practical-sql-2/Chapter_14/president_speeches.csv

1	Harry S. Truman|Message to the Congress on the State of the Union and on the Budget for 1946|1946-01-21|@To the Congress of the United States:
2	A quarter century ago the Congress decided that it could no longer consider the financial programs of the various departments on a piecemeal basis. Instead it has called on the President to present a comprehensive Executive Budget. The Congress has shown its satisfaction with that method by extending the budget system and tightening its controls. The bigger and more complex the Federal Program, the more necessary it is for the Chief Executive to submit a single budget for action by the Congress.
3	At the same time, it is clear that the budgetary program and the general program of the Government are actually inseparable. The President bears the responsibility for recommending to the Congress a comprehensive set of proposals on all Government activities and their financing. In formulating policies, as in preparing budgetary estimates mates, the Nation and the Congress have the right to expect the President to adjust and coordinate the views of the various departments and agencies to form a unified program. And that program requires consideration in connection with the Budget, which is the annual work program of the Government.
4	Since our programs for this period which combines war liquidation with reconversion to a peacetime economy are inevitably large and numerous it is imperative that they be planned and executed with the utmost efficiency and the utmost economy. We have cut the war program to the maximum extent consistent with national security. We have held our peacetime programs to the level necessary to our national well-being and the attainment of our postwar objectives. Where increased programs have been recommended, the increases have been held as low as is consistent with these goals. I can assure the Congress of the necessity of these programs. I can further assure the Congress that the program as a whole is well within our capacity to finance it. All the programs I have recommended for action are included in the Budget figures.
5	For these reasons I have chosen to combine the customary Message on the State of the Union with the annual Budget Message, and to include in the Budget not only estimates for functions authorized by the Congress, but also for those which I recommend for its action.
6	I am also transmitting herewith the Fifth Quarterly Report of the Director of War Mobilization and Reconversion. It is a comprehensive discussion of the present state of the reconversion program and of the immediate and long-range needs and recommendations.
7	This constitutes, then, as complete a report as I find it possible to prepare now. It constitutes a program of government in relation to the Nation's needs.
8	With the growing responsibility of modern government to foster economic expansion and to promote conditions that assure full and steady employment opportunities, it has become necessary to formulate and determine the Government program in the light of national economic conditions as a whole. In both the executive and the legislative branches we must make arrangements which will permit us to formulate the Government program in that light. Such an approach has become imperative if the American political and economic system is to succeed under the conditions of economic instability and uncertainty which we have to face. The Government needs to assure business, labor, and agriculture that Government policies will take due account of the requirements of a full employment economy. The lack of that assurance would, I believe, aggravate the economic instability.
9	With the passage of a full employment bill which I confidently anticipate for the very near future, the executive and legislative branches of government will be empowered to devote their best talents and resources in subsequent years to preparing and acting on such a program.
10	I. FROM WAR TO PEACE-THE YEAR OF DECISION
11	In his last Message on the State of the Union, delivered one year ago, President Roosevelt said:
12	All those hopes, and more, were fulfilled in the year 1945. It was the greatest year of achievement in human history. It saw the end of the Nazi-Fascist terror in Europe, and also the end of the malignant power of Japan. And it saw the substantial beginning of world organization for peace. These momentous events became realities because of the steadfast purpose of the United Nations and of the forces that fought for freedom under their flags. The plain fact is that civilization was saved in 1945 by the United Nations.
13	Our own part in this accomplishment was not the product of any single service. Those who fought on land, those who fought on the sea, and those who fought in the air deserve equal credit. They were supported by other millions in the armed forces who through no fault of their own could not go overseas and who rendered indispensable service in this country. They were supported by millions in all levels of government, including many volunteers, whose devoted public service furnished basic organization and leadership. They were also supported by the millions of Americans in private life-men and women in industry, in commerce, on the farms, and in all manner of activity on the home front-who contributed their brains and their brawn in arming, equipping, and feeding them. The country was brought through four years of peril by an effort that was truly national in character.
14	Everlasting tribute and gratitude will be paid by all Americans to those brave men who did not come back, who will never come back-the 330,000 who died that the Nation might live and progress. All Americans will also remain deeply conscious of the obligation owed to that larger number of soldiers, sailors, and marines who suffered wounds and sickness in their service. They may be certain that their sacrifice will never be forgotten or their needs neglected.
15	The beginning of the year 1946 finds the United States strong and deservedly confident. We have a record of enormous achievements as a democratic society in solving problems and meeting opportunities as they developed. We find ourselves possessed of immeasurable advantages-vast and varied natural resources; great plants, institutions, and other facilities; unsurpassed technological and managerial skills; an alert, resourceful, and able citizenry. We have in the United States Government rich resources in information, perspective, and facilities for doing whatever may be found necessary to do in giving support and form to the widespread and diversified efforts of all our people.
16	And for the immediate future the business prospects are generally so favorable that there is danger of such feverish and opportunistic activity that our grave postwar problems may be neglected. We need to act now with full regard for pitfalls; we need to act with foresight and balance. We should not be lulled by the immediate alluring prospects into forgetting the fundamental complexity of modern affairs, the catastrophe that can come in this complexity, or the values that can be wrested from it.
17	But the long-range difficulties we face should no more lead to despair than our immediate business prospects should lead to the optimism which comes from the present short-range prospect. On the foundation of our victory we can build a lasting peace, with greater freedom and security for mankind in our country and throughout the world. We will more certainly do this if we are constantly aware of the fact that we face crucial issues and prepare now to meet them.
18	To achieve success will require both boldness in setting our sights and caution in steering our way on an uncharted course. But we have no luxury of choice. We must move ahead. No return to the past is possible.
19	Our Nation has always been a land of great opportunities for those people of the world who sought to become part of us. Now we have become a land of great responsibilities to all the people of all the world. We must squarely recognize and face the fact of those responsibilities. Advances in science, in communication, in transportation, have compressed the world into a community. The economic and political health of each member of the world community bears directly on the economic and political health of each other member.
20	The evolution of centuries has brought us to a new era in world history in which manifold relationships between nations must be formalized and developed in new and intricate ways.
21	The United Nations Organization now being established represents a minimum essential beginning. It must be developed rapidly and steadily. Its work must be amplified to fill in the whole pattern that has been outlined. Economic collaboration, for example, already charted, now must be carried on as carefully and as comprehensively as the political and security measures.
22	It is important that the nations come together as States in the Assembly and in the Security Council and in the other specialized assemblies and councils that have been and will be arranged. But this is not enough. Our ultimate security requires more than a process of consultation and compromise.
23	It requires that we begin now to develop the United Nations Organization as the representative of the world as one society. The United Nations Organization, if we have the will adequately to staff it and to make it work as it should, will provide a great voice to speak constantly and responsibly in terms of world collaboration and world well-being.
24	There are many new responsibilities for us as we enter into this new international era. The whole power and will and wisdom of our Government and of our people should be focused to contribute to and to influence international action. It is intricate, continuing business. Many concessions and adjustments will be required.
25	The spectacular progress of science in recent years makes these necessities more vivid and urgent. That progress has speeded internal development and has changed world relationships so fast that we must realize the fact of a new era. It is an era in which affairs have become complex and rich in promise. Delicate and intricate relationships, involving us all in countless ways, must be carefully considered.
26	The general objective, on the contrary, is to move forward to find the way in time of peace to the full utilization and development of our physical and human resources that were demonstrated so effectively in the war.
27	To accomplish this, it is not intended that the Federal Government should do things that can be done as well for the Nation by private enterprise, or by State and local governments. On the contrary, the war has demonstrated how effectively we can organize our productive system and develop the potential abilities of our people by aiding the efforts of private enterprise.
28	As we move toward one common objective there will be many and urgent problems to meet.
29	Industrial peace between management and labor will have to be achieved-through the process of collective bargaining-with Government assistance but not Government compulsion. This is a problem which is the concern not only of management, labor, and the Government, but also the concern of every one of us.
30	Private capital and private management are entitled to adequate reward for efficiency, but business must recognize that its reward results from the employment of the resources of the Nation. Business is a public trust and must adhere to national standards in the conduct of its affairs. These standards include as a minimum the establishment of fair wages and fair employment practices.
31	Labor also has its own new peacetime responsibilities. Under our collective bargaining system, which must become progressively more secure, labor attains increasing political as well as economic power, and this, as with all power, means increased responsibility.
32	The lives of millions of veterans and war workers will be greatly affected by the success or failure of our program of war liquidation and reconversion. Their transition to peacetime pursuits will be determined by our efforts to break the bottlenecks in key items of productions, to make surplus property immediately available where it is needed, to maintain an effective national employment service, and many other reconversion policies. Our obligations to the people who won the war will not be paid if we fail to prevent inflation and to maintain employment opportunities.
33	While our peacetime prosperity will be based on the private enterprise system, Government can and must assist in many ways. It is the Government's responsibility to see that our economic system remains competitive, that new businesses have adequate opportunities, and that our national resources are restored and improved. Government must realize the effect of its operations on the whole economy. It is the responsibility of Government to gear its total program to the achievement of full production and full employment.
34	Our basic objective-toward which all others lead-is to improve the welfare of the American people. In addition to economic prosperity, this means that we need social security in the fullest sense of the term; the people must be protected from the fear of want during old age, sickness, and unemployment. Opportunities for a good education and adequate medical care must be generally available. Every family should have a decent home. The new economic bill of rights to which I have referred on previous occasions is a charter of economic freedom which seeks to assure that all who will may work toward their own security and the general advancement; that we become a well housed people, a well-nourished people, an educated people, a people socially and economically secure, an alert and responsible people.
35	These and other problems which may face us can be met by the cooperation of all of us in furthering a positive and well balanced Government program-a program which will further national and international well-being.
36	II. THE FEDERAL PROGRAM
37	INTERNATIONAL AFFAIRS
38	1. FOREIGN POLICY
39	The year 1945 brought with it the final defeat of our enemies. There lies before us now the work of building a just and enduring peace.
40	Our most immediate task toward that end is to deprive our enemies completely and forever of their power to start another war. Of even greater importance to the preservation of international peace is the need to preserve the wartime agreement of the United Nations and to direct it into the ways of peace.
41	Long before our enemies surrendered, the foundations had been laid on which to continue this unity in the peace to come. The Atlantic meeting in 1941 and the conferences at Casablanca, Quebec, Moscow, Cairo, Tehran, and Dumbarton Oaks each added a stone to the structure.
42	Early in 1945, at Yalta, the three major powers broadened and solidified this base of understanding. There fundamental decisions were reached concerning the occupation and control of Germany. There also a formula was arrived at for the interim government of the areas in Europe which were rapidly being wrested from Nazi control. This formula was based on the policy of the United States that people be permitted to choose their own form of government by their own freely expressed choice without interference from any foreign source.
43	At Potsdam, in July 1945, Marshal Stalin, Prime Ministers Churchill and Attlee, and I met to exchange views primarily with respect to Germany. As a result, agreements were reached which outlined broadly the policy to be executed by the Allied Control Council. At Potsdam there was also established a Council of Foreign Ministers which convened for the first time in London in September. The Council is about to resume its primary assignment of drawing up treaties of peace with Italy, Rumania, Bulgaria, Hungary, and Finland.
44	In addition to these meetings, and in accordance with the agreement at Yalta, the Foreign Ministers of Great Britain, the Soviet Union, and the United States conferred together in San Francisco last spring, in Potsdam in July, in London in September, and in Moscow in December. These meetings have been useful in promoting understanding and agreement among the three governments.
45	Simply to name all the international meetings and conferences is to suggest the size and complexity of the undertaking to prevent international war in which the United States has now enlisted for the duration of history.
46	It is encouraging to know that the common effort of the United Nations to learn to live together did not cease with the surrender of our enemies.
47	When difficulties arise among us, the United States does not propose to remove them by sacrificing its ideals or its vital interests. Neither do we propose, however, to ignore the ideals and vital interests of our friends.
48	Last February and March an Inter-American Conference on Problems of War and Peace was held in Mexico City. Among the many significant accomplishments of that Conference was an understanding that an attack by any country against any one of the sovereign American republics would be considered an act of aggression against all of them; and that if such an attack were made or threatened, the American republics would decide jointly, through consultations in which each republic has equal representation, what measures they would take for their mutual protection. This agreement stipulates that its execution shall be in full accord with the Charter of the United Nations Organization.
49	The first meeting of the General Assembly of the United Nations now in progress in London marks the real beginning of our bold adventure toward the preservation of world peace, to which is bound the dearest hope of men.
50	We have solemnly dedicated ourselves and all our will to the success of the United Nations Organization. For this reason we have sought to insure that in the peacemaking the smaller nations shall have a voice as well as the larger states. The agreement reached at Moscow last month preserves this opportunity in the making of peace with Italy, Rumania, Bulgaria, Hungary, and Finland. The United States intends to preserve it when the treaties with Germany and Japan are drawn.
51	It will be the continuing policy of the United States to use all its influence to foster, support, and develop the United Nations Organization in its purpose of preventing international war. If peace is to endure it must rest upon justice no less than upon power. The question is how justice among nations is best achieved. We know from day-to-day experience that the chance for a just solution is immeasurably increased when everyone directly interested is given a voice. That does not mean that each must enjoy an equal voice, but it does mean that each must be heard.
52	Last November, Prime Minister Attlee, Prime Minister MacKenzie King, and I announced our proposal that a commission be established within the framework of the United Nations to explore the problems of effective international control of atomic energy.
53	The Soviet Union, France, and China have joined us in the purpose of introducing in the General Assembly a resolution for the establishment of such a commission. Our earnest wish is that the work of this commission go forward carefully and thoroughly, but with the greatest dispatch. I have great hope for the development of mutually effective safeguards which will permit the fullest international control of this new atomic force.
54	I believe it possible that effective means can be developed through the United Nations Organization to prohibit, outlaw, and prevent the use of atomic energy for destructive purposes.
55	The power which the United States demonstrated during the war is the fact that underlies every phase of our relations with other countries. We cannot escape the responsibility which it thrusts upon us. What we think, plan, say, and do is of profound significance to the future of every corner of the world.
56	The great and dominant objective of United States foreign policy is to build and preserve a just peace. The peace we seek is not peace for twenty years. It is permanent peace. At a time when massive changes are occurring with lightning speed throughout the world, it is often difficult to perceive how this central objective is best served in one isolated complex situation or another. Despite this very real difficulty, there are certain basic propositions to which the United States adheres and to which we shall continue to adhere.
57	One proposition is that lasting peace requires genuine understanding and active cooperation among the most powerful nations. Another is that even the support of the strongest nations cannot guarantee a peace unless it is infused with the quality of justice for all nations.
58	On October 27, 1945, I made, in New York City, the following public statement of my understanding of the fundamental foreign policy of the United States. I believe that policy to be in accord with the opinion of the Congress and of the people of the United States. I believe that that policy carries out our fundamental objectives.
59	1.We seek no territorial expansion or selfish advantage. We have no plans for aggression against any other state, large or small. We have no objective which need clash with the peaceful aims of any other nation.
60	2.We believe in the eventual return of sovereign rights and self government to all peoples who have been deprived of them by force.
61	3.We shall approve no territorial changes in any friendly part of the world unless they accord with the freely expressed wishes of the people concerned.
62	4. We believe that all peoples who are prepared for self-government should be permitted to choose their own form of government by their own freely expressed choice, without interference from any foreign source, That is true in Europe, in Asia, in Africa, as well as in the Western Hemisphere.
63	5.By the combined and cooperative action of our war allies, we shall help the defeated enemy states establish peaceful democratic governments of their own free choice, And we shall try to attain a world in which nazism, fascism, and military aggression cannot exist.
64	6.We shall refuse to recognize any government imposed upon any nation by the force of any foreign power. In some cases it may be impossible to prevent forceful imposition of such a government. But the United States will not recognize any such government.
65	7.We believe that all nations should have the freedom of the seas and equal rights to the navigation of boundary rivers and waterways and of rivers and waterways which pass through more than one country.
66	8.We believe that all states which are accepted in the society of nations should have access on equal terms to the trade and the raw materials of the world.
67	9.We believe that the sovereign states of the Western Hemisphere, without interference from outside the Western Hemisphere, must work together as good neighbors in the solution of their common problems.
68	10.We believe that full economic collaboration between all nations, great and small, is essential to the improvement of living conditions all over the world, and to the establishment of freedom from fear and freedom from want.
69	11.We shall continue to strive to promote freedom of expression and freedom of religion throughout the peace-loving areas of the world.
70	12.We are convinced that the preservation of peace between nations requires a United Nations Organization composed of all the peace-loving nations of the world who are willing jointly to use force, if necessary, to insure peace.
71	That is our foreign policy.
72	We may not always fully succeed in our objectives. There may be instances where the attainment of those objectives is delayed. But we will not give our full sanction and approval to actions which fly in the face of these ideals.
73	The world has a great stake in the political and economic future of Germany. The Allied Control Council has now been in operation there for a substantial period of time.. It has not met with unqualified success. The accommodation of varying views of four governments in the day-to-day civil administration of occupied territory is a challenging task. In my judgment, however, the Council has made encouraging progress in the face of most serious difficulties. It is my purpose at the earliest practicable date to transfer from military to civilian personnel the execution of United States participation in the government of occupied territory in Europe. We are determined that effective control shall be maintained in Germany until we are satisfied that the German people have regained the right to a place of honor and respect.
74	On the other side of the world, a method of international cooperation has recently been agreed upon for the treatment of Japan. In this pattern of control, the United States, with the full approval of its partners, has retained primary authority and primary responsibility. It will continue to do so until the Japanese people, by their own freely expressed choice, choose their own form of government.
75	Our basic policy in the Far East is to encourage the development of a strong, independent, united, and democratic China. That has been the traditional policy of the United States.
76	At Moscow the United States, the Union of Soviet Socialist Republics, and Great Britain agreed to further this development by supporting the efforts of the national government and nongovernmental Chinese political elements in bringing about cessation of civil strife and in broadening the basis of representation in the Government. That is the policy which General Marshall is so ably executing today.
77	It is the purpose of the Government of the United States to proceed as rapidly as is practicable toward the restoration of the sovereignty of Korea and the establishment of a democratic government by the free choice of the people of Korea.
78	At the threshold of every problem which confronts us today in international affairs is the appalling devastation, hunger, sickness, and pervasive human misery that mark so many areas of the world.
79	By joining and participating in the work of the United Nations Relief and Rehabilitation Administration the United States has directly recognized and assumed an obligation to give such relief assistance as is practicable to millions of innocent and helpless victims of the war. The Congress has earned the gratitude of the world by generous financial contributions to the United Nations Relief and Rehabilitation Administration.
80	We have taken the lead, modest though it is, in facilitating under our existing immigration quotas the admission to the United States of refugees and displaced persons from Europe.
81	We have joined with Great Britain in the organization of a commission to study the problem of Palestine. The Commission is already at work and its recommendations will be made at an early date.
82	The members of the United Nations have paid us the high compliment of choosing the United States as the site of the United Nations headquarters. We shall be host in spirit as well as in fact, for nowhere does there abide a fiercer determination that this peace shall live than in the hearts of the American people.
83	It is the hope of all Americans that in time future historians will speak not of World War I and World War II, but of the first and last world wars.
84	2. FOREIGN ECONOMIC POLICY
85	The foreign economic policy of the United States is designed to promote our own prosperity, and at the same time to aid in the restoration and expansion of world markets and to contribute thereby to world peace and world security. We shall continue our efforts to provide relief from the devastation of war, to alleviate the sufferings of displaced persons, to assist in reconstruction and development, and to promote the expansion of world trade.
86	We have already joined the International Monetary Fund and the International Bank for Reconstruction and Development. We have expanded the Export-Import Bank and provided it with additional capital. The Congress has renewed the Trade Agreements Act which provides the necessary framework within which to negotiate a reduction of trade barriers on a reciprocal basis. It has given our support to the United Nations Relief and Rehabilitation Administration.
87	In accordance with the intentions of the Congress, lend-lease, except as to continuing military lend-lease in China, was terminated upon the surrender of Japan. The first of the lend-lease settlement agreements has been completed with the United Kingdom. Negotiations with other lend-lease countries are in progress. In negotiating these agreements, we intend to seek settlements which will not encumber world trade through war debts of a character that proved to be so detrimental to the stability of the world economy after the last war.
88	We have taken steps to dispose of the goods which on VJ-day were in the lend-lease pipe line to the various lend-lease countries and to allow them long-term credit for the purpose where necessary. We are also making arrangments under which those countries may use the lend-lease inventories in their possession and acquire surplus property abroad to assist in their economic rehabilitation and reconstruction. These goods will be accounted for at fair values.
89	The proposed loan to the United Kingdom, which I shall recommend to the Congress in a separate message, will contribute to easing the transition problem of one of our major partners in the war. It will enable the whole sterling area and other countries affiliated with it to resume trade on a multilateral basis. Extension of this credit will enable the United Kingdom to avoid discriminatory trade arrangements of the type which destroyed freedom of trade during the 1930's. I consider the progress toward multilateral trade which will be achieved by this agreement to be in itself sufficient warrant for the credit.
90	The view of this Government is that, in the longer run, our economic prosperity and the prosperity of the whole world are best served by the elimination of artificial barriers to international trade, whether in the form of unreasonable tariffs or tariff preferences or commercial quotas or embargoes or the restrictive practices of cartels.
91	The United States Government has issued proposals for the expansion of world trade and employment to which the Government of the United Kingdom has given its support on every important issue. These proposals are intended to form the basis for a trade and employment conference to be held in the middle of this year. If that conference is a success, I feel confident that the way will have been adequately prepared for an expanded and prosperous world trade.
92	We shall also continue negotiations looking to the full and equitable development of facilities for transportation and communications among nations.
93	The vast majority of the nations of the world have chosen to work together to achieve, on a cooperative basis, world security and world prosperity. The effort cannot succeed without full cooperation of the United States. To play our part, we must not only resolutely carry out the foreign policies we have adopted but also follow a domestic policy which will maintain full production and employment in the United States. A serious depression here can disrupt the whole fabric of the world economy.
94	3. OCCUPIED COUNTRIES
95	The major tasks of our Military Establishment in Europe following VE-day, and in the Pacific since the surrender of Japan, have been those of occupation and military government. In addition we have given much needed aid to the peoples of the liberated countries.
96	The end of the war in Europe found Germany in a chaotic condition. Organized government had ceased to exist, transportation systems had been wrecked, cities and industrial facilities had been bombed into ruins. In addition to the tasks of occupation we had to assume all of the functions of government. Great progress has been made in the repatriation of displaced persons and of prisoners of war. Of the total of 3,500,000 displaced persons found in the United States zone only 460,000 now remain.
97	The extensive complications involved by the requirement of dealing with three other governments engaged in occupation and with the governments of liberated countries require intensive work and energetic cooperation. The influx of some 2 million German refugees into our zone of occupation is a pressing problem, making exacting demands upon an already overstrained internal economy.
98	Improvements in the European economy during 1945 have made it possible for our military authorities to relinquish to the governments of all liberated areas, or to the United Nations Relief and Rehabilitation Administration, the responsibility for the provision of food and other civilian relief supplies. The Army's responsibilities in Europe extend now only to our zones of occupation in Germany and Austria and to two small areas in northern Italy.
99	By contrast with Germany, in Japan we have occupied a Country still possessing an organized and Operating governmental system. Although severely damaged, the Japanese industrial and transportation systems have been able to insure at least a survival existence for the population. The repatriation of Japanese military and civilian personnel from overseas is proceeding as rapidly as shipping and other means permit.
100	In order to insure that neither Germany nor Japan will again be in a position to wage aggressive warfare, the armament making potential of these countries is being dismantled and fundamental changes in their social and political structures are being effected. Democratic systems are being fostered to the end that the voice of the common man may be heard in the councils of his government.
101	For the first time in history the legal culpability of war makers is being determined. The trials now in progress in Nurnberg- those soon to begin in Tokyo- bring before the bar of international justice those individuals who are charged with the responsibility for the sufferings of the past six years. We have high hope that this public portrayal of the guilt of these evildoers will bring wholesale and permanent revulsion on the part of the masses of our former enemies against war, militarism, aggression, and notions of race superiority.
102	4. DEMOBILIZATION OF OUR ARMED FORCES
103	The cessation of active campaigning does not mean that we can completely disband our fighting forces. For their sake and for the sake of their loved ones at home, I wish that we could. But we still have the task of clinching the victories we have won- making certain that Germany and Japan can never again wage aggressive warfare, that they will not again have the means to bring on another world war. The performance of that task requires that, together with our allies, we occupy the hostile areas, complete the disarmament of our enemies, and take the necessary measures to see to it that they do not rearm.
104	As quickly as possible, we are bringing about the reduction of our armed services to the size required for these tasks of occupation and disarmament. The Army and the Navy are following both length-of-service and point systems as far as possible in releasing men and women from the service. The points are based chiefly on length and character of service, and on the existence of dependents.
105	Over 5 million from the Army have already passed through the separation centers.
106	The Navy, including the Marine Corps and the Coast Guard, has discharged over one and a half million.
107	Of the 12 million men and women serving in the Army and Navy at the time of the surrender of Germany, one-half have already been released. The greater part of these had to be brought back to this country from distant parts of the world.
108	Of course there are cases of individual hardship in retention of personnel in the service. There will be in the future. No system of such size can operate to perfection. But the systems are founded on fairness and justice, and they are working at full speed. We shall try to avoid mistakes, injustices, and hardship as far as humanly possible.
109	We have already reached the point where shipping is no longer the bottleneck in the return of troops from the European theater. The governing factor now has become the requirement for troops in sufficient strength to carry out their missions.
110	In a few months the same situation will exist in the Pacific. By the end of June, 9 out of 10 who were serving in the armed forces on V-day will have been released. Demobilization will continue thereafter, but at a slower rate, determined by our military responsibilities.
111	Our national safety and the security of the world will require substantial armed forces, particularly in overseas service. At the same time it is imperative that we relieve those who have already done their duty, and that we relieve them as fast as we can. To do that, the Army and the Navy are conducting recruiting drives with considerable success.
112	The Army has obtained nearly 400,000 volunteers in the past four months, and the Navy has obtained 80,000. Eighty percent of these volunteers for the regular service have come from those already with the colors. The Congress has made it possible to offer valuable inducements to those who are eligible for enlistment. Every effort will be made to enlist the required number of young men.
113	The War and Navy Departments now estimate that by a year from now we still will need a strength of about 2 million including officers, for the armed forces-Army, Navy, and Air. I have reviewed their estimates and believe that the safety of the Nation will require the maintenance of an armed strength of this size for the calendar year that is before us.
114	In case the campaign for volunteers does not produce that number, it will be necessary by additional legislation to extend the Selective Service Act beyond May 16, the date of expiration under existing law. That is the only way we can get the men and bring back our veterans. There is no other way. Action along this line should not be postponed beyond March, in order to avoid uncertainty and disruption.
115	DOMESTIC AFFAIRS
116	I. THE ECONOMIC OUTLOOK
117	Prophets of doom predicted that the United States could not escape a runaway inflation during the war and an economic collapse after the war. These predictions have not been borne out. On the contrary, the record of economic stabilization during the war and during the period of reconversion has been an outstanding accomplishment.
118	We know, however, that nothing is as dangerous as overconfidence, in war or in peace. We have had to fight hard to hold the line. We have made strenuous efforts to speed reconversion. But neither the danger of a postwar inflation nor of a subsequent collapse in production and employment is yet overcome. We must base our policies not on unreasoning optimism or pessimism but upon a candid recognition of our objectives and upon a careful analysis of foreseeable trends.
119	Any precise appraisal of the economic outlook at this time is particularly difficult. The period of demobilization and reconversion is fraught with uncertainties. There are also serious gaps in our statistical information. Certain tendencies are, however, fairly clear and recognition of them should serve as background for the consideration of next year's Federal Program. In general, the outlook for business is good, and it is likely to continue to be good--provided we control inflation and achieve peace in management- labor relations.
120	Civilian production and employment can be expected to increase throughout the next year. This does not mean, however, that continuing full employment is assured. It is probable that demobilization of the armed forces will proceed faster than the increase in civilian employment opportunities. Even if substantial further withdrawals from the labor market occur, unemployment will increase temporarily. The extent to which this unemployment will persist depends largely on the speed of industrial expansion and the effectiveness of the policies of the Federal Government.
121	Along with extraordinary demand there are still at this time many critical shortages resulting from the war. These extraordinary demands and shortages may lead to a speculative boom, especially in the price of securities, real estate, and inventories.
122	Therefore, our chief worry still is inflation.
123	While we control this inflationary pressure we must look forward to the time when this extraordinary demand will subside. It will be years before we catch up with the demand for housing. The extraordinary demand for other durable goods, for the replenishment of inventories, and for exports may be satisfied earlier. No backlog of demand can exist very long in the face of our tremendous productive capacity. We must expect again to face the problem of shrinking demand and consequent slackening in sales, production, and employment. This possibility of a deflationary spiral in the future will exist unless we now plan and adopt an effective full employment program.
124	2. GENERAL POLICIES--IMMEDIATE AND LONG-RANGE
125	During the war, production for civilian use was limited by war needs and available manpower. Economic stabilization required measures to spread limited supplies equitably by rationing, price controls, increased taxes, savings bond campaigns, and credit controls. Now, with the surrender of our enemies, economic stabilization requires that policies be directed toward promoting an increase in supplies at low unit prices.
126	We must encourage the development of resources and enterprises in all parts of the country, particularly in underdeveloped areas. For example, the establishment of new peacetime industries in the Western States and in the South would, in my judgment, add to existing production and markets rather than merely bring about a shifting of production. I am asking the Secretaries of Agriculture, Commerce, and Labor to explore jointly methods for stimulating new industries, particularly in areas with surplus agricultural labor.
127	We must also aid small businessmen and particularly veterans who are competent to start their own businesses. The establishment and development of efficient small business ventures, I believe, will not take away from, but rather will add to, the total business of all enterprises.
128	Even with maximum encouragement of production, we cannot hope to remove scarcities within a short time. The most serious deficiencies will persist in the fields of residential housing, building materials, and consumers' durable goods. The critical situation makes continued rent control, price control, and priorities, allocations, and inventory controls absolutely essential. Continued control of consumer credit will help to reduce the pressure on prices of durable goods and will also prolong the period during which the backlog demand will be effective.
129	While we are meeting these immediate needs we must look forward to a long-range program of security and increased standard of living.
130	The best protection of purchasing power is a policy of full production and full employment opportunities. Obviously, an employed worker is a better customer than an unemployed worker. There always will be, however, some frictional unemployment. In the present period of transition we must deal with such temporary unemployment as results from the fact that demobilization will proceed faster than reconversion or industrial expansion. Such temporary unemployment is probably unavoidable in a period of rapid change. The unemployed worker is a victim of conditions beyond his control. He should be enabled to maintain a reasonable standard of living for himself and his family.
131	The most serious difficulty in the path of reconversion and expansion is the establishment of a fair wage structure.
132	The ability of labor and management to work together, and the wage and price policies which they develop, are social and economic issues of first importance.
133	Both labor and management have a special interest. Labor's interest is very direct and personal because working conditions, wages, and prices affect the very life and happiness of the worker and his family.
134	Management has a no less direct interest because on management rests the responsibility for conducting a growing and prosperous business.
135	But management and labor have identical interests in the long run. Good wages mean good markets. Good business means more jobs and better wages. In this age of cooperation and in our highly organized economy the problems of one very soon become the problems of all.
136	Better human relationships are an urgent need to which organized labor and management should address themselves. No government policy can make men understand each other, agree, and get along unless they conduct themselves in a way to foster mutual respect and good will.
137	The Government can, however, help to develop machinery which, with the backing of public opinion, will assist labor and management to resolve their disagreements in a peaceful manner and reduce the number and duration of strikes.
