility.
They have refused to accept Federal appropriations
as not being consonant either with the need
or the character of their organization.
The Government departments have given
and are giving them every assistance.
We possibly need to strengthen the Public Health Service
in matters of sanitation and to strengthen the credit facilities
of that area through the method approved
by the Government departments to divert some existing
appropriations to strengthen agricultural credit corporations.
In the matter of unemployment outside of
the drought areas important economic measures
of mutual self-help have been developed,
such as those to maintain wages,
to distribute employment equitably,
to increase construction work by industry,
to increase Federal construction work from a rate
of about $275 million a year prior to the depression
to a rate now of over $750 million a year,
to expand State and municipal construction—
all upon a scale never before provided
or even attempted in any depression.
But beyond this to assure that there shall be no suffering,
in every town and county voluntary agencies
in relief of distress have been strengthened and created,
and generous funds have been placed at their disposal.
They are carrying on their work
efficiently and sympathetically.
But after and coincidently with voluntary relief,
our American system requires that municipal, county,
and State governments shall use their own resources
and credit before seeking such assistance
from the Federal Treasury.
I have indeed spent much of my life in fighting hardship
and starvation both abroad and in the Southern States.
I do not feel that I should be charged
with lack of human sympathy for those who suffer,
but I recall that in all the organizations with which
I have been connected over these many years,
the foundation has been to summon
the maximum of self-help.
I am proud to have sought the help of Congress in the past
for nations who were so disorganized
by war and anarchy that self-help was impossible.
But even these appropriations were but a tithe of that which
was coincidently mobilized from the public charity
of the United States and foreign countries.
There is no such paralysis in the United States,
and I am confident that our people have the resources,
the initiative, the courage, the stamina
and kindliness of spirit to meet this situation
in the way they have met their problems over generations.
I will accredit to those who advocate Federal charity
a natural anxiety for the people of their States.
I am willing to pledge myself
that if the time should ever come
that the voluntary agencies of the country,
together with the local and State governments,
are unable to find resources with which
to prevent hunger and suffering in my country,
I will ask the aid of every resource
of the Federal Government because I would no more
see starvation amongst our countrymen
than would any Senator or Congressman.
I have the faith in the American people
that such a day will not come.
The American people are doing their job today.
They should be given a chance to show whether
they wish to preserve the principles of individual
and local responsibility and mutual self-help
before they embark on
what I believe is a disastrous system.
I feel sure they will succeed if given the opportunity.
The whole business situation would be
greatly strengthened by the prompt completion
of the necessary legislation of this session of Congress
and thereby the unemployment problem would be lessened,
the drought area indirectly benefited and
the resources of self-help in the country strengthened.15
On February 10 President Hoover’s statement on
the Employment Stabilization Act began,
I have today had great pleasure in approving the act
providing for advance planning of construction
and Federal public works in preparation
for future unemployment relief.
Senator Wagner and Representative Graham have
worked out an admirable measure in which
they adopted the constructive suggestions
of the various Government departments.
The act gives wider authority and specific organization
for the methods which have been pursued
by the administration during the past 14 months
in respect to the planning and acceleration
of Federal construction work for purposes of
relief to unemployment in times of depression.
It is not a cure for business depression but will afford
better organization for relief in future depressions.16
On February 12 Hoover talked on radio about Abraham Lincoln,
and then he described his approach to their current situation saying,
The moment responsibilities of any community,
particularly in economic and social questions,
are shifted from any part of the Nation to Washington,
then that community has subjected itself
to a remote bureaucracy with its
minimum of understanding and of sympathy.
It has lost a large part of its voice
and its control of its own destiny.
Under Federal control the varied conditions of life
in our country are forced into standard molds,
with all their limitations upon life,
either of the individual or the community.
Where people divest themselves
of local government responsibilities they at once
lay the foundation for the destruction of their liberties.
And buried in this problem lies something even deeper.
The whole of our governmental machinery was devised
for the purpose that through ordered liberty
we give incentive and equality of opportunity
to every individual to rise to that highest achievement
of which he is capable.
At once when government is centralized there arises
a limitation upon the liberty of the individual
and a restriction of individual opportunity.
The true growth of the Nation
is the growth of character in its citizens.
The spread of government destroys initiative
and thus destroys character.
Character is made in the community as well as
in the individual by assuming responsibilities,
not by escape from them.
Carried to its logical extreme,
all this shouldering of individual
and community responsibility upon the Government
can lead but to the superstate where every man
becomes the servant of the State and real liberty is lost….
Due to lack of caution in business and to the impact
of forces from an outside world, one-half of which
is involved in social and political revolution,
the march of our prosperity has been retarded.
We are projected into temporary
unemployment, losses, and hardships.
In a nation rich in resources, many people were faced
with hunger and cold through no fault of their own.
Our national resources are not only material supplies
and material wealth but a spiritual and moral wealth
in kindliness, in compassion, in a sense of obligation
of neighbor to neighbor and a realization of responsibility
by industry, by business, and the community
for its social security and its social welfare.
The evidence of our ability to solve great problems
outside of Government action and the degree
of moral strength with which we emerge from this period
will be determined by whether the individuals and
the local communities continue to meet their responsibilities.
Throughout this depression I have insisted upon
organization of these forces through industry,
through local government and through charity,
that they should meet this crisis by their own initiative,
by the assumption of their own responsibilities.
The Federal Government has sought to do its part
by example in the expansion of employment,
by affording credit to drought sufferers for rehabilitation,
and by cooperation with the community,
and thus to avoid the opiates of government charity
and the stifling of our national spirit of mutual self-help.
We can take courage and pride in the effective work
of thousands of voluntary organizations
for provision of employment, for relief of distress,
that have sprung up over the entire Nation.
Industry and business have recognized a social obligation
to their employees as never before.
The State and local governments are being helpful.
The people are themselves succeeding in this task.
Never before in a great depression has there been
so systematic a protection against distress.
Never before has there been so little social disorder.
Never before has there been such an outpouring
of the spirit of self-sacrifice and of service.
The ever-growing complexity of modern life,
with its train of evermore perplexing and difficult problems,
is a challenge to our individual characters
and to our devotion to our ideals.
The resourcefulness of America
when challenged has never failed.
Success is not gained by leaning upon government
to solve all the problems before us.
That way leads to enervation of will
and destruction of character.
Victory over this depression and over our other difficulties
will be won by the resolution of our people
to fight their own battles in their own communities,
by stimulating their ingenuity to solve their own problems,
by taking new courage to be masters
of their own destiny in the struggle of life.17
On February 13 the United States Secretary of State Stimson
announced that 1,000 of the 1,500 Marines in Nicaragua would be
withdrawn beginning on June 3 and that the rest would
depart after the elections in November 1932.
The US Congress on February 15 appropriated $20,000,000
to the Department of Agriculture for drought relief.
Only $3,600,000 of this fund was actually spent.
On February 16 the House of Representatives approved 363 to 39
a bonus for service men that would range from $225 to $500 for each veteran.
Hoover vetoed this bill because over 700,000 World War Veterans
and their dependents were already “receiving monthly allowances,
and its cost of between $1 billion and $1.28 billion was needed
for “public construction for assistance to unemployment and other relief measures.”
The House overrode the veto 328-79, and the Senate did so 76-17.
Another public works bill was passed in February.
Hoover heard that the Depressions of 1873 and 1893 only lasted
about 19 months to two years because people stopped talking about them.
He believed the public mood might start changing in March 1831.
On March 3 President Hoover vetoed the Joint Resolution on Muscle Shoals
introduced by Senator Norris to transform a war plant
to distribute power and manufacture fertilizer.
Hoover wrote a detailed critique of the project that he rejected on political grounds.
He also vetoed another bonus bill for war veterans’ pensions
which already had been budgeted for $5 billion.
His third veto was of a federal employment bill sponsored by
Democratic Senator Robert Wagner because it would inefficiently
attempt to replace the existing federal employment offices.
Congress adjourned on March 3 and would not meet again for nine months.
This enabled Hoover to take a vacation while touring the West Indies.
He became concerned about the sickness in Puerto Rico and the Virgin Islands,
and he wanted federal aid sent especially for the children.