138	All of us realize that productivity--increased output per man--is in the long run the basis of our standard of living. Management especially must realize that if labor is to work wholeheartedly for an increase in production, workers must be given a just share of increased output in higher wages.
139	Most industries and most companies have adequate leeway within which to grant substantial wage increases. These increases will have a direct effect in increasing consumer demand to the high levels needed. Substantial wage increases are good business for business because they assure a large market for their products; substantial wage increases are good business for labor because they increase labor's standard of living; substantial wage increases are good business for the country as a whole because capacity production means an active, healthy, friendly citizenry enjoying the benefits of democracy under our free enterprise system.
140	Labor and management in many industries have been operating successfully under the Government's wage-price policy. Upward revisions of wage scales have been made in thousands of establishments throughout the Nation since VJ-day. It is estimated that about 6 million workers, or more than 20 percent of all employees in nonagricultural and nongovernmental establishments, have received wage increases since August 18, 1945. The amounts of increases given by individual employers concentrate between 10 and 15 percent, but range from less than 5 percent to over 30 percent.
141	The United States Conciliation Service since VJ-day has settled over 3,000 disputes affecting over 1,300,000 workers without a strike threat and has assisted in settling about 1,300 disputes where strikes were threatened which involved about 500,000 workers. Only workers directly involved, and not those in related industries who might have been indirectly affected, are included in these estimates.
142	Many of these adjustments have occurred in key industries and would have seemed to us major crises if they had not been settled peaceably.
143	Within the framework of the wage-price policy there has been definite success, and it is to be expected that this success will continue in a vast majority of the cases arising in the months ahead.
144	However, everyone who realizes the extreme need for a swift and orderly reconversion must feel a deep concern about the number of major strikes now in progress. If long continued, these strikes could put a heavy brake on our program.
145	I have already made recommendations to the Congress as to the procedure best adapted to meeting the threat of work stoppages in Nation-wide industries without sacrificing the fundamental rights of labor to bargain collectively and ultimately to strike in support of their position.
146	If we manage our economy properly, the future will see us on a level of production half again as high as anything we have ever accomplished in peacetime. Business can in the future pay higher wages and sell for lower prices than ever before. This is not true now for all companies, nor will it ever be true for all, but for business generally it is true.
147	Production and more production was the byword during the war and still is during the transition from war to peace. However, when deferred demand slackens, we shall once again face the deflationary dangers which beset this and other countries during the 1930's. Prosperity can be assured only by a high level of demand supported by high current income; it cannot be sustained by deferred needs and use of accumulated savings.
148	If we take the right steps in time we can certainly avoid the disastrous excesses of runaway booms and headlong depressions. We must not let a year or two of prosperity lull us into a false feeling of security and a repetition of the mistakes of the 1920's that culminated in the crash of 1929.
149	During the year ahead the Government will be called upon to act in many important fields of economic policy from taxation and foreign trade to social security and housing. In every case there will be alternatives. We must choose the alternatives which will best measure up to our need for maintaining production and employment in the future. We must never lose sight of our long-term objectives: the broadening of markets--the maintenance of steadily rising demand. This demand can come from only three sources: consumers, businesses, or government.
150	In this country the job of production and distribution is in the hands of businessmen, farmers, workers, and professional people -- in the hands of our citizens. We want to keep it that way. However, it is the Government's responsibility to help business, labor, and farmers do their jobs.
151	There is no question in my mind that the Government, acting on behalf of all the people, must assume the ultimate responsibility for the economic health of the Nation. There is no other agency that can. No other organization has the scope or the authority, nor is any other agency accountable, to all the people. This does not mean that the Government has the sole responsibility, nor that it can do the job alone, nor that it can do the job directly.
152	All of the policies of the Federal Government must be geared to the objective of sustained full production and full employment--to raise consumer purchasing power and to encourage business investment. The programs we adopt this year and from now on will determine our ability to achieve our objectives. We must continue to pay particular attention to our fiscal, monetary, and tax policy, programs to aid business--especially small business--and transportation, labor-management relations and wage-price policy, social security and health, education, the farm program, public works, housing and resource development, and economic foreign policy.
153	For example, the kinds of tax measures we have at different times--whether we raise our revenue in a way to encourage consumer spending and business investment or to discourage it--have a vital bearing on this question. It is affected also by regular notions on consumer credit and by the money market, which is strongly influenced by the rate of interest on Government securities. It is affected by almost every step we take.
154	In short, the way we handle the proper functions of government, the way we time the exercise of our traditional and legitimate governmental functions, has a vital bearing on the economic health of the Nation.
155	These policies are discussed in greater detail in the accompanying Fifth Quarterly Report of the Director of War Mobilization and Reconversion.
156	3. LEGISLATION HERETOFORE RECOMMENDED AND STILL PENDING
157	To attain some of these objectives and to meet the other needs of the United States in the reconversion and postwar period, I have from time to time made various recommendations to the Congress.
158	In making these recommendations I have indicated the reasons why I deemed them essential for progress at home and abroad. A few--a very few--of these recommendations have been enacted into law by the Congress. Most of them have not. I here reiterate some of them, and discuss others later in this Message. I urge upon the Congress early consideration of them. Some are more urgent than others, but all are necessary.
159	(1) Legislation to authorize the President to create fact-finding boards for the prevention of stoppages of work in Nationwide industries after collective bargaining and conciliation and voluntary arbitration have failed--as recommended by me on December 3, 1945.
160	(2) Enactment of a satisfactory full employment bill such as the Senate bill now in conference between the Senate and the House--as recommended by me on September 6, 1945.
161	(3) Legislation to supplement the unemployment insurance benefits for unemployed workers now provided by the different States--as recommended by me on May 28,1945.
162	(4) Adoption of a permanent Fair Employment Practice Act--as recommended by me on September 6, 1945.
163	(5) Legislation substantially raising the amount of minimum wages now provided by law--as recommended by me on September 6, 1945.
164	(6) Legislation providing for a comprehensive program for scientific research--as recommended by me on September 6, 1945.
165	(7) Legislation enacting a health and medical care program--as recommended by me on November 19, 1945.
166	(8) Legislation adopting the program of universal training--as recommended by me on October 23, 1945.
167	(9) Legislation providing an adequate salary scale for all Government employees in all branches of the Government--as recommended by me on September 6, 1945.
168	(10) Legislation making provision for succession to the Presidency in the event of the death or incapacity or disqualification of the President and Vice President--as recommended by me on June 19, 1945.
169	(11) Legislation for the unification of the armed services--as recommended by me on December 19, 1945.
170	(12) Legislation for the domestic use and control of atomic energy--as recommended by me on October 3, 1945.
171	(13) Retention of the United States Employment Service in the Federal Government for a period at least up to June 30, 1947--as recommended by me on September 6, 1945.
172	(14) Legislation to increase unemployment allowances for veterans in line with increases for civilians--as recommended by me on September 6, 1945.
173	(15) Social security coverage for veterans for their period of military service--as recommended by me on September 6, 1945.
174	(16) Extension of crop insurance--as recommended by me on September 6, 1945.
175	(17) Legislation permitting the sale of ships by the Maritime Commission at home and abroad--as recommended by me on September 6, 1945. I further recommend that this legislation include adequate authority for chartering vessels both here and abroad.
176	(18) Legislation to take care of the stock piling of materials in which the United States is naturally deficient--as recommended by me on September 6, 1945.
177	(19) Enactment of Federal airport legislation--as recommended by me on September 6, 1945.
178	(20) Legislation repealing the Johnson Act on foreign loans--as recommended by me on September 6, 1945.
179	(21) Legislation for the development of the Great Lakes-St. Lawrence River Basin--as recommended by me on October 3, 1945.
180	4. POLICIES IN SPECIFIC FIELDS
181	(a) Extension of Price Control Act.
182	This record has been made possible by the vigorous efforts of the agencies responsible for this program. But their efforts would have been fruitless if they had not had the solid support of the great masses of our people. The Congress is to be congratulated for its role in providing the legislation under which this work has been carried out.
183	On VJ-day it was clear to all thinking people that the danger of inflation was by no means over. Many of us can remember vividly our disastrous experience following World War I. Then the very restricted wartime controls were lifted too quickly, and as a result prices and rents moved more rapidly upward. In the year and a half following the armistice, rents, food, and clothing shot to higher and still higher levels.
184	When the inevitable crash occurred less than two years after the end of the war, business bankruptcies were widespread. Profits were wiped out. Inventory losses amounted to billions of dollars. Farm income dropped by one-half. Factory pay rolls dropped 40 percent, and nearly one fifth of all our industrial workers were walking the streets in search of jobs. This was a grim greeting, indeed, to offer our veterans who had just returned from overseas.
185	When I addressed the Congress in September, I emphasized that we must continue to hold the price line until the production of goods caught up with the tremendous demands. Since then we have seen demonstrated the strength of the inflationary pressures which we have to face.
186	Retail sales in the closing months of 1945 ran 12 percent above the previous peak for that season, which came in 1944. Prices throughout the entire economy have been pressing hard against the price ceilings. The prices of real estate, which cannot now be controlled under the law, are rising rapidly. Commercial rents are not included in the present price control law and, where they are not controlled by State law, have been increasing, causing difficulties to many businessmen.
187	It will be impossible to maintain a high purchasing power or an expanding production unless we can keep prices at levels which can be met by the vast majority of our people. Full production is the greatest weapon against inflation, but until we can produce enough goods to meet the threat of inflation the Government will have to exercise its wartime control over prices.
188	I am sure that the people of the United States are disturbed by the demands made by several business groups with regard to price and rent control.
189	I am particularly disturbed at the effect such thinking may have on production and employment. If manufacturers continue to hold back goods and decline to submit bids when invited--as I am informed some are doing--in anticipation of higher prices which would follow the end of price controls, we shall inevitably slow down production and create needless unemployment. On the other hand, there are the vast majority of American businessmen who are not holding back goods, but who need certainty about the Government pricing policy in order to fix their own long-range pricing policies.
190	Businessmen are entitled therefore to a clear statement of the policy of the Government on the subject. Tenants and housewives, farmers and workers--consumers in general--have an equal right.
191	We are all anxious to eliminate unnecessary controls just as rapidly as we can do so. The steps that we have already taken in many directions toward that end are a clear indication of our policy.
192	The present Price Control Act expires on June 30, 1946. If we expect to maintain a steady economy we shall have to maintain price and rent control for many months to come. The inflationary pressures on prices and rents, with relatively few exceptions, are now at an all-time peak. Unless the Price Control Act is renewed there will be no limit to which our price levels would soar. Our country would face a national disaster.
193	We cannot wait to renew the act until immediately before it expires. Inflation results from psychological as well as economic conditions. The country has a clear right to know where the Congress stands on this all-important problem. Any uncertainty now as to whether the act will be extended gives rise to price speculation, to withholding of goods from the market in anticipation of rising prices, and to delays in achieving maximum production.
194	I do not doubt that the Congress will be beset by many groups who will urge that the legislation that I have proposed should either be eliminated or modified to the point where it is nearly useless. The Congress has a clear responsibility to meet this challenge with courage and determination. I have every confidence that it will do so.
195	I strongly urge that the Congress now resolve all doubts and as soon as possible adopt legislation continuing rent and price control in effect for a full year from June 30, 1946.
196	(b) Food subsidies.
197	If the price line is to be held, if our people are to be protected against the inflationary dangers which confront us, we must do more than extend the Price Control Act. In September we were hopeful that the inflationary pressures would by this time have begun to diminish. We were particularly hopeful on food. Indeed, it was estimated that food prices at retail would drop from 3 to 5 per cent in the first six months following the end of the war.
198	In anticipation of this decline in food prices, it was our belief that food subsidies could be removed gradually during the winter and spring months, and eliminated almost completely by June 30 of this year. It was our feeling that the food subsidies could be dropped without an increase to the consumer in the present level of food prices or in the over-all cost of living.
199	As matters stand today, however, food prices are pressing hard against the ceilings. The expected decline in food prices has not occurred, nor is it likely to occur for many months to come. This brings me to the reluctant conclusion that food subsidies must be continued beyond June 30, 1946.
200	If we fail to take this necessary step, meat prices on July 1 will be from 3 to 5 cents higher than their average present levels; butter will be at least 12 cents a pound higher, in addition to the 5 cents a pound increase of last fall; milk will increase from 1 to 2 cents a quart; bread will increase about 1 cent a loaf; sugar will increase over 1 cent a pound; cheese, in addition to the increase of 4 cents now planned for the latter part of this month, will go up an additional 8 cents. In terms of percentages we may find the cost-of-living index for food increased by more than 8 percent, which in turn would result in more than a 3-percent increase in the cost of living.
201	If prices of food were allowed to increase by these amounts, I must make it clear to the Congress that, in my opinion, it would become extremely difficult for us to control the forces of inflation.
202	None of us likes subsidies. Our farmers, in particular, have always been opposed to them.
203	But I believe our farmers are as deeply conscious as any group in the land of the havoc which inflation can create. Certainly in the past eighteen months there has been no group which has fought any harder in support of the Government's price control program. I am confident that, if the facts are placed before them and if they see clearly the evils between which we are forced to choose, they will understand the reasons why subsidies must be continued.
204	The legislation continuing the use of food subsidies into the new fiscal year should be tied down specifically to certain standards. A very proper requirement, in my opinion, would be that subsidies be removed as soon as it is indicated that the cost of living will decline below the present levels.
205	(c) Extension of War Powers Act.
206	The Second War Powers Act has recently been extended by the Congress for six months instead of for a year. It will now expire, unless further extended, on June 30, 1946. This act is the basis for priority and inventory controls governing the use of scarce materials, as well as for other powers essential to orderly reconversion.
207	I think that this Administration has given adequate proof of the fact that it desires to eliminate wartime controls as quickly and as expeditiously as possible. However, we know that there will continue to be shortages of certain materials caused by the war even after June 30, 1946. It is important that businessmen know now that materials in short supply are going to be controlled and distributed fairly as long as these war-born shortages continue.
208	I, therefore, urge the Congress soon to extend the Second War Powers Act. We cannot afford to wait until just before the act expires next June. To wait would cause the controls to break down in a short time, and would hamper our production and employment program.
209	(d) Small business and competition.
210	A rising birth rate for small business, and a favorable environment for its growth, are not only economic necessities but also important practical demonstrations of opportunity in a democratic free society. A great many veterans and workers with new skills and experience will want to start in for themselves. The opportunity must be afforded them to do so. They are the small businessmen of the future.
211	Actually when we talk about small business we are talking about almost all of the Nation's individual businesses. Nine out of every ten concerns fall into this category, and 45 percent of all workers are employed by them. Between 30 and 40 percent of the total value of all business transactions are handled by small business.
212	It is obvious national policy to foster the sound development of small business. It helps to maintain high levels of employment and national income and consumption of the goods and services that the Nation can produce. It encourages the competition that keeps our free enterprise economy vigorous and expanding. Small business, because of its flexibility, assists in the rapid exploitation of scientific and technological discoveries. Investment in small business can absorb a large volume of savings that might otherwise not be tapped.
213	The Government should encourage and is encouraging small-business initiative and originality to stimulate progress through competition.
214	During the war, the Smaller War Plants Corporation assisted small concerns to make a maximum contribution to victory. The work of the Smaller War Plants Corporation is being carried on in peacetime by the Federal Loan Agency and the Department of Commerce. The fundamental approach to the job of encouraging small concerns must be based on:
215	1.Arrangements for making private and public financial resources available on reasonable terms.
216	2.Provision of technical advice and assistance to business as a whole on production, research, and management problems. This will help equalize competitive relationships between large and small companies, for many of the small companies cannot afford expensive technical research, accounting, and tax advice.
217	3.Elimination of trade practices and agreements which reduce competition and discriminate against new or small enterprises.
218	We speak a great deal about the free enterprise economy of our country. It is competition that keeps it free. It is competition that keeps it growing and developing. The truth is that we need far more competition in the future than we have had in the immediate past.
219	By strangling competition, monopolistic activity prevents or deters investment in new or expanded production facilities. This lessens the opportunity for employment and chokes off new outlets for idle savings. Monopoly maintains prices at artificially high levels and reduces consumption which, with lower prices, would rise and support larger production and higher employment. Monopoly, not being subject to competitive pressure, is slow to take advantage of technical advances which would lower prices or improve quality. All three of these monopolistic activities very directly lower the standard of living--through higher prices and lower quality of product--which free competition would improve.
220	The Federal Government must protect legitimate business and consumers from predatory and monopolistic practices by the vigilant enforcement of regulatory legislation. The program will be designed to have a maximum impact upon monopolistic bottlenecks and unfair competitive practices hindering expansion in employment.
221	During the war, enforcement of antimonopoly laws was suspended in a number of fields. The Government must now take major steps not only to maintain enforcement of antitrust laws but to encourage new and competing enterprises in every way. The deferred demand of the war years and the large accumulations of liquid assets pro- vide ample incentive for expansion. Equalizing of business opportunity, under full and free competition, must be a prime responsibility in the reconversion period and in the years that follow. Many leading businessmen have recognized the importance of such action both to themselves and to the economy as a whole.
222	But we must do more than break up trusts and monopolies after they have begun to strangle competition. We must take positive action to foster new, expanding enterprises. By legislation and by administration we must take specific steps to discourage the formation or the strengthening of competition-restricting business. We must have an over-all antimonopoly policy which can be applied by all agencies of the Government in exercising the functions assigned to them--a policy designed to encourage the formation and growth of new and freely competitive enterprises.
223	Among the many departments and agencies which have parts in the program affecting business and competition, the Department of Commerce has a particularly important role. That is why I have recommended a substantial increase in appropriations for the next fiscal year for this Department.
224	In its assistance to industry, the Department of Commerce will concentrate its efforts on these primary objectives: Promotion of a large and well-balanced foreign trade; provision of improved technical assistance and management aids, especially for small enterprises; and strengthening of basic statistics on business operations, both by industries and by regions. To make new inventions and discoveries available more promptly to all businesses, small and large, the Department proposes to expand its own research activities, promote research by universities, improve Patent Office procedures, and develop a greatly expanded system of field offices readily accessible to the businesses they serve.
225	Many gaps exist in the private financial mechanism, especially in the provision of long-term funds for small and medium-sized enterprises. In the peacetime economy the Reconstruction Finance Corporation will take the leadership in assuring adequate financing for small enterprises which cannot secure funds from other sources. Most of the funds should and will be provided by private lenders; but the Reconstruction Finance Corporation will share any unusual risks through guarantees of private loans, with direct loans only when private capital is unwilling to participate on a reasonable basis.
226	(e) Minimum wage.
227	Full employment and full production may be achieved only by maintaining a level of consumer income far higher than that of the prewar period. A high level of consumer income will maintain the market for the output of our mills, farms, and factories, which we have demonstrated during the war years that we can produce. One of the basic steps which the Congress can take to establish a high level of consumer income is to amend the Fair Labor Standards Act to raise substandard wages to a decent minimum and to extend similar protection to additional workers who are not covered by the present act.
228	Substandard wages are bad for business and for the farmer. Substandard wages provide only a substandard market for the goods and services produced by American industry and agriculture.
229	At the present time the Fair Labor Standards Act prescribes a minimum wage of 40 cents an hour for those workers who are covered by the act. The present minimum wage represents an annual income of about $800 to those continuously employed for 50 weeks--clearly a wholly inadequate budget for an American family. I am in full accord with the proposal now pending in the Congress that the statutory minimum be raised immediately to 65 cents an hour, with further increases to 70 cents after one year and to 75 cents after two years. I also favor the proposal that the industry committee procedure be used to set rates higher than 65 cents per hour during the two-year interval before the 75-cent basic wage would otherwise become applicable.
230	The proposed minimum wage of 65 cents an hour would assure the worker an annual income of about $1,300 a year in steady employment. This amount is clearly a modest goal. After considering cost-of living increases in recent years, it is little more than a 10-cent increase over the present legal minimum. In fact, if any large number of workers earn less than this amount, we will find it impossible to maintain the levels of purchasing power needed to sustain the stable prosperity which we desire. Raising the minimum to 75 cents an hour will provide the wage earner with an annual income of $1,500 if he is fully employed.
231	The proposed higher minimum wage levels are feasible without involving serious price adjustments or serious geographic dislocations.
232	Today about 20 percent of our manufacturing wage earners--or about 2 million-- earn less than 65 cents an hour. Because wages in most industries have risen during the war, this is about the same as the proportion--17 percent--who were earning less than 40 cents an hour in 1941.
233	I also recommend that minimum wage protection be extended to several groups of workers not now covered. The need for a decent standard of living is by no means limited to those workers who happen to be covered by the act as it now stands. It is particularly vital at this period of readjustment in the national economy and readjustment in employment of labor to extend minimum wage protection as far as possible.
234	Lifting the basic minimum wage is necessary, it is justified as a matter of simple equity to workers, and it will prove not only feasible but also directly beneficial to the Nation's employers.
235	(f) Agricultural programs.
236	The farmers of America generally are entering the crop year of 1946 in better financial condition than ever before. Farm mortgage debt is the lowest in 30 years. Farmers' savings are the largest in history. Our agricultural plant is in much better condition than after World War I. Farm machinery and supplies are expected to be available in larger volume, and farm labor problems will be less acute.
237	The demand for farm products will continue strong during the next year or two because domestic purchases will be supplemented by a high level of exports and foreign relief shipments. It is currently estimated that from 7 to 10 percent of the total United States food supply may be exported in the calendar year 1946.
238	Farm prices are expected to remain at least at their present levels in the immediate future, and for at least the next 12 months they are expected to yield a net farm income double the 1935-39 average and higher than in any year prior to 1943.
239	We can look to the future of agriculture with greater confidence than in many a year in the past. Agriculture itself is moving confidently ahead, planning for another year of big production, taking definite and positive steps to lead the way toward an economy of abundance.
240	Agricultural production goals for 1946 call for somewhat greater acreage than actually was planted in 1945. Agriculture is prepared to demonstrate that it can make a peacetime contribution as great as its contribution toward the winning of the war.
241	In spite of supplying our armed forces and our allies during the war with a fifth to a fourth of our total food output, farmers were still able to provide our civilians with 8 percent more food per capita than the average for the five years preceding the war. Since the surrender of Japan, civilian food consumption has risen still further. By the end of 1945 the amount of the increase in food consumption was estimated to be as high as 15 percent over the prewar average. The record shows that the people of this country want and need more food and that they will buy more food if only they have the jobs and the purchasing power. The first essential therefore in providing fully for the welfare of agriculture is to maintain full employment and a high level of purchasing power throughout the Nation.
242	For the period immediately ahead we shall still have the problem of supplying enough food. If we are to do our part in aiding the war-stricken and starving countries some of the food desires of our own people will not be completely satisfied, at least until these nations have had an opportunity to harvest another crop. During the next few months the need for food in the world will be more serious than at any time during the war. And, despite the large shipments we have already made, and despite what we shall send, there remain great needs abroad.
243	Beyond the relief feeding period, there will still be substantial foreign outlets for our farm commodities. The chief dependence of the farmer, however, as always, must be upon the buying power of our own people.
244	The first obligation of the Government to agriculture for the reconversion period is to make good on its price-support commitments. This we intend to do, with realistic consideration for the sound patterns of production that will contribute most to the long-time welfare of agriculture and the whole Nation. The period during which prices are supported will provide an opportunity for farmers individually to strengthen their position in changing over from a wartime to a peacetime basis of production. It will provide an opportunity for the Congress to review the needs of agriculture and make changes in national legislation where experience has shown changes to be needed. In this connection, the Congress will wish to consider legislation to take the place of the 1937 Sugar Act which expires at the end of this year. During this period we must do a thorough job of basic planning to the end that agriculture shall be able to contribute its full share toward a healthy national economy.
245	Our long-range agricultural policies should have two main objectives: First, to assure the people on the farms a fair share of the national income; and, second, to encourage an agricultural production pattern that is best fitted to the Nation's needs. To accomplish this second objective we shall have to take into consideration changes that have taken place and will continue to take place in the production of farm commodities--changes that affect costs and efficiency and volume.
246	What we seek ultimately is a high level of food production and consumption that will provide good nutrition for everyone. This cannot be accomplished by agriculture alone. We can be certain of our capacity to produce food, but we have often failed to distribute it as well as we should and to see that our people can afford to buy it. The way to get good nutrition for the whole Nation is to provide employment opportunities and purchasing power for all groups that will enable them to buy full diets at market prices.
247	Wherever purchasing power fails to reach this level we should see that they have some means of getting adequate food at prices in line with their ability to buy. Therefore, we should have available supplementary programs that will enable all our people to have enough of the right kind of food.
248	For example, one of the best possible contributions toward building a stronger, healthier Nation would be a permanent school-lunch program on a scale adequate to assure every school child a good lunch at noon. The Congress, of course, has recognized this need for a continuing school-lunch program and legislation to that effect has been introduced and hearings held. The plan contemplates the attainment of this objective with a minimum of Federal expenditures. I hope that the legislation will be enacted in time for a permanent program to start with the beginning of the school year next fall.
249	We have the technical knowledge and the productive capacity to provide plenty of good food for every man, woman, and child in the United States. It is time we made that possibility a reality.
250	(g) Resource development.
251	The strength of our Nation and the welfare of the people rest upon the natural resources of the country. We have learned that proper conservation of our lands, including our forests and minerals, and wise management of our waters will add immensely to our national wealth.
252	The first step in the Government's conservation program must be to find out just what are our basic resources, and how they should be used. We need to take, as soon as possible, an inventory of the lands, the minerals, and the forests of the Nation.
253	During the war it was necessary to curtail some of our long-range plans for development of our natural resources, and to emphasize programs vital to the prosecution of the war. Work was suspended on a number of flood control and reclamation projects and on the development of our national forests and parks. This work must now be resumed, and new projects must be undertaken to provide essential services and to assist in the process of economic development.
254	The rivers of America offer a great opportunity to our generation in the management of the national wealth. By a wise use of Federal funds, most of which will be repaid into the Treasury, the scourge of floods and drought can be curbed, water can be brought to arid lands, navigation can be extended, and cheap power can be brought alike to the farms and to the industries of our land.
255	Through the use of the waters of the Columbia River, for example, we are creating a rich agricultural area as large as the State of Delaware. At the same time, we are producing power at Grand Coulee and at Bonneville which played a mighty part in winning the war and which will found a great peacetime industry in the Northwest. The Tennessee Valley Authority will resume its peacetime program of promoting full use of the resources of the Valley. We shall continue our plans for the development of the Missouri Valley, the Arkansas Valley, and the Central Valley of California.
256	The Congress has shown itself alive to the practical requirements for a beneficial use of our water resources by providing that preference in the sale of power be given to farmers' cooperatives and public agencies. The public power program thus authorized must continue to be made effective by building the necessary generating and transmission facilities to furnish the maximum of firm power needed at the wholesale markets, which are often distant from the dam sites.
257	These great developmental projects will open the frontiers of agriculture, industry, and commerce. The employment opportunities thus offered will also go far to ease the transition from war to peace.
258	(h) Public works.
259	During the war even urgently needed Federal, State, and local construction projects were deferred in order to release resources for war production. In resuming public works construction, it is desirable to proceed only at a moderate rate, since demand for private construction will be abnormally high for some time. Our public works program should be timed to reach its peak after demand for private construction has begun to taper off. Meanwhile, however, plans should be prepared if we are to act promptly when the present extraordinary private demand begins to run out.
260	The Congress made money available to Federal agencies for their public works planning in the fiscal year 1946. I strongly recommend that this policy be continued and extended in the fiscal year 1947.
261	State and local governments have an essential role to play in a national public works program. In my message of September 6, 1945,I recommended that the Congress vote such grants to State and local governments as will insure that each level of government makes its proper contribution to a balanced public construction program. Specifically, the Federal Government should aid State and local governments in planning their own public works programs, in undertaking projects related to Federal programs of regional development, and in constructing such public works as are necessary to carry out the various policies of the Federal Government.
262	Early in 1945 the Congress made available advances to State and local governments for planning public works projects, and recently made additional provision to continue these advances through the fiscal year 1946. I believe that further appropriations will be needed for the same purpose for the fiscal year 1947.
263	The Congress has already made provision for highway programs. It is now considering legislation which would expand Federal grants and loans in several other fields, including construction of airports, hospital and health centers, housing, water pollution control facilities, and educational plant facilities. I hope that early action will be taken to authorize these Federal programs.
264	With respect to public works of strictly local importance, State and local governments should proceed without Federal assistance except in planning. This rule should be subject to review when and if the prospect of highly adverse general economic developments warrants it.
265	All loans and grants for public works should be planned and administered in such a way that they are brought into accord with the other elements of the Federal Program.
266	Our long-run objective is to achieve a program of direct Federal and Federally assisted public works which is planned in advance and synchronized with business conditions. In this way it can make its greatest contribution to general economic stability.
267	(i) National housing program.
268	Last September I stated in my message to the Congress that housing was high on the list of matters calling for decisive action.
269	Since then the housing shortage in countless communities, affecting millions of families, has magnified this call to action.
270	Today we face both an immediate emergency and a major postwar problem.
271	Since VJ-day the wartime housing shortage has been growing steadily worse and pressure on real estate values has increased. Returning veterans often cannot find a satisfactory place for their families to live, and many who buy have to pay exorbitant prices. Rapid demobilization inevitably means further overcrowding.
272	A realistic and practical attack on the emergency will require aggressive action by local governments, with Federal aid, to exploit all opportunities and to give the veterans as far as possible first chance at vacancies. It will require continuation of rent control in shortage areas as well as legislation to permit control of sales prices. It will require maximum conversion of temporary war units for veterans' housing and their transportation to communities with the most pressing needs; the Congress has already appropriated funds for this purpose.
273	The inflation in the price of housing is growing daily.
274	As a result of the housing shortage, it is inevitable that the present dangers of inflation in home values will continue unless the Congress takes action in the immediate future.
275	Legislation is now pending in the Congress which would provide for ceiling prices for old and new houses. The authority to fix such ceilings is essential. With such authority, our veterans and other prospective home owners would be protected against a skyrocketing of home prices. The country would be protected from the extension of the present inflation in home values which, if allowed to continue, will threaten not only the stabilization program but our opportunities for attaining a sustained high level of home construction.
276	Such measures are necessary stopgaps--but only stopgaps. This emergency action, taken alone, is good--but not enough. The housing shortage did not start with the war or with demobilization; it began years before that and has steadily accumulated. The speed with which the Congress establishes the foundation for a permanent, long-range housing program will determine how effectively we grasp the immense opportunity to achieve our goal of decent housing and to make housing a major instrument of continuing prosperity and full employment in the years ahead. It will determine whether we move forward to a stable and healthy housing enterprise and toward providing a decent home for every American family.
277	Production is the only fully effective answer. To get the wheels turning, I have appointed an emergency housing expediter. I have approved establishment of priorities designed to assure an ample share of scarce materials to builders of houses for which veterans will have preference. Additional price and wage adjustments will be made where necessary, and other steps will be taken to stimulate greater production of bottleneck items. I recommend consideration of every sound method for expansion in facilities for insurance of privately financed housing by the Federal Housing Administration and resumption of previously authorized low-rent public housing projects suspended during the war.
278	In order to meet as many demands of the emergency situation as possible, a program of emergency measures is now being formulated for action. These will include steps in addition to those already taken. As quickly as this program can be formulated, announcement will be made.
279	Last September I also outlined to the Congress the basic principles for the kind of decisive, permanent legislation necessary for a long-range housing program.
280	These principles place paramount the fact that housing construction and financing for the overwhelming majority of our citizens should be done by private enterprise. They contemplate also that we afford governmental encouragement to privately financed house construction for families of moderate income, through extension of the successful system of insurance of housing investment; that research be undertaken to develop better and cheaper methods of building homes; that communities be assisted in appraising their housing needs; that we commence a program of Federal aid, with fair local participation, to stimulate and promote the rebuilding and redevelopment of slums and blighted areas--with maximum use of private capital. It is equally essential that we use public funds to assist families of low income who could not otherwise enjoy adequate housing, and that we quicken our rate of progress in rural housing.