In the year from March 1930 to March 1931
unemployment doubled from 4 million to 8 million.
In 1931 the United States Employment Service was revived
with a $500,000 appropriation and put in the Department of Labor.
President Hoover recruited fifty prominent Americans
to raise private money for the Red Cross.
The political comedian Will Rogers went on a tour that brought in $250,000,
and John D. Rockefeller matched that.
Hoover was donating a large portion of his salary to private charities,
and by the middle of March they had raised $10 million.
At that time over 100,000 farmers were given small loans to help new planting.
In the spring and summer $47 million was loaned to
395,192 farmers in 31 states, and some only received $100.
Stocks in New York began to fall on 25 March 1931,
and by the end of April they had lost 20% of their value.
On April 27 Hoover spoke to the Gridiron Club,
This depression has now, in the view
of our leading economists, proceeded to as great a depth
in its fundamental forces of diminished production
and distribution as any in a century, in fact,
has its only parallels in the world depression
which followed about a decade after the Napoleonic Wars
and that which followed 10 years after the Civil War.
And like those depressions it has its roots
in the destruction of war and the dislocation of social and
political institutions which flow from them down to today.
I have recently read accounts
by a careful historian of the depression of 1873.
Three major characteristics stand out in that period—
the general bankruptcy, the widespread social disorder,
and the actual physical suffering of the people.
Strikes, lockouts, and riots dominated the times;
police forces were increased, the militia called out,
and Federal troops mobilized.
These were but surface indications of the violence
and hatred which the period developed.
That depression was accompanied by
monetary panics, bank failures,
receiverships for nearly half the railway systems,
and unparalleled foreclosures on homes and farms.
It was estimated at the time that
half the industrial population was without income.
Actual starvation occurred in practically every city.
In contrast, we can say with satisfaction of this period
of nearly 20 months of continuous economic degeneration
that we have had fewer strikes and lockouts
than in normal times; that we have had no mob violence
worth noting to trouble the police or the militia;
we have not summoned a single Federal soldier to arms.
The first duty of the Government—that is,
to secure social tranquillity and to maintain confidence
in our institutions—has been performed.
That has been accomplished by the good will
and cooperation in the community
and not by either force or legislation.
At the approach of the present depression
I and my colleagues realized that while no action
of the Government could stem the gigantic forces
which had accumulated to dominate production
and distribution of commodities in our country,
more especially as the larger portion of the forces
swept upon us from abroad, yet it was our duty
to constantly encourage the organization of the community
to mitigate the destruction of the storm
with the utmost minimum of legislative action.
The unparalleled growth of cooperative sense
in the American people over the last half century
has proved its strength.
This mobilized voluntary action has preserved
the social system free from hate and ill will,
and has held the economic machinery in such order
that it can quickly resume
upon amelioration of these destructive forces.
With only local and unnecessary exceptions
there has been no starvation.18
Conditions were improving in the first half of 1931,
and Gov. Harvey Parnell of Arkansas noted that
local charities were taking care of the destitute.
On May 4 Hoover addressed the General Congress
of the International Chamber of Commerce in Washington.
I do wish to give emphasis to one of these
war inheritances in which international cooperation
can effect a major accomplishment
in reduction of the tax burdens of the world,
removing a primary cause of unrest and the establishment
of greater confidence for the long future.
That is the limitation and reduction of armaments.
The world expenditure on all arms is now
nearly five billions of dollars yearly, an increase of
about 70 percent over that previous to the Great War.
We stand today with near 5,500,000 men
actively under arms and 20 million more in reserves.
These vast forces, greatly exceeding those
of even the prewar period, still are to be demobilized,
even though 12 years have passed
since the Armistice was signed,
and because of fear and of inability
of nations to cooperate in mutual reductions.
Yet we are all signatories to the Kellogg-Briand Pact,
by which we have renounced war
as an instrument of national policy and have agreed
to settle all controversies by pacific means.
Surely with this understanding, the self-defense of nations
could be assured with proportionately
far less military forces than we have.
This vast armament continues not only a burden
upon the economic recuperation of the world,
but, of even more consequence,
the constant threats and fears which arise from it
are a serious contribution to all forms of instability,
whether they be social, political, or economic.
Endeavor as we must in support of every proposal
of international economic cooperation
that is just to our respective peoples,
yet we must recognize that
the reduction of this gigantic waste,
this competition in military establishments
is in the ultimate of an importance transcendent
over nearly every other form of economic effort.
International confidence cannot be builded upon fear.
It must be builded upon good will.
The whole history of the world is filled with chapter
after chapter of the failure to secure peace through
either competitive arms or intimidation.19
Hoover studied German and Austrian problems from the consequences
of the World War, and he was disappointed to learn that the world was
spending $5 billion each year on arms which was 70% more than before the war.
He had noted that the naval limits by the United States, Britain, and Japan
from the London Naval Conference were saving over $2 billion.
He urged the International Chamber of Commerce to promote
more arms reductions so that governments could lower taxes,
balance budgets, and invest in productive industries.
On May 11 Austria’s major bank Creditanstalt failed,
and this triggered economic collapse in Austria.
On that day Hoover learned that the total annual interest payments
on reparations and inter-governmental debts were about $1 billion
which was burdening international exchange and the stability of currency.
Only about $250,000 was owed to the United States.
On May 15 the American delegation in Budapest reported that
rumors were spreading in Hungary of the imminent collapse of Austrian finances.
On May 14 President Hoover directed that leasing of Federal forests
for new lumbering be stopped for a while.
On May 22 he declined to call for a special session of Congress
because he believed that they could not legislate themselves out of the depression.
In a speech on May 30 at Valley Forge, Pennsylvania
the President appealed to the self-sacrifice of George Washington
and other revolutionaries, saying,
Yet the instinct and the judgment of our people
after the abrasion of the years
has appraised this place as a foremost shrine
in the War of Independence and in our Nation.
It is a shrine to the things of the spirit and of the soul.
It was a transcendent fortitude and steadfastness
of these men who in adversity and in suffering
through the darkest hour of our history
held faithful to an ideal.
Here men endured that a nation might live.20
Hoover decided that since the current situation was like wartimes
that some deficit spending would be appropriate.
About 28% of the factory labor force, which was 15%
of the total work force, would be unemployed by June.
The financial crisis affected Germans, and in early June their government
announced they could no longer afford to pay reparations.
On June 15 Hoover gave a fairly long speech in Indianapolis to the
Indiana Republican Editorial Association that has been called his “best speech.”
He said,
Fear and apprehension, whether their origins are domestic
or foreign, are very real, tangible, economic forces.
Fear of loss of a job or uncertainty as to the future
has caused millions of our people unnecessarily
to reduce their purchases of goods,
thereby decreasing our production and employment.
These uncertainties lead our bankers and businessmen
to extreme caution, and in consequence a mania
for liquidation has reduced our stocks of goods
and our credits far below any necessity.
All these apprehensions and actions check enterprise
and lessen our national activities.
We are suffering today more from frozen confidence
than we are from frozen securities….
I am able to propose an American plan to you.
We plan to take care of 20 million
increase in population in the next 20 years.
We plan to build for them 4 million new and better homes,
thousands of new and still more beautiful city buildings,
thousands of factories;
to increase the capacity of our railways;
to add thousands of miles of highways and waterways;
to install 25 million electrical horsepower;
to grow 20 percent more farm products.
We plan to provide new parks, schools, colleges,
and churches for this 20 million people.
We plan more leisure for men and women
and better opportunities for its enjoyment.
We not only plan to provide for all the new generation,
but we shall, by scientific research and invention,
lift the standard of living and security of life
to the whole people.
We plan to secure a greater diffusion of wealth,
a decrease in poverty, and a great reduction in crime.
And this plan will be carried out if we just keep on
giving the American people a chance.
Its impulsive force is in the character
and spirit of our people.
They have already done a better job for 120 million people
than any other nation in all history….
In conclusion, whatever the immediate difficulties may be,
we know they are transitory in our lives
and in the life of the Nation.
We should have full faith and confidence
in those mighty resources, those intellectual
and spiritual forces, which have impelled this Nation
to a success never before known in the history of the world.