281	Legislation now under consideration by the Congress provides for a comprehensive attack jointly by private enterprise, State and local authorities, and the Federal Government. This legislation would make permanent the National Housing Agency and give it authority and funds for much needed technical and economic research. It would provide additional stimulus for privately financed housing construction. This stimulus consists of establishing a new system of yield insurance to encourage large-scale investment in rental housing and broadening the insuring powers of the Federal Housing Administration and the lending powers of the Federal savings and loan associations.
282	Where private industry cannot build, the Government must step in to do the job. The bill would encourage expansion in housing available for the lowest income groups by continuing to provide direct subsidies for low-rent housing and rural housing. It would facilitate land assembly for urban redevelopment by loans and contributions to local public agencies where the localities do their share.
283	Prompt enactment of permanent housing legislation along these lines will not interfere with the emergency action already under way. On the contrary, it would lift us out of a potentially perpetual state of housing emergency. It would offer the best hope and prospect to millions of veterans and other American families that the American system can offer more to them than temporary makeshifts.
284	I have said before that the people of the United States can be the best housed people in the world. I repeat that assertion, and I welcome the cooperation of the Congress in achieving that goal.
285	(j) Social security and health.
286	Our Social Security System has just celebrated its tenth anniversary. During the past decade this program has supported the welfare and morale of a large part of our people by removing some of the hazards and hardships of the aged, the unemployed, and widows and dependent children.
287	But, looking back over 10 years' experience and ahead to the future, we cannot fail to see defects and serious inadequacies in our system as it now exists. Benefits are in many cases inadequate; a great many persons are excluded from coverage; and provision has not been made for social insurance to cover the cost of medical care and the earnings lost by the sick and the disabled.
288	In the field of old-age security, there seems to be no adequate reason for excluding such groups as the self-employed, agricultural and domestic workers, and employees of non-profit organizations. Since many of these groups earn wages too low to permit significant savings for old age, they are in special need of the assured income that can be provided by old-age insurance.
289	We must take urgent measures for the readjustment period ahead. The Congress for some time has been considering legislation designed to supplement at Federal expense, during the immediate reconversion period, compensation payments to the unemployed. Again I urge the Congress to enact legislation liberalizing unemployment compensation benefits and extending the coverage. Providing for the sustained consumption by the unemployed persons and their families is more than a welfare policy; it is sound economic policy. A sustained high level of consumer purchases is a basic ingredient of a prosperous economy.
290	During the war, nearly 5 million men were rejected for military service because of physical or mental defects which in many cases might have been prevented or corrected. This is shocking evidence that large sections of the population are at substandard levels of health. The need for a program that will give everyone opportunity for medical care is obvious. Nor can there be any serious doubt of the Government's responsibility for helping in this human and social problem.
291	The comprehensive health program which I recommended on November 19, 1945, will require substantial additions to the Social Security System and, in conjunction with other changes that need to be made, will require further consideration of the financial basis for social security. The system of prepaid medical care which I have recommended is expected eventually to require amounts equivalent to 4 percent of earnings up to $3,600 a year, which is about the average of present expenditures by individuals for medical care. The pooling of medical costs, under a plan which permits each individual to make a free choice of doctor and hospital, would assure that individuals receive adequate treatment and hospitalization when they are faced with emergencies for which they cannot budget individually. In addition, I recommended insurance benefits to replace part of the earnings lost through temporary sickness and permanent disability.
292	Even without these proposed major additions, it would now be time to undertake a thorough reconsideration of our social security laws. The structure should be expanded and liberalized. Provision should be made for extending coverage credit to veterans for the period of their service in the armed forces. In the financial provisions we must reconcile the actuarial needs of social security, including health insurance, with the requirements of a revenue system that is designed to promote a high level of consumption and full employment.
293	(k) Education.
294	Although the major responsibility for financing education rests with the States, some assistance has long been given by the Federal Government. Further assistance is desirable and essential. There are many areas and some whole States where good schools cannot be provided without imposing an undue local tax burden on the citizens. It is essential to provide adequate elementary and secondary schools everywhere, and additional educational opportunities for large numbers of people beyond the secondary level. Accordingly, I repeat the proposal of last year's Budget Message that the Federal Government provide financial aid to assist the States in assuring more nearly equal opportunities for a good education. The proposed Federal grants for current educational expenditures should be made for the purpose of improving the educational systern where improvement is most needed. They should not be used to replace existing non-Federal expenditures, or even to restore merely the situation which existed before the war.
295	In the future we expect incomes considerably higher than before the war. Higher incomes should make it possible for State and local governments and for individuals to support higher and more nearly adequate expenditures for education. But inequality among the States will still remain, and Federal help will still be needed.
296	As a part of our total public works program, consideration should be given to the need for providing adequate buildings for schools and other educational institutions. In view of current arrears in the construction of educational facilities, I believe that legislation to authorize grants for educational facilities, to be matched by similar expenditures by State and local authorities, should receive the favorable consideration of the Congress.
297	The Federal Government has not sought, and will not seek, to dominate education in the States. It should continue its historic role of leadership and advice and, for the purpose of equalizing educational opportunity, it should extend further financial support to the cause of education in areas where this is desirable.
298	(l) Federal Government personnel.
299	The rapid reconversion of the Federal Government from war to peace is reflected in the demobilization of its civilian personnel. The number of these employees in continental United States has been reduced by more than 500,000 from the total of approximately 2,900,000 employed in the final months of the war. I expect that by next June we shall have made a further reduction of equal magnitude and that there will be continuing reductions during the next fiscal year. Of the special wartime agencies now remaining, only a few are expected to continue actively into the next fiscal year.
300	At the same time that we have curtailed the number of employees, we have shortened the workweek by one-sixth or more throughout the Government and have restored holidays. The process of readjustment has been complicated and costs have been increased by a heavy turn-over in the remaining personnel-particularly by the loss of some of our best administrators. Thousands of war veterans have been reinstated or newly employed in the civil service. Many civilians have been transferred from war agencies to their former peacetime agencies. Recruitment standards, which had to be relaxed during the war, are now being tightened.
301	The elimination last autumn of overtime work for nearly all Federal employees meant a sharp cut in their incomes. For salaried workers, the blow was softened but by no means offset by the increased rates of pay which had become effective July 1. Further adjustments to compensate for increased living costs are required. Moreover, we have long needed a general upward revision of Federal Government salary scales at all levels in all branches-legislative, judicial, and executive. Too many in Government have had to sacrifice too much in economic advantage to serve the Nation.
302	Adequate salaries will result in economies and improved efficiency in the conduct of Government business-gains that will far outweigh the immediate costs. I hope the Congress will expedite action on salary legislation for all Federal employees in all branches of the Government. The only exception I would make is in the case of workers whose pay rates are established by wage boards; a blanket adjustment would destroy the system by which their wages are kept aligned with prevailing rates in particular localities. The wage boards should he sensitive now, as they were during the war, to changes in local prevailing wage rates and should make adjustments
303	I hope also that the Congress may see fit to enact legislation for the adequate protection of the health and safety of Federal employees, for their coverage under a system of unemployment compensation, and for their return at Government expense to their homes after separation from wartime service.
304	(m) Territories, insular possessions, and the District of Columbia.
305	The major governments of the world face few problems as important and as perplexing as those relating to dependent peoples. This Government is committed to the democratic principle that it is for the dependent peoples themselves to decide what their status shall be. To this end I asked the Congress last October to provide a means by which the people of Puerto Rico might choose their form of government and ultimate status with respect to the United States. I urge, too, that the Congress promptly accede to the wishes of the people of Hawaii that the Territory be admitted to statehood in our Union, and that similar action be taken with respect to Alaska as soon as it is certain that this is the desire of the people of that great Territory. The people of the Virgin Islands should be given an increasing measure of self-government.
306	We have already determined that the Philippine Islands are to be independent on July 4, 1946. The ravages of war and enemy occupation, however, have placed a heavy responsibility upon the United States. I urge that the Congress complete, as promptly and as generously as may be possible, legislation which will aid economic rehabilitation for the Philippines. This will be not only a just acknowledgment of the loyalty of the people of the Philippines, but it will help to avoid the economic chaos which otherwise will he their heritage from our common war. Perhaps no event in the long centuries of colonialism gives more hope for the pattern of the future than the independence of the Philippines.
307	The District of Columbia, because of its special relation to the Federal Government, has been treated since 18oo as a dependent area. We should move toward a greater measure of local self-government consistent with the constitutional status of the District. We should take adequate steps to assure that citizens of the United States are not denied their franchise merely because they reside at the Nation's Capital.
308	III. THE BUDGET FOR THE FEDERAL PROGRAM FOR THE FISCAL YEAR 1947 SUMMARY OF THE BUDGET For the first time since the fiscal year 1930 the Budget for the next fiscal year will require no increase in the national debt.
309	Expenditures of all kinds, authorized and recommended, in the next year are estimated at just above 35.8 billion dollars. Net receipts are estimated at 31.5 billion dollars. The estimated difference of 4.3 billion dollars will be met by a reduction in the very substantial balance which will be in the Treasury during the next fiscal year.
310	To elaborate, the Budget, as I have remarked above, reflects on both sides of the ledger the Government's program as recommended by the Executive. It includes estimates not only of expenditures and receipts for which legislative authority already exists, but also of expenditures and receipts for which authorization is recommended.
311	The Budget total for the next fiscal year, the year that ends on June 30, 1947, is estimated at just above 35.8 billion dollars--about a third of the budgets for global war, although nearly four times the prewar budgets. This estimate is based on the assumption that a rapid liquidation of the war program will be associated with rapid reconversion and expansion of peacetime production. The total includes net outlays of Government corporations.
312	The estimated expenditures in the next and current fiscal year compare as follows with those of a year of global war and a prewar year:
313	TOTAL BUDGET EXPENDITURES Fiscal year: (in millions)
314	1947 $35,860
315	1946 67,229
316	1945 100,031
317	1940 9,252
318	On the other side of the ledger, net receipts are estimated at 31.5 billion dollars. This estimate assumes that all existing taxes will continue all through the fiscal year 1947. Included are the extraordinary receipts from the disposal of surplus property.
319	As a result, estimated expenditures will exceed estimated receipts by 4.3 billion dollars. This amount can be provided by a reduction in the cash balance in the Treasury. Thus, after a long period of increasing public debt resulting from depression budgets and war budgets, it is anticipated that no increase in the Federal debt will he required next year.
320	The current fiscal year, 1946, is a year of transition. When the year opened, in July 1945, we were still fighting a major war, and Federal expenditures were running at an annual rate of about 100 billion dollars. By June 1946 that rate will be more than cut in half. The Budget total for the current fiscal year is now estimated at 67.2 billion dollars, of which more than two-thirds provides for war and war liquidation. Since net receipts are estimated at 38.6 billion dollars, there will be an excess of expenditures of 28.6 billion dollars for the current fiscal year.
321	For all programs discussed in this Message I estimate the total of Budget appropriations and authorizations (including reappropriations and permanent appropriations) at 30,982 million dollars for the fiscal year 1947. Of this amount, present permanent appropriations are expected to provide 5,755 million dollars, principally for interest. This leaves 24,224 million dollars to be made available through new appropriations, exclusive of appropriations to liquidate contract authorizations; 900 million dollars in new contract authorizations; and 103 million dollars through the reappropriation of unliquidated balances of previous appropriations. The appropriations needed to liquidate contract authorizations are estimated at 1,113 million dollars.
322	In the Budget for the year ahead only over-all estimates are included at this time for the major war agencies and for net outlays of Government corporations. Detailed recommendations will be transmitted in the spring for the war agencies; and the business-type budgets of Government corporations will likewise be transmitted in accordance with the recently adopted Government Corporation Control Act.
323	Similarly, only overall estimates are provided for new programs recommended in this Message; detailed recommendations will be transmitted after authorizing legislation has been enacted. It should be recognized that many of the estimates for new programs recommended in this Message are initial year figures. These figures will be affected by the date the legislation is enacted and by the time needed for getting a program under way. New programs, such as that for a national research agency, will require larger amounts in later years. The estimates exclude major elements of the proposed national health program since the greater part of these will be covered by expenditures from trust funds.
324	The Budget total includes expenditures for capital outlay as well as for current operations. An estimated 1,740 million dollars will be expended in the fiscal year 1947 for direct Federal public works and for loans and grants for public works.
325	THE ECONOMIC IMPACT OF THE LIQUIDATION OF THE WAR PROGRAM
326	Government programs are of such importance in the development of production and employment opportunities-domestic and international--that it has become essential to formulate and consider the Federal Budget in the light of the Nation's budget as a whole. The relationship between the receipts, expenditures, and savings of consumers, business, and government is shown in the accompanying table.
327	Considering the whole Nation, total expenditures must equal the total receipts, because what any individual or group spends becomes receipts of other individuals or groups. Such equality can he achieved on either a high level of incomes or on a low or depression level of incomes.
328	Tremendous orders for munitions during the war shifted production and employment into high gear. Total goods produced and services rendered for private as well as for Government purposes--the Nation's budget--reached about 200 billion dollars in the calendar year 1944. Federal, State, and local government expenditures represented half of this total.
329	Corresponding estimates for the past 3 months depict the national economy in the process of demobilization and reconversion.
330	The wartime annual rate of Federal expenditures has been reduced by 32 billion dollars, while the Nation's budget total has dropped only half as much. The drop in total value of production and services has been less drastic because increasing private activities have absorbed in large measure the manpower and materials released from war production and war services.
331	The largest increase in private activities has occurred in business investments, which include residential and other construction, producers' durable equipment, accumulation of inventories, and net exports. Under conditions of global war, expenditures for private construction and equipment were held to a minimum and inventories were depleted. With the beginning of reconversion these developments have been reversed. Residential construction and outlays for plant and equipment are on the increase; inventories, too, are being replenished. International transactions (excluding landless and international relief which are included under war expenditures) showed an import surplus under conditions of global war. In the past 3 months private exports have been slightly in excess of imports, for the first time since 1941.
332	Unemployment has increased less than was expected during this first period of demobilization and reconversion. It is true that 6 million men and women have been discharged from the armed forces since May 1945 and more than 5 million have been laid off from war work. On the other hand, more than a million civilians have been enlisted in the armed forces, a considerable number of war veterans have not immediately sought jobs, and many war workers, especially women, have withdrawn from the labor force. In addition, many industries, and especially service trades which were undermanned during the war, are beginning now, for the first time in years, to recruit an adequate labor force. The reduced workweek has also contributed to the absorption of those released from war service and war work.
333	In general, the drastic cut in war programs has thrown the economy into lower gear; it has not thrown it out of gear. Our economic machine demonstrates remarkable resiliency, although there are many difficulties that must still be overcome. The rapid termination of war contracts, prompt clearance of unneeded Government-owned equipment from private plants, and other reconversion policies have greatly speeded up the beginning of peacetime work in reconverted plants.
334	Although the first great shock of demobilization and war-work termination has thus been met better than many observers expected, specific industries and specific regions show much unevenness in the progress of reconversion.
335	The Quarterly Report of the Director of War Mobilization and Reconversion analyzes the difficulties in recruiting personnel and obtaining materials that hamper reconversion in certain industries and proposes policies to deal with these situations. The lack of adequate housing is one of the main factors checking the flow of workers into areas where job opportunities exist.
336	FEDERAL REVENUE, BORROWING, AND THE PUBLIC DEBT
337	I. FINANCIAL REQUIREMENTS AND TAX POLICY
338	Recommendations for tax legislation should be considered not only in the light of the financial requirements of the ensuing year, but also in the light of future years financial requirements and a full consideration of economic conditions.
339	Expenditures are estimated at nearly 36 billion dollars in the fiscal year 1947; they can hardly he expected to be reduced to less than 25 billion dollars in subsequent years. Net receipts in the fiscal year 1947 are estimated at 31.5 billion dollars.
340	Included in this estimate are 2 billion dollars of receipts from disposal and rental of surplus property and 190 million dollars of receipts from renegotiation of wartime contracts. These sources of receipts will disappear in future years. Tax collections for the fiscal year 1947 also will not yet fully reflect the reduction in corporate tax liabilities provided in the Revenue Act of 1945. If the extraordinary receipts from the disposal of surplus property and renegotiation of contracts be disregarded, and if the tax reductions adopted in the Revenue Act of 1945 were fully effective, present tax rates would yield about 27 billion dollars.
341	These estimates for the fiscal year 1947 are based on the assumption of generally favorable business conditions but not on an income reflecting full employment and the high productivity that we hope to achieve. In future years the present tax system, in conjunction with a full employment level of national income, could be expected to yield more than 30 billion dollars, which is substantially above the anticipated peacetime level of expenditures.
342	In view of the still extraordinarily large expenditures in the coming year and continuing inflationary pressures, I am making no recommendation for tax reduction at this time.
343	We have already had a substantial reduction in taxes from wartime peaks. The Revenue Act of 1945 was a major tax-reduction measure. It decreased the total tax load by more than one-sixth, an amount substantially in excess of the reductions proposed by the Secretary of the Treasury to congressional tax committees in October 1945. These proposed reductions were designed to encourage reconversion and peacetime business expansion.
344	The possibility of further tax reductions must depend on the budgetary situation and the economic situation. The level of anticipated expenditures for the fiscal year 1947 and the volume of outstanding public debt require the maintenance of large revenues. Moreover, inflationary pressures still appear dangerously powerful, and ill-advised tax reduction would operate to strengthen them still further.
345	My decision not to recommend additional tax reductions at this time is made in the light of existing economic conditions and prospects.
346	BORROWING AND THE PUBLIC DEBT
347	The successful conclusion of the Victory loan marked the end of war borrowing and the beginning of the transition to postwar debt management.
348	Because of the success of the Victory loan, I am happy to report that the Treasury will not need to borrow any new money from the public during the remainder of the present fiscal year except through regular sales of savings bonds and savings notes. Furthermore, a part of the large cash balance now in the Treasury will be used for debt redemption so that the public debt which now amounts to about 278 billion dollars will decrease by several billion dollars during the next 18 months. The present statutory debt limit of 300 billion dollars will provide an ample margin for all of the public-debt transactions through the fiscal year 1947. The net effect of the excess of expenditures and debt redemption on the Treasury cash balance, as compared with selected previous years, is shown in the following table:
349	Although the public debt is expected to decline, a substantial volume of refinancing will be required, because of the large volume of maturing obligations. Redemptions of savings bonds also have been running high in recent months and are expected to remain large for some time. The issuance of Savings bonds will be continued. These bonds represent a convenient method of investment for small savers, and also an anti-inflationary method of refinancing. Government agencies and trust funds are expected to buy about 2.5 billion dollars of Government securities during the next 6 months, and 2.8 billion dollars more during the fiscal year 1947. Through these and other debt operations, the distribution of the Federal debt among the various types of public and private owners will change, even though the total is expected to decline.
350	The interest policies followed in the refinancing operations will have a major impact not only on the provision for interest payments in future budgets, but also on the level of interest rates prevailing in private financing. The average rate of interest on the debt is now a little under 2 percent. Low interest rates will be an important force in promoting the full production and full employment in the postwar period for which we are all striving. Close wartime cooperation between the Treasury Department and the Federal Reserve System has made it possible to finance the most expensive war in history at low and stable rates of interest. This cooperation will continue.
351	No less important than the level of interest rates paid on the debt is the distribution of its ownership. Of the total debt, more than half represents direct savings of individuals or investments of funds received from individual Savings by life insurance companies, mutual Savings banks, Savings and loan associations, private or Government trust funds, and other agencies.
352	Most of the remaining debt-more than 100 billion dollars--is held by the commercial banks and the Federal Reserve banks. Heavy purchases by the banks were necessary to provide adequate funds to finance war expenditures. A considerable portion of these obligations are short-term in character and hence will require refinancing in the coming months and years. Since they have been purchased out of newly created bank funds, continuance of the present low rates of interest is entirely appropriate. To do otherwise would merely increase bank profits at the expense of the taxpayer.
353	The 275-billion-dollar debt poses a problem that requires careful consideration in the determination of financial and economic policies. We have learned that the problem, serious as it is, can be managed. Its management will require determined action to keep our Federal Budget in order and to relate our fiscal policies to the requirements of an expanding economy. The more successful we are in achieving full production and full employment the easier it will he to manage the debt and pay for the debt service. Large though the debt is, it is within our economic capacity. The interest charges on it amount to but a small proportion of our national income. The Government is determined, by a resolute policy of economic stabilization, to protect the interests of the millions of American citizens who have invested in its securities.
354	During the past 6 months the net revenue receipts of the Federal Government have been about 20 billion dollars, almost as much as during the closing 6 months of 1944 when the country was still engaged in all-out warfare. The high level of these receipts reflects the smoothness of the reconversion and particularly the strength of consumer demand. But the receipts so far collected, it must be remembered, do not reflect any of the tax reductions made by the Revenue Act of 1945. These reductions will not have their full effect on the revenue collected until the fiscal year 1948.
355	It is good to move toward a balanced budget and a start on the retirement of the debt at a time when demand for goods is strong and the business outlook is good. These conditions prevail today. Business is good and there are still powerful forces working in the direction of inflation. This is not the time for tax reduction.
356	RECOMMENDATIONS FOR SPECIFIC FEDERAL ACIVITIES
357	I. WAR LIQUIDATION AND NATIONAL DEFENSE
358	(a) War expenditures.
359	The fiscal year 1947 will see a continuance of war liquidation and occupation. During this period we shall also lay the foundation for our peacetime system of national defense.
360	In the fiscal year that ended on June 30, 1945, almost wholly a period of global war-fare, war expenditures amounted to 90.5 billion dollars. For the fiscal year 1946.war expenditures were originally estimated at 70 billion dollars. That estimate was made a year ago while we were still engaged in global warfare. After victory over Japan this estimate was revised to 50.5 billion dollars. Further cut-backs and accelerated demobilization have made possible an additional reduction in the rate of war spending. During the first 6 months 32.9 billion dollars were spent. It is now estimated that 16.1 billion dollars will be spent during the second 6 months, or a total of 49 billion dollars during the whole fiscal year.
361	For the fiscal year 1947 it is estimated, tentatively, that expenditures for war liquidation, for occupation, and for national defense will be reduced to 15 billion dollars. The War and Navy Departments are expected to spend 13 billion dollars; expenditures of other agencies, such as the United States Maritime Commission, the War Shipping Administration, and the Office of Price Administration, and payments to the United Nations Relief and Rehabilitation Administration are estimated at 3 billion dollars. Allowing for estimated net receipts of 1 billion dollars arising from war activities of the Reconstruction Finance Corporation, the estimated total of war expenditures is 15 billion dollars. At this time Only a tentative break-down of the total estimate for war and defense activities can be indicated.
362	An expenditure of 15 billion dollars for war liquidation, occupation, and national defense is a large sum for a year which begins 10 months after fighting has ended. It is 10 times our expenditures for defense before the war; it amounts to about 10 percent of our expected national income. This estimate reflects the immense job that is involved in winding up a global war effort and stresses the great responsibility that victory has placed upon this country. The large expenditures needed for our national defense emphasize the great scope for effective organization in furthering economy and efficiency. To this end I have recently recommended to the Congress adoption of legislation combining the War and Navy Departments into a single Department of National Defense.
363	A large part of these expenditures is still to be attributed to the costs of the. war. Assuming, somewhat arbitrarily, that about one-half of the 15-billion-dollar outlay for the fiscal year 1947 is for war liquidation, aggregate expenditures by this Government for the second World War are now estimated at 347 billion dollars through June 30, 1947. Of this, about 9 billion dollars will have been recovered through renegotiation and sale of surplus property by June 30, 1947; this has been reflected in the estimates of receipts.
364	Demobilization and strength of armed forces.--Demobilization of our armed forces is proceeding rapidly. At the time of victory in Europe, about 12.3 million men and women were in the armed forces; 7.6 million were overseas. By the end of December 1945 our armed forces had been reduced to below 7 million. By June 30, 1946, they will number about 2.9 million, of whom 1.8 million will be individuals enlisted and inducted after VE-day. Mustering-out pay is a large item of our war liquidation expense; it will total 2.5 billion dollars in the fiscal year 1946, and about 500 million dollars in the fiscal year 1947.
365	In the fiscal year 1947 the strength of our armed forces will still be above the ultimate peacetime level. As I have said, War and Navy Department requirements indicate a strength of about 2 million in the armed forces a year from now. This is necessary to enable us to do our share in the occupation of enemy territories and in the preservation of peace in a troubled world. Expenditures for pay, subsistence, travel, and miscellaneous expenses of the armed forces, excluding mustering-out pay, are estimated at 5 billion dollars.
366	Contract settlement and surplus property disposal.--The winding up of war procurement is the second most important liquidation job. By the end of November a total of 301,000 prime contracts involving commitments of 64 billion dollars had been terminated. Of this total, 67,000 contracts with commitments of 35 billion dollars remained to be settled. Termination payments on these contracts are estimated at about 3.5 billion dollars. It is expected that more than half of these terminated contracts will be settled during the current fiscal year, leaving payments of about 1.5 billion dollars for the fiscal year 1947.
367	Another important aspect of war supply liquidation is the disposal of surplus property. Munitions, ships, plants, installations, and supplies, originally costing 50 billion dollars or more, will ultimately be declared surplus. The sale value of this property will be far less than original cost and disposal expenses are estimated at 10 to 15 cents on each dollar realized. Disposal units within existing agencies have been organized to liquidate surplus property under the direction of the Surplus Property Administration. Overseas disposal activities have been centralized in the State Department to permit this program to he carried on in line with over-all foreign policy. Thus far only about 13 billion dollars of the ultimate surplus, including 5 billion dollars of unsalable aircraft, has been declared. Of this amount, 2.3 billion dollars have been disposed of, in sales yielding 600 million dollars. The tremendous job of handling surplus stocks will continue to affect Federal expenditures and receipts for several years. The speed and effectiveness of surplus disposal operations will be of great importance for the domestic economy as well as for foreign economic policies.
368	War supplies, maintenance, and relief.--Adequate provision for the national defense requires that we keep abreast of scientific and technical advances. The tentative estimates for the fiscal year 1947 make allowance for military research, limited procurement of weapons in the developmental state, and some regular procurement of munitions which were developed but not mass-produced when the war ended. Expenditures for procurement and construction will constitute one-third or less of total defense outlays, compared to a ratio of two-thirds during the war years.
369	The estimates also provide for the maintenance of our war-expanded naval and merchant fleets, military installations, and stocks of military equipment and supplies. Our naval combatant fleet is three times its pre-Pearl Harbor tonnage. Our Merchant Marine is five times its prewar size. The War Department has billions of dollars worth of equipment and supplies. Considerable maintenance and repair expense is necessary for the equipment which we desire to retain in active status or in war reserve. Expenses will be incurred for winnowing the stocks of surpluses, for preparing lay-up facilities for the reserve fleets, and for storage of reserve equipment and supplies.
370	Military expenditures in the current fiscal year include 650 million dollars for civilian supplies for the prevention of starvation and disease in occupied areas. Expenditures on this account will continue in the fiscal year 1947. The war expenditures also cover the expenses of civilian administration in occupied areas.
371	During the war, 15 cents of each dollar of our war expenditures was for lend-lease aid. With lend-lease terminated, I expect the direct operations under this program to be substantially completed in the current fiscal year. The expenditures estimated for the fiscal year 1947 under this program are mainly inter-agency reimbursements for past transactions.
372	Relief and rehabilitation expenditures are increasing. It is imperative that we give all necessary aid within our means to the people who have borne the ravages of war. I estimate that in the fiscal year 1946 expenditures for the United Nations Relief and Rehabilitation Administration will total 1.3 billion dollars and in the following year 1.2 billion dollars. Insofar as possible, procurement for this purpose will be from war surpluses.
373	(b) Authorizations for war and national defense.
374	During the war, authorizations and appropriations had to be enacted well in advance of obligation and spending to afford ample time for planning of production by the procurement services and by industry. Thus our cumulative war program authorized in the period between July 1, 1940, and July I, 1945, was 431 billion dollars, including net war commitments of Government corporations. Expenditures against those authorizations totaled 290 billion dollars. This left 141 billion dollars in unobligated authorizations and unliquidated obligations.
375	With the end of fighting, it became necessary to adjust war authorizations to the requirements of war liquidation and continuing national defense. Intensive review of the war authorizations by both the executive and the legislative branches has been continued since VJ-day. As a result, the authorized war program is being brought more nearly into line with expenditures.
376	Rescissions and authorizations through the fiscal year 1946.--Readjusting the war program, as the Congress well knows, is not an easy task. Authorizations must not be too tight, lest we hamper necessary operations; they must not be too ample, lest we lose control of spending. Last September, I transmitted to the Congress recommendations on the basis of which the Congress voted H.R. 4407 to repeal 50.3 billion dollars of appropriations and authorizations. I found it necessary to veto this bill because it was used as a vehicle for legislation that would impair the reemployment program. However, in order to preserve the fine work of the Congress on the rescissions, I asked the Director of the Bureau of the Budget to place the exact amounts indicated for repeal in a nonexpendable reserve, and to advise the departments and agencies accordingly. This has been done.
377	In accord with Public Law 132 of the Seventy-ninth Congress, I have transmitted recommendations for additional rescissions for the current fiscal year of appropriations amounting to 5.8 billion dollars and of contract authorizations totaling 420 million dollars. The net reduction in authority to obligate will be 5.0 billion dollars, because, of the appropriations, 1.2 billion dollars will have to be restored in subsequent years to liquidate contract authorizations still on the books.
378	The appropriations recommended for repeal include 2,827 million dollars for the Navy Department, 1,421 million dollars for the War Department, 850 million dollars for lend-lease, 384 million dollars for the War Shipping Administration, and 260 million dollars for the United States Maritime Commission. The contract authorizations proposed for repeal are for the Maritime Commission.
379	In addition, there are unused tonnage authorizations for construction of naval vessels now valued at 5.4 billion dollars. In September 1945, I suggested that this authority be reviewed by the appropriate committees of the Congress, and the Congress has moved to bar construction under these authorizations during the remainder of the fiscal year 1946. I propose to continue this prohibition in the Navy budget estimates for the fiscal year 1947 and now renew my recommendation that legislation be enacted at the earliest time to clear the statute books of these authorizations.
380	The amounts indicated for repeal in H.R. 4407 and the further rescissions which I have recommended, excluding duplications and deferred cash payments on existing authorizations, represent a cut in the authorized war program of 60.8 billion dollars. The war authorizations will also be reduced 3.7 billion dollars by carrying receipts of revolving accounts to surplus, by lapses, and by cancellation and repayment of commitments of the Government war corporations.
381	On the other hand, supplemental appropriations of 600 million dollars will be required for the United Nations Relief and Rehabilitation Administration.
382	In the net, it is estimated that the cumulative authorized war and national defense program will amount to 368 billion dollars on June 30, 1946. Expenditures of 49 billion dollars during the fiscal year 1946 will have pushed cumulative expenditures to 339 billion dollars. The unexpended balances will be down to 28 billion dollars on June 30,1946.
383	New authorizations for national defense and war liquidation in the fiscal year 1947. --The expenditures of 15 billion dollars for national defense and war liquidation in the fiscal year 1947 will be partly for payment of contractual obligations incurred in the past, and partly for the payment of new obligations. The unexpended balances on June 30, 1946, will be scattered among hundreds of separate appropriations. Thus, while some appropriation accounts will have unused balances, others will require additional appropriations.
384	It is estimated that authorizations to incur new obligations of 11,772 million dollars will be needed during the fiscal year '947, mainly for the War and Navy Departments. Of the required authorizations, 11,365 million dollars will be in new appropriations, 400 million dollars in new contract authority, and 7 million dollars in reappropriations of unobligated balances. In addition, appropriations of 825 million dollars will be needed to liquidate obligations under existing contract authorizations.
385	Taking into account the tentative authorizations and expenditures estimated for the fiscal year 1947, and offsets of 3 billion dollars in war commitments of Government corporations, the cumulative authorized war and national defense program on June 30, 1947, will be 376 billion dollars; total expenditures, 354 billion dollars; and unexpended balances, 22 billion dollars.
386	The 22 billion dollars of unexpended balances tentatively indicated as of June 30, 1947, comprise both unobligated authorizations and unliquidated obligations. Most of the unliquidated obligations result from transactions booked during the war years. A large part of the 22 billion dollars would never be spent even if not repealed, for the appropriations will lapse in due course. For example, several billion dollars of these unliquidated obligations represent unsettled inter- and intra-departmental agency accounts for war procurement. Legislation is being requested to facilitate the adjustment of some of these inter-agency accounts. Another 6 billion dollars is set aside for contract termination payments. If contract settlement costs continue in line with recent experience, it is likely that part of the 6 billion dollars will remain unspent.
387	On the other hand, some of the 22 billion dollars would be available for obligation and expenditure unless impounded. In certain appropriations, such as those for longcycle procurement, considerable carryover of unliquidated obligations into future years is to be expected and is necessary. However, substantial further rescissions can and should he made when the war liquidation program tapers off and budgetary requirements for national defense are clarified. As I have said, I shall continue to review the war authorizations and from time to time recommend excess balances for repeal.
388	As in recent years, detailed recommendations concerning most appropriations for the national defense program are postponed until the spring. In connection with the war activities of the United States Maritime Commission and certain other agencies, however, I now make specific recommendations for the fiscal year 1947. No additional authorizations or appropriations will be necessary for the Maritime Commission since sufficient balances will he left after the above mentioned rescissions to carry out the program now contemplated for the fiscal year 1947.
389	2.AFTERMATH OF WAR
390	Nearly one-third--11 billion dollars --of estimated Federal expenditures in the fiscal year 1947 will be for purposes that are largely inherited from the war-payments to veterans, interest on the Federal debt, and refunds of taxes.
391	(a) For veterans.
392	The Congress has provided unemployment allowances for veterans during their readjustment period. Expenditure of 850 million dollars for this purpose is anticipated for the fiscal year 1947. In addition, readjustment allowances for self-employed veterans are expected to cost 340 million dollars in the fiscal year 1947.
393	On May 28, 1945, in asking the Congress to raise the ceiling on benefits for civilian unemployed to not less than 25 dollars a week during the immediate reconversion period, I suggested that the Congress also consider liberalizing veterans' allowances. Elsewhere in this Message I reiterate my recommendation with respect to emergency unemployment compensation. I also recommend increasing veterans' unemployment allowances from 20 dollars to 25 dollars a week. This would involve additional expenditures estimated at approximately 220 million dollars for the fiscal year.
394	Included in the 1947 Budget is an expenditure of 535 million dollars for veterans' education under provisions of the Servicemen's Readjustment Act. This amount includes both tuition expenses and maintenance allowances. It is expected that half a million veterans will be enrolled in our schools and colleges during the year.
395	The ultimate benefit which veterans receive from the loan guarantee provisions of the Servicemen's Readjustment Act depends largely on the success of our stabilization program in restraining building costs and real estate values. Under the revised procedure contained in recent amendments, the administrative workload will be minimized by the almost complete transfer of authority for approving the guarantees to private lending agencies and private appraisers designated by the Veterans Administration. This authority carries with it the responsibility for restricting the guarantees to loans on reasonably valued properties. Costs of the program, other than for administration, are estimated at 21 million dollars in the fiscal year 1947.
396	Pensions for veterans will require expenditures estimated at 1,748 million dollars for the fiscal year 1947. Two-thirds of this amount will be received by veterans of the war which we have just won. This figure includes 55 million dollars of increased pensions for student-veterans in our vocational rehabilitation program. In addition, 170 million dollars will he expended in transfers to the National Service Life Insurance Fund from general and special accounts.
397	Expenditures under the appropriation for salaries and expenses of the Veterans Administration are estimated at 528 million dollars in the fiscal year 1947. This includes 260 million dollars for medical care and the operation of some 103,000 hospital and domiciliary beds.
398	A separate appropriation for hospital and domiciliary facilities, additional to the total for veterans' pensions and benefits, covers construction that will provide some 13,000 hospital beds as part of the 500-million dollar hospital construction program already authorized by the Congress. The estimated expenditures of 130 million dollars for this purpose are classified in the Budget as part of the general public works program for the next fiscal year.
399	(b) For interest.
400	Interest payments on the public debt are estimated at 5 billion dollars in the fiscal year 1947, an increase of 250 million dollars from the revised estimate for the current fiscal year. This increase reflects chiefly payment of interest on additions to the debt this year. Assuming continuance of present interest rates, the Government's interest bill is now reaching the probable postwar level.
401	(c) For refunds.
402	An estimated total of 1,585 million dollars of refunds will he paid to individuals and corporations during the fiscal year 1947. Slightly over half of this amount, or 80 million dollars, will be accessory to the simplified pay-as-you-go method of tax collection, and will be the result of overwithholding and overdeclaration of expected income. Most of the remainder will arise from loss and excess-profits credit carrybacks, recomputed amortization on war plants, and special relief from the excess profits tax.
403	3.AGRICULTURAL PROGRAMS
404	Net outlays for the price stabilization, price support, and other programs of the Commodity Credit Corporation are expected to increase from about 750 million dollars in the fiscal year 1946 to about 1,500 million dollars in 1947. Cash advances made on loans by the Farm Security Administration and the Rural Electrification Administration are expected to amount to 266 million dollars in the fiscal year 1946 and 351 million dollars in 1947; and after receipts from principal and interest are taken into account, net loan expenditures of these two agencies will amount to 120 and 209 million dollars in the two fiscal years.
405	To provide for the expenditures from general and special accounts, I recommend for the fiscal year 1947 appropriations of 721 million dollars (including the existing permanent appropriation of an amount equal to 30 percent of estimated annual customs receipts) and a reappropriation of 88 million dollars of prior-year balances from customs receipts. In addition there is a recommended authorization of 367.5 million dollars for borrowing from the Reconstruction Finance Corporation for the loan programs of the Farm Security Administration and the Rural Electrification Administration. It is expected that the operations of the Commodity Credit Corporation will be financed during the coming year through the 500 million dollars of lend-lease funds which the Congress has earmarked for price support purposes, a supplemental appropriation to restore impaired capital of the Corporation, and the borrowing authority of the Corporation.
406	Some detailed recommendations follow for major agricultural programs.
407	For the past several years, this program has consisted largely of payments to farmers for application of fertilizer and other approved soil management practices. I am convinced that farmers generally are now fully alert to the benefits, both immediate and long-term, which they derive from the practices encouraged by this program. I believe, therefore, that this subsidization should continue to be reduced.
408	Rural electrification.-- It is proposed that the loan authorization for the Rural Electrification Administration for the fiscal year 1947 he increased from 200 million dollars to 250 million dollars. During the war period, REA was limited by the scarcity of materials and manpower. But that situation is rapidly changing, and the REA program, which was materially stepped up for the fiscal year 1946, can he increased still more. It is my belief that a feasible and practical rural electrification program should be carried forward as rapidly as possible. This will involve total loans of approximately 1,800 million dollars over the next 10 years, much of which will be repaid during that period.
409	Other programs.--It is recommended that the continuing forest land-acquisition program be resumed at the rate of 3 million dollars annually, which is about the minimum rate at which this program can be economically carried on. The lands involved in this program can contribute fully to the national welfare only when brought into the national forest system for protection and development.
410	Such programs as those of the Farm Security Administration and the Farm Credit Administration are estimated to be continued during the fiscal year 1947 at about the same level as in the fiscal year 1946. Recent action by the Congress has permitted some expansion of the school-lunch program. I hope it will be continued and expanded. The budgets of the Federal Crop Insurance Corporation and the Federal Farm Mortgage Corporation will be transmitted in the spring under the terms of the Government Corporation Control Act.
411	4. TRANSPORTATION
412	Transportation is one of the major fields for both public and private investment. Our facilities for transportation and communication must be constantly improved to serve better the convenience of the public and to facilitate the sound growth and development of the whole economy.
413	Federal capital outlays for transportation facilities are expected to approximate 519 million dollars in the fiscal year 1947. State and local governments may spend 400 million dollars. Private investment, over half of it by railways, may approach 1,150 million dollars.
414	The Congress has already taken steps for the resumption of work on improvement of rivers and harbors and on the construction of new Federal-aid highways. Much needed work on airports can begin when the Congress enacts legislation now in conference between the two Houses.
415	The Federal expenditure estimates for the fiscal year 1947 include 53 million dollars for new construction in rivers, harbors, and the Panama Canal and 291 million dollars for highways and grade-crossing elimination, assuming that the States expend some 275 million dollars on the Federal-aid system. Additional expenditures for highways totaling 36 million dollars are anticipated by the Forest Service, National Park Service, and the Territory of Alaska. Civil airways and airports will involve expenditures of 35 million dollars under existing authority. Additional Federal expenditures exceeding 20 million dollars (to be matched by States and municipalities) may be made during the fiscal year 1947 under the airport legislation now in conference between the two Houses of the Congress.
416	The United States now controls almost two-thirds of the world's merchant shipping, most of it Government-owned, compared with little more than one-seventh of the world's tonnage in 1939. This places a heavy responsibility upon the Nation to provide for speedy and efficient world commerce as a contribution to general economic recovery.
417	The estimates for the United States Maritime Commission and War Shipping Administration provide for the transition of shipping operation from a war to a peace basis; the sale, chartering, or lay-up of much of the war-built fleet; and for a program of ship construction of some 84 million dollars in the fiscal year 1947 to round out the merchant fleet for peacetime use.
418	Federal aids, subsidies, and regulatory controls for transportation should follow the general principle of benefiting the national economy as a whole. They should seek to improve the transportation system and increase its efficiency with resulting lower rates and superior service. Differential treatment which benefits one type of transportation to the detriment of another should be avoided save when it is demonstrated clearly to be in the public interest.
419	5.RESOURCE DEVELOPMENT
420	The reclamation and flood control projects which I am recommending for the fiscal year 1947 will involve capital outlays of approximately 319 million dollars as compared with 245 million dollars in the fiscal year 1946. These expenditures cover programs of the Corps of Engineers, the Bureau of Reclamation, the Bureau of Indian Affairs, the Department of Agriculture, and the International Boundary and Water Commission, United States and Mexico. A number of these projects are multiple-purpose projects, providing not only for reclamation and irrigation of barren land and flood control, but also for the production of power needed for industrial development of the areas.
421	Expenditures for power transmission and distribution facilities by the Bonneville Power Administration are expected to increase from 12 million dollars in the fiscal year 1946 to 15 million dollars in the next fiscal year. In addition, the Southwestern Power Administration will undertake a new program involving expenditures of about 16 million dollars in the fiscal year 1947. The Rural Electrification Administration will require expenditures during the current fiscal year estimated at 156 million dollars; in the fiscal year 1947, at 241 million dollars.
422	The TVA program includes completion of major multiple-purpose projects-navigation, flood control, and power facilities--and additions to chemical plants and related facilities. Expenditures for these capital improvement programs are estimated at 30 million dollars in the fiscal year 1946 and 39 million dollars in the fiscal year 1947.
423	Expenditures for construction of roads and other developmental works in the national forests, parks, and other public lands, and for capital outlays for fish and wildlife development will increase from below 9 million dollars in the fiscal year 1946 to 24 million dollars in the fiscal year 1947.
424	6. SOCIAL SECURITY AND HEALTH
425	Benefit payments out of the Old-Age and Survivors Insurance Trust Fund during 1947 are estimated at 407 million dollars, while withdrawals by the States from the Unemployment Trust Fund for compensation payments are expected to total 1 billion dollars. These disbursements are financed out of Social Security contributions.
426	The appropriations from general and special accounts for the social security program, which cover Federal administrative expenses and grants to States for assistance programs, are estimated at 593 million dollars for the fiscal year 1947, an increase of 57 million dollars over the current year. The increase anticipates greater administrative workload and higher grants to match increasing State payments. The social security program does not include all the Federal health services under existing legislation. For the other health services classified under general government and national defense, appropriations are estimated at 102 million dollars for the fiscal year 1947.
427	Some expansion in peacetime medical research and other programs of the Public Health Service is provided for in the appropriation estimates for these purposes totaling approximately 87 million dollars for the fiscal year 1947 which are submitted under provisions of existing law. Part of this will be provided through the social security appropriations, the remainder through other appropriations. About 28 million dollars is recommended for maternity care and health services for children under existing law, mainly under the emergency provision for the wives and infants of servicemen. While we should avoid duplication of maternity and child health services which will be provided through the proposed general system of prepaid medical care, legislation is needed to supplement such services. For medical education, I have recommended legislation authorizing grants-in-aid to public and nonprofit institutions. The existing sources of support for medical schools require supplementation to sustain the expansion that is needed.
428	Hospitals, sanitation works, and additional facilities at medical schools will be required for an adequate national health program. Legislation is now pending in the Congress to authorize grants for the construction of hospitals and health centers and grants and loans for water-pollution control. I hope the Congress will act favorably on generous authorizing legislation.
429	7.RESEARCH AND EDUCATION
430	The Budget provides for continuation and desirable expansion of the research activities that are carried on throughout the Federal establishment and through previously authorized grants to the States. Additional appropriations will he required for the proposed central Federal research agency which I recommended last September 6. That agency will coordinate existing research activities and administer funds for new research activities wherever they are needed; it will not itself conduct research. The plan contemplates expenditures through the new research agency of approximately 40 million dollars for the first year.
431	These amounts are small in relation to the important contribution they can make to the national income, the welfare of our people, and the common defense. Expenditures must be limited for the time being by the capacity of research agencies to make wise use of funds. The maintenance of our position as a nation, however, will require more emphasis on research expenditures in the future than in the past.
432	Educational expenditures will require a significant share of the national income in the fiscal year 1947. State, local, and private expenditures for the current support of elementary, secondary, and higher education are expected to be substantially above 3 billion dollars in that year. These non-Federal expenditures will be supplemented by Federal expenditures estimated at 625 million dollars in the present Budget. Of this amount, the estimate for veterans' education, as previously mentioned, is 535 million dollars. Other amounts include 21 million dollars for the support of vocational education in public schools, 5 million dollars for the land-grant colleges, 50 million dollars for the present school lunch and milk program, 1 million dollars for the Office of Education, and approximately 13 million dollars for various other items. In view of the major policy issues which are still under study by the Congress and the Administration, no specific amount has been determined for the Federal grants, previously recommended in this Message, which would assist the States generally in assuring more nearly equal opportunities for a good education.
433	Notwithstanding the urgent need for additional school and college buildings, careful planning will be required for the expenditures to be made under the proposed legislation to aid the States in providing educational facilities. A major share of the grants for the first year would he for surveys and plans.
434	8.INTERNATIONAL-FINANCIAL PROGRAMS
435	I have already outlined the broad objectives of our foreign economic policy. In the present section I shall indicate the Federal outlays which the execution of these programs may require in the fiscal years 1946 and 1947.
436	(a) On the termination of lend-lease, the lend-lease countries were required to pay for goods in the lend-lease pipe line either in cash or by borrowing from the United States or by supplying goods and services to the United States. Credits for this purpose have already been extended to the Soviet Union, France, the Netherlands, and Belgium amounting to 675 million dollars. The settlement credit of 650 million dollars to the United Kingdom includes an amount preliminarily fixed at 118 million dollars which represents the excess of purchases by the United Kingdom from the pipe line over goods and services supplied by the United Kingdom to the United States since VJ-day and the balance of various claims by one government against the other.
437	Credits are also being negotiated with lend-lease countries to finance the disposition of lend-lease inventories and installations and property declared to be surplus. For instance, 532 million dollars of the settlement credit to the United Kingdom is for this purpose. These credits will involve no new expenditures by this Government, since they merely provide for deferred repayment by other governments for goods and services which have been financed from war appropriations.
438	(b) Expenditures from the appropriations to United Nations Relief and Rehabilitation Administration, which were discussed under war expenditures above, are estimated to be 1.3 billion dollars in the fiscal year 1946 and 1.2 billion dollars in the fiscal year 1947.
439	(c) To assist other countries in the restoration of their economies the Export-Import Bank has already negotiated loans in the fiscal year 1946 amounting in total to about 1,010 million dollars and an additional 195 million dollars will probably be committed shortly. The Bank is also granting loans to carry out its original purpose of directly expanding the foreign trade of the United States. In this connection the Bank has established a fund of too million dollars to finance the export of cotton from the United States. The Export-Import Bank has thus loaned or committed approximately 1,300 million dollars during the current fiscal year and it is expected that demands on its resources will increase in the last 6 months of the fiscal year 1946. Requests for loans are constantly being received by the Bank from countries desiring to secure goods and services in this country for the reconstruction or development of their economies. On July 31, 1945, the lending authority of the Export-Import Bank was increased to a total of 3,500 million dollars. I anticipate that during the period covered by this. Budget the Bank will reach this limit. The bulk of the expenditures from the loans already granted will fall in the fiscal year 1946 while the bulk of the expenditures from loans yet to be negotiated will fall in the fiscal year 1947. In view of the urgent need for the Bank's credit, I may find it necessary to request a further increase in its lending authority at a later date.
440	(d) The proposed line of credit of 3,750 million dollars to the United Kingdom will be available up to the end of 1951 and will be used to assist the United Kingdom in financing the deficit in its balance of payments during the transition period. The rate at which the United Kingdom will draw on the credit will depend on the rapidity with which it can reconvert its economy and adapt its trade to the postwar world. The anticipated rate of expenditure is likely to be heaviest during the next 2 years.
441	(e)Since the Bretton Woods Agreements have now been approved by the required number of countries, both the International Monetary Fund and the International Bank for Reconstruction and Development will commence operations during 1946. The organization of these institutions will undoubtedly take some time, and it is unlikely that their operations will reach any appreciable scale before the beginning of the fiscal year 1947.
442	Of the 2,750 million dollars required for the Fund, t,Soo million dollars will be provided in cash or notes from the exchange stabilization fund established under the Gold Reserve Act of '934. The remaining 950 million dollars will be paid initially in the form of non-interest-bearing notes issued by the Secretary of the Treasury. It is not anticipated that the Fund will require in cash any of the 950 million dollars during the fiscal years 1946 and 1947. Consequently, no cash withdrawals from the Treasury will be required in connection with the Fund in these years.
443	The subscription to the Bank amounts to 3,175 million dollars. Of this total, 2 percent must be paid immediately and the Bank is required to call a further 8 percent of the subscription during its first year of operations. The balance of the subscription is payable when required by the Bank either for direct lending or to make good its guarantees. It is likely that the United States will be required to pay little if any more than the initial 10 percent before the end of the fiscal year 1947.
444	I anticipate that net expenditures of the Export-Import Bank and expenditures arising from the British credit and the Bretton Woods Agreements will amount to 2,614 million dollars, including the noncash item of 950 million dollars for the Fund, in the fiscal year 1946, and 2,754 million dollars in the fiscal year 1947.
445	9.GENERAL GOVERNMENT
446	The responsibilities of the Government, in both domestic and international affairs, have increased greatly in the past decade. Consequently, the Government is larger than it was before the war, and its general operating costs are higher. We cannot shrink the Government to prewar dimensions unless we slough off these new responsibilities--and we cannot do that without paying an excessive price in terms of our national welfare. We can, however, enhance its operating efficiency through improved organization. I expect to make such improvements under the authority of the Reorganization Act of 1945.
447	The appropriations which I am recommending for general government for the fiscal year 1947 are 1,604 million dollars under existing legislation. This is an increase of 458 million dollars over the total of enacted appropriations for the current fiscal year, but a substantial part of this increase is due to the fact that the appropriations for the fiscal year 1946 were made prior to the general increase of employees' salaries last July 1, for which allowance is made in the anticipated supplemental appropriations for 1946. The recommended total for 1947 for general government, like the estimates for national defense and other specific programs, does not allow for the further salary increases for Government employees which, I hope, will be authorized by pending legislation, but the tentative lump-sum estimates under proposed legislation contemplate that such salary increases will be effective almost at once.
448	Expenditures for general government in the fiscal year 1947 are expected to continue the slowly rising trend which began in 1943. This category includes a great variety of items-not merely the overhead costs of the Government. It includes all the expenditures of the Cabinet departments, other than for national defense, aids to agriculture, general public works, and the social security program. It includes also expenditures of the legislative branch, the Judiciary; and many of the independent agencies of the executive branch. Consequently, the estimated increase in 1947 in the total of general government expenditures reflects a variety of influences.
449	Now included in general government are certain activities formerly classified under national defense. Some of these, such as certain functions of the former Foreign Economic Administration and the War Manpower Commission, are still needed during the period of reconversion; others are in the process of liquidation. A few wartime activities, for example, the international information and foreign intelligence services and some of the wartime programs for controlling disease and crime, have become part of our regular government establishment. Expenditures for these former wartime functions explain about 40 percent of the increase in expenditures for general government.
450	Other increases are for civil aeronautics promotion, the business and manufacturing censuses, and other expanded business services of the Department of Commerce which have been referred to above; the Forest and Soil Conservation Services and other activities of the Department of Agriculture; certain conservation activities of the Department of the Interior; and the collection of internal revenue in the Treasury Department.
451	The necessity for reestablishing postal services curtailed during the war and advances in the rates of pay for postal employees have increased substantially the estimated expenditures for postal service for both the current and the next fiscal year. It is not expected that this increase will cause expenditures to exceed postal revenues in either year, although an excess of expenditures may occur in the fiscal year 1947 if salaries are increased further.
452	Expenditures for our share of the administrative budgets of the United Nations and other permanent international bodes will increase sharply in the fiscal year 1947, yet will remain a small part of our total Budget. The budget for the United Nations has not yet been determined; an estimate for our contribution will be submitted later. Our contributions to the Food and Agriculture Organization, the International Labor Office, the Pan American Union, and other similar international agencies will aggregate about 3 million dollars for the fiscal year 1947. The administrative expenses of the International Monetary Fund and the International Bank will be met from their general funds.
453	We have won a great war- we, the nations of plain people who hate war. In the test of that war we found a strength of unity that brought us through - a strength that crushed the power of those who sought by force to deny our faith in the dignity of man.
454	It should be impossible for any man to contemplate without a sense of personal humility the tremendous events of the 12 months since the last annual Message, the great tasks that confront us, the new and huge problems of the coming months and years. Yet these very things justify the deepest confidence in the future of this Nation of free men and women. The plain people of this country found the courage and the strength, the self-discipline, and the mutual respect to fight and to win, with the help of our allies, under God. I doubt if the tasks of the future are more difficult. But if they are, then I say that our strength and our knowledge and our understanding will be equal to those tasks.@
455	Harry S. Truman|Annual Message to the Congress on the State of the Union|1947-01-06|@Mr. President, Mr. Speaker, Members of the Congress of the United States: It looks like a good many of you have moved over to the left since I was here last.
456	I come before you today to report on the State of the Union and, in the words of the Constitution, to recommend such measures as I judge necessary and expedient.
457	I come also to welcome you as you take up your duties and to discuss with you the manner in which you and I should fulfill our obligations to the American people during the next 2 years.
458	The power to mold the future of this Nation lies in our hands-yours and mine, and they are joined together by the Constitution.
459	If in this year, and in the next, we can find the right course to take as each issue arises, and if, in spite of all difficulties, we have the courage and the resolution to take that course, then we shall achieve a state of well-being for our people without precedent in history. And if we continue to work with the other nations of the world earnestly, patiently, and wisely, we can-granting a will for peace on the part of our neighbors make a lasting peace for the world.
460	But, if we are to realize these ends, the Congress and the President, during the next 2 years, must work together. It is not unusual in our history that the majority of the Congress represents a party in opposition to the President's party. I am the twentieth President of the United States who, at some time during his term of office, has found his own party to be in the minority in one or both Houses of Congress. The first one was George Washington. Wilson was number eighteen, and Hoover was number nineteen.
461	I realize that on some matters the Congress and the President may have honest differences of opinion. Partisan differences, however, did not cause material disagreements as to the conduct of the war. Nor, in the conduct of our international relations, during and since the war, have such partisan differences been material.
462	On some domestic issues we may, and probably shall, disagree. That in itself is not to be feared. It is inherent in our form of Government. But there are ways of disagreeing; men who differ can still work together sincerely for the common good. We shall be risking the Nation's safety and destroying our opportunities for progress if we do not sett]e any disagreements in this spirit, without thought of partisan advantage.
463	As the year 1947 begins, the state of our national economy presents great opportunities for all. We have virtually full employment, our national production of goods and services is 50 percent higher than in any year prior to the war emergency. The national income in 1946 was higher than in any peace-time year. Our food production is greater than it has ever been. During the last 5 years our productive facilities have been expanded in almost every field. The American standard of living is higher now than ever before, and when the housing shortage can be overcome it will be even higher.
464	During the past few months we have removed at a rapid rate the emergency controls that the Federal Government had to exercise during the war. The remaining controls will be retained only as long as they are needed to protect the public. Private enterprise must be given the greatest possible freedom to continue the expansion of our economy.
465	In my proclamation of December 31, 1946, I announced the termination of hostilities. This automatically ended certain temporary legislation and certain executive powers.
466	Now that nearly all wartime controls have been removed, the operation of our industrial system depends to a greater extent on the decisions of businessmen, farmers, and workers. These decisions must be wisely made with genuine concern for public welfare. The welfare of businessmen, farmers, and workers depends upon the economic well-being of those who buy their products. An important present source of danger to our economy is the possibility that prices might be raised to such an extent that the consuming public could not purchase the tremendous volume of goods and services which will be produced during 1947.
467	We all know that recent price increases have denied to many of our workers much of the value of recent wage increases. Farmers have found that a large part of their increased income has been absorbed by increased prices. While some of our people have received raises in income which exceed price increases, the great majority have not. Those persons who live on modest fixed incomes-retired persons living on pensions, for example-and workers whose incomes are relatively inflexible, such as teachers and other civil servants-have suffered hardship.
468	In the effort to bring about a sound and equitable price structure, each group of our population has its own responsibilities.
469	It is up to industry not only to hold the line on existing prices, but to make reductions whenever profits justify such action.
470	It is up to labor to refrain from pressing for unjustified wage increases that will force increases in the price level.
471	And it is up to Government to do everything in its power to encourage high- volume production, for that is what makes possible good wages, low prices, and reasonable profits.
472	In a few days there will be submitted to the Congress the Economic Report of the President, and also the Budget Message. Those messages will contain many recommendations. Today I shall outline five major economic policies which I believe the Government should pursue during 1947. These policies are designed to meet our immediate needs and, at the same time, to provide for the long-range welfare of our free enterprise system:
473	First, the promotion of greater harmony between labor and management.
474	Second, restriction of monopoly and unfair business practices; assistance to small business; and the promotion of the free competitive system of private enterprise.
475	Third, continuation of an aggressive program of home construction.
476	Fourth, the balancing of the budget in the next fiscal year and the achieving of a substantial surplus to be applied to the reduction of the public debt,
477	Fifth, protection of a fair level of return to farmers in post-war agriculture.
478	LABOR AND MANAGEMENT
479	The year just past-like the year after the First World War-was marred by labor management strife.
480	Despite this outbreak of economic warfare in 1946, we are today producing goods and services in record volume. Nevertheless, it is essential to improve the methods for reaching agreement between labor and management and to reduce the number of strikes and lockouts.
481	We must not, however, adopt punitive legislation. We must not, in order to punish a few labor leaders, pass vindictive laws which will restrict the proper rights of the rank and file of labor. We must not, under the stress of emotion, endanger our American freedoms by taking ill-considered action which will lead to results not anticipated or desired.
482	We must remember, in reviewing the record of disputes in 1946, that management shares with labor the responsibility for failure to reach agreements which would have averted strikes. For that reason, we must realize that industrial peace cannot be achieved merely by laws directed against labor unions.
483	During the last decade and a half, we have established a national labor policy in this country based upon free collective bargaining as the process for determining wages and working conditions.
484	That is still the national policy.
485	And it should continue to be the national policy.
486	But as yet, not all of us have learned what it means to bargain freely and fairly. Nor have all of us learned to carry the mutual responsibilities that accompany the right to bargain. There have been abuses and harmful practices which limit the effectiveness of our system of collective bargaining. Furthermore, we have lacked sufficient governmental machinery to aid labor and management in resolving their differences.
487	Certain labor-management problems need attention at once and certain others, by reason of their complexity, need exhaustive investigation. and study.
488	We should enact legislation to correct certain abuses and to provide additional governmental assistance in bargaining. But we should also concern ourselves with the basic causes of labor-management difficulties. In the light of these considerations, I propose to you and urge your cooperation in effecting the following four-point program to reduce industrial strife:
489	Point number one is the early enactment of legislation to prevent certain unjustifiable practices.
490	First, under this point, are jurisdictional strikes. In such strikes the public and the employer are innocent bystanders who are injured by a collision between rival unions. This type of dispute hurts production, industry, and the public-and labor itself. I consider jurisdictional strikes indefensible.
491	The National Labor Relations Act provides procedures for determining which union represents employees of a particular employer. In some jurisdictional disputes, however, minority unions strike to compel employers to deal with them despite a legal duty to bargain with the majority union. Strikes to compel an employer to violate the law are inexcusable. Legislation to prevent such strikes is clearly desirable.
492	Another form of inter-union disagreement is the jurisdictional strike involving the question of which labor union is entitled to perform a particular task. When rival umons are unable to settle such disputes themselves, provision must be made for peaceful and binding determination of the issues.
493	A second unjustifiable practice is the secondary boycott, when used to further jurisdictional disputes or to compel employers to violate the National Labor Relations Act.
494	Not all secondary boycotts are unjustified. We must judge them on the basis of their objectives. For example, boycotts intended to protect wage rates and working conditions should be distinguished from those in furtherance of jurisdictional disputes. The structure of industry sometimes requires unions, as a matter of self-preservation, to extend the conflict beyond a particular employer. There should be no blanket prohibition against boycotts. The appropriate goal is legislation which prohibits secondary boycotts in pursuance of unjustifiable objectives, but does not impair the union's right to preserve its own existence and the gains made in genuine collective bargaining.
495	A third practice that should be corrected is the use of economic force, by either labor or management, to decide issues arising out of the interpretation of existing contracts.
496	Collective bargaining agreements, like other contracts, should he faithfully adhered to by both parties. In the most enlightened union-management relationships, disputes over the interpretation of contract terms are settled peaceably by negotiation or arbitration. Legislation should be enacted to provide machinery whereby unsettled disputes concerning the interpretation of an existing agreement may be referred by either party to final and binding arbitration.
497	Point number two is the extension of facilities within the Department of Labor for assisting collective bargaining.
498	One of our difficulties in avoiding labor strife arises from a lack of order in the collective bargaining process. The parties often do not have a clear understanding of their responsibility for settling disputes through their own negotiations. We constantly see instances where labor or management resorts to economic force without exhausting the possibilities for agreement through the bargaining process. Neither the parties nor the Government have a definite yardstick for determining when and how Government assistance should be invoked. There is need for integrated governmental machinery to provide the successive steps of mediation, voluntary arbitration, and-ultimately in appropriate cases-ascertainment of the facts of the dispute and the reporting of the facts to the public. Such machinery would facilitate and expedite the settlement of disputes.
499	Point number three is the broadening of our program of social legislation to alleviate the causes of workers' insecurity.
500	On June ii, 1946, in my message vetoing the Case Bill, I made a comprehensive statement of my views concerning labor-management relations. I said then, and I repeat now, that the solution of labor-management difficulties is to be found not only in legislation dealing directly with labor relations, but also in a program designed to remove the causes of insecurity felt by many workers in our industrial society. In this connection, for example, the Congress should consider the extension and broadening of our social security system, better housing, a comprehensive national health program, and provision for a fair minimum wage.