Far from being impaired, these forces
were never stronger than at this moment.
Under the guidance of Divine Providence
they will return to us a greater and more wholesome
prosperity than we have ever known.21
On June 16 the notorious gangster Al Capone pleaded guilty in a federal court
to tax evasion and Volstead Act violations; he was sentenced to 30 months in prison.
At a news conference on June 20 President Hoover proposed
a one-year moratorium on intergovernmental debts from war loans
or reparation duties to provide a period to negotiate a solution to the problems.
He read and distributed copies of a speech that included this,
The American Government proposes the postponement
during one year of all payments on intergovernmental debts,
reparations, and relief debts, both principal and interest,
of course, not including the obligations
of governments held by private parties.
Subject to confirmation by Congress,
the American Government will postpone all payments
upon the debts of foreign governments
to the American Government payable
during the fiscal year beginning July 1 next,
conditional on a like postponement for one year
of all payments on intergovernmental debts
owing the important creditor powers….
The purpose of this action is to give the forthcoming year
to the economic recovery of the world
and to help free the recuperative forces
already in motion in the United States
from retarding influences from abroad.
The world wide depression has affected
the countries of Europe more severely than our own.
Some of these countries are feeling to a serious extent
the drain of this depression on national economy.
The fabric of intergovernmental debts,
supportable in normal times,
weighs heavily in the midst of this depression.
From a variety of causes arising out of the depression
such as the fall in the price of foreign commodities
and the lack of confidence in economic and political
stability abroad there is an abnormal movement
of gold into the United States which is
lowering the credit stability of many foreign countries.
These and the other difficulties abroad
diminish buying power for our exports and in a measure
are the cause of our continued unemployment
and continued lower prices to our farmers.
Wise and timely action should contribute to relieve
the pressure of these adverse forces in foreign countries
and should assist in the reestablishment of confidence,
thus forwarding political peace
and economic stability in the world.
Authority of the President to deal with this problem
is limited as this action must be supported by the Congress.
It has been assured the cordial support of leading Members
of both parties in the Senate and the House.
The essence of this proposition is to give time to permit
debtor governments to recover their national prosperity.
I am suggesting to the American people that they be wise
creditors in their own interest and be good neighbors….
I wish further to add that while this action has no bearing
on the conference for limitation of land armaments
to be held next February,
inasmuch as the burden of competitive armaments
has contributed to bring about this depression,
we trust that by this evidence of our desire to assist
we shall have contributed to the good will which is
so necessary in the solution of this major question.22
The response was very favorable, and the Dow Jones Industrial Average
went up more than 11% in the next two days.
Italy and Britain accepted unconditionally, and
they thanked President Hoover for intervening.
Sixteen nations had been paying more than 20% of their GNP for the war debts.
France was upset, and the French complained about “America’s shock tactics.”
The United States census reported that 6 million were unemployed.
On June 30 the Pennsylvania Department of Labor and Industry
announced that almost a quarter of the workers in the state did not have jobs.
In the fiscal year that ended in June 1930 the national debt
had been reduced by about $750 million.
In the year ending in June 1931 the debt had increased by $720 million.
In 1931 the internal revenue of the United States fell by more than
$600 million while federal spending increased by over $300 million.
The AFL labor leader William Green suggested reforms
such as a 5-day week, maintaining wages, modifying antitrust legislation,
cancelling war debts, progressive income taxes based on ability to pay,
industrial planning, and security for workers.
Leo Wolman led the Amalgamated Clothing Workers of America.
He asked for a $3 billion loan to hire 750,000 unemployed workers,
and he urged the federal government to control the economy.
On July 6 Hoover announced that the moratorium had been approved
“by all the important creditor governments.”
Germany’s annual reparations were usually $400 million.
They went to Britain and France who used two-thirds of it
to pay their war debts to the United States.
When Germany failed to pay their reparation to France in 1923,
the French took over the Ruhr Valley.
On July 13 Hoover put out a press release summarizing the work
of the Tariff Commission on investigations and changes.
“The Tariff Act of 1930 contained 3,221 dutiable items.
Of this total 2,171 were unchanged from the 1922 tariff;
890 were increased; and 235 were decreased.”23
On July 23 President Hoover gave the press a statement on the
accomplishments of the London Conference on Recovery from Depression.
This is the complete statement:
The London Conference has laid sound foundations
for the establishment of stability in Germany.
The major problem is one affecting primarily the banking
and credit conditions and can best be solved
by the voluntary cooperation of the bankers of the world
rather than by governments with their conflicting interests.
Such a basis of cooperation is assured.
The program supplements the suspension
of intergovernmental debts already in effect.
The combined effect should enable the German people
with their resources, industry, and courage, to overcome
the temporary difficulties and restore their credit.
The program contributes to expedite recovery
from worldwide depression through the overcoming
of the most important elements
in the crisis affecting Central Europe.
The world is indebted to Premiers MacDonald, Laval,
and Bruning, to Messrs. Stimson, Mellon, Grandi, Francqui,
and other governmental representatives in this Conference.
The Conference has demonstrated a fine spirit of conciliation
and consideration amongst nations that will have
lasting benefits in establishment of stability.24
Hoover on 19 August 1931 had PECE replaced by the
President’s Organization on Unemployment Relief (POUR),
and he appointed to lead it Walter S. Gifford who had been president
of American Telephone and Telegraph and was chairman
of the Charity Organization Society of New York City.
Gifford’s Committee spent increased municipal relief in New York City
that went from $9 million in 1930 to $58 million in 1931.
Gifford organized an advertising campaign to increase private charity.
They found that unemployment was about 13%.
During the summer the Dow Jones fell 50%.
Pennsylvania’s Governor Gifford Pinchot had almost a quarter of the workers
in his state unemployed, and he wanted Congress to meet in August.
New York Gov. Franklin Roosevelt increased the state’s income tax by almost half,
and he asked the legislature to approve $20 million to relieve the unemployed.
On September 8 Hoover summoned the Federal Reserve Governor
Eugene Meyer to the White House, and the President suggested that
bankers could form a private credit corporation to help suffering banks.
One week later he proposed a credit pool of $500 million,
but Meyer doubted that bankers would support that.
US Steel in September became the first major company to cut wages by 10%.
Hoover asked the Surgeon General to study the public’s health,
and he found that mortality and diseases were reduced.
The Association of Community Chests and Councils were in 227 cities,
and they gave work to 760,000 Americans that year,
and the average was usually 180,000.
The New York Times reported that 24 mayors of big cities said
they could get through the winter without federal aid.
In September depositors panicked and withdrew their money
from the Bank of Pittsburgh, a bank controlled by the Mellon family.
Andrew Mellon’s brother and nephew arranged for him to deposit $1 million.
This with a syndicate’s $3 million would save the bank.
Mellon insisted that his family be given a majority of the stock.
The directors refused to do that, and
the Bank of Pittsburgh was closed on September 21.
This triggered a run on 15 banks in the area.
During the summer banks in Central Europe failed, and Britain was affected
because of its holding much of Germany’s long-term debt.
On September 21 the British Government went off the gold standard
and defaulted on gold payments to foreigners.
In the next month 522 banks failed.
By the end of the year 2,294 American banks had failed.
Japan’s Kwantung Army invaded Manchuria on 18 September 1931.
When the Japanese forces occupied Manchuria,
the US Secretary of State Stimson and Hoover argued that they were
violating the League Covenant and the Nine-Power Treaty of 1922.
Japan was also breaking the Kellogg-Briand Pact of 1928.
Hoover removed Stimson’s threat of sanctions against Japan
because he believed that sanctions can lead to wars.
Hoover wisely did not want the US to get into a war in the Far East.
He was influenced by the policy of the pacifist William Jennings Bryan
during the Wilson administration, and the Stimson Doctrine was based
on covenants and the Kellogg-Briand Pact and refused to recognize
any territorial changes based on aggression in violation of moral sanctions.
China appealed to the League of Nations which
asked for help from the United States.
Hoover and Stimson were getting contradictory
reports on Japan’s government and its army.