501	Point number four is the appointment of a Temporary Joint Commission to inquire into the entire field of labor-management relations.
502	I recommend that the Congress provide for the appointment of a Temporary Joint Commission to undertake this broad study.
503	The President, the Congress, and management and labor have a continuing responsibility to cooperate in seeking and finding the solution of these problems. I therefore recommend that the Commission be composed as follows: twelve to be chosen by the Congress from members of both parties in the House and the Senate, and eight representing the public, management and labor, to be appointed by the President.
504	The Commission should be charged with investigating and making recommendations upon certain major subjects, among others:
505	First, the special and unique problem of nationwide strikes in vital industries affecting the public interest. In particular, the Commission should examine into the question of how to settle or prevent such strikes without endangering our general democratic freedoms.
506	Upon a proper solution of this problem may depend the whole industrial future of the United States. The paralyzing effects of a nationwide strike in such industries as transportation, coal, oil, steel, or communications can result in national disaster. We have been able to avoid such disaster, in recent years, only by the use of extraordinary war powers. All those powers will soon be gone. In their place there must be created an adequate system and effective machinery in these vital fields. This prob1cm will require careful study and a bold approach, but an approach consistent with the preservation of the rights of our people. The need is pressing. The Commission should give this its earliest attention.
507	Second, the best methods and procedures for carrying out the collective bargaining process. This should include the responsibilities of labor and management to negotiate freely and fairly with each other, and to refrain from strikes or lockouts until all possibilities of negotiation have been exhausted.
508	Third, the underlying causes of labor management disputes.
509	Some of the subjects presented here for investigation involve long-range study. Others can be considered immediately by the Commission and its recommendations can be submitted to the Congress in the near future.
510	I recommend that this Commission make its first report, including specific legislative recommendations, not later than March 15, 1947.
511	RESTRICTION OF MONOPOLY AND PROMOTION OF PRIVATE ENTERPRISE
512	The second major policy I desire to lay before you has to do with the growing concentration of economic power and the threat to free competitive private enterprise. In 1941 the Temporary National Economic Committee completed a comprehensive investigation into the workings of the national economy. The Committee's study showed that, despite a half century of anti-trust law enforcement, one of the gravest threats to our welfare lay in the increasing concentration of power in the hands of a small number of giant organizations.
513	During the war, this long-standing tendency toward economic concentration was accelerated. As a consequence, we now find that to a greater extent than ever before, whole industries are dominated by one or a few large organizations which can restrict production in the interest of higher profits and thus reduce employment and purchasing power.
514	In an effort to assure full opportunity and free competition to business we will vigorously enforce the anti-trust laws. There is much the Congress can do to cooperate and assist in this program.
515	To strengthen and enforce the laws that regulate business practices is not enough. Enforcement must be supplemented by positive measures of aid to new enterprises. Government assistance, research programs, and credit powers should be designed and used to promote the growth of new firms and new industries. Assistance to small business is particularly important at this time when thousands of veterans who are potential business and industrial leaders are beginning their careers.
516	We should also give special attention to the decentralization of industry and the development of areas that are now underindustrialized.
517	HOUSING
518	The third major policy is also of great Importance to the national economy-an aggressive program to encourage home construction. The first Federal program to relieve the veterans' housing shortage was announced in February 1946. In 1946 one million family housing units have been put under construction and more than 665,000 units have already been completed. The rate of expansion in construction has broken all records.
519	In the coming year the number of dwelling units built will approach, if not surpass, the top construction year of 1926. The primary responsibility to deliver housing at reasonable prices that veterans can afford rests with private industry and with labor. The Government will continue to expedite the flow of key building materials, to limit nonresidential construction, and to give financial support where it will do the most good. Measures to stimulate rental housing and new types of housing construction will receive special emphasis.
520	To reach our long-range goal of adequate housing for all our people, comprehensive housing legislation is urgently required, similar to the non-partisan bill passed by the Senate last year. At a minimum, such legislation should open the way for rebuilding the blighted areas of our cities and should establish positive incentives for the investment of billions of dollars of private capital in large-scale rental housing projects. It should provide for improvement of housing in rural areas and for the construction, over a 4-year period, of half a million units of public low-rental housing. It should authorize a single peacetime Federal housing agency to assure efficient use of our resources on the vast housing front.
521	FISCAL AFFAIRS
522	The fourth major policy has to do with the balancing of the budget. in a prosperous period such as the present one, the budget of the Federal Government should be balanced. Prudent management of public finance requires that we begin the process of reducing the public debt. The budget which I shall submit to you this week has a small margin of surplus. In the Budget Message I am making recommendations which, if accepted, will result in a substantially larger surplus which should be applied to debt retirement. One of these recommendations is that the Congress take early action to continue throughout the next fiscal year the war excise tax rates which, under the present law, will expire on June 30, 1947.
523	Expenditures relating to the war are still high. Considerable sums are required to alleviate world famine and suffering. Aid to veterans will continue at peak level. The world situation is such that large military expenditures are required. Interest on the public debt and certain other costs are irreducible. For these reasons I have had to practice stringent economy in preparing the budget; and I hope that the Congress will cooperate in this program of economy.
524	AGRICULTURE
525	The fifth major policy has to do with the welfare of our farm population.
526	Production of food reached record heights in 1946. Much of our tremendous grain crop can readily be sold abroad and thus will become no threat to our domestic markets. But in the next few years American agriculture can face the same dangers it did after World War I. In the early twenties the Nation failed to maintain outlets for the new productive capacity of our agricultural plant. It failed to provide means to protect the farmer while he adjusted his acreage to peacetime demands.
527	The result we all remember too well. Farm production stayed up while demand and prices fell, in contrast with industry where prices stayed up and output declined. Farm surpluses piled up, and disaster followed.
528	We must make sure of meeting the problems which we failed to meet after the first World War. Present laws give considerable stability to farm prices for 1947 and i948, and these 2 years must be utilized to maintain and develop markets for our great productive power.
529	The purpose of these laws was to permit an orderly transition from war to peace. The Government plan of support prices was not designed to absorb, at great cost, the unlimited surpluses of a highly productive agriculture.
530	We must not wait until the guarantees expire to set the stage for permanent farm welfare.
531	The farmer is entitled to a fair income.
532	Ways can be found to utilize his new skills and better practices, to expand his markets at home and abroad, and to carry out the objectives of a balanced pattern of peacetime production without either undue sacrifice by farm people or undue expense to the Government.
533	HEALTH AND GENERAL WELFARE
534	Of all our national resources, none is of more basic value than the health of our people. Over a year ago I presented to the Congress my views on a national health program. The Congress acted on several of the recommendations in this program: mental health, the health of mothers and children, and hospital construction. I urge this Congress to complete the work begun last year and to enact the most important recommendation of the program-to provide adequate medical care to all who need it, not as charity but on the basis of payments made by the beneficiaries of the program.
535	One administrative change would help greatly to further our national program in the fields of health, education, and welfare. I again recommend the establishment of a well-integrated Department of Welfare.
536	VETERANS
537	Fourteen million World War II servicemen have returned to civil life. The great majority have found their places as citizens of their communities and their Nation. It is a tribute to the fiber of our servicemen and to the flexibility of our economy that these adjustments have been made so rapidly and so successfully.
538	More than two million of these veterans are attending schools or acquiring job skills through the financial assistance of the Federal Government. Thousands of sick and wounded veterans are daily receiving the best of medical and hospital care. Half a million have obtained loans, with Government guarantees, to purchase homes or farms or to embark upon new businesses. Compensation is being paid in almost two million cases for disabilities or death. More than three million are continuing to maintain their low-cost National Service Life Insurance policies. Almost seven million veterans have been aided by unemployment and self employment allowances.
539	Exclusive of mustering-out payments and terminal leave pay, the program for veterans of all wars is costing over seven billion dollars a year - one-fifth of our total Federal budget. This is the most far-reaching and complete veterans program ever conceived by any nation.
540	Except for minor adjustments, I believe that our program of benefits for veterans is now complete. In the long run, the success of the program will not be measured by the number of veterans receiving financial aid or by the number of dollars we spend. History will judge us not by the money we spend, but by the further contribution we enable our veterans to make to their country. In considering any additional legislation, that must be our criterion.
541	CIVIL RIGHTS
542	We have recently witnessed in this country numerous attacks upon the constitutional rights of individual citizens as a result of racial and religious bigotry. Substantial segments of our people have been prevented from exercising fully their right to participate in the election of public officials, both locally and nationally. Freedom to engage in lawful callings has been denied.
543	The will to fight these crimes should be in the hearts of every one of us.
544	For the Federal Government that fight is now being carried on by the Department of Justice to the full extent of the powers that have been conferred upon it. While the Constitution withholds from the Federal Government the major task of preserving peace in the several States, I am not convinced that the present legislation reached the limit of Federal power to protect the civil rights of its citizens.
545	I have, therefore, by Executive order,1 established the President's Committee on Civil Rights to study and report on the whole problem of federally-secured civil rights, with a view to making recommendations to the Congress.
546	NATURAL RESOURCES
547	In our responsibility to promote the general welfare of the people, we have always to consider the natural resources of our country. They are the foundation of our life. In the development of the great river systems of America there is the major opportunity of our generation to contribute to the increase of the national wealth. This program is already well along; it should be pushed with full vigor.
548	Executive Order 9808 (3 CFR, '943-1948 Comp., p.590).
549	FOREIGN AFFAIRS
550	Progress in reaching our domestic goals is closely related to our conduct of foreign affairs. All that I have said about maintaining a sound and prosperous economy and improving the welfare of our people has greater meaning because of the world leadership of the United States. What we do, or fail to do, at home affects not only ourselves but millions throughout the world. If we are to fulfill our responsibilities to ourselves and to other peoples, we must make sure that the United States is sound economically, socially, and politically. Only then will we be able to help bring about the elements of peace in other countries-political stability, economic advancement, and social progress.
551	Peace treaties for Italy, Bulgaria, Rumania, and Hungary have finally been prepared. Following the signing of these treaties next month in Paris, they will he submitted to the Senate for ratification. This Government does not regard the treaties as completely satisfactory. Whatever their defects, however, I am convinced that they are as good as we can hope to obtain by agreement among the principal wartime Allies. Further dispute and delay would gravely jeopardize political stability in the countries concerned for many years.
552	During the long months of debate on these treaties, we have made it clear to all nations that the United States will not consent to settlements at the expense of principles we regard as vital to a just and enduring peace. We have made it equally clear that we will not retreat to isolationism. Our policies will be the same during the forthcoming negotiations in Moscow on the German and Austrian treaties, and during the future conferences on the Japanese treaty.
553	The delay in arriving at the first peace settlements is due partly to the difficulty of reaching agreement with the Soviet Union on the terms of settlement. Whatever differences there may have been between us and the Soviet Union, however, should not be allowed to obscure the fact that the basic interests of both nations lie in the early making of a peace under which the peoples of all countries may return, as free men and women, to the essential tasks of production and reconstruction. The major concern of each of us should be the promotion of collective security, not the advancement of individual security.
554	Our policy toward the Soviet Union is guided by the same principles which determine our policies toward all nations. We seek only to uphold the principles of international justice which have been embodied in the Charter of the United Nations.
555	We must now get on with the peace settlements. The occupying powers should recognize the independence of Austria and withdraw their troops. The Germans and the Japanese cannot be left in doubt and fear as to their future; they must know their national boundaries, their resources, and what reparations they must pay. Without trying to manage their internal affairs, we can insure that these countries do not re-arm.
556	INTERNATIONAL RELIEF AND DISPLACED PERSONS
557	The United States can be proud of its part in caring for the peoples reduced to want by the ravages of war, and in aiding nations to restore their national economies. We have shipped more supplies to the hungry peoples of the world since the end of the war than all other countries combined.
558	However, insofar as admitting displaced persons is concerned, I do not feel that the United States has done its part. Only about 5,000 of them have entered this country since May, 1946. The fact is that the executive agencies are now doing all that is reasonably possible under the limitation of the existing law and established quotas. Congressional assistance in the form of new legislation is needed. I urge the Congress to turn its attention to this world problem, in an effort to find ways whereby we can fulfill our responsibilities to these thousands of homeless and suffering refugees of all faiths.
559	INTERNATIONAL TRADE
560	World economic cooperation is essential to world political cooperation. We have made a good start on economic cooperation through the International Bank, the International Monetary Fund, and the Export Import Bank. We must now take other Steps for the reconstruction of world trade and we should continue to Strive for an international trade system as free from obstructions as possible.
561	ATOMIC ENERGY
562	The United States has taken the lead in the endeavor to put atomic energy under effective international control. We seek no monopoly for ourselves or for any group of nations. We ask only that there be safeguards sufficient to insure that no nation will be able to use this power for military purposes. So long as all governments are not agreed on means of international control of atomic energy, the shadow of fear will obscure the bright prospects for the peaceful use of this enormous power.
563	In accordance with the Atomic Energy Act of 1946, the Commission established under that law is assuming full jurisdiction over domestic atomic energy enterprise. The program of the Commission will, of course, be worked out in close collaboration with the military services in conformity with the wish of the Congress, but it is my fervent hope that the military significance of atomic energy will steadily decline. We look to the Commission to foster the development of atomic energy for industrial use and scientific and medical research. In the vigorous and effective development of peaceful uses of atomic energy rests our hope that this new force may ultimately be turned into a blessing for all nations.
564	MILITARY POLICY
565	In 1946 the Army and Navy completed the demobilization of their wartime forces. They are now maintaining the forces which we need for national defense and to fulfill our international obligations.
566	We live in a world in which strength on the part of peace4oving nations is still the greatest deterrent to aggression. World stability can be destroyed when nations with great responsibilities neglect to maintain the means of discharging those responsibilities.
567	This is an age when unforeseen attack could come with unprecedented speed. We must be strong enough to defeat, and thus forestall, any such attack. In our steady progress toward a more rational world order, the need for large armed forces is progressively declining; but the stabilizing force of American military strength must not be weakened until our hopes are fully realized. When a system of collective security under the United Nations has been established, we shall be willing to lead in collective disarmament, but, until such a system becomes a reality, we must not again allow ourselves to become weak and invite attack.
568	For those reasons, we need well equipped, well trained armed forces and we must be able to mobilize rapidly our resources in men and material for our own defense, should the need arise.
569	The Army will be reduced to 1,070,000 officers and men by July I, 1947. Half of the Army will be used for occupation duties abroad and most of the remainder will be employed at home in the support of these overseas forces.
570	The Navy is supporting the occupation troops in Europe and in the Far East. Its fundamental mission-to support our national interests wherever required-is unchanged. The Navy, including the Marine Corps, will average 571,000 officers and men during the fiscal year 1948.
571	We are encountering serious difficulties in maintaining our forces at even these reduced levels. Occupation troops are barely sufficient to carry out the duties which our foreign policy requires. Our forces at home are at a point where further reduction is impracticable. We should like an Army and a Navy composed entirely of long-term volunteers, but in spite of liberal inducements the basic needs of the Army are not now being met by voluntary enlistments.
572	The War Department has advised me that it is unable to make an accurate forecast at the present time as to whether it will be possible to maintain the strength of the Army by relying exclusively on volunteers. The situation will be much clearer in a few weeks, when the results of the campaign for volunteers are known. The War Department will make its recommendations as to the need for the extension of Selective Service in sufficient time to enable the Congress to take action prior to the expiration of the present law on March 31st. The responsibility for maintaining our armed forces at the strength necessary for our national safety rests with the Congress.
573	The development of a trained citizen reserve is also vital to our national security. This can best be accomplished through universal training. I have appointed an Advisory Commission on Universal Training to study the various plans for a training program, and I expect that the recommendations of the Commission will be of benefit to the Congress and to me in reaching decisions on this problem.
574	The cost of the military establishment is substantial. There is one certain way by which we can cut costs and at the same time enhance our national security. That is by the establishment of a single Department of National Defense. I shall communicate with the Congress in the near future with reference to the establishment of a single Department of National Defense.
575	National security docs not consist only of an army, a navy, and an air force. It rests on a much broader basis. It depends on a sound economy of prices and wages, on prosperous agriculture, on satisfied and productive workers, on a competitive private enterprise free from monopolistic repression, on continued industrial harmony and production, on civil liberties and human freedoms in all the forces which create in our men and women a strong moral fiber and spiritual stamina.
576	But we have a higher duty and a greater responsibility than the attainment of our own national security. Our goal is collective security for all mankind.
577	If we can work in a spirit of understanding and mutual respect, we can fulfill this solemn obligation which rests upon us.
578	The spirit of the American people can set the course of world history. If we maintain and strengthen our cherished ideals, and if we share our great bounty with war-stricken people over the world, then the faith of our citizens in freedom and democracy will be spread over the whole earth and free men everywhere will share our devotion to those ideals.
579	Let us have the will and the patience to do this job together.
580	May the Lord strengthen us in our faith. May He give us wisdom to lead the peoples of the world in His ways of peace.@
581	Harry S. Truman|Annual Message to the Congress on the State of the Union|1948-01-07|@Mr. President, Mr. Speaker, and Members of the 80th Congress:
582	We are here today to consider the state of the Union.
583	On this occasion, above all others, the Congress and the President should concentrate their attention, not upon party but upon the country; not upon things which divide us but upon those which bind us together-the enduring principles of our American syst em, and our common aspirations for the future welfare and security of the people of the United States.
584	The United States has become great because we, as a people, have been able to work together for great objectives even while differing about details.
585	The elements of our strength are many. They include our democratic government, our economic system, our great natural resources. But these are only partial explanations.
586	The basic source of our strength is spiritual. For we are a people with a faith. We believe in the dignity of man. We believe that he was created in the image of the Father of us all.
587	We do not believe that men exist merely to strengthen the state or to be cogs in the economic machine. We do believe that governments are created to serve the people and that economic systems exist to minister to their wants. We have a profound devotion to the welfare and rights of the individual as a human being.
588	The faith of our people has particular meaning at this time in history because of the unsettled and changing state of the world.
589	The victims of war in many lands are striving to rebuild their lives, and are seeking assurance that the tragedy of war will not occur again. Throughout the world new ideas are challenging the old. Men of all nations are re-examining the beliefs by whi ch they live. Great scientific and industrial changes have released new forces which will affect the future course of civilization.
590	The state of our Union reflects the changing nature of the modern world. On all sides there is heartening evidence of great energy-of capacity for economic development-and even more important, capacity for spiritual growth. But accompanying this great a ctivity there are equally great questions, great anxieties, and great aspirations. They represent the concern of an enlightened people that conditions should be so arranged as to make life more worthwhile.
591	We must devote ourselves to finding answers to these anxieties and aspirations. We seek answers which will embody the moral and spiritual elements of tolerance, unselfishness, and brotherhood upon which true freedom and opportunity must rest.
592	As we examine the state of our Union today, we can benefit from viewing it on a basis of the accomplishments of the last decade and of our goals for the next. How far have we come during the last 10 years and how far can we go in the next 10?
593	It was 10 years ago that the determination of dictators to wage war upon mankind became apparent. The years that followed brought untold death and destruction.
594	We shared in the human suffering of the war, but we were fortunate enough to escape most of war's destruction. We were able through these 10 years to expand the productive strength of our farms and factories.
595	More important, however, is the fact that these years brought us new courage, new confidence in the ideals of our free democracy. Our deep belief in freedom and justice was reinforced in the crucible of war.
596	On the foundations of our greatly strengthened economy and our renewed confidence in democratic values, we can continue to move forward.
597	There are some who look with fear and distrust upon planning for the future. Yet our great national achievements have been attained by those with vision. Our Union was formed, our frontiers were pushed back, and our great industries were built by men wh o looked ahead.
598	I propose that we look ahead today toward those goals for the future which have the greatest bearing upon the foundations of our democracy and the happiness of our people.
599	I do so, confident in the thought that with clear objectives and with firm determination, we can, in the next 10 years, build upon the accomplishments of the past decades to achieve a glorious future. Year by year, beginning now, we must make a substan tial part of this progress.
600	Our first goal is to secure fully the essential human rights of our citizens.
601	The United States has always had a deep concern for human rights. Religious freedom, free speech, and freedom of thought are cherished realities in our land. Any denial of human rights is a denial of the basic beliefs of democracy and of our regard for the worth of each individual.
602	Today, however, some of our citizens are still denied equal opportunity for education, for jobs and economic advancement, and for the expression of their views at the polls. Most serious of all, some are denied equal protection under laws. Whether discri mination is based on race, or creed, or color, or land of origin, it is utterly contrary to American ideals of democracy.
603	The recent report of the President's Committee on Civil Rights points the way to corrective action by the Federal Government and by State and local governments. Because of the need for effective Federal action, I shall send a special message to the Cong ress on this important subject.
604	We should also consider our obligation to assure the fullest possible measure of civil rights to the people of our territories and possessions. I believe that the time has come for Alaska and Hawaii to be admitted to the Union as States.
605	Our second goal is to protect and develop our human resources.
606	The safeguarding of the rights of our citizens must be accompanied by an equal regard for their opportunities for development and their protection from economic insecurity. In this Nation the ideals of freedom and equality can be given specific meaning in terms of health, education, social security, and housing.
607	Over the past 12 years we have erected a sound framework of social security legislation. Many millions of our citizens are now protected against the loss of income which can come with unemployment, old age, or the death of wage earners. Yet our system has gaps and inconsistencies; it is only half finished.
608	We should now extend unemployment compensation, old age benefits, and survivors' benefits to millions who are not now protected. We should also raise the level of benefits.
609	The greatest gap in our social security structure is the lack of adequate provision for the Nation's health. We are rightly proud of the high standards of medical care we know how to provide in the United States. The fact is, however, that most of our p eople cannot afford to pay for the care they need.
610	I have often and strongly urged that this condition demands a national health program. The heart of the program must be a national system of payment for medical care based on well-tried insurance principles. This great Nation cannot afford to allow its citizens to suffer needlessly from the lack of proper medical care.
611	Our ultimate aim must be a comprehensive insurance system to protect all our people equally against insecurity and ill health.
612	Another fundamental aim of our democracy is to provide an adequate education for every person.
613	Our educational systems face a financial crisis. It is deplorable that in a Nation as rich as ours there are millions of children who do not have adequate schoolhouses or enough teachers for a good elementary or secondary education. If there are educat ional inadequacies in any State, the whole Nation suffers. The Federal Government has a responsibility for providing financial aid to meet this crisis.
614	In addition, we must make possible greater equality of opportunity to all our citizens for education. Only by so doing can we insure that our citizens will be capable of understanding and sharing the responsibilities of democracy.
615	The Government's programs for health, education, and security are of such great importance to our democracy that we should now establish an executive department for their administration.
616	Health and education have their beginning in the home. No matter what our hospitals or schools are like, the youth of our Nation are handicapped when millions of them live in city slums and country shacks. Within the next decade, we must see that every A merican family has a decent home. As an immediate step we need the long range housing program which I have recommended on many occasions to this Congress. This should include financial aids designed to yield more housing at lower prices. It should provi de public housing for low-income families, and vigorous development of new techniques to lower the cost of building.
617	Until we can overcome the present drastic housing shortage, we must extend and strengthen rent control.
618	We have had, and shall continue to have, a special interest in the welfare of our veterans. Over 14 million men and women who served in the armed forces in World War II have now returned to civilian life. Over 2 million veterans are being helped through school. Millions have been aided while finding jobs, and have been helped in buying homes, in obtaining medical care, and in adjusting themselves to physical handicaps.
619	All but a very few veterans have successfully made the transition from military life to their home communities. The success of our veterans' program is proved by this fact. This Nation is proud of the eagerness shown by our veterans to become self-relian t and self-supporting citizens.
620	Our third goal is to conserve and use our natural resources so that they can contribute most effectively to the welfare of our people.
621	The resources given by nature to this country are rich and extensive. The material foundations of our growth and economic development are the bounty of our fields, the wealth of our mines and forests, and the energy of our waters. As a Nation, we are co ming to appreciate more each day the close relationship between the conservation of these resources and the preservation of our national strength.
622	We are doing far less than we know how to do to make use of our resources without destroying them. Both the public and private use of these resources must have the primary objective of maintaining and increasing these basic supports for an expanding fut ure.
623	We must continue to take specific steps toward this goal. We must vigorously defend our natural wealth against those who would misuse it for selfish gain.
624	We need accurate and comprehensive knowledge of our mineral resources and must intensify our efforts to develop new supplies and to acquire stockpiles of scarce materials.
625	We need to protect and restore our land public and private-through combating erosion and rebuilding the fertility of the soil.
626	We must expand our reclamation program to bring millions of acres of arid land into production, and to improve water supplies for additional millions of acres. This will provide new opportunities for veterans and others, particularly in the West, and ai d in providing a rising living standard for a growing population.
627	We must protect and restore our forests by sustained-yield forestry and by planting new trees in areas now slashed and barren.
628	We must continue to erect multiple-purpose dams on our great rivers-not only to reclaim land, but also to prevent floods, to extend our inland waterways and to provide hydroelectric power. This public power must not be monopolized for private gain. Only through well established policies of transmitting power directly to its market and thus encouraging widespread use at low rates can the Federal Government assure the people of their full share of its benefits. Additional power - public and private - i s needed to raise the ceilings now imposed by power shortages on industrial and agricultural development.
629	We should achieve the wise use of resources through the integrated development of our great river basins. We can learn much from our Tennessee Valley experience. We should no longer delay in applying the lessons of that vast undertaking to our other gre at river basins.
630	Our fourth goal is to lift the standard of living for all our people by strengthening our economic system and sharing more broadly among our people the goods we produce.
631	The amazing economic progress of the past 10 years points the way for the next 10.
632	Today 14 million more people have jobs than in 1938.
633	Our yearly output of goods and services has increased by two-thirds.
634	The average income of our people, measured in dollars of equal purchasing power, has increased-after taxes-by more than 50 percent.
635	In no other 10 years have farmers, businessmen, and wage earners made such great gains.
636	We may not be able to expand as rapidly in the next decade as in the last, because we are now starting from full employment and very high production. But we can increase our annual output by at least one-third above the present level. We can lift our sta ndard of living to nearly double what it was 10 years ago.
637	If we distribute these gains properly, we can go far toward stamping out poverty in our generation.
638	To do this, agriculture, business, and labor must move forward together.
639	Permanent farm prosperity and agricultural abundance will be achieved only as our whole economy grows and prospers. The farmer can sell more food at good prices when the incomes of wage earners are high and when there is full employment. Adequate diets for every American family, and the needs of our industries at full production, will absorb a farm output well above our present levels.
640	Although the average farmer is now better off than ever before, farm families as a whole have only begun to catch up with the standards of living enjoyed in the cities. In 1946, the average income of farm people was $779, contrasted with an average incom e of $1,288 for non-farm people. Within the next decade, we should eliminate elements of inequality in these living standards.
641	To this end our farm program should enable the farmer to market his varied crops at fair price levels and to improve his standard of living.
642	We need to continue price supports for major farm commodities on a basis which will afford reasonable protection against fluctuations in the levels of production and demand. The present price support program must be reexamined and modernized.
643	Crop insurance should be strengthened and its benefits extended in order to protect the farmer against the special hazards to which he is subject.
644	We also need to improve the means for getting farm products into markets and into the hands of consumers. Cooperatives which directly or indirectly serve this purpose must be encouraged - not discouraged. The school lunch program should be continued and adequately financed.
645	We need to go forward with the rural electrification program to bring the benefits of electricity to all our farm population.
646	We can, and must, aid and encourage farmers to conserve their soil resources and restore the fertility of the land that has suffered from neglect or unwise use.
647	All these are practical measures upon which we should act immediately to enable agriculture to make its full contribution to our prosperity.
648	We must also strengthen our economic system within the next decade by enlarging our industrial capacity within the framework of our free enterprise system.
649	We are today far short of the industrial capacity we need for a growing future. At least $50 billion should be invested by industry to improve and expand our productive facilities over the next few years. But this is only the beginning. The industrial ap plication of atomic energy and other scientific advances will constantly open up further opportunities for expansion. Farm prosperity and high employment will call for an immensely increased output of goods and services.
650	Growth and vitality in our economy depend on vigorous private enterprise. Free competition is the key to industrial development, full production and employment, fair prices, and an ever improving standard of living. Competition is seriously limited tod ay in many industries by the concentration of economic power and other elements of monopoly. The appropriation of sufficient funds to permit proper enforcement of the present antitrust laws is essential. Beyond that we should go on to strengthen our leg islation to protect competition.
651	Another basic element of a strong economic system is the well-being of the wage earners.
652	We have learned that the well-being of workers depends on high production and consequent high employment. We have learned equally well that the welfare of industry and agriculture depends on high incomes for our workers.
653	The Government has wisely chosen to set a floor under wages. But our 40-cent minimum wage is inadequate and obsolete. I recommend the lifting of the minimum wage to 75 cents an hour.
654	In general, however, we must continue to rely on our sound system of collective bargaining to set wage scales. Workers' incomes should increase at a rate consistent with the maintenance of sound price, profit, and wage relationships and with increase of productivity.
655	The Government's part in labor-management relations is now largely controlled by the terms of the Labor-Management Relations Act of 1947. I made my attitude clear on this act in my veto message to the Congress last June. Nothing has occurred since to ch ange my opinion of this law. As long as it remains the law of the land, however, I shall carry out my constitutional duty and administer it.
656	As we look ahead we can understand the crucial importance of restraint and wisdom in arriving at new labor-management contracts. Work stoppages would result in a loss of production-a loss which could bring higher prices for our citizens and could also d eny the necessities of life to the hard pressed peoples of other lands. It is my sincere hope that the representatives of labor and of industry will bear in mind that the Nation as a whole has a vital stake in the success of their bargaining efforts.
657	If we surmount our current economic difficulties, we can move ahead to a great increase in our national income which will enable all our people to enjoy richer and fuller lives.
658	All of us must advance together. One fifth of our families now have average annual incomes of less than $850. We must see that our gains in national income are made more largely available to those with low incomes, whose need is greatest. This will bene fit us all through providing a stable foundation of buying power to maintain prosperity.
659	Business, labor, agriculture, and Government, working together, must develop the policies which will make possible the realization of the full benefits of our economic system.
660	Our fifth goal is to achieve world peace based on principles of freedom and justice and the equality of all nations.
661	Twice within our generation, world wars have taught us that we cannot isolate ourselves from the rest of the world.
662	We have learned that the loss of freedom in any area of the world means a loss of freedom to ourselves - that the loss of independence by any nation adds directly to the insecurity of the United States and all free nations.
663	We have learned that a healthy world economy is essential to world peace-that economic distress is a disease whose evil effects spread far beyond the boundaries of the afflicted nation.
664	For these reasons the United States is vigorously following policies designed to achieve a peaceful and prosperous world.
665	We are giving, and will continue to give, our full support to the United Nations. While that organization has encountered unforeseen and unwelcome difficulties, I am confident of its ultimate success. We are also devoting our efforts toward world econom ic recovery and the revival of world trade. These actions are closely related and mutually supporting.
666	We believe that the United States can be an effective force for world peace only if it is strong. We look forward to the day when nations will decrease their armaments. Yet so long as there remains serious opposition to the ideals of a peaceful world, w e must maintain strong armed forces.
667	The passage of the National Security Act by the Congress at its last session was a notable step in providing for the security of this country. A further step which I consider of even greater importance is the early provision for universal training. There are many elements in a balanced national security program, all interrelated and necessary, but universal training should be the foundation for them all. A favorable decision by the Congress at an early date is of world importance. I am convinced that su ch action is vital to the security of this Nation and to the maintenance of its leadership.
668	The United States is engaged today in many international activities directed toward the creation of lasting peaceful relationships among nations.