On 1 October 1931 New York’s Gov. Franklin Roosevelt created
the Temporary Emergency Relief Administration to provide $20 million.
On October 4 Hoover met with bankers at
Treasury Secretary Mellon’s elegant home, and
they organized the National Credit Corporation.
In a few weeks they loaned only $10 million, and it became very conservative.
President Hoover invited 32 Senators to the White House on the evening
of October 6, and House Speaker John Garner flew 14 hours to get there.
Hoover spoke the following to them in the Lincoln Study:
The nations of Europe have not found peace.
Hates and fears dominate their relations.
War injuries have permitted no abatement.
The multitude of small democracies created by the
Treaty of Versailles have developed excessive nationalism.
They have created a maze
of trade barriers between each other.
Underneath all is the social turmoil of communism
and fascism gnawing at the vitals of young democracies.
The armies of Europe have doubled
since the demobilization.
They have wasted the substance which
should have gone into productive work
upon these huge armies and massive fortifications.
They have lived in a maze of changing military alliances
and they have vibrated with enmities and fears.
They have borrowed from any foreign country
willing to lend, and at any rates of interest,
in order to carry unbalanced budgets….
Nineteen countries in the world, in two years,
have gone through revolutions or violent disturbances.
Whether or not Germany and Central Europe will avoid
Russian infiltrated communism or some other “ism,”
is still in the balance, and that does not contribute
to a revival of world confidence.25
Hoover then described his plans for a private funds to support struggling banks,
put more money into Federal Farm Loans, and other financial improvements.
Hoover asked for their approval, and Garner refused to be bound.
Then the Democratic Senator Pat Harrison of Mississippi,
who was respected on the Finance Committee,
said the plan would help the fragile economy.
Gradually everyone accept the plans except for Garner and Senator Borah.
The news about the plans stimulated the best day on the
New York Stock Exchange since the Great Crash.
The renowned economist Melchio Palyi praised Hoover’s
National Credit Corporation and said, “The panic is over.”
In an address to the Pan-American Commercial
Conference in Washington on October 8 Hoover said,
There is one lesson from this depression to which
I wish to refer, and I can present it no more forcibly
than by repeating a statement which I made
to this conference just 4 years ago,
when we were in the heyday of foreign loans.
I stated, in respect to such loans, that they are helpful
in world development, “provided always one
principle dominates the character of these transactions.
That is, that no nation as a government should borrow
or no government lend, and nations should discourage
their citizens from borrowing or lending unless this money
is to be devoted to productive enterprise.
Out of the wealth and the higher standards of living
created from enterprise itself must come the ability
to repay the capital to the borrowing country.
Any other course of action creates obligations
impossible of repayment except by a direct subtraction
from the standards of living of the borrowing country
and the impoverishment of its people.
In fact, if this principle could be adopted
between nations of the world—that is,
if nations would do away with the lending of money
for the balancing of budgets for purposes
of military equipment or war purposes, or even that type
of public works which does not bring some direct or indirect
productive return—a great number of blessings
would follow to the entire world.26
On October 10 Hoover sent a letter to the Women’s International League
for Peace and Freedom thanking them for their petitions, and he wrote,
I appreciate deeply your coming to me.
You realize as well as I the favorable attitude
of the President on the limitation of world armaments.
I am grateful for your effort to mobilize public opinion.
No head of a government can go beyond the support
that can be gained from public opinion
in a world where democracy rules.
There is no statesman at the head of any government
in the world today that has not expressed himself
as desirous of attaining these ends.
I am glad to receive your petitions and will act
as their custodian until you wish to use them elsewhere.27
That month in a memorandum Hoover wrote,
The United States has never set out
to preserve peace among other nations by force….
Our policy in connection with controversies
is to exhaust the processes of peaceful negotiation.
But in contemplating these we must make up our minds
whether we consider war as the ultimate if these efforts fail.
Neither our obligation to China, nor our own interest,
nor our dignity requires us
to go to war over these questions.28
The French Premier Pierre Laval met with
Hoover on October 23 in the White House.
Laval said he would help Hoover with the gold standard.
Hoover said he could not reduce the French debt without the approval of Congress.
Laval refused to consider disarmament unless
the United States became an ally of France.
Hoover said that alliances make wars worse.
France withdrew $790 million in gold from the US Treasury in 1931.
That year 2,294 American banks failed,
and that was double those that closed in 1930.
On October 27 Hoover and his Cabinet discussed Philippine independence,
the President was concerned that independence would cause economic instability,
and he suggested they consider it in the near future.
In the fall Hoover persuaded the American Friends Service Committee,
the Quaker peace organization, to help feed children in coal-mining areas
with financing by the American Relief Association and the Rockefeller Foundation.
At a Cabinet meeting on November 9 Hoover proposed not recognizing
any treaty that Japan might impose by force on China for Manchuria,
and that became the policy.
Hoover in November met with Italy’s Foreign Minister Dino Grandi,
and they agreed to work together on disarmament at the Geneva Conference
that would begin on 1 February 1932.
The Democratic Party’s Chairman John J. Raskob was the main owner
of General Motors, and he used his wealth to dominate their policies and candidates.
In November the Federal Reserve began offering discounted loans to holders
of home mortgages as it did to banking and commercial concerns.
In November only 175 banks failed.
From August 1931 to January 1932 the amount of money in US banks fell by 17%.
In the first week of December 1931 at least
1,000 hungry leftists marched in Washington.
They sang the “The Internationale,” and speakers called Hoover
the “chief engineer of the New York Stock market.”
Police had been lining the roadways for a week, and they arrested fourteen activists
who tried to unfurl banners in front of the White House.
The march and the rally were peaceful, and DC’s Police Chief Pelham Glassford
let some sleep in barracks Marines had vacated.
Then he rode his blue motorcycle at the front of the protestors’ parade.
After three days they dispersed.
The new Congress met on December 7, and on that day Hoover proposed
reviving the War Finance Corporation (WFC) that had begun in April 1918
to provide loans for wartime industries and to maintain the nation’s finances.
The new WFC would be called the Emergency Reconstruction Corporation
and would have $2 billion.
The name would be changed to the Reconstruction Finance Corporation (RFC).
Hoover invited Republican leaders to a White House dinner and gave them
a preview of his Third Annual Message to Congress on December 8.
This is the entire document:
The chief influence affecting the state of the Union
during the past year has been
the continued world-wide economic disturbance.
Our national concern has been to meet the emergencies
it has created for us and to lay the foundations for recovery.
If we lift our vision beyond these immediate emergencies
we find fundamental national gains even amid depression.
In meeting the problems of this difficult period,
we have witnessed a remarkable development
of the sense of cooperation in the community.
For the first time in the history of our major economic
depressions there has been a notable absence
of public disorders and industrial conflict.
Above all there is an enlargement
of social and spiritual responsibility among the people.To the Senate and House of Representatives:
It is my duty under the Constitution to transmit
to the Congress information on the state of the Union
and to recommend for its consideration necessary
and expedient measures.
The chief influence affecting the state of the Union
during the past year has been the continued
world-wide economic disturbance.
Our national concern has been to meet the emergencies it
has created for us and to lay the foundations for recovery.
If we lift our vision beyond these immediate emergencies
we find fundamental national gains even amid depression.
In meeting the problems of this difficult period, we have
witnessed a remarkable development of the sense of
cooperation in the community.
For the first time in the history of our major
economic depressions there has been a notable
absence of public disorders and industrial conflict.
Above all there is an enlargement of social and
spiritual responsibility among the people.
The strains and stresses upon business have resulted in
closer application, in saner policies, and in better methods.
Public improvements have been carried out on a
larger scale than even in normal times.
The country is richer in physical property, in newly
discovered resources, and in productive capacity
than ever before.
There has been constant gain in knowledge and education;
there has been continuous advance in science and invention;
there has been distinct gain in public health.
Business depressions have been recurrent
in the life of our country and are but transitory.
The Nation has emerged from each of them with
increased strength and virility because of the
enlightenment they have brought, the readjustments
and the larger understanding of the realities and
obligations of life and work which come from them.NATIONAL DEFENSE
Both our Army and Navy have been maintained
in a high state of efficiency.