669	We have been giving substantial aid to Greece and Turkey to assist those nations in preserving their integrity against foreign pressures. Had it not been for our aid, their situation today might well be radically different. The continued integrity of th ose countries will have a powerful effect upon other nations in the Middle East and in Europe struggling to maintain their independence while they repair the damages of war.
670	The United States has special responsibilities with respect to the countries in which we have occupation forces: Germany, Austria, Japan, and Korea. Our efforts to reach agreements on peace settlements for these countries have so far been blocked. But we shall continue to exert our utmost efforts to obtain satisfactory settlements for each of these nations.
671	Many thousands of displaced persons, still living in camps overseas, should be allowed entry into the United States. I again urge the Congress to pass suitable legislation at once so that this Nation may do its share in caring for the homeless and suffer ing refugees of all faiths. I believe that the admission of these persons will add to the strength and energy of this Nation.
672	We are moving toward our goal of world peace in many ways. But the most important efforts which we are now making are those which support world economic reconstruction. We are seeking to restore the world trading system which was shattered by the war an d to remedy the economic paralysis which grips many countries.
673	To restore world trade we have recently taken the lead in bringing about the greatest reduction of world tariffs that the world has ever seen. The extension of the provisions of the Reciprocal Trade Agreements Act, which made this achievement possible, is of extreme importance. We must also go on to support the International Trade Organization, through which we hope to obtain worldwide agreement on a code of fair conduct in international trade.
674	Our present major effort toward economic reconstruction is to support the program for recovery developed by the countries of Europe. In my recent message to the Congress, I outlined the reasons why it is wise and necessary for the United States to extend this support.
675	I want to reaffirm my belief in the soundness and the promise of this proposal. When the European economy is strengthened, the product of its industry will be of benefit to many other areas of economic distress. The ability of free men to overcome hunger and despair will be a moral stimulus to the entire world.
676	We intend to work also with other nations in achieving world economic recovery. We shall continue our cooperation with the nations of the Western Hemisphere. A special program of assistance to China, to provide urgent relief needs and to speed reconstru ction, will be submitted to the Congress.
677	Unfortunately, not all governments share the hope of the people of the United States that economic reconstruction in many areas of the world can be achieved through cooperative effort among nations. In spite of these differences we will go forward with o ur efforts to overcome economic paralysis.
678	No nation by itself can carry these programs to success; they depend upon the cooperative and honest efforts of all participating countries. Yet the leadership is inevitably ours.
679	I consider it of the highest importance that the Congress should authorize support for the European recovery program for the period from April 1, 1948, to June 30, 1952, with an initial amount for the first 15 months of $6.8 billion. I urge the Congress to act promptly on this vital measure of our foreign policy this decisive contribution to world peace.
680	We are following a sound, constructive, and practical course in carrying out our determination to achieve peace.
681	We are fighting poverty, hunger, and suffering.
682	This leads to peace-not war.
683	We are building toward a world where all nations, large and small alike, may live free from the fear of aggression.
684	This leads to peace-not war. Above all else, we are striving to achieve a concord among the peoples of the world based upon the dignity of the individual and the brotherhood of man.
685	This leads to peace-not war.
686	We can go forward with confidence that we are following sound policies, both at home and with other nations, which will lead us toward our great goals for economic, social and moral achievement.
687	As we enter the new year, we must surmount one major problem which affects all our goals. That is the problem of inflation.
688	Already inflation in this country is undermining the living standards of millions of families. Food costs too much. Housing has reached fantastic price levels. Schools and hospitals are in financial distress. Inflation threatens to bring on disagreem ent and strife between labor and management.
689	Worst of all, inflation holds the threat of another depression, just as we had a depression after the unstable boom following the First World War.
690	When I announced last October that the Congress was being called into session, I described the price increases which had taken place since June 1946. Wholesale prices had increased 40 percent; retail prices had increased 23 percent.
691	Since October prices have continued to rise. Wholesale prices have gone up at an annual rate of 18 percent. Retail prices have gone up at an annual rate of 10 percent.
692	The events which have occurred since I presented my 10-point anti-inflation program to the Congress in November have made it even clearer that all in points are essential.
693	High prices must not be our means of rationing.
694	We must deal effectively and at once with the high cost of living.
695	We must stop the spiral of inflation.
696	I trust that within the shortest possible time the Congress will make available to the Government the weapons that are so desperately needed in the fight against inflation.
697	One of the most powerful anti-inflationary factors in our economy today is the excess of Government revenues over expenditures.
698	Government expenditures have been and must continue to be held at the lowest safe levels. Since V-J day Federal expenditures have been sharply reduced. They have been cut from more than $63 billion in the fiscal year 1946 to less than $38 billion in the present fiscal year. The number of civilian employees has been cut nearly in half-from 3/4 million down to 2 million.
699	On the other hand, Government revenues must not be reduced. Until inflation has been stopped there should be no Cut in taxes that is not offset by additions at another point in our tax structure.
700	Certain adjustments should be made within our existing tax structure that will not affect total receipts, yet will adjust the tax burden so that those least able to pay will have their burden lessened by the transfer of a portion of it to those best able to pay.
701	Many of our families today are suffering hardship because of the high cost of living. At the same time profits of corporations have reached an all-time record in 1947. Corporate profits total $17 billion after taxes. This compared with $12.5 billion in 1 946, the previous high year.
702	Because of this extraordinarily high level of profits, corporations can well afford to carry a larger share of the tax load at this time.
703	During this period in which the high cost of living is bearing down on so many of our families, tax adjustments should be made to ease their burden. The low-income group particularly is being pressed very hard. To this group a tax adjustment would resul t in a saving that could be used to buy the necessities of life.
704	I recommend therefore that, effective January I, 1948, a cost of living tax credit be extended to our people consisting of a credit of $40 to each individual taxpayer and an additional credit of $40 for each dependent. Thus the income tax of a man with a wife and two children would be reduced $160. The credit would be extended to all taxpayers, but it would be particular helpful to those in the low-income group.
705	It is estimated that such a tax credit would reduce Federal revenue by $3.2 billion. This reduction should be made up by increasing the tax on corporate profits in an amount that will produce this sum-with appropriate adjustments for small corporations.
706	This is the proper method of tax relief at this time. It gives relief to those who need it most without cutting the total tax revenue of the Government.
707	When the present danger of inflation has passed we should consider tax reduction based upon a revision of our entire tax structure.
708	When we have conquered inflation, we shall be in a position to move forward toward our chosen goals.
709	As we do so, let us keep ever before us our high purposes.
710	We are determined that every citizen of this Nation shall have an equal right and an equal opportunity to grow in wisdom and in stature and to take his place in the control of his Nation's destiny.
711	We are determined that the productive resources of this Nation shall be used wisely and fully for the benefit of all.
712	We are determined that the democratic faith of our people and the strength of our resources shall contribute their full share to the attainment of enduring peace in the world.
713	It is our faith in human dignity that underlies these purposes. It is this faith that keeps us a strong and vital people.
714	This is a time to remind ourselves of these fundamentals. For today the whole world looks to us for leadership.
715	This is the hour to rededicate ourselves to the faith in mankind that makes us strong.
716	This is the hour to rededicate ourselves to the faith in God that gives us confidence as we face the challenge of the years ahead.@
717	Harry S. Truman|Annual Message to the Congress on the State of the Union|1949-01-05|@Mr. President, Mr. Speaker, Members of the Congress:
718	I am happy to report to this 81st Congress that the state of the Union is good. Our Nation is better able than ever before to meet the needs of the American people, and to give them their fair chance in the pursuit of happiness. This great Republic is foremost among the nations of the world in the search for peace.
719	During the last 16 years, our people have been creating a society which offers new opportunities for every man to enjoy his share of the good things of life.
720	The recent election shows that the people of the United States are in favor of this kind of society and want to go on improving it.
721	The American people have decided that poverty is just as wasteful and just as unnecessary as preventable disease. We have pledged our common resources to help one another in the hazards and struggles of individual life. We believe that no unfair prejudice or artificial distinction should bar any citizen of the United States of America from an education, or from good health, or from a job that he is capable of performing.
722	The attainment of this kind of society demands the best efforts of every citizen in every walk of life, and it imposes increasing responsibilities on the Government.
723	The Government must work with industry, labor, and the farmers in keeping our economy running at full speed. The Government must see that every American has a chance to obtain his fair share of our increasing abundance. These responsibilities go hand in hand.
724	We cannot maintain prosperity unless we have a fair distribution of opportunity and a widespread consumption of the products of our factories and farms.
725	Our Government has undertaken to meet these responsibilities.
726	We have made tremendous public investments in highways, hydroelectric power projects, soil conservation, and reclamation. We have established a system of social security. We have enacted laws protecting the rights and the welfare of our working people and the income of our farmers. These Federal policies have paid for themselves many times over. They have strengthened the material foundations of our democratic ideals. Without them, our present prosperity would be impossible.
727	Reinforced by these policies, our private enterprise system has reached new heights of production. Since the boom year of 1929, while our population has increased by only 20 percent, our agricultural production has increased by 45 percent, and our industrial production has increased by 75 percent. We are turning out far more goods and more wealth per worker than we have ever done before.
728	This progress has confounded the gloomy prophets-at home and abroad-who predicted the downfall of American capitalism. The people of the United States, going their own way, confident in their own powers, have achieved the greatest prosperity the world has even seen.
729	But, great as our progress has been, we still have a long way to go.
730	As we look around the country, many of our shortcomings stand out in bold relief.
731	We are suffering from excessively high prices.
732	Our production is still not large enough to satisfy our demands.
733	Our minimum wages are far too low.
734	Small business is losing ground to growing monopoly.
735	Our farmers still face an uncertain future. And too many of them lack the benefits of our modern civilization.
736	Some of our natural resources are still being wasted.
737	We are acutely short of electric power, although the means for developing such power are abundant.
738	Five million families are still living in slums and firetraps. Three million families share their homes with others.
739	Our health is far behind the progress of medical science. Proper medical care is so expensive that it is out of the reach of the great majority of our citizens.
740	Our schools, in many localities, are utterly inadequate.
741	Our democratic ideals are often thwarted by prejudice and intolerance.
742	Each of these shortcomings is also an opportunity-an opportunity for the Congress and the President to work for the good of the people.
743	This objective cannot be attained by government alone. Indeed, the greater part of the task must be performed by individual efforts under our system of free enterprise. We can keep our present prosperity, and increase it, only if free enterprise and free government work together to that end.
744	We cannot afford to float along ceaselessly on a postwar boom until it collapses. It is not enough merely to prepare to weather a recession if it comes. Instead, government and business must work together constancy to achieve more and more jobs and more and more production-which mean more and more prosperity for all the people.
745	The business cycle is man-made; and men of good will, working together, can smooth it out.
746	So far as business is concerned, it should plan for steady, vigorous expansion-seeking always to increase its output, lower its prices, and avoid the vices of monopoly and restriction. So long as business does this, it will be contributing to continued prosperity, and it will have the help and encouragement of the Government.
747	The Employment Act of 1946 pledges the Government to use all its resources to promote maximum employment, production, and purchasing power. This means that the Government is firmly committed to protect business and the people against the dangers of recession and against the evils of inflation. This means that the Government must adapt its plans and policies to meet changing circumstances.
748	At the present time, our prosperity is threatened by inflationary pressures at a number of critical points in our economy. And the Government must be in a position to take effective action at these danger spots. To that end, I recommend that the Congress enact legislation for the following purposes:
749	First, to continue the power to control consumer credit and enlarge the power to control bank credit.
750	Second, to grant authority to regulate speculation on the commodity exchanges.
751	Third, to continue export control authority and to provide adequate machinery for its enforcement.
752	Fourth, to continue the priorities and allocation authority in the field of transportation.
753	Fifth, to authorize priorities and allocations for key materials in short supply.
754	Sixth, to extend and strengthen rent control.
755	Seventh, to provide standby authority to impose price ceilings for scarce commodities which basically affect essential industrial production or the cost of living, and to limit unjustified wage adjustments which would force a break in an established price ceiling.
756	Eighth, to authorize an immediate study of the adequacy of production facilities for materials in critically short supply, such as steel; and, if found necessary, to authorize Government loans for the expansion of production facilities to relieve such shortages, and to authorize the construction of such facilities directly, if action by private industry fails to meet our needs.
757	The Economic Report, which I shall submit to the Congress shortly, will discuss in detail the economic background for these recommendations.
758	One of the most important factors in maintaining prosperity is the Government's fiscal policy. At this time, it is essential not only that the Federal budget be balanced, but also that there be a substantial surplus to reduce inflationary pressures, and to permit a sizable reduction in the national debt, which now stands at $252 billion. I recommend, therefore, that the Congress enact new tax legislation to bring in an additional $4 billion of Government revenue. This should come principally from additional corporate taxes. A portion should come from revised estate and gift taxes. Consideration should be given to raising personal income rates in the middle and upper brackets.
759	If we want to keep our economy running in high gear, we must be sure that every group has the incentive to make its full contribution to the national welfare. At present, the working men and women of the Nation are unfairly discriminated against by a statute that abridges their rights, curtails their constructive efforts, and hampers our system of free collective bargaining. That statute is the Labor-Management Relations Act of 1947, sometimes called the Taft-Hartley Act.
760	That act should be repealed!
761	The Wagner Act should be reenacted. However, certain improvements, which I recommended to the Congress 2 years ago, are needed. Jurisdictional strikes and unjustified secondary boycotts should be prohibited. The use of economic force to decide issues arising out of the interpretation of existing contracts should be prevented. Without endangering our democratic freedoms, means should be provided for setting up machinery for preventing strikes in vital industries which affect the public interest.
762	The Department of Labor should be rebuilt and strengthened and those units properly belonging within that department should be placed in it.
763	The health of our economy and its maintenance at high levels further require that the minimum wage fixed by law should be raised to at least 75 cents an hour.
764	If our free enterprise economy is to be strong and healthy, we must reinvigorate the forces of competition. We must assure small business the freedom and opportunity to grow and prosper. To this purpose, we should strengthen our antitrust laws by closing those loopholes that permit monopolistic mergers and consolidations.
765	Our national farm program should be improved-not only in the interest of the farmers, but for the lasting prosperity of the whole Nation. Our goals should he abundant farm production and parity income for agriculture. Standards of living on the farm should be just as good as anywhere else in the country.
766	Farm price supports are an essential part of our program to achieve these ends. Price supports should be used to prevent farm price declines which are out of line with general price levels, to facilitate adjustments in production to consumer demands, and to promote good land use. Our price support legislation must be adapted to these objectives. The authority of the Commodity Credit Corporation to provide adequate storage space for crops should be restored.
767	Our program for farm prosperity should also seek to expand the domestic market for agricultural products, particularly among low-income groups, and to increase and stabilize foreign markets.
768	We should give special attention to extending modern conveniences and services to our farms. Rural electrification should be pushed forward. And in considering legislation relating to housing, education, health, and social security, special attention should be given to rural problems.
769	Our growing population and the expansion of our economy depend upon the wise management of our land, water, forest, and mineral wealth. In our present dynamic economy, the task of conservation is not to lockup our resources but to develop and improve them. Failure, today, to make the investments which are necessary to support our progress in the future would be false economy.
770	We must push forward the development of our rivers for power, irrigation, navigation, and flood control. We should apply the lessons of our Tennessee Valley experience to our other great river basins. I again recommend action be taken by the Congress to approve the St. Lawrence Seaway and Power project. This is about the fifth time I have recommended it.
771	We must adopt a program for the planned use of the petroleum reserves under the sea, which are-and must remain-vested in the Federal Government. We must extend our programs of soil conservation. We must place our forests on a sustained yield basis, and encourage the development of new sources of vital minerals.
772	In all this we must make sure that the benefits of these public undertakings are directly available to the people. Public power should be earned to consuming areas by public transmission lines where necessary to provide electricity at the lowest possible rates. Irrigation waters should serve family farms and not land speculators.
773	The Government has still other opportunities-to help raise the standard of living of our citizens. These opportunities lie in the fields of social security, health, education, housing, and civil rights.
774	The present coverage of the social security laws is altogether inadequate; the benefit payments are too low. One-third of our workers are not covered. Those who receive old-age and survivors insurance benefits receive an average payment of only $25 a month. Many others who cannot work because they are physically disabled are left to the mercy of charity. We should expand our social security program, both as to the size of the benefits and the extent of coverage, against the economic hazards due to unemployment, old age, sickness, and disability.
775	We must spare no effort to raise the general level of health in this country. In a nation as rich as ours, it is a shocking fact that tens of millions lack adequate medical care. We are short of doctors, hospitals, nurses. We must remedy these shortages. Moreover, we need-and we must have without further delay-a system of prepaid medical insurance which will enable every American to afford good medical care.
776	It is equally shocking that millions of our children are not receiving a good education. Millions of them are in overcrowded, obsolete buildings. We are short of teachers, because teachers' salaries are too low to attract new teachers, or to hold the ones we have. All these school problems will become much more acute as a result of the tremendous increase in the enrollment in our elementary schools in the next few years. I cannot repeat too strongly my desire for prompt Federal financial aid to the States to help them operate and maintain their school systems.
777	The governmental agency which now administers the programs of health, education, and social security should be given full departmental status.
778	The housing shortage continues to be acute. As an immediate step, the Congress should enact the provisions for low-rent public housing, slum clearance, farm housing, and housing research which I have repeatedly recommended. The number of low-rent public housing units provided for in the legislation should be increased to 1 million units in the next 7 years. Even this number of units will not begin to meet our need for new housing.
779	Most of the houses we need will have to be built by private enterprise, without public subsidy. By producing too few rental units and too large a proportion of high-priced houses, the building industry is rapidly pricing itself out of the market. Building costs must be lowered.
780	The Government is now engaged in a campaign to induce all segments of the building industry to concentrate on the production of lower priced housing. Additional legislation to encourage such housing will be submitted.
781	The authority which I have requested, to allocate materials in short supply and to impose price ceilings on such materials, could be used, if found necessary, to channel more materials into homes large enough for family life at prices which wage earners can afford.
782	The driving force behind our progress is our faith in our democratic institutions. That faith is embodied in the promise of equal rights and equal opportunities which the founders of our Republic proclaimed to their countrymen and to the whole world.
783	The fulfillment of this promise is among the highest purposes of government. The civil rights proposals I made to the 80th Congress, I now repeat to the 81st Congress. They should be enacted in order that the Federal Government may assume the leadership and discharge the obligations clearly placed upon it by the Constitution.
784	I stand squarely behind those proposals. Our domestic programs are the foundation of our foreign policy. The world today looks to us for leadership because we have so largely realized, within our borders, those benefits of democratic government for which most of the peoples of the world are yearning.
785	We are following a foreign policy which is the outward expression of the democratic faith we profess. We are doing what we can to encourage free states and free peoples throughout the world, to aid the suffering and afflicted in foreign lands, and to strengthen democratic nations against aggression.
786	The heart of our foreign policy is peace. We are supporting a world organization to keep peace and a world economic policy to create prosperity for mankind. Our guiding star is the principle of international cooperation. To this concept we have made a national commitment as profound as anything in history. To it we have pledged our resources and our honor.
787	Until a system of world security is established upon which we can safely rely, we cannot escape the burden of creating and maintaining armed forces sufficient to deter aggression. We have made great progress in the last year in the effective organization of our Armed Forces, but further improvements in our national security legislation are necessary. Universal training is essential to the security of the United States.
788	During the course of this session I shall have occasion to ask the Congress to consider several measures in the field of foreign policy. At this time, I recommend that we restore the Reciprocal Trade Agreements Act to full effectiveness, and extend it for 3 years. We should also open our doors to displaced persons without unfair discrimination.
789	It should be clear by now to all citizens that we are not seeking to freeze the status quo. We have no intention of preserving the injustices of the past. We welcome the constructive efforts being made by many nations to achieve a better life for their citizens. In the European recovery program, in our good-neighbor policy and in the United Nations, we have begun to batter down those national walls which block the economic growth and the social advancement of the peoples of the world.
790	We believe that if we hold resolutely to this course, the principle of international cooperation will eventually command the approval even of those nations which are now seeking to weaken or subvert it.
791	We stand at the opening of an era which can mean either great achievement or terrible catastrophe for ourselves and for all mankind.
792	The strength of our Nation must continue to be used in the interest of all our people rather than a privileged few. It must continue to be used unselfishly in the struggle for world peace and the betterment of mankind the world over.
793	This is the task before us.
794	It is not an easy one. It has many complications, and there will be strong opposition from selfish interests.
795	I hope for cooperation from farmers, from labor, and from business. Every segment of our population and every individual has a right to expect from our Government a fair deal.
796	In 1945, when I came down before the Congress for the first time on April 16, I quoted to you King Solomon's prayer that he wanted wisdom and the ability to govern his people as they should be governed. I explained to you at that time that the task before me was one of the greatest in the history of the world, and that it was necessary to have the complete cooperation of the Congress and the people of the United States.
797	Well now, we are taking a new start with the same situation. It is absolutely essential that your President have the complete cooperation of the Congress to carry out the great work that must be done to keep the peace in this world, and to keep this country prosperous.
798	The people of this great country have a right to expect that the Congress and the President will work in closest cooperation with one objective-the welfare of the people of this Nation as a whole.
799	In the months ahead I know that I shall be able to cooperate with this Congress.
800	Now, I am confident that the Divine Power which has guided us to this time of fateful responsibility and glorious opportunity will not desert us now.
801	With that help from Almighty God which we have humbly acknowledged at every turning point in our national life, we shall be able to perform the great tasks which He now sets before us.@
802	Harry S. Truman|Annual Message to the Congress on the State of the Union|1950-01-04|@Mr. President, Mr. Speaker, Members of the Congress:
803	A year ago I reported to this Congress that the state of the Union was good. I am happy to be able to report to you today that the state of the Union Continues to be good. Our Republic continues to increase in the enjoyment of freedom within its borders, and to offer strength and encouragement to all those who love freedom throughout the world.
804	During the past year we have made notable progress in strengthening the foundations of peace and freedom, abroad and at home.
805	We have taken important steps in securing the North Atlantic community against aggression. We have continued our successful support of European recovery. We have returned to our established policy of expanding international trade through reciprocal agreement. We have strengthened our support of the United Nations.
806	While great problems still confront us, the greatest danger has receded-the possibility which faced us 3 years ago that most of Europe and the Mediterranean area might collapse under totalitarian pressure. Today, the free peoples of the world have new vigor and new hope for the cause of peace.
807	In our domestic affairs, we have made notable advances toward broader opportunity and a better life for all our citizens.
808	We have met and reversed the first significant downturn in economic activity since the war. In accomplishing this, Government programs for maintaining employment and purchasing power have been of tremendous benefit. As the result of these programs, and the wisdom and good judgment of our businessmen and workers, major readjustments have been made without widespread suffering.
809	During the past year, we have also made a good start in providing housing for low-income groups; we have raised minimum wages; we have gone forward with the development of our natural resources; we have given a greater assurance of stability to the farmer; and we have improved the organization and efficiency of our Government.
810	Today, by the grace of God, we stand a free and prosperous nation with greater possibilities for the future than any people ever had before in the history of the world.
811	We are now, in this year of 1950, nearing the midpoint of the 20th century.
812	The first half of this century will be known as the most turbulent and eventful period in recorded history. The swift pace of events promises to make the next 50 years decisive in the history of man on this planet.
813	The scientific and industrial revolution which began two centuries ago has, in the last 50 years, caught up the peoples of the globe in a common destiny. Two world-shattering wars have proved that no corner of the earth can be isolated from the affairs of mankind.
814	The human race has reached a turning point. Man has opened the secrets of nature and mastered new powers. If he uses them wisely, he can reach new heights of civilization. If he uses them foolishly, they may destroy him.
815	Man must create the moral and legal framework for the world which will insure that his new powers are used for good and not for evil. In shaping the outcome, the people of the United States will play a leading role.
816	Among all the great changes that have occurred in the last 50 years, none is more important than the change in the position of the United States in world affairs. Fifty years ago we were a country devoted largely to our own internal affairs. Our industry was growing, and we had new interests in the Far East and in the Caribbean, but we were primarily concerned with the development of vast areas of our own continental territory.
817	Today, our population has doubled. Our national production has risen from about $50 billion, in terms of today's prices, to the staggering figure of $255 billion a year. We have a more productive economic system and a greater industrial potential than any other nation on the globe. Our standard of living is an inspiration for all other peoples. Even the slightest changes in our economic and social life have their effect on other countries all around the world.
818	Our tremendous strength has brought with it tremendous responsibilities. We have moved from the outer edge to the center of world affairs. Other nations look to us for a wise exercise of our economic and military strength, and for vigorous support of the ideals of representative government and a free society. We will not fail them.
819	Our objective in the world is peace. Our country has joined with others in the task of achieving peace. We know now that this is not an easy task, or a short one. But we are determined to see it through. Both of our great political parties are committed to working together-and I am sure they will continue to work together-to achieve this end. We are prepared to devote our energy and our resources to this task, because we know that our own security and the future of mankind are at stake.
820	Right here, I want to say that no one appreciates more than I the bipartisan cooperation in foreign affairs which has been enjoyed by this administration.
821	Our success in working with other nations to achieve peace depends largely on what we do at home. We must preserve our national strength. Strength is not simply a matter of arms and force. It is a matter of economic growth, and social health, and vigorous institutions, public and private. We can achieve peace only if we maintain our productive energy, our democratic institutions, and our firm belief in individual freedom.
822	Our surest guide in the days that lie ahead will be the spirit in which this great Republic was founded. We must make our decisions in the conviction that all men are created equal, that they are equally entided to life, liberty, and the pursuit of happiness, and that the duty of government is to serve these ends.
823	This country of ours has experienced many blessings, but none greater than its dedication to these principles. At every point in our history, these ideals have served to correct our failures and shortcomings, to spur us on to greater efforts, and to keep clearly before us the primary purpose of our existence as a nation. They have enshrined for us, a principle of government, the moral imperative to do justice, and the divine command to men to love one another.
824	These principles give meaning to all that we do. In foreign policy, they mean that we can never be tolerant of oppression or tyranny. They mean that we must throw our weight on the side of greater freedom and a better life for all peoples. These principles confirm us in carrying out the specific programs for peace which we have already begun.
825	We shall continue to give our wholehearted support to the United Nations. We believe that this organization can ultimately provide the framework of international law and morality without which mankind cannot survive. It has already set up new standards for the conduct of nations in the Declaration of Human Rights and the Convention on Genocide. It is moving ahead to give meaning to the concept of world brotherhood through a wide variety of cultural, economic, and technical activities.
826	The events of the past year again showed the value of the United Nations in bringing about the peaceful adjustment of tense international controversies. In Indonesia and in Palestine the efforts of the United Nations have put a stop to bloodshed and paved the way to peaceful settlements.
827	We are working toward the time when the United Nations will control weapons of mass destruction and will have the forces to preserve international law and order. While the world remains unsettled, however, and as long as our own security and the security of the free world require, we will maintain a strong and well-balanced defense organization. The Selective Service System is an essential part of our defense plans, and it must be continued.
828	Under the principles of the United Nations Charter we must continue to share in the common defense of free nations against aggression. At the last session this Congress laid the basis for this joint effort. We now must put into effect the common defense plans that are being worked out.
829	We shall continue our efforts for world economic recovery, because world prosperity is the only sure foundation of a permanent peace.
830	As an immediate means to this end we must continue our support of the European recovery program. This program has achieved great success in the first 2 years of its operation, but it has not yet been completed. If we were to stop this program now, or cripple it, just because it is succeeding, we should be doing exactly what the enemies of democracy want us to do. We should be just as foolish as a man who, for reasons of false economy, failed to put a roof on his house after building the foundation and the walls.
831	World prosperity also requires that we do all we can to expand world trade. As a major step in this direction we should promptly join the International Trade Organization. The purpose of this organization, which the United States has been foremost in creating, is to establish a code of fair practice, and an international authority for adjusting differences in international commercial relations. It is an effort to prevent the kind of anarchy and irresponsibility in world trade which did so much to bring about the world depression of the 1930's.
832	An expanding world economy requires the improvement of living standards and the development of resources in areas where human poverty and misery now prevail. Without such improvement the recovery of Europe and the future of our own economy will not be secure. I urge that the Congress adopt the legislation now before it to provide for increasing the flow of technical assistance and capital investment in underdeveloped regions.
833	It is more essential now than ever, if the ideals of freedom and representative government are to prevail in these areas, and particularly in the Far East, that their peoples experience, in their own lives, the benefits of scientific and economic advances. This program will require the movement of large amounts of capital from the industrial nations, and particularly from the United States, to productive uses in the underdeveloped areas of the world. Recent world events make prompt action imperative.
834	This program is in the interest of all peoples-and has nothing in common with either the old imperialism of the last century or the new imperialism of the Communists.
835	Our aim for a peaceful, democratic world of free peoples will be achieved in the long run, not by force of arms, but by an appeal to the minds and hearts of men. If the peace policy of the democratic nations is to be successful, they must demonstrate that the benefits of their way of life can be increased and extended to all nations and all races.
836	In the world today we are confronted with the danger that the rising demand of people everywhere for freedom and a better life may be corrupted and betrayed by the false promises of communism. In its ruthless struggle for power, communism seizes upon our imperfections, and takes advantage of the delays and setbacks which the democratic nations experience in their effort to secure a better life for their citizens. This challenge to us is more than a military challenge. It is a challenge to the honesty of our profession of the democratic faith; it is a challenge to the efficiency and stability of our economic system; it is a challenge to the willingness to work with other peoples for world peace and for world prosperity.
837	For my part I welcome that challenge. I believe that our country, at this crucial point in world history, will meet that challenge successfully. I believe that, in cooperation with the other free nations of the world, we shall extend the full benefits of the democratic way of life to millions who do not now enjoy them, and preserve mankind from dictatorship and tyranny.
838	I believe that we shall succeed in our struggle for this peace, because I have seen the success we have had in our own country in following the principles of freedom. Over the last 50 years, the ideals of liberty and equal opportunity to which this Nation is dedicated have been increasingly realized in the lives of our people.
839	The ideal of equal opportunity no longer means simply the opportunity which a man has to advance beyond his fellows. Some of our citizens do achieve greater success than others as a reward for individual merit and effort, and this is as it should be. At the same time our country must be more than a land of opportunity for a select few. It must be a land of opportunity for all of us. In such a land we can grow and prosper together.
840	The simple truth that we can all go forward together is often questioned by selfish or shortsighted persons. It is strange that this is so, for this proposition is so clearly demonstrated by our national history. During the last 50 years, for example, our Nation has grown enormously in material wellbeing. This growth has come about, not by concentrating the benefits of our progress in the hands of a few, but by increasing the wealth of the great body of our Nation and our citizens.
841	In the last 50 years the income of the average family has increased so greatly that its buying power has doubled. The average hours of work have declined from 60 to 40 a week, the whole hourly production of the average worker has tripled. Average wages, allowing for price changes, have increased from about 45 cents an hour to $I.40 an hour.
842	We have accomplished what to earlier ages of mankind would have been a miracle-we work shorter hours, we produce more, and we live better.
843	Increasing freedom from poverty and drudgery has given a fuller meaning to American life. Our people are better educated; we have more opportunities for travel and recreation and enjoyment of the arts. We enjoy more personal liberty in the United States today than ever before.
844	If we can continue in the spirit of cooperative adventure which has marked the recent years of our progress, we can expect further scientific advances, further increases in our standard of living, and a still wider enjoyment of democratic freedom.
845	No one, of course, can foretell the future exactly. However, if we assume that we shall grow as fast in the future as we have grown in the past, we can get a good idea of how much our country should grow in the next 50 years.
846	At present our total national production is $255 billion a year. Our working population and our output per worker are increasing. If our productive power continues to increase at the same rate as it has increased over the past 50 years, our total national production 50 years from now will be nearly four times as much as it is today. Allowing for the expected growth in population, this would mean that the real income of the average family in the year 2000 A.D. would be ahout three times what it is today.