The ability and devotion of both officers and men
sustain the highest traditions of the service.
Reductions and postponements in expenditure of these
departments to meet the present emergency are being
made without reducing existing personnel or impairing
the morale of either establishment.
The agreement between the leading naval powers
for limitation of naval armaments and establishment
of their relative strength and thus elimination of
competitive building also implies for ourselves the
gradual expansion of the deficient categories in our
Navy to the parities provided in those treaties.
However, none of the other nations, parties to these
agreements, is to-day maintaining the full rate of
construction which the treaty size of fleets would imply.
Although these agreements secured the maximum
reduction of fleets which it was at that time possible to
attain, I am hopeful that the naval powers, party to these
agreements, will realize that establishment of relative
strength in itself offers opportunity for further
reduction without injury to any of them.
This would be the more possible if pending
negotiations are successful between France and Italy.
If the world is to regain its standards of life,
it must further decrease both naval and other arms.
The subject will come before the General Disarmament
Conference which meets in Geneva on February 2.FOREIGN AFFAIRS
We are at peace with the world.
We have cooperated with other nations to preserve peace.
The rights of our citizens abroad have been protected.
The economic depression has continued and deepened
in every part of the world during the past year.
In many countries political instability, excessive armaments,
debts, governmental expenditures, and taxes have resulted
in revolutions, in unbalanced budgets and monetary collapse
and financial panics, in dumping of goods upon world
markets, and in diminished consumption of commodities.
Within two years there have been revolutions or
acute social disorders in 19 countries, embracing
more than half the population of the world.
Ten countries have been unable to meet
their external obligations.
In 14 countries, embracing a quarter of the world's
population, former monetary standards have been
temporarily abandoned.
In a number of countries there have been acute financial
panics or compulsory restraints upon banking.
These disturbances have many roots in the
dislocations from the World War.
Every one of them has reacted upon us.
They have sharply affected the markets and prices
of our agricultural and industrial products.
They have increased unemployment and greatly
embarrassed our financial and credit system.
As our difficulties during the past year have plainly
originated in large degree from these sources, any effort to
bring about our own recuperation has dictated the necessity
of cooperation by us with other nations in reasonable
effort to restore world confidence and economic stability.
Cooperation of our Federal reserve system and our banks
with the central banks in foreign countries has contributed
to localize and ameliorate a number of serious financial
crises or moderate the pressures upon us and thus
avert disasters which would have affected us.
The economic crisis in Germany and Central Europe
last June rose to the dimensions of a general panic
from which it was apparent that without assistance
these nations must collapse.
Apprehensions of such collapse had demoralized our
agricultural and security markets and so threatened
other nations as to impose further dangers upon us.
But of highest importance was the necessity of cooperation
on our part to relieve the people of Germany from
imminent disasters and to maintain their important
relations to progress and stability in the world.
Upon the initiative of this Government a year's
postponement of reparations and other
intergovernmental debts was brought about.
Upon our further initiative an agreement was made by
Germany's private creditors providing for an extension
of such credits until the German people can develop
more permanent and definite forms of relief.
We have continued our policy of withdrawing
our marines from Haiti and Nicaragua.
The difficulties between China and Japan have given
us great concern, not alone for the maintenance of the
spirit of the Kellogg-Briand Pact, but for the maintenance
of the treaties to which we are a party assuring the
territorial integrity of China.
It is our purpose to assist in finding solutions
sustaining the full spirit of those treaties.
I shall deal at greater length with our foreign relations
in a later message.THE DOMESTIC SITUATION
Many undertakings have been organized and forwarded
during the past year to meet the new and changing
emergencies which have constantly confronted us.
Broadly the community has cooperated to meet the
needs of honest distress, and to take such emergency
measures as would sustain confidence in our financial
system and would cushion the violence of liquidation
in industry and commerce, thus giving time for
orderly readjustment of costs, inventories, and
credits without panic and widespread bankruptcy.
These measures have served those purposes
and will promote recovery.
In these measures we have striven to mobilize
and stimulate private initiative and local and
community responsibility.
There has been the least possible Government entry
into the economic field, and that only in temporary
and emergency form.
Our citizens and our local governments have given
a magnificent display of unity and action, initiative
and patriotism in solving a multitude of difficulties
and in cooperating with the Federal Government.
For a proper understanding of my recommendations
to the Congress it is desirable very briefly to review
such activities during the past year.
The emergencies of unemployment have
been met by action in many directions.
The appropriations for the continued speeding up of the
great Federal construction program have provided direct
and indirect aid to employment upon a large scale.
By organized unity of action, the States and
municipalities have also maintained large
programs of public improvement.
Many industries have been prevailed upon to
anticipate and intensify construction.
Industrial concerns and other employers have been
organized to spread available work amongst all their
employees, instead of discharging a portion of them.
A large majority have maintained wages at as high
levels as the safe conduct of their business would permit.
This course has saved us from industrial conflict and
disorder which have characterized all previous depressions.
Immigration has been curtailed by administrative action.
Upon the basis of normal immigration the decrease
amounts to about 300,000 individuals who otherwise
would have been added to our unemployment.
The expansion of Federal employment agencies under
appropriations by the Congress has proved most effective.
Through the President's organization for unemployment
relief, public and private agencies were successfully
mobilized last winter to provide employment
and other measures against distress.
Similar organization gives assurance against suffering
during the coming winter.
Committees of leading citizens are now active
at practically every point of unemployment.
In the large majority they have been assured the funds
necessary which, together with local government aids,
will meet the situation.
A few exceptional localities will be further organized.
The evidence of the Public Health Service shows
an actual decrease of sickness and infant and
general mortality below normal years.
No greater proof could be adduced that our people
have been protected from hunger and cold and
that the sense of social responsibility in the Nation
has responded to the need of the unfortunate.
To meet the emergencies in agriculture the loans
authorized by Congress for rehabilitation in the
drought areas have enabled farmers to produce
abundant crops in those districts.
The Red Cross undertook and magnificently administered
relief for over 2,500,000 drought sufferers last winter.
It has undertaken this year to administer relief to
100,000 sufferers in the new drought area
of certain Northwest States.
The action of the Federal Farm Board in granting credits
to farm cooperatives saved many of them from
bankruptcy and increased their purpose and strength.
By enabling farm cooperatives to cushion the fall in prices
of farm products in 1930 and 1931 the Board secured
higher prices to the farmer than would have been
obtained otherwise, although the benefits of this action
were partially defeated by continued world overproduction.
Incident to this action the failure of a large number of
farmers and of country banks was averted which could
quite possibly have spread into a major disaster.
The banks in the South have cooperated with the
Farm Board in creation of a pool for the better
marketing of accumulated cotton.
Growers have been materially assisted by this action.
Constant effort has been made to reduce
overproduction in relief of agriculture and to
promote the foreign buying of agricultural
products by sustaining economic stability abroad.
To meet our domestic emergencies in credit and
banking arising from the reaction to acute crisis
abroad the National Credit Association was set up by the
banks with resources of $500,000,000 to support sound
banks against the frightened withdrawals and hoarding.
It is giving aid to reopen solvent banks
which have been closed.
Federal officials have brought about many beneficial
unions of banks and have employed other means
which have prevented many bank closings.
As a result of these measures the hoarding
withdrawals which had risen to over $250,000,000
per week after the British crisis have substantially ceased.FURTHER MEASURES
The major economic forces and weaknesses at home and
abroad have now been exposed and can be appraised, and
the time is ripe for forward action to expedite our recovery.
Although some of the causes of our depression are due
to speculation, inflation of securities and real estate,
unsound foreign investments, and mismanagement
of financial institutions, yet our self-contained national
economy, with its matchless strength and resources,
would have enabled us to recover long since but for the
continued dislocations, shocks, and setbacks from abroad.
Whatever the causes may be, the vast liquidation and
readjustments which have taken place have left us with
a large degree of credit paralysis, which together with
the situation in our railways and the conditions abroad,
are now the outstanding obstacles to recuperation.
If we can put our financial resources to work and
can ameliorate the financial situation in the railways,
I am confident we can make a large measure of
recovery independent of the rest of the world.