847	These are estimates of what we can do in the future, but we can reach these heights only if we follow the right policies. We have learned by bitter experience that progress is not automatic-that wrong policies lead to depression and disaster. We cannot achieve these gains unless we have a stable economy and avoid the catastrophes of boom and bust that have set us back in the past.
848	These gains cannot be achieved unless our businessmen maintain their spirit of initiative and enterprise and operate in a competitive economy. They cannot be achieved unless our workingmen and women and their unions help to increase productivity and obtain for labor a fair share of the benefits of our economic system. They cannot be achieved unless we have a stable and prosperous agriculture. They cannot be achieved unless we conserve and develop our natural resources in the public interest. Our system will not work unless our people are healthy, well-educated, and confident of the future. It will not work unless all citizens can participate fully in our national life.
849	In achieving these gains the Government has a special responsibility to help create and maintain the conditions which will permit the growth we know is possible. Foremost among these conditions is the need for a fair distribution of our increasing prosperity among all the great groups of our population who help to bring it about - labor, business, agriculture.
850	Businessmen must continue to have the incentives necessary for investment and for the development of new lines of enterprise. In the future growth of this country, lie possibilities for hundreds of thousands of new and independent businesses. As our national production increases, as it doubles and redoubles in the next 50 years, the number of independent and competing enterprises should also increase. If the number does not increase, our constantly growing economy will fall under the control of a few dominant economic groups whose powers will be so great that they will be a challenge to democratic institutions.
851	To avoid this danger, we must curb monopoly and provide aids to independent business so that it may have the credit and capital to compete in a system of free enterprise. I recommend that the Congress complete action at this session on the pending bill to close the loopholes in the Clayton Act which now permit monopolistic mergers. I also hope before this session is over to transmit to the Congress a series of proposals to strengthen the antimonopoly laws, to assist small business, and to encourage the growth of new enterprises.
852	In the case of labor, free collective bargaining must be protected and encouraged. Collective bargaining is not only a fundamental economic freedom for labor. It is also a strengthening and stabilizing influence for our whole economy.
853	The Federal statute now governing labor relations is punitive in purpose and onesided in operation. This statute is, and always has been, inconsistent with the practice of true and effective collective bargaining. It should be repealed and replaced by a law that is fair to all and in harmony with our democratic ideals.
854	A full understanding of the problems of modern labor relations is of such importance that I recommend the establishment of a labor extension service to encourage educational activities in this field.
855	Another essential for our continued growth is a stable and prosperous agriculture. For many years we have been building a program to give the farmer a reasonable measure of protection against the special hazards to which he is exposed. That program was improved at the last session of the Congress. However, our farm legislation is still not adequate.
856	Although the Congress has properly declared as a matter of national policy that safeguards must be maintained against slumps in farm prices, there are serious shortcomings in the methods now available for carrying out this policy. Mandatory price supports should be provided for the commodities not now covered which are major sources of farm income.
857	Moreover, we should provide a method of supporting farm income at fair levels which will, at the same time, avoid piling up unmanageable surpluses and allow consumers to obtain the full benefit of our abundant agricultural production. A system of production payments gives the greatest promise of accomplishing this purpose. I recommend that the use of such a system be authorized.
858	One of the most important factors in our continued growth is the construction of more good, up-to-date housing. In a country such as ours there is no reason why decent homes should not be within the reach of all. With the help of various Government programs we have made great progress in the last few years in increasing the number of homes.
859	Despite this increase, there is still an acute shortage of housing for the lower and middle-income groups, especially in large metropolitan areas. We have laid the groundwork for relieving the plight of lower-income families in the Housing Act of 1949. To aid the middle-income families, I recommend that the Congress enact new legislation authorizing a vigorous program to help co-operatives and other nonprofit groups build housing which these families can afford.
860	Rent control has done a great deal to prevent the housing shortage from having had worse effects during this postwar period of adjustment. Rent control is still necessary to prevent widespread hardship and sharp curtailment of the buying power of millions of consumers in metropolitan areas. I recommend, therefore, that rent control be continued for another year.
861	If we are to achieve a better life for all, the natural resources of the country must be regarded as a public trust. We must use our precious assets of soil, water, and forest, and grassland in such a way that they become constantly more productive and more valuable. Government investment in the conservation and development of our resources is necessary to the future economic expansion of the country.
862	We need to enlarge the production and transmission of public power. That is true not only in those regions which have already received great benefits from Federal power projects, but also in regions such as New England where the benefits of large-scale public power development have not yet been experienced.
863	In our hydroelectric and irrigation undertakings, as well as in our other resource programs, we must continue policies to assure that their benefits will be spread among the many and not restricted to the favored few.
864	Important resource legislation which should be passed at this session includes the authorization of the St. Lawrence seaway and power project and the establishment of the Columbia Valley Administration - the establishment of the Columbia Valley Administration, I don't want you to miss that.
865	Through wise Government policies and Government expenditures for the conservation and development of our natural resources, we can be sure of transmitting to our children and our children's children a country far richer and more productive than the one we know today.
866	The value of our natural resources is constantly being increased by the progress of science. Research is finding new ways of using such natural assets as minerals, sea water, and plant life. In the peaceful development of atomic energy, particularly, we stand on the threshold of new wonders. The first experimental machines for producing useful power from atomic energy are now under construction. We have made only the first beginnings in this field, but in the perspective of history they may loom larger than the first airplane, or even the first tools that started man on the road to civilization.
867	To take full advantage of the increasing possibilities of nature we must equip ourselves with increasing knowledge. Government has a responsibility to see that our country maintains its position in the advance of science. As a step toward this end, the Congress should complete action on the measure to create a National Science Foundation.
868	Another duty of the Government is to promote the economic security, the health, and the education of its citizens. By so doing, we strengthen both our economy and the structure of our society. In a nation as rich as ours, all citizens should be able to live in decency and health.
869	Our Social Security System should be developed into the main reliance of our people for basic protection against the economic hazards of old-age, unemployment, and illness. I earnestly hope that the Congress will complete action at this session on legislation to increase the benefits and extend the coverage of old-age and survivors insurance. The widespread movement to provide pensions in private industry dramatizes the need for improvements in the public insurance system.
870	I also urge that the Congress strengthen our unemployment compensation law to meet present-day needs more adequately. The economic downturn of the past year was the first real test that our system of unemployment insurance has had to meet. That test has proved the wisdom of the system, but it has also made strikingly apparent the need for improving its operation and increasing its coverage and its benefits.
871	In the field of health there are immense opportunities to extend to more of our people the benefits of the amazing advances in medical science. We have made a good beginning in expanding our hospitals, but we must also go on to remedy the shortages of doctors, nurses, and public health services, and to establish a system of medical insurance which will enable all Americans to afford good medical care.
872	We must take immediate steps to strengthen our educational system. In many parts of our country, young people are being handicapped for life because of a poor education. The rapidly increasing number of children of school age, coupled with the shortage of qualified teachers, makes this problem more critical each year. I believe that the Congress should no longer delay in providing Federal assistance to the States so that they can maintain adequate schools.
873	As we go forward in achieving greater economic security and greater opportunity for all our people, we should make every effort to extend the benefits of our democratic institutions to every citizen. The religious ideals which we profess, and the heritage of freedom which we have received from the past, clearly place that duty upon us. I again urge the Congress to enact the civil rights proposals I made in February 1948. These proposals are for the enactment of Federal statutes which will protect all our people in the exercise of their democratic rights and their search for economic opportunity, grant statehood to Alaska and Hawaii, provide a greater measure of self-government for our island possessions, and accord home rule to the District of Columbia. Some of those proposals have been before the Congress for a long time. Those who oppose them, as well as those who favor them, should recognize that it is the duty of the elected representatives of the people to let these proposals come to a vote.
874	Our democratic ideals, as well as our best interests, require that we do our fair share in providing homes for the unfortunate victims of war and tyranny. In so doing, we shall add strength to our democracy through the abilities and skills which these men and women will bring here. I urge the prompt enactment by the Congress of the legislation now before it to extend and broaden the existing displaced persons law and remove its discriminatory features.
875	The measures I am recommending to the Congress concerning both our foreign and our domestic policies represent a carefully considered program to meet our national needs. It is a program which necessarily requires large expenditures of funds. More than 70 percent of the Government's expenditures are required to meet the costs of past wars and to work for world peace. This is the dominant factor in our fiscal policy. At the same time, the Government must make substantial expenditures which are necessary to the growth and expansion of the domestic economy.
876	At present, largely because of the ill-considered tax reduction of the 80th Congress, the Government is not receiving enough revenue to meet its necessary expenditures.
877	To meet this situation, I am proposing that Federal expenditures be held to the lowest levels consistent with our international requirements and the essential needs of economic growth, and the well-being of our people. I think I had better read that over; you interrupted me in the middle.
878	To meet this situation, I am proposing that Federal expenditures be held to the lowest levels consistent with our international requirements and the essential needs of ceonomic growth, and the well-being of our people. Don't forget that last phrase. At the same time, we must guard against the folly of attempting budget slashes which would impair our prospects for peace or cripple the programs essential to our national strength.
879	The budget recommendations I shall shortly transmit to the Congress show that we can expect a substantial improvement in our fiscal position over the next few years, as the cost of some of our extraordinary postwar programs declines, and as the Government revenue rises as a result of growth in employment and national income. To further improve our fiscal outlook, we should make some changes in our tax system which will reduce present inequities, stimulate business activity, and yield a moderate amount of additional revenue. I expect to transmit specific recommendations to the Congress on this subject at a very early date.
880	The fiscal policy I am recommending is the quickest and safest way of achieving a balanced budget.
881	As we move forward into the second half of the 20th century, we must always bear in mind the central purpose of our national life. We do not seek material prosperity for ourselves because we love luxury; we do not aid other nations because we wish to increase our power. We have not devised programs for the security and well-being of our people because we are afraid or unwilling to take risks. This is not the meaning of our past history or our present course.
882	We work for a better life for all, so that all men may put to good use the great gifts with which they have been endowed by their Creator. We seek to establish those material conditions of life in which, without exception, men may live in dignity, perform useful work, serve their communities, and worship God as they see fit.
883	These may seem simple goals, but they are not little ones. They are worth a great deal more than all the empires and conquests of history. They are not to be achieved by military aggression or political fanaticism. They are to be achieved by humbler means---by hard work, by a spirit of self-restraint in our dealings with one another, and by a deep devotion to the principles of justice and equality.
884	It should make us truly thankful, as we look back to the beginnings of this country, that we have come so far along the road to a better life for all. It should make us humble to think, as we look ahead, how much farther we have to go to accomplish, at home and abroad, the objectives that were set out for us at the founding of this great Nation. As we approach the halfway mark of the 20th century, we should ask for continued strength and guidance from that Almighty Power who has placed before us such great opportunities for the good of mankind in the years to come.@
885	Harry S. Truman|Annual Message to the Congress on the State of the Union|1951-01-08|@Mr. President, Mr. Speaker, Members Of the Congress:
886	This 82d Congress faces as grave a task as any Congress in the history of our Republic. The actions you take will be watched by the whole world. These actions will measure the ability of a free people, acting through their chosen representatives and their free institutions, to meet a deadly challenge to their way of life.
887	We can meet this challenge foolishly or wisely. We can meet it timidly or bravely, shamefully or honorably.
888	I know that the 82d Congress will meet this challenge in a way worthy of our great heritage. I know that your debates will be earnest, responsible, constructive, and to the point. I know that from these debates there will come the great decisions needed to carry us forward.
889	At this critical time, I am glad to say that our country is in a healthy condition. Our democratic institutions are sound and strong. We have more men and women at work than ever before. We are able to produce more than ever before in fact, far more than any country ever produced in the history of the world.
890	I am confident that we can succeed in the great task that lies before us.
891	We will succeed, but we must all do our part. We must all act together as citizens of this great Republic.
892	As we meet here today, American soldiers are fighting a bitter campaign in Korea. We pay tribute to their courage, devotion, and gallantry.
893	Our men are fighting, alongside their United Nations allies, because they know, as we do, that the aggression in Korea is part of the attempt of the Russian Communist dictatorship to take over the world, step by step.
894	Our men are fighting a long way from home, but they are fighting for our lives and our liberties. They are fighting to protect our right to meet here today-our right to govern ourselves as a free nation.
895	The threat of world conquest by Soviet Russia endangers our liberty and endangers the kind of world in which the free spirit of man can survive. This threat is aimed at all peoples who strive to win or defend their own freedom and national independence.
896	Indeed, the state of our Nation is in great part the state of our friends and allies throughout the world. The gun that points at them points at us, also. The threat is a total threat and the danger is a common danger.
897	All free nations are exposed and all are in peril. Their only security lies in banding together. No one nation can find protection in a selfish search for a safe haven from the storm.
898	The free nations do not have any aggressive purpose. We want only peace in the world-peace for all countries. No threat to the security of any nation is concealed in our plans and programs.
899	We had hoped that the Soviet Union, with its security assured by the Charter of the United Nations, would be willing to live and let live. But I am sorry to say that has not been the case.
900	The imperialism of the czars has been replaced by the even more ambitious, more crafty, and more menacing imperialism of the rulers of the Soviet Union.
901	This new imperialism has powerful military forces. It is keeping millions of men under arms. It has a large air force and a strong submarine force. It has complete control of the men and equipment of its satellites. It has kept its subject peoples and i ts economy in a state of perpetual mobilization.
902	The present rulers of the Soviet Union have shown that they are willing to use this power to destroy the free nations and win domination over the whole world.
903	The Soviet imperialists have two ways of going about their destructive work. They use the method of subversion and internal revolution, and they use the method of external aggression. In preparation for either of these methods of attack, they stir up cl ass strife and disorder. They encourage sabotage. They put out poisonous propaganda. They deliberately try to prevent economic improvement.
904	If their efforts are successful, they foment a revolution, as they did in Czechoslovakia and China, and as they tried, unsuccessfully, to do in Greece. If their methods of subversion are blocked, and if they think they can get away with outright warfare, they resort to external aggression. This is what they did when they loosed the armies of their puppet states against the Republic of Korea, in an evil war by proxy.
905	We of the free world must be ready to meet both of these methods of Soviet action. We must not neglect one or the other.
906	The free world has power and resources to meet these two forms of aggression resources that are far greater than those of the Soviet dictatorship. We have skilled and vigorous peoples, great industrial strength, and abundant sources of raw materials. And above all, we cherish liberty. Our common ideals are a great part of our strength. These ideals are the driving force of human progress.
907	The free nations believe in the dignity and the worth of man.
908	We believe in independence for all nations.
909	We believe that free and independent nations can band together into a world order based on law. We have laid the cornerstone of such a peaceful world in the United Nations.
910	We believe that such a world order can and should spread the benefits of modern science and industry, better health and education, more food and rising standards of living-throughout the world.
911	These ideals give our cause a power and vitality that Russian communism can never command.
912	The free nations, however, are bound together by more than ideals. They are a real community bound together also by the ties of self-interest and self-preservation. If they should fall apart, the results would be fatal to human freedom.
913	Our own national security is deeply involved with that of the other free nations. While they need our support, we equally need theirs. Our national safety would be gravely prejudiced if the Soviet Union were to succeed in harnessing to its war machine th e resources and the manpower of the free nations on the borders of its empire.
914	If Western Europe were to fall to Soviet Russia, it would double the Soviet supply of coal and triple the Soviet supply of steel. If the free countries of Asia and Africa should fall to Soviet Russia, we would lose the sources of many of our most vital r aw materials, including uranium, which is the basis of our atomic power. And Soviet command of the manpower of the free nations of Europe and Asia would confront us with military forces which we could never hope to equal.
915	In such a situation, the Soviet Union could impose its demands on the world, without resort to conflict, simply through the preponderance of its economic and military power. The Soviet Union does not have to attack the United States to secure domination of the world. It can achieve its ends by isolating us and swallowing up all our allies. Therefore, even if we were craven enough-I do not believe we could be-but, I say, even if we were craven enough to aband on our ideals, it would be disastrous for us to withdraw from the community of free nations.
916	We are the most powerful single member of this community, and we have a special responsibility. We must take the leadership in meeting the challenge to freedom and in helping to protect the rights of independent nations.
917	This country has a practical, realistic protect gram of action for meeting this challenge.
918	First, we shall have to extend economic assistance, where it can be effective. The best way to stop subversion by the Kremlin is to strike at the roots of social injustice and economic disorder. People who have jobs, homes, and hopes for the future will defend themselves against the underground agents of the Kremlin. Our programs of economic aid have done much to turn back communism.
919	In Europe the Marshall plan has had an electrifying result. As European recovery progressed, the strikes led by the Kremlin's agents in Italy and France failed. All over Western Europe the Communist Party took worse and worse beatings at the polls.
920	The countries which have received Marshall Plan aid have been able, through hard work, to expand their productive strength in many cases, to levels higher than ever before in their history. Without this strength they would be completely incapable of def ending themselves today. They are now ready to use this strength in helping to build a strong combined defense against aggression.
921	We shall need to continue some economic aid to European countries. This aid should now be specifically related to the building of their defenses.
922	In other parts of the world our economic assistance will need to be more broadly directed toward economic development. In the Near East, in Africa, in Asia, we must do what we can to help people who are striving to advance from misery, poverty, and hung er. We must also continue to help the economic growth of our good neighbors in this hemisphere. These actions will bring greater strength for the free world. They will give many people a real stake in the future and reason to defend their freedom. They will mean increased production of goods they need and materials we need.
923	Second, we shall need to continue our military assistance to countries which want to defend themselves.
924	The heart of our common defense effort is the North Atlantic community. The defense of Europe is the basis for the defense of the whole free world-ourselves included. Next to the United States, Europe is the largest workshop in the world. It is also a ho meland of the great religious beliefs shared by many of our citizens-beliefs which are now threatened by the tide of atheistic communism.
925	Strategically, economically, and morally, the defense of Europe is a part of our own defense. That is why we have joined with the countries of Europe in the North Atlantic Treaty, pledging ourselves to work with them.
926	There has been much discussion recently over whether the European countries are willing to defend themselves. Their actions are answering this question.
927	Our North Atlantic Treaty partners have strict systems of universal military training. Several have recently increased the term of service. All have taken measures to improve the quality of training. Forces are being trained and expanded as rapidly as th e necessary arms and equipment can be supplied from their factories and ours. Our North Atlantic Treaty partners, together, are building armies bigger than our own.
928	None of the North Atlantic Treaty countries, including our own country, has done enough yet. But real progress is being made. Together, we have worked out defense plans. The military leaders of our own country took part in working out these plans, and a re agreed that they are sound and within our capabilities.
929	To put these plans into action, we sent to Europe last week one of our greatest military commanders, General Dwight D. Eisenhower.
930	General Eisenhower went to Europe to assume command of the united forces of the North Atlantic Treaty countries, including our own forces in Germany.
931	The people of Europe have confidence in General Eisenhower. They know his ability to put together a fighting force of allies. His mission is vital to our security. We should all stand behind him, and give him every bit of help we can.
932	Part of our job will be to reinforce the military strength of our European partners by sending them weapons and equipment as our military production expands.
933	Our program of military assistance extends to the nations in the Near East and the Far East which are trying to defend their freedom. Soviet communism is trying to make these nations into colonies, and to use their people as cannon fodder in new wars of conquest. We want their people to be free men and to enjoy peace.
934	Our country has always stood for freedom for the peoples of Asia. Long, long ago it stood for the freedom of the peoples of Asia. Our history shows this. We have demonstrated it in the Philippines. We have demonstrated it in our relations with Indonesia, India, and with China. We hope to join in restoring the people of Japan to membership in the community of free nations.
935	It is in the Far East that we have taken up arms, under the United Nations, to preserve the principle of independence for free nations. We are fighting to keep the forces of Communist aggression from making a slave state out of Korea.
936	Korea has tremendous significance for the world. It means that free nations, acting through the United Nations, are fighting together against aggression.
937	We will understand the importance of this best if we look back into history. If the democracies had stood up against the invasion of Manchuria in 1931, or the attack on Ethiopia in 1935, or the seizure of Austria in 1938, if they had stood together again st aggression on those occasions as the United Nations has done in Korea, the whole history of our time would have been different.
938	The principles for which we are fighting in Korea are right and just. They are the foundations of collective security and of the future of free nations. Korea is not only a country undergoing the torment of aggression; it is also a symbol. It stands for right and justice in the world against oppression and slavery. The free world must always stand for these principles-and we will stand with the free world.
939	As the third part of our program, we will continue to work for peaceful settlements in international disputes. We will support the United Nations and remain loyal to the great principles of international cooperation laid down in its charter.
940	We are willing, as we have always been, to negotiate honorable settlements with the Soviet Union. But we will not engage in appeasement.
941	The Soviet rulers have made it clear that we must have strength as well as right on our side. If we build our strength-and we are building it-the Soviet rulers may face the facts and lay aside their plans to take over the world.
942	That is what we hope will happen, and that is what we are trying to bring about. That is the only realistic road to peace.
943	These are the main elements of the course our Nation must follow as a member of the community of free nations. These are the things we must do to preserve our security and help create a peaceful world. But they will be successful only if we increase the strength of our own country.
944	Here at home we have some very big jobs to do. We are building much stronger military forces-and we are building them fast. We are preparing for full wartime mobilization, if that should be necessary. And we are continuing to build a strong and growing economy, able to maintain whatever effort may be required for as long as necessary.
945	We are building our own Army, Navy, and Air Force to an active strength of nearly 3 1/2 million men and women. We are stepping up the training of the reserve forces, and establishing more training facilities, so that we can rapidly increase our active fo rces far more on short notice.
946	We are going to produce all the weapons and equipment that such an armed force will need. Furthermore, we will make weapons for our allies, and weapons for our own reserve supplies. On top of this, we will build the capacity to turn out on short notice arms and supplies that may be needed for a full-scale war.
947	In many cases, however, our stocks of weapons are low. In other cases, those on hand are not the most modern. We have made remarkable technical advances. We have developed new types of jet planes and powerful new tanks. We are concentrating on producing the newest types of weapons and producing them as fast as we can.
948	This production drive is more selective than the one we had during World War II, but it is just as urgent and intense. It is a big program and it is a costly one.
949	Let me give you two concrete examples. Our present program calls for expanding the aircraft industry so that it will have the capacity to produce 50,000 modern military planes a year. We are preparing the capacity to produce 35,000 tanks a year. We are not now ordering that many planes or that many tanks, and we hope that we never have to, but we mean to be able to turn them out if we need them.
950	The planes we are producing now are much bigger, much better, and much more expensive than the planes we had during the last war.
951	We used to think that the B-17 was a huge plane, and the blockbuster it carried a huge load. But the B-36 can carry five of these blockbusters in its belly, and it can carry them five times as far. Of course, the B-36 is much more complicated to build than the B-17, and far more expensive. One B-17 costs $275,000, while now one B-36 costs 3 million.
952	I ask you to remember that what we are doing is to provide the best and most modern military equipment in the world for our fighting forces.
953	This kind of defense production program has two parts. The first part is to get our defense protect production going as fast as possible. We have to convert plants and channel materials to defense production. This means heavy cuts in civilian uses of copper, aluminum, rubber, and other essential materials. It means shortages in various consumer goods.
954	The second part is to increase our capacity to produce and to keep our economy strong for the long pull. We do not know how long Communist aggression will threaten the world.
955	Only by increasing our output can we carry the burden of preparedness for an indefinite period in the future. This means that we will have to build more power plants and more steel mills, grow more cotton, mine more copper, and expand our capacity in many other ways.
956	The Congress will need to consider legislation, at this session, affecting all the aspects of our mobilization job. The main subjects on which legislation will be needed are:
957	First, appropriations for our military buildup.
958	Second, extension and revision of the Selective Service Act.
959	Third, military and economic aid to help build up the strength of the free world.
960	Fourth, revision and extension of the authority to expand production and to stabilize prices, wages, and rents.
961	Fifth, improvement of our agricultural laws to help obtain the kinds of farm products we need for the defense effort.
962	Sixth, improvement of our labor laws to help provide stable labor-management relations and to make sure that we have steady production in this emergency.
963	Seventh, housing and training of defense workers and the full use of all our manpower resources.
964	Eighth, means for increasing the supply of doctors, nurses, and other trained medical personnel critically needed for the defense effort.
965	Ninth, aid to the States to meet the most urgent needs of our elementary and secondary schools. Some of our plans will have to be deferred for the time being. But we should do all we can to make sure our children are being trained as good and useful citizens in the critical times ahead.
966	Tenth, a major increase in taxes to meet the cost of the defense effort.
967	The Economic Report and the Budget Message will discuss these subjects further. In addition, I shall send to the Congress special messages containing detailed recommendations on legislation needed at this session.
968	In the months ahead the Government must give priority to activities that are urgent-like military procurement and atomic energy and power development. It must practice rigid economy in its non defense activities. Many of the things we would normally do must be curtailed or postponed.
969	But in a long-term defense effort like this one, we cannot neglect the measures needed to maintain a strong economy and a healthy democratic society.
970	The Congress, therefore, should give continued attention to the measures which our country will need for the long pull. And it should act upon such legislation as promptly as circumstances permit.
971	To take just one example-we need to continue and complete the work of rounding out our system of social insurance. We still need to improve our protection against unemployment and old age. We still need to provide insurance against the loss of earnings through sickness, and against the high costs of modern medical care.
972	And above all, we must remember that the fundamentals of our strength rest upon the freedoms of our people. We must continue our efforts to achieve the full realization of our democratic ideals. We must uphold the freedom of speech and the freedom of conscience in our land. We must assure equal rights and equal opportunities to all our citizens.
973	As we go forward this year in the defense of freedom, let us keep clearly before us the nature of our present effort.
974	We are building up our strength, in concert with other free nations, to meet the danger of aggression that has been turned loose on the world. The strength of the free nations is the world's best hope of peace.
975	I ask the Congress for unity in these crucial days.
976	Make no mistake about my meaning. I do not ask, or expect, unanimity. I do not ask for an end to debate. Only by debate can we arrive at decisions which are wise, and which reflect the desires of the American people. We do not have a dictatorship in this country, and we never will have one in this country.
977	When I request unity, what I am really asking for is a sense of responsibility on the part of every Member of this Congress. Let us debate the issues, but let every man among us weigh his words and his deeds. There is a sharp difference between harmful criticism and constructive criticism. If we are truly responsible as individuals, I am sure that we will be unified as a government.
978	Let us keep our eyes on the issues and work for the things we all believe in.
979	Let each of us put our country ahead of our party, and ahead of our own personal interests.
980	I had the honor to be a Member of the Senate during World War II, and I know from experience that unity of purpose and of effort is possible in the Congress without any lessening of the vitality of our two party system.
981	Let us all stand together as Americans. Let us stand together with all men every where who believe in human liberty.
982	Peace is precious to us. It is the way of life we strive for with all the strength and wisdom we possess. But more precious than peace are freedom and justice. We will fight, if fight we must, to keep our freedom and to prevent justice from being destroyed.
983	These are the things that give meaning to our lives, and which we acknowledge to be greater than ourselves.
984	This is our cause-peace, freedom, justice. We will pursue this cause with determination and humility, asking divine guidance that in all we do we may follow the will of God.@
985	Harry S. Truman|Annual Message to the Congress on the State of the Union|1952-01-09|@Mr. President, Mr. Speaker, Members of the Congress:
986	I have the honor to report to the Congress on the state of the Union.
987	At the outset, I should like to speak of the necessity for putting first things first as we work together this year for the good of our country.
988	The United States and the whole free world are passing through a period of grave danger. Every action you take here in Congress, and every action that I take as President, must be measured against the test of whether it helps to meet that danger.
989	This will be a presidential election year-the year in which politics plays a large part in our lives--a larger part than usual. That is perfectly proper. But we have a greater responsibility to conduct our political fights in a manner that does not harm the national interest.
990	We can find plenty of things to differ about without destroying our free institutions and without abandoning our bipartisan foreign policy for peace.
991	When everything is said and done, all of us--Republicans and Democrats alike--all of us are Americans; and we are all going to sink or swim together.
992	We are moving through a perilous time. Faced with a terrible threat of aggression, our Nation has embarked upon a great effort to help establish the kind of world in which peace shall be secure. Peace is our goal-not peace at any price, but a peace based on freedom and justice. We are now in the midst of our effort to reach that goal. On the whole, we have been doing very well.
993	Last year, 1951, was a year in which we threw back aggression, added greatly to our military strength, and improved the chances for peace and freedom in many parts of the world.
994	When we look at the record of the past year, 1951, we find important things on both the credit and the debit side of the ledger. We have made great advances. At the same time we have run into new problems which must be overcome.
995	Now let us look at the credit side first.
996	Peace depends upon the free nations sticking together, and making a combined effort to check aggression and prevent war. In this respect, 1951 was a year of great achievement.
997	In Korea the forces of the United Nations turned back the Chinese Communist invasion-and did it without widening the area of conflict. The action of the United Nations in Korea has been a powerful deterrent to a third world war. However, the situation in Korea remains very hazardous. The outcome of the armistice negotiation still remains uncertain.
998	In Indochina and Malaya, our aid has helped our allies to hold back the Communist advance, although there are signs of further trouble in that area.
999	In 1951 we strengthened the chances of peace in the Pacific region by the treaties with Japan and the defense arrangements with Australia, New Zealand, and the Philippines.
1000	In Europe combined defense has become a reality. The free nations have created a real fighting force. This force is not yet as strong as it needs to be; but it is already a real obstacle to any attempt by hostile forces to sweep across Europe to the Atlantic.
1001	In 1951 we also moved to strengthen the security of Europe by the agreement to bring Greece and Turkey into the North Atlantic Treaty.
1002	The United Nations, the world's greatest hope for peace, has come through a year of trial stronger and more useful than ever. The free nations have stood together in blocking Communist attempts to tear up the charter.
1003	At the present session of the United Nations in Paris, we, together with the British and the French, offered a plan to reduce and control all armaments under a foolproof inspection system. This is a concrete, practical proposal for disarmament.
1004	Disarmament is not a joke. Vishinsky's laughter met with shock and anger from the people all over the world. And, as a result, Mr. Stalin's representative received orders to stop laughing and start talking.
1005	If the Soviet leaders were to accept this proposal, it would lighten the burden of armaments, and permit the resources of the earth to be devoted to the good of mankind. But until the Soviet Union accepts a sound disarmament proposal, and joins in peaceful settlements, we have no choice except to build up our defenses.
1006	During this past year we added more than a million men and women to our Armed Forces. The total is now nearly 3 and a half million. We have made rapid progress in the field of atomic weapons. We have turned out billion worth of military supplies and equipment, three times as much as the year before.
1007	Economic conditions in the country are good. There are 61 million people on the job; wages, farm incomes, and business profits are at high levels. Total production of goods and services in our country has increased 8 percent over last year--about twice the normal rate of growth.
1008	Perhaps the most amazing thing about our economic progress is the way we are increasing our basic capacity to produce. For example, we are now in the second year of a 3-year program which will double our output of aluminum, increase our electric power supply by 40 percent, and increase our steelmaking capacity by 15 percent. We can then produce 120 million tons of steel a year, as much as all the rest of the world put together.
1009	This expansion will mean more jobs and higher standards of living for all of us in the years ahead. At the present time it means greater strength for us and for the rest of the free world in the fight for peace.
1010	Now, I must turn to the debit side of the ledger for the past year.
1011	The outstanding fact to note on the debit side of the ledger is that the Soviet Union, in 1951, continued to expand its military production and increase its already excessive military power.
1012	It is true that the Soviets have run into increasing difficulties. Their hostile policies have awakened stern resistance among free men throughout the world. And behind the Iron Curtain the Soviet rule of force has created growing political and economic stresses in the satellite nations.
1013	Nevertheless, the grim fact remains that the Soviet Union is increasing its armed might. It is still producing more war planes than the free nations. It has set off two more atomic explosions. The world still walks in the shadow of another world war.