A strong America is the highest contribution
to world stability.
One phase of the credit situation is indicated in the banks.
During the past year banks, representing 3 percent
of our total deposits have been closed.
A large part of these failures have been caused by
withdrawals for hoarding, as distinguished from the
failures early in the depression where weakness due
to mismanagement was the larger cause of failure.
Despite their closing, many of them will pay in full.
Although such withdrawals have practically ceased,
yet $1,100,000,000 of currency was previously
withdrawn which has still to return to circulation.
This represents a large reduction of the ability
of our banks to extend credit which would
otherwise fertilize industry and agriculture.
Furthermore, many of our bankers, in order to
prepare themselves to meet possible withdrawals,
have felt compelled to call in loans, to refuse new
credits, and to realize upon securities, which in
turn has demoralized the markets.
The paralysis has been further augmented by the
steady increase in recent years of the proportion
of bank assets invested in long-term securities,
such as mortgages and bonds.
These securities tend to lose their liquidity in depression or
temporarily to fall in value so that the ability of the banks to
meet the shock of sudden withdrawal is greatly lessened
and the restriction of all kinds of credit is thereby increased.
The continuing credit paralysis has operated to accentuate
the deflation and liquidation of commodities, real estate,
and securities below any reasonable basis of values.
All of this tends to stifle business, especially the
smaller units, and finally expresses itself in further
depression of prices and values, in restriction
on new enterprise, and in increased unemployment.
The situation largely arises from an unjustified
lack of confidence.
We have enormous volumes of idle money
in the banks and in hoarding.
We do not require more money or working capital—
we need to put what we have to work.
The fundamental difficulties which have brought
about financial strains in foreign countries do not
exist in the United States.
No external drain on our resources can threaten our
position, because the balance of international payments
is in our favor; we owe less to foreign countries than
they owe to us; our industries are efficiently organized;
our currency and bank deposits are protected
by the greatest gold reserve in history.
Our first step toward recovery is to reestablish
confidence and thus restore the flow of credit
which is the very basis of our economic life.
We must put some steel beams in the
foundations of our credit structure.
It is our duty to apply the full strength of our
Government not only to the immediate phases,
but to provide security against shocks and the
repetition of the weaknesses which have been proven.
The recommendations which I here lay before
the Congress are designed to meet these needs
by strengthening financial, industrial, and
agricultural life through the medium of our
existing institutions, and thus to avoid the entry of the
Government into competition with private business.FEDERAL GOVERNMENT FINANCE
The first requirement of confidence and of
economic recovery is financial stability of
the United States Government.
I shall deal with fiscal questions at
greater length in the Budget message.
But I must at this time call attention to the magnitude
of the deficits which have developed and the resulting
necessity for determined and courageous policies.
These deficits arise in the main from the heavy decrease
in tax receipts due to the depression and to the increase
in expenditure on construction in aid to unemployment,
aids to agriculture, and upon services to veterans.
During the fiscal year ending June 30 last we incurred
a deficit of about $903,000,000, which included the
statutory reduction of the debt and represented
an increase of the national debt by $616,000,000.
Of this, however, $153,000,000 is offset
by increased cash balances.
In comparison with the fiscal year 1928 there is
indicated a fall in Federal receipts for the present fiscal year
amounting to $1,683,000,000, of which $1,034,000,000
is in individual and corporate income taxes alone.
During this fiscal year there will be an increased
expenditure, as compared to 1928, on veterans of
$255,000,000, and an increased expenditure on
construction work which may reach $520,000,000.
Despite large economies in other directions,
we have an indicated deficit, including the statutory
retirement of the debt, of $2,123,000,000, and an
indicated net debt increase of about $1,711,000,000.
The Budget for the fiscal year beginning July 1 next,
after allowing for some increase of taxes under the present
laws and after allowing for drastic reduction in expenditures,
still indicates a deficit of $1,417,000,000.
After offsetting the statutory debt retirements this
would indicate an increase in the national debt
for the fiscal year 1933 of about $921,000,000.
Several conclusions are inevitable.
We must have insistent and determined
reduction in Government expenses.
We must face a temporary increase in taxes.
Such increase should not cover the whole of these
deficits or it will retard recovery.
We must partially finance the deficit by borrowing.
It is my view that the amount of taxation should be fixed
so as to balance the Budget for 1933 except for
the statutory debt retirement.
Such Government receipts would assure the balance
of the following year's budget including debt retirement.
It is my further view that the additional taxation should
be imposed solely as an emergency measure
terminating definitely two years from July 1 next.
Such a basis will give confidence in the determination
of the Government to stabilize its finance and
will assure taxpayers of its temporary character.
Even with increased taxation, the Government will
reach the utmost safe limit of its borrowing capacity
by the expenditures for which we are already
obligated and the recommendations here proposed.
To go further than these limits in either expenditures,
taxes, or borrowing will destroy confidence, denude
commerce and industry of its resources, jeopardize
the financial system, and actually extend unemployment
and demoralize agriculture rather than relieve it.FEDERAL LAND BANKS
I recommend that the Congress authorize the subscription
by the Treasury of further capital to the Federal land banks
to be retired as provided in the original act, or when funds
are available, and that repayments of such capital be
treated as a fund available for further subscriptions
in the same manner.
It is urgent that the banks be supported so as to stabilize
the market values of their bonds and thus secure capital
for the farmers at low rates, that they may continue
their services to agriculture and that they may meet
the present situation with consideration to the farmers.DEPOSITS IN CLOSED BANKS
A method should be devised to make available
quickly to depositors some portion of their deposits
in closed banks as the assets of such banks may warrant.
Such provision would go far to relieve distress in a multitude
of families, would stabilize values in many communities,
and would liberate working capital to thousands of concerns.
I recommend that measures be enacted promptly
to accomplish these results and I suggest that the
Congress should consider the development of such
a plan through the Federal Reserve Banks.HOME-LOAN DISCOUNT BANKS
I recommend the establishment of a system
of home-loan discount banks as the necessary
companion in our financial structure of the
Federal Reserve Banks and our Federal Land Banks.
Such action will relieve present distressing pressures
against home and farm property owners.
It will relieve pressures upon and give added strength
to building and loan associations, savings banks,
and deposit banks, engaged in extending such credits.
Such action would further decentralize our credit structure.
It would revive residential construction and employment.
It would enable such loaning institutions more
effectually to promote home ownership.
I discussed this plan at some length in a statement
made public November 14, last.
This plan has been warmly endorsed by the recent
National Conference upon Home Ownership and Housing,
whose members were designated by the governors
of the States and the groups interested.RECONSTRUCTION FINANCE CORPORATION
In order that the public may be absolutely assured
and that the Government may be in position to meet
any public necessity, I recommend that an emergency
Reconstruction Corporation of the nature of the former
War Finance Corporation should be established.
It may not be necessary to use such an
instrumentality very extensively.
The very existence of such a bulwark
will strengthen confidence.
The Treasury should be authorized to subscribe a
reasonable capital to it, and it should be given
authority to issue its own debentures.
It should be placed in liquidation at the end of two years.
Its purpose is that by strengthening the weak spots to
thus liberate the full strength of the Nation's resources.
It should be in position to facilitate exports by American
agencies; make advances to agricultural credit agencies
where necessary to protect and aid the agricultural industry;
to make temporary advances upon proper securities to
established industries, railways, and financial institutions
which cannot otherwise secure credit, and where
such advances will protect the credit structure
and stimulate employment.
Its functions would not overlap those
of the National Credit Corporation.FEDERAL RESERVE ELIGIBILITY
On October 6th I issued a statement that I should
recommend to the Congress an extension during
emergencies of the eligibility provisions in the
Federal reserve act.
This statement was approved by a representative
gathering of the Members of both Houses of the Congress,
including members of the appropriate committees.
It was approved by the officials of the Treasury
Department, and I understand such an extension
has been approved by a majority of the governors
of the Federal reserve banks.
Nothing should be done which would lower
the safeguards of the system.
The establishment of the mortgage-discount banks
herein referred to will also contribute to further
reserve strength in the banks without inflation.BANKING LAWS
Our people have a right to a banking system
in which their deposits shall be safeguarded
and the flow of credit less subject to storms.
The need of a sounder system is plainly shown
by the extent of bank failures.
I recommend the prompt improvement of the banking laws.
Changed financial conditions and commercial
practices must be met.
The Congress should investigate the need for separation
between different kinds of banking; an enlargement
of branch banking under proper restrictions;
and the methods by which enlarged membership
in the Federal reserve system may be brought about.POSTAL SAVINGS BANKS
The Postal Savings deposits have increased from about
$200,000,000 to about $550,000,000 during the past year.
This experience has raised important practical questions
in relation to deposits and investments which should
receive the attention of the Congress.RAILWAYS
The railways present one of our immediate
and pressing problems.
They are and must remain the backbone
of our transportation system.
Their prosperity is interrelated with the
prosperity of all industries.
Their fundamental service in transportation, the volume
of their employment, their buying power for supplies from
other industries, the enormous investment in their securities,
particularly their bonds, by insurance companies,
savings banks, benevolent and other trusts,
all reflect their partnership in the whole economic fabric.
Through these institutions the railway bonds are
in a large sense the investment of every family.
The well-maintained and successful operation
and the stability of railway finances are
of primary importance to economic recovery.
They should have more effective opportunity
to reduce operating costs by proper consolidation.
As their rates must be regulated in public interest,
so also approximate regulation should be applied
to competing services by some authority.
The methods of their regulation should be revised.
The Interstate Commerce Commission has made
important and far-reaching recommendations
upon the whole subject, which I commend
to the early consideration of the Congress.ANTITRUST LAWS
In my message of a year ago I commented on the
necessity of congressional inquiry into the
economic action of the antitrust laws.
There is wide conviction that some change should
be made especially in the procedure under these laws.
I do not favor their repeal.
Such action would open wide the door to price fixing,
monopoly, and destruction of healthy competition.
Particular attention should be given to the industries
rounded upon natural resources, especially where
destructive competition produces great wastes of
these resources and brings great hardships
upon operators, employees, and the public.
In recent years there has been continued demoralization
in the bituminous coal, oil, and lumber industries.
I again commend the matter to the
consideration of the Congress.UNEMPLOYMENT
As an aid to unemployment the Federal Government
is engaged in the greatest program of public-building,
harbor, flood-control, highway, waterway, aviation,
merchant and naval ship construction in all history.
Our expenditures on these works during this
calendar year will reach about $780,000,000
compared with $260,000,000 in 1928.
Through this increased construction, through the
maintenance of a full complement of Federal employees,
and through services to veterans it is estimated that
the Federal taxpayer is now directly contributing
to the livelihood of 10,000,000 of our citizens.
We must avoid burdens upon the Government
which will create more unemployment in private
industry than can be gained by further expansion
of employment by the Federal Government.
We can now stimulate employment and agriculture
more effectually and speedily through the voluntary
measures in progress, through the thawing out of credit,
through the building up of stability abroad,
through the home loan discount banks,
through an emergency finance corporation and the
rehabilitation of the railways and other such directions.
I am opposed to any direct or indirect Government dole.
The breakdown and increased unemployment
in Europe is due in part to such practices.
Our people are providing against distress from
unemployment in true American fashion by a
magnificent response to public appeal and by
action of the local governments.GENERAL LEGISLATION
There are many other subjects requiring
legislative action at this session of the Congress.
I may list the following among them:VETERANS' SERVICES
The law enacted last March authorizing loans of
50 percent upon adjusted-service certificates has,
together with the loans made under previous laws,
resulted in payments of about $1,260,000,000.
Appropriations have been exhausted.
The Administrator of Veterans' Affairs advises that a further
appropriation of $200,000,000 is required at once to meet
the obligations made necessary by existing legislation.
There will be demands for further veterans' legislation;
there are inequalities in our system of veterans' relief;
it is our national duty to meet our obligations
to those who have served the Nation.
But our present expenditure upon these services
now exceeds $1,000,000,000 per annum.
I am opposed to any extension of these expenditures until
the country has recovered from the present situation.ELECTRICAL-POWER REGULATION
I have recommended in previous messages the effective
regulation of interstate electrical power as the essential
function of the reorganized Federal Power Commission.
I renew the recommendation.
It is urgently needed in public protection.MUSCLE SHOALS
At my suggestion, the Governors and Legislatures of
Alabama and Tennessee selected three members each
for service on a committee to which I appointed a
representative of the farm organizations and two
representatives of the War Department for the purpose of
recommending a plan for the disposal of these properties
which would be in the interest of the people of those States
and the agricultural industry throughout the country.
I shall transmit the recommendations to the Congress.REORGANIZATION OF FEDERAL DEPARTMENTS
I have referred in previous messages to the profound
need of further reorganization and consolidation of Federal
administrative functions to eliminate overlap and waste, and
to enable coordination and definition of Government policies
now wholly impossible in scattered and conflicting agencies
which deal with parts of the same major function.
I shall lay before the Congress further recommendations
upon this subject, particularly in relation
to the Department of the Interior.
There are two directions of such reorganization,
however, which have an important bearing upon the
emergency problems with which we are confronted.SHIPPING BOARD
At present the Shipping Board exercises large
administrative functions independent of the Executive.
These administrative functions should be transferred to
the Department of Commerce, in keeping with that
single responsibility which has been the basis of
our governmental structure since its foundation.
There should be created in that department a position
of Assistant Secretary for Merchant Marine, under
whom this work and the several bureaus having
to do with merchant marine may be grouped.
The Shipping Board should be made a regulatory
body acting also in advisory capacity on loans and policies,
in keeping with its original conception.
Its regulatory powers should be amended to include
regulation of coastwise shipping so as to assure
stability and better service.
It is also worthy of consideration that the regulation
of rates and services upon the inland waterways
should be assigned to such a reorganized board.REORGANIZATION OF PUBLIC WORKS ADMINISTRATION
I recommend that all building and construction activities
of the Government now carried on by many departments be
consolidated into an independent establishment under the
President to be known as the "Public Works Administration"
directed by a Public Works Administrator.
This agency should undertake all construction work in
service to the different departments of the Government
(except naval and military work).
The services of the Corps of Army Engineers should be
delegated in rotation for military duty to this administration
in continuation of their supervision of river and harbor work.
Great economies, sounder policies, more effective
coordination to employment, and expedition in all
construction work would result from this consolidation.LAW ENFORCEMENT
I shall present some recommendations in a
special message looking to the strengthening of
criminal-law enforcement and improvement
in judicial procedure connected therewith.INLAND WATERWAY AND HARBOR IMPROVEMENT
These improvements are now proceeding
upon an unprecedented scale.
Some indication of the volume of work in progress
is conveyed by the fact that during the current year
over 380,000,000 cubic yards of material have been
moved—an amount equal to the entire removal
in the construction of the Panama Canal.
The Mississippi waterway system, connecting Chicago,
Kansas City, Pittsburgh, and New Orleans,
will be in full operation during 1933.
Substantial progress is being made upon the projects
of the upper Missouri, upper Mississippi, etc.
Negotiations are now in progress with Canada
for the construction of the St. Lawrence Waterway.THE TARIFF
Wages and standards of living abroad have
been materially lowered during the past year.
The temporary abandonment of the gold standard
by certain countries has also reduced their
production costs compared to ours.
Fortunately any increases in the tariff which may be
necessary to protect agriculture and industry from
these lowered foreign costs, or decreases in items
which may prove to be excessive, may be undertaken
at any time by the Tariff Commission under authority
which it possesses by virtue of the tariff act of 1930.
The commission during the past year has reviewed
the rates upon over 254 items subject to tariff.
As a result of vigorous and industrious action, it is up to date
in the consideration of pending references and is prepared
to give prompt attention to any further applications.
This procedure presents an orderly method
for correcting inequalities.
I am opposed to any general congressional
revision of the tariff.
Such action would disturb industry,
business, and agriculture.
It would prolong the depression.IMMIGRATION AND DEPORTATION
I recommend that immigration restriction now in force
under administrative action be placed upon a
more definite basis by law.
The deportation laws should be strengthened.
Aliens lawfully in the country should be protected
by the issuance of a certificate of residence.PUBLIC HEALTH
I again call attention to my previous recommendations
upon this subject, particularly in its relation to children.
The moral results are of the utmost importance.CONCLUSION
It is inevitable that in these times much of the
legislation proposed to the Congress and many
of the recommendations of the Executive must
be designed to meet emergencies.
In reaching solutions we must not jeopardize
those principles which we have found to be
the basis of the growth of the Nation.
The Federal Government must not encroach upon
nor permit local communities to abandon that precious
possession of local initiative and responsibility.
Again, just as the largest measure of responsibility
in the government of the Nation rests upon local
self-government, so does the largest measure of social
responsibility in our country rest upon the individual.
If the individual surrenders his own initiative and
responsibilities, he is surrendering
his own freedom and his own liberty.
It is the duty of the National Government to insist
that both the local governments and the individual
shall assume and bear these responsibilities as a
fundamental of preserving the very basis of our freedom.
Many vital changes and movements of vast proportions
are taking place in the economic world.
The effect of these changes upon the future
cannot be seen clearly as yet.
Of this, however, we are sure: Our system, based
upon the ideals of individual initiative and of equality
of opportunity, is not an artificial thing.
Rather it is the outgrowth of the experience of America,
and expresses the faith and spirit of our people.
It has carried us in a century and a half
to leadership of the economic world.
If our economic system does not match our highest
expectations at all times, it does not require
revolutionary action to bring it into accord
with any necessity that experience may prove.
It has successfully adjusted itself to
changing conditions in the past.
It will do so again.
The mobility of our institutions, the richness of our
resources, and the abilities of our people
enable us to meet them unafraid.
It is a distressful time for many of our people,
but they have shown qualities as high in fortitude,
courage, and resourcefulness as ever in our history.
With that spirit, I have faith that out of it will come
a sounder life, a truer standard of values,
a greater recognition of the results of honest effort,
and a healthier atmosphere in which to rear our children.
Ours must be a country of such stability and security
as cannot fail to carry forward and enlarge among
all the people that abundant life of material and
spiritual opportunity which it has represented
among all nations since its beginning.29
On December 11 Hoover released this statement
on his Economic Recovery Program:
That the country may get this program thoroughly in mind,
I review its major parts:
1. Provision for distress among the unemployed by
voluntary organization and united action of local authorities
in cooperation with the President’s Unemployment Relief
Organization, whose appeal for organization and funds
has met with a response unparalleled since the war.
Almost every locality in the country has reported that
it will take care of its own.
In order to assure that there will be no failure
to meet problems as they arise,
the organization will continue through the winter.
2. Our employers are organized and will continue
to give part-time work instead of
discharging a portion of their employees.
This plan is affording help to several million people
who otherwise would have no resources.
The Government will continue to aid unemployment
over the winter through the large program
of Federal construction now in progress.
This program represents an expenditure
at the rate of over $60 million a month.
3. The strengthening of the Federal land bank system
in the interest of the farmer.
4. Assistance to homeowners, both agricultural and urban,
who are in difficulties in securing renewals of mortgages
by strengthening the country banks, savings banks,
and building and loan associations through the creation
of a system of home loan discount banks.
By restoring these institutions to normal functioning,
we will see a revival in employment in new construction.
5. Development of a plan to assure early distribution
to depositors in closed banks, and thus relieve distress
amongst millions of smaller depositors
and smaller businesses.
6. The enlargement under full safeguards
of the discount facilities of the Federal Reserve banks
in the interest of a more adequate credit system.
7. The creation for the period of the emergency
of a reconstruction finance corporation to furnish
necessary credit otherwise unobtainable
under existing circumstances, and so give confidence
to agriculture, to industry and to labor
against further paralyzing influences and shocks,
but more especially by the reopening of credit channels
which will assure the maintenance
and normal working of the commercial fabric.
8. Assistance to all railroads by protection
from unregulated competition, and to the weaker ones
by the formation of a credit pool,
as authorized by the Interstate Commerce Commission,
and by other measures, thus affording security to the bonds
held by our insurance companies, our savings banks,
and other benevolent trusts, thereby protecting
the interest of every family
and promoting the recuperation of the railways.
9. The revision of our banking laws
so as better to safeguard the depositors.
10. The safeguarding and support of banks
through the National Credit Association,
which has already given great confidence to bankers
and extended their ability to make loans
to commerce and industry.
11. The maintenance of the public finance on a sound basis:
(a) By drastic economy.
(b) Resolute opposition to the enlargement
of Federal expenditure until recovery.
(c) A temporary increase in taxation, so distributed
that the burden may be borne in proportion to ability to pay
amongst all groups and in such a fashion
as not to retard recovery.
12. The maintenance of the American system
of individual initiative
and individual and community responsibility.
The broad purpose of this program is to restore the old job
instead of create a made job,
to help the worker at the desk as well as the bench,
to restore their buying power for the farmers’ products—
in fact, turn the processes of liquidation and deflation
and start the country forward all along the line.
This program will affect favorably every man, woman
and child—not a special class or any group.
One of its purposes is to start the flow of credit
now impeded by fear and uncertainty,
to the detriment of every manufacturer,
business man and farmer.
To reestablish normal functioning is the need of the hour.30
On December 22 the US Senate ratified the international debt
moratorium 69-12, and the House of Representatives did so 317-100.
Hoover also organized a similar plan for private investors with large debts
allowing them a one-year standstill agreement.
Detroit was suffering because of few auto sales, and Minneapolis had a big debt.
At the end of 1931 Chicago had 624,000 unemployed.
In the first two years of the Depression the Federal Government hired three times
as many people for construction and road work adding about 655,000 new jobs.
The Federal Government’s deficit in 1931 was over $900 million,
and the 1932 shortfall was estimated to be $2 billion.
Hoover noted,
Several conclusions are inevitable.
We must have an insistent and determined
reduction in government expenses, …
and we must face a temporary increase in taxes.31
Notes
1. Herbert Hoover: President of the United States by Edgar Eugene Robinson
and Vaughn Davis Bornet, p. 133.
2. The State Papers and Other Public Writings of Herbert Hoover, Volume One,
p. 289-290, 296.
3. Herbert Hoover and the Great Depression by Harris Gaylord Warren, p. 120.
4. Herbert Hoover: A Life by Glen Jeansonne, p. 222-223.
5. The State Papers and Other Public Writings of Herbert Hoover, Volume One,
p. 315-316.
6. Ibid. p. 585.
7. Ibid. p. 366.
8. Ibid. p. 383-384
9. Ibid. p. 402.
10. Ibid. p. 404.
11. Ibid. p. 428-432, 434, 437, 440.
12. Ibid. p. 429-430.
13. Ibid. p. 431.
14. Herbert Hoover in the White House: The Ordeal of the Presidency
by Charles Rappleye, p. 227-228.
15. The State Papers and Other Public Writings of Herbert Hoover, Volume One,
p. 496-499.
16. Statement on the Employment Stabilization Act of 1931 (Online).
17. The State Papers and Other Public Writings of Herbert Hoover, Volume One,
p. 502-504.
18. Ibid. p. 557-558.
19. Ibid. p. 559-560.
20. Ibid. p. 566.
21. Ibid. p. 575, 581-583.
22. Ibid. p. 591-593.
23. Ibid. p. 600.
24. Ibid. p. 598.
25. Hoover: An Extraordinary Life in Extraordinary Times by Kenneth Whyte,
p. 467-468.
26. The State Papers and Other Public Writings of Herbert Hoover, Volume Two,
p. 7-8.
27. The State Papers and Other Public Writings of Herbert Hoover, Volume Two,
p. 9.
28. Herbert Hoover: President of the United States by Edgar Eugene Robinson
and Vaughn Davis Bornet, p. 201.
29. The State Papers and Other Public Writings of Herbert Hoover, Volume Two,
p. 41-57.
30. Herbert Hoover: President of the United States by Edgar Eugene Robinson
and Vaughn Davis Bornet, p. 214.
31. Herbert Hoover in the White House: The Ordeal of the Presidency
by Charles Rappleye, p. 303.
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