1014	And here at home, our defense preparations are far from complete.
1015	During 1951 we did not make adequate progress in building up civil defense against atomic attack. This is a major weakness in our plans for peace, since inadequate civilian defense is an open invitation to a surprise attack. Failure to provide adequate civilian defense has the same effect as adding to the enemy's supply of atomic bombs.
1016	In the field of defense production we have run into difficulties and delays in designing and producing the latest types of airplanes and tanks. Some machine tools and metals are still in extremely short supply.
1017	In other free countries the defense buildup has created severe economic problems. It has increased inflation in Europe and has endangered the continued recovery of our allies.
1018	In the Middle East political tensions and the oil controversy in Iran are keeping the region in a turmoil. In the Far East the dark threat of Communist imperialism still hangs over many nations.
1019	This, very briefly, is the good side and the bad side of the picture.
1020	Taking the good and bad together, we have made real progress this last year along the road to peace. We have increased the power and unity of the free world. And while we were doing this, we have avoided world war on the one hand, and appeasement on the other. This is a hard road to follow, but the events of the last year show that it is the right road to peace.
1021	We cannot expect to complete the job overnight. The free nations may have to maintain for years the larger military forces needed to deter aggression. We must build steadily, over a period of years, toward political solidarity and economic progress among the free nations in all parts of the world.
1022	Our task will not be easy; but if we go at it with a will, we can look forward to steady progress. On our side are all the great resources of freedom--the ideals of religion and democracy, the aspiration of people for a better life, and the industrial and technical power of a free civilization.
1023	These advantages outweigh anything the slave world can produce. The only thing that can defeat us is our own state of mind. We can lose if we falter.
1024	The middle period of a great national effort like this is a very difficult time. The way seems long and hard. The goal seems far distant. Some people get discouraged. That is only natural.
1025	But if there are any among us who think we ought to ease up in the fight for peace, I want to remind them of three things--just three things.
1026	First: The threat of world war is still very real. We had one Pearl Harbor--let's not get caught off guard again. If you don't think the threat of Communist armies is real, talk to some of our men back from Korea.
1027	Second: If the United States had to try to stand alone against a Soviet-dominated world, it would destroy the life we know and the ideals we hold dear. Our allies are essential to us, just as we are essential to them. The more shoulders there are to bear the burden the lighter that burden will be.
1028	Third: The things we believe in most deeply are under relentless attack. We have the great responsibility of saving the basic moral and spiritual values of our civilization. We have started out well--with a program for peace that is unparalleled in history. If we believe in ourselves and the faith we profess, we will stick to that job until it is victoriously finished.
1029	This is a time for courage, not for grumbling and mumbling.
1030	Now, let us take a look at the things we have to do.
1031	The thing that is uppermost in the minds of all of us is the situation in Korea. We must, and we will, keep up the fight there until we get the kind of armistice that will put an end to the aggression and protect the safety of our forces and the security of the Republic of Korea. Beyond that we shall continue to work for a settlement in Korea that upholds the principles of the United Nations.
1032	We went into Korea because we knew that Communist aggression had to be met firmly if freedom was to be preserved in the world. We went into the fight to save the Republic of Korea, a free country, established under the United Nations. These are our aims. We will not give up until we attain them.
1033	Meanwhile, we must continue to strengthen the forces of freedom throughout the world.
1034	I hope the Senate will take early and favorable action on the Japanese peace treaty, on our security pacts with the Pacific countries, and on the agreement to bring Greece and Turkey into the North Atlantic Treaty.
1035	We are also negotiating an agreement with the German Federal Republic under which it can play an honorable and equal part among nations and take its place in the defense of Western Europe.
1036	But treaties and plans are only the skeleton of our defense structure. The sinew and muscle of defense are the forces and equipment which must be provided.
1037	In Europe we must go on helping our friends and allies to build up their military forces. This means we must send weapons in large volume to our European allies. I have directed that weapons for Europe be given a very high priority. Economic aid is necessary, too, to supply the margin of difference between success and failure in making Europe a strong partner in our joint defense.
1038	In the long run we want to see Europe freed from any dependence on our aid. Our European allies want that just as bad as we do. The steps that are now being taken to build European unity should help bring that about. Six European countries are pooling their coal and steel production under the Schuman plan. Work is going forward on the merger of European national forces on the Continent into a single army. These great projects should become realities in 1952.
1039	We should do all we can to help and encourage the move toward a strong and united Europe.
1040	In Asia the new Communist empire is a daily threat to millions of people. The peoples of Asia want to be free to follow their own way of life. They want to preserve their culture and their traditions against communism, just as much as we want to preserve ours. They are laboring under terrific handicaps--poverty, ill health, feudal systems of land ownership, and the threat of internal subversion or external attack. We can and we must increase our help to them.
1041	This means military aid, especially to those places like Indochina which might be hardest hit by some new Communist attack.
1042	It also means economic aid, both technical know-how and capital investment.
1043	This last year we made available millions of bushels of wheat to relieve famine in India. But far more important, in the long run, is the work Americans are doing in India to help the Indian farmers themselves raise more grain. With the help of our technicians, Indian farmers, using simple, inexpensive means, have been able since 1948 to double the crops in one area in India. One farmer there raised 63 bushels of wheat to the acre, where 13 bushels had been the average before.
1044	This is point 4--our point 4 program at work. It is working--not only in India but in Iran, Paraguay, Liberia--in 33 countries around the globe. Our technical missionaries are out there. We need more of them. We need more funds to speed their efforts, because there is nothing of greater importance in all our foreign policy. There is nothing that shows more clearly what we stand for, and what we want to achieve.
1045	My friends of the Congress, less than one-third of the expenditure for the cost of World War II would have created the developments necessary to feed the whole world so we wouldn't have to stomach communism. That is what we have got to fight, and unless we fight that battle and win it, we can't win the cold war or a hot one either.
1046	We have recently lost a great public servant who was leading this effort to bring opportunity and hope to the people of half the world. Dr. Henry Bennett and his associates died in line of duty on a point 4 mission. It is up to us to carry on the great work for which they gave their lives.
1047	During the coming year we must not forget the suffering of the people who live behind the Iron Curtain. In those areas minorities are being oppressed, human rights violated, religions persecuted. We should continue to expose those wrongs. We should continue and expand the activities of the Voice of America, which brings our message of hope and truth to those peoples and other peoples throughout the world.
1048	I have just had an opportunity to discuss many of these world problems with Prime Minister Churchill. We have had a most satisfactory series of meetings. We thoroughly reviewed the situation in Europe, the Middle East, and the Far East. We both look forward to steady progress toward peace through the cooperative action and teamwork of the free nations.
1049	Turning from our foreign policies, let us consider the jobs we have here at home as a part of our program for peace.
1050	The first of these jobs is to move ahead full steam on the defense program.
1051	Our objective is to have a well-equipped active defense force large enough--in concert with the forces of our allies--to deter aggression and to inflict punishing losses on the enemy immediately if we should be attacked. This active force must be backed by adequate reserves, and by the plants and tools to turn out the tremendous quantities of new weapons that would be needed if war came. We are not building an active force adequate to carry on full scale war, but we are putting ourselves in a position to mobilize very rapidly if we have to.
1052	This year I shall recommend some increases in the size of the active force we are building, with particular emphasis on air power. This means we shall have to continue large-scale production of planes and other equipment for a longer period of time than we had originally planned.
1053	We shall have to hold to a high rate of military output for about a year after that. In 1954 we hope to have enough equipment so that we can reduce the production of most military items substantially. The next 2 years should therefore be the peak period of defense production.
1054	Defense needs will take a lot of steel, aluminum, copper, nickel, and other scarce materials. This means smaller production of some civilian goods. The cutbacks will be nothing like those during World War II, when most civilian production was completely stopped. But there will be considerably less of some goods than we have been used to these past 2 or 3 years.
1055	The very critical part of our defense job this year is to keep down inflation.
1056	We can control inflation if we make up our minds to do it.
1057	On the executive side of the Government, we intend to hold the line on prices just as tightly as the law allows. We will permit only those wage increases which are clearly justified under sound stabilization policies; and we will see to it that industries absorb cost increases out of earnings wherever feasible, before they are authorized to raise prices. We will do that, at any rate, except where the recent amendments to the law specifically require us to give further price increases.
1058	Congress has a tremendous responsibility in this matter. Our stabilization law was shot full of holes at the last session. This year, it will be one of the main tasks before the Congress to repair the damage and enact a strong anti-inflation law.
1059	As a part of our program to keep our country strong, we are determined to preserve the financial strength of the Government. This means high taxes over the next few years. We must see to it that these taxes are shared among the people as fairly as possible. I expect to discuss these matters in the Economic Report and the Budget Message which will soon be presented to the Congress.
1060	Our tax laws must be fair. And we must make absolutely certain they are administered fairly, without fear or favor of any kind for anybody. To this end, steps have already been taken to remedy weaknesses which have been disclosed in the administration of the tax laws. In addition, I hope the Congress will approve my reorganization plan for the Bureau of Internal Revenue. We must do everything necessary in order to make just as certain as is humanly possible that every taxpayer receives equal treatment under the law.
1061	To carry the burden of defense we must have a strong, productive, and expanding economy here at home. We cannot neglect those things that have made us the great and powerful nation we are today.
1062	Our strength depends upon the health, the morale, the freedom of our people. We can take on the burden of leadership in the fight for world peace because, for nearly 20 years, the Government and the people have been working together for the general welfare. We have given more and more of out citizens a fair chance at decent, useful, productive lives. That is the reason we are as strong as we are today.
1063	This Government of ours--the Congress and the executive both--must keep on working to bring about a fair deal for all the American people. Some people will say that we haven't the time or the money this year for measures for the welfare of the people. But if we want to win the fight for peace, this is a part of the job we cannot ignore.
1064	We will have to give up some things, we will have to go forward on others at a slower pace. But, so far as I am concerned, I do not think we can give up the things that are vital to our national strength.
1065	I believe most people in this country will agree with me on that.
1066	I think most farmers understand that soil conservation and rural electrification and agricultural research are not frills or luxuries, but real necessities in order to boost our farm production.
1067	I think most workers understand that decent housing and good working conditions are not luxuries, but necessities if the working men and women of this country are to continue to out-produce the rest of the world.
1068	I think our businessmen know that scientific research and transportation services and more steel mills and power projects are not luxuries, but necessities to keep our business and our industry in the forefront of industrial progress.
1069	I think everybody knows that social insurance and better schools and health services are not frills, but necessities in helping all Americans to be useful and productive citizens, who can contribute their full share in the national effort to protect and advance our way of life.
1070	We cannot do all we want to in times like these--we have to choose the things that will contribute most to defense--but we must continue to make progress if we are to be a strong nation in the years ahead.
1071	Let me give you some examples.
1072	We are going right ahead with the urgently needed work to develop our natural resources, to conserve our soil, and to prevent floods. We are going to produce essential power and build the lines that are necessary and that we have to have to transmit it to our farms and factories. We are going to encourage exploration for new mineral deposits.
1073	We are going to keep on building essential highways and taking any other steps that will assure the Nation an adequate transportation system--on land, on the sea, and in the air.
1074	We must move right ahead this year to see that defense workers and soldiers' families get decent housing at rents they can afford to pay.
1075	We must begin our long deferred program of Federal aid to education--to help the States meet the present crisis in the operation of our schools. And we must help with the construction of schools in areas where they are critically needed because of the defense effort.
1076	We urgently need to train more doctors and other health personnel, through aid to medical education. We also urgently need to expand the basic public health services in our home communities--especially in defense areas. The Congress should go ahead with these two measures immediately.
1077	I have set up an impartial commission to make a thorough study of the Nation's health needs. One of the things this commission is looking into is how to bring the cost of modern medical care within the reach of all the people. I have repeatedly recommended national health insurance as the best way to do this. So far as I know, it is still the best way. If there are any better answers, I hope this commission will find them. But of one thing I am sure: something must be done, and done soon.
1078	This year we ought to make a number of urgently needed improvements in our social security law. For one thing, benefits under old-age and survivors insurance should be raised $5 a month above the present average of $42. For another thing, the States should be given special aid to help them increase public assistance payments. By doing these things now, we can ease the pressure of living costs for people who depend on those fixed payments.
1079	We should also make some cost-of-living adjustments for those receiving veterans' compensation for death or disability incurred in the service of our country. In addition, now is the time to start a sensible program of readjustment benefits for our veterans who have seen service since the fighting broke out in Korea.
1080	We need to act promptly to improve our labor law. The Taft-Hartley Act has many serious and far-reaching defects. Experience has demonstrated this so clearly that even the sponsors of the act now admit that it needs to be changed. A fair law, fair to both management and labor, is indispensable to sound labor relations and to full, uninterrupted production. I intend to keep on working for a fair law until we get one.
1081	As we build our strength to defend the freedom in the world, we ourselves must extend the benefits of freedom more widely among all our own people. We need to take action toward the wider enjoyment of civil rights. Freedom is the birthright of every American.
1082	The executive branch has been making real progress toward full equality of treatment and opportunity--in the Armed Forces, in the civil service, and in private firms working for the Government. Further advances require action by Congress, and I hope that means will be provided to give the Members of the Senate and the House a chance to vote on them.
1083	I am glad to hear that home rule for the District of Columbia will be the first item of business before the Senate. I hope that it, as well as statehood for Hawaii and Alaska, will be adopted promptly.
1084	All these measures I have been talking about--measures to advance the well-being of our people--demonstrate to the world the forward movement of our free society.
1085	This demonstration of the way free men govern themselves has a more powerful influence on the people of the world--on both sides of the Iron Curtain--than all the trick slogans and pie-in-the-sky promises of the Communists.
1086	But our shortcomings, as well as our progress, are watched from abroad. And there is one shortcoming I want to speak about plainly.
1087	Our kind of government above all others cannot tolerate dishonesty among public servants.
1088	Some dishonest people worm themselves into almost every human organization. It is all the more shocking, however, when they make their way into a Government such as ours, which is based on the principle of justice for all. Such unworthy public servants must be weeded out. I intend to see to it that Federal employees who have been guilty of misconduct are punished for it. I also intend to see to it that the honest and hard-working great majority of our Federal employees are protected against partisan slander and malicious attack.
1089	I have already made some recommendations to the Congress to help accomplish these purposes. I intend to submit further recommendations to this end. I will welcome the wholehearted cooperation of the Congress in this effort.
1090	I also think that the Congress can do a great deal to strengthen confidence in our institutions by applying rigorous standards of moral integrity to its own operations, and by finding an effective way to control campaign expenditures, and by protecting the rights of individuals in congressional investigations.
1091	To meet the crisis which now hangs over the world, we need many different kinds of strength--military, economic, political, and moral. And of all these, I am convinced that moral strength is the most vital.
1092	When you come right down to it, it is the courage and the character of our Nation--and of each one of us as individuals-that will really decide how well we meet this challenge.
1093	We are engaged in a great undertaking at home and abroad--the greatest, in fact, that any nation has ever been privileged to embark upon. We are working night and day to bring peace to the world and to spread the democratic ideals of justice and self-government to all people. Our accomplishments are already remarkable. We ought to be full of pride in what we are doing, and full of confidence and hope in the outcome. No nation ever had greater resources, or greater energy, or nobler traditions to inspire it.
1094	And yet, day in and day out, we see a long procession of timid and fearful men who wring their hands and cry out that we have lost the way, that we don't know what we are doing, that we are bound to fail. Some say we should give up the struggle for peace, and others say we should have a war and get it over with. That's a terrible statement. I had heard it made, but they want us to forget the great objective of preventing another world war--the objective for which our soldiers have been fighting in the hills of Korea.
1095	If we are to be worthy of all that has been done for us by our soldiers in the field, we must be true to the ideals for which they are fighting. We must reject the counsels of defeat and despair. We must have the determination to complete the great work for which our men have laid down their lives.
1096	We must have that same faith and vision. In the great contest in which we are engaged today, we cannot expect to have fair weather all the way. But it is a contest just as important for this country and for all men, as the desperate struggle that George Washington fought through to victory.
1097	Let us prove, again, that we are not merely sunshine patriots and summer soldiers. Let us go forward, trusting in the God of Peace, to win the goals we seek.@
1098	Dwight D. Eisenhower|Annual Message to the Congress on the State of the Union|1953-02-02|@Mr. President, Mr. Speaker, Members of the Eighty-third Congress:
1099	I welcome the honor of appearing before you to deliver my first message to the Congress.
1100	It is manifestly the joint purpose of the congressional leadership and of this administration to justify the summons to governmental responsibility issued last November by the American people. The grand labors of this leadership will involve:
1101	Application of America's influence in world affairs with such fortitude and such foresight that it will deter aggression and eventually secure peace;
1102	Establishment of a national administration of such integrity and such efficiency that its honor at home will ensure respect abroad;
1103	Encouragement of those incentives that inspire creative initiative in our economy, so that its productivity may fortify freedom everywhere; and
1104	Dedication to the well-being of all our citizens and to the attainment of equality of opportunity for all, so that our Nation will ever act with the strength of unity in every task to which it is called.
1105	The purpose of this message is to suggest certain lines along which our joint efforts may immediately be directed toward realization of these four ruling purposes.
1106	The time that this administration has been in office has been too brief to permit preparation of a detailed and comprehensive program of recommended action to cover all phases of the responsibilities that devolve upon our country's new leaders. Such a program will be filled out in the weeks ahead as, after appropriate study, I shall submit additional recommendations for your consideration. Today can provide only a sure and substantial beginning.
1107	II.
1108	Our country has come through a painful period of trial and disillusionment since the victory of 1945. We anticipated a world of peace and cooperation. The calculated pressures of aggressive communism have forced us, instead, to live in a world of turmoil.
1109	From this costly experience we have learned one clear lesson. We have learned that the free world cannot indefinitely remain in a posture of paralyzed tension, leaving forever to the aggressor the choice of time and place and means to cause greatest hurt to us at least cost to himself.
1110	This administration has, therefore, begun the definition of a new, positive foreign policy. This policy will be governed by certain fixed ideas. They are these:
1111	(1) Our foreign policy must be clear, consistent, and confident. This means that it must be the product of genuine, continuous cooperation between the executive and the legislative branches of this Government. It must be developed and directed in the spirit of true bipartisanship.
1112	(2) The policy we embrace must be a coherent global policy. The freedom we cherish and defend in Europe and in the Americas is no different from the freedom that is imperiled in Asia.
1113	(3) Our policy, dedicated to making the free world secure, will envision all peaceful methods and devices--except breaking faith with our friends. We shall never acquiesce in the enslavement of any people in order to purchase fancied gain for ourselves. I shall ask the Congress at a later date to join in an appropriate resolution making clear that this Government recognizes no kind of commitment contained in secret understandings of the past with foreign governments which permit this kind of enslavement.
1114	(4) The policy we pursue will recognize the truth that no single country, even one so powerful as ours, can alone defend the liberty of all nations threatened by Communist aggression from without or subversion within. Mutual security means effective mutual cooperation. For the United States, this means that, as a matter of common sense and national interest, we shall give help to other nations in the measure that they strive earnestly to do their full share of the common task. No wealth of aid could compensate for poverty of spirit. The heart of every free nation must be honestly dedicated to the preserving of its own independence and security.
1115	(5) Our policy will be designed to foster the advent of practical unity in Western Europe. The nations of that region have contributed notably to the effort of sustaining the security of the free world. From the jungles of Indochina and Malaya to the northern shores of Europe, they have vastly improved their defensive strength. Where called upon to do so, they have made costly and bitter sacrifices to hold the line of freedom.
1116	But the problem of security demands closer cooperation among the nations of Europe than has been known to date. Only a more closely integrated economic and political system can provide the greatly increased economic strength needed to maintain both necessary military readiness and respectable living standards.
1117	Europe's enlightened leaders have long been aware of these facts. All the devoted work that has gone into the Schuman plan, the European Army, and the Strasbourg Conference has testified to their vision and determination. These achievements are the more remarkable when we realize that each of them has marked a victory--for France and for Germany alike over the divisions that in the past have brought such tragedy to these two great nations and to the world.
1118	The needed unity of Western Europe manifestly cannot be manufactured from without; it can only be created from within. But it is right and necessary that we encourage Europe's leaders by informing them of the high value we place upon the earnestness of their efforts toward this goal. Real progress will be conclusive evidence to the American people that our material sacrifices in the cause of collective security are matched by essential political, economic, and military accomplishments in Western Europe.
1119	(6) Our foreign policy will recognize the importance of profitable and equitable world trade.
1120	A substantial beginning can and should be made by our friends themselves. Europe, for example, is now marked by checkered areas of labor surplus and labor shortage, of agricultural areas needing machines and industrial areas needing food. Here and elsewhere we can hope that our friends will take the initiative in creating broader markets and more dependable currencies, to allow greater exchange of goods and services among themselves.
1121	Action along these lines can create an economic environment that will invite vital help from us.
1122	This help includes:
1123	First: Revising our customs regulations to remove procedural obstacles to profitable trade. I further recommend that the Congress take the Reciprocal Trade Agreements Act under immediate study and extend it by appropriate legislation. This objective must not ignore legitimate safeguarding of domestic industries, agriculture, and labor standards. In all executive study and recommendations on this problem labor and management and farmers alike will be earnestly consulted.
1124	Second: Doing whatever Government properly can to encourage the flow of private American investment abroad. This involves, as a serious and explicit purpose of our foreign policy, the encouragement of a hospitable climate for such investment in foreign nations.
1125	Third: Availing ourselves of facilities overseas for the economical production of manufactured articles which are needed for mutual defense and which are not seriously competitive with our own normal peacetime production.
1126	Fourth: Receiving from the rest of the world, in equitable exchange for what we supply, greater amounts of important raw materials which we do not ourselves possess in adequate quantities.
1127	III.
1128	This war is, for Americans, the most painful phase of Communist aggression throughout the world. It is clearly a part of the same calculated assault that the aggressor is simultaneously pressing in Indochina and in Malaya, and of the strategic situation that manifestly embraces the island of Formosa and the Chinese Nationalist forces there. The working out of any military solution to the Korean war will inevitably affect all these areas.
1129	The administration is giving immediate increased attention to the development of additional Republic of Korea forces. The citizens of that country have proved their capacity as fighting men and their eagerness to take a greater share in the defense of their homeland. Organization, equipment, and training will allow them to do so. Increased assistance to Korea for this purpose conforms fully to our global policies.
1130	In June 1950, following the aggressive attack on the Republic of Korea, the United States Seventh Fleet was instructed both to prevent attack upon Formosa and also to insure that Formosa should not be used as a base of operations against the Chinese Communist mainland.
1131	This has meant, in effect, that the United States Navy was required to serve as a defensive arm of Communist China. Regardless of the situation in 1950, since the date of that order the Chinese Communists have invaded Korea to attack the United Nations forces there. They have consistently rejected the proposals of the United Nations Command for an armistice. They recently joined with Soviet Russia in rejecting the armistice proposal sponsored in the United Nations by the Government of India. This proposal had been accepted by the United States and 53 other nations.
1132	Consequently there is no longer any logic or sense in a condition that required the United States Navy to assume defensive responsibilities on behalf of the Chinese Communists, thus permitting those Communists, with greater impunity, to kill our soldiers and those of our United Nations allies in Korea.
1133	I am, therefore, issuing instructions that the Seventh Fleet no longer be employed to shield Communist China. This order implies no aggressive intent on our part. But we certainly have no obligation to protect a nation fighting us in Korea.
1134	IV.
1135	Our labor for peace in Korea and in the world imperatively demands the maintenance by the United States of a strong fighting service ready for any contingency.
1136	Our problem is to achieve adequate military strength within the limits of endurable strain upon our economy. To amass military power without regard to our economic capacity would be to defend ourselves against one kind of disaster by inviting another.
1137	Both military and economic objectives demand a single national military policy, proper coordination of our armed services, and effective consolidation of certain logistics activities.
1138	We must eliminate waste and duplication of effort in the armed services.
1139	We must realize clearly that size alone is not sufficient. The biggest force is not necessarily the best--and we want the best.
1140	We must not let traditions or habits of the past stand in the way of developing an efficient military force. All members of our forces must be ever mindful that they serve under a single flag and for a single cause.
1141	We must effectively integrate our armament programs and plan them in such careful relation to our industrial facilities that we assure the best use of our manpower and our materials.
1142	Because of the complex technical nature of our military organization and because of the security reasons involved, the Secretary of Defense must take the initiative and assume the responsibility for developing plans to give our Nation maximum safety at minimum cost. Accordingly, the new Secretary of Defense and his civilian and military associates will, in the future, recommend such changes in present laws affecting our defense activities as may be necessary to clarify responsibilities and improve the total effectiveness of our defense effort.
1143	This effort must always conform to policies laid down in the National Security Council.
1144	The statutory function of the National Security Council is to assist the President in the formulation and coordination of significant domestic, foreign, and military policies required for the security of the Nation. In these days of tension it is essential that this central body have the vitality to perform effectively its statutory role. I propose to see that it does so.
1145	Careful formulation of policies must be followed by clear understanding of them by all peoples. A related need, therefore, is to make more effective all activities of the Government related to international information.
1146	I have recently appointed a committee of representative and informed citizens to survey this subject and to make recommendations in the near future for legislative, administrative, or other action.
1147	A unified and dynamic effort in this whole field is essential to the security of the United States and of the other peoples in the community of free nations. There is but one sure way to avoid total war--and that is to win the cold war.
1148	While retaliatory power is one strong deterrent to a would-be aggressor, another powerful deterrent is defensive power. No enemy is likely to attempt an attack foredoomed to failure.
1149	Because the building of a completely impenetrable defense against attack is still not possible, total defensive strength must include civil defense preparedness. Because we have incontrovertible evidence that Soviet Russia possesses atomic weapons, this kind of protection becomes sheer necessity.
1150	Civil defense responsibilities primarily belong to the State and local governments--recruiting, training, and organizing volunteers to meet any emergency. The immediate job of the Federal Government is to provide leadership, to supply technical guidance, and to continue to strengthen its civil defense stockpile of medical, engineering, and related supplies and equipment. This work must go forward without lag.
1151	V.
1152	I have referred to the inescapable need for economic health and strength if we are to maintain adequate military power and exert influential leadership for peace in the world.
1153	Our immediate task is to chart a fiscal and economic policy that can:
1154	(1) Reduce the planned deficits and then balance the budget, which means, among other things, reducing Federal expenditures to the safe minimum;
1155	(2) Meet the huge costs of our defense;
1156	(3) Properly handle the burden of our inheritance of debt and obligations;
1157	(4) Check the menace of inflation;
1158	(5) Work toward the earliest possible reduction of the tax burden;
1159	(6) Make constructive plans to encourage the initiative of our citizens.
1160	It is important that all of us understand that this administration does not and cannot begin its task with a clean slate. Much already has been written on the record, beyond our power quickly to erase or to amend. This record includes our inherited burden of indebtedness and obligations and deficits.
1161	The current year's budget, as you know, carries a 5.9 billion dollar deficit; and the budget, which was presented to you before this administration took office, indicates a budgetary deficit of 9.9 billion for the fiscal year ending June 30, 1954. The national debt is now more than 265 billion dollars. In addition, the accumulated obligational authority of the Federal Government for future payment totals over 80 billion dollars. Even this amount is exclusive of large contingent liabilities, so numerous and extensive as to be almost beyond description.
1162	The bills for the payment of nearly all of the 80 billion dollars of obligations will be presented during the next 4 years. These bills, added to the current costs of government we must meet, make a formidable burden.
1163	The present authorized Government-debt limit is 275 billion dollars. The forecast presented by the outgoing administration with the fiscal year 1954 budget indicates that--before the end of the fiscal year and at the peak of demand for payments during the year--the total Government debt may approach and even exceed that limit. Unless budgeted deficits are checked, the momentum of past programs will force an increase of the statutory debt limit.
1164	Permit me this one understatement: to meet and to correct this situation will not be easy.
1165	Permit me this one assurance: every department head and I are determined to do everything we can to resolve it.
1166	The first order of business is the elimination of the annual deficit. This cannot be achieved merely by exhortation. It demands the concerted action of all those in responsible positions in the Government and the earnest cooperation of the Congress.
1167	Already, we have begun an examination of the appropriations and expenditures of all departments in an effort to find significant items that may be decreased or canceled without damage to our essential requirements.
1168	Getting control of the budget requires also that State and local governments and interested groups of citizens restrain themselves in their demands upon the Congress that the Federal Treasury spend more and more money for all types of projects.
1169	A balanced budget is an essential first measure in checking further depreciation in the buying power of the dollar. This is one of the critical steps to be taken to bring an end to planned inflation. Our purpose is to manage the Government's finances so as to help and not hinder each family in balancing its own budget.
1170	Reduction of taxes will be justified only as we show we can succeed in bringing the budget under control. As the budget is balanced and inflation checked, the tax burden that today stifles initiative can and must be eased.
1171	Until we can determine the extent to which expenditures can be reduced, it would not be wise to reduce our revenues.
1172	Meanwhile, the tax structure as a whole demands review. The Secretary of the Treasury is undertaking this study immediately. We must develop a system of taxation which will impose the least possible obstacle to the dynamic growth of the country. This includes particularly real opportunity for the growth of small businesses. Many readjustments in existing taxes will be necessary to serve these objectives and also to remove existing inequities. Clarification and simplification in the tax laws as well as the regulations will be undertaken.
1173	In the entire area of fiscal policy--which must, in its various aspects, be treated in recommendations to the Congress in coming weeks--there can now be stated certain basic facts and principles.
1174	First. It is axiomatic that our economy is a highly complex and sensitive mechanism. Hasty and ill-considered action of any kind could seriously upset the subtle equation that encompasses debts, obligations, expenditures, defense demands, deficits, taxes, and the general economic health of the Nation. Our goals can be clear, our start toward them can be immediate--but action must be gradual.
1175	Second. It is clear that too great a part of the national debt comes due in too short a time. The Department of the Treasury will undertake at suitable times a program of extending part of the debt over longer periods and gradually placing greater amounts in the hands of longer-term investors.
1176	Third. Past differences in policy between the Treasury and the Federal Reserve Board have helped to encourage inflation. Henceforth, I expect that their single purpose shall be to serve the whole Nation by policies designed to stabilize the economy and encourage the free play of our people's genius for individual initiative.
1177	In encouraging this initiative, no single item in our current problems has received more thoughtful consideration by my associates, and by the many individuals called into our counsels, than the matter of price and wage control by law.
1178	The great economic strength of our democracy has developed in an atmosphere of freedom. The character of our people resists artificial and arbitrary controls of any kind. Direct controls, except those on credit, deal not with the real causes of inflation but only with its symptoms. In times of national emergency, this kind of control has a role to play. Our whole system, however, is based upon the assumption that, normally, we should combat wide fluctuations in our price structure by relying largely on the effective use of sound fiscal and monetary policy, and upon the natural workings of economic law.
1179	Moreover, American labor and American business can best resolve their wage problems across the bargaining table. Government should refrain from sitting in with them unless, in extreme cases, the public welfare requires protection.
1180	We are, of course, living in an international situation that is neither an emergency demanding full mobilization, nor is it peace. No one can know how long this condition will persist. Consequently, we are forced to learn many new things as we go along-clinging to what works, discarding what does not.
1181	In all our current discussions on these and related facts, the weight of evidence is clearly against the use of controls in their present forms. They have proved largely unsatisfactory or unworkable. They have not prevented inflation; they have not kept down the cost of living. Dissatisfaction with them is wholly justified. I am convinced that now--as well as in the long run--free and competitive prices will best serve the interests of all the people, and best meet the changing, growing needs of our economy.
1182	Accordingly, I do not intend to ask for a renewal of the present wage and price controls on April 30, 1953, when present legislation expires. In the meantime, steps will be taken to eliminate controls in an orderly manner, and to terminate special agencies no longer needed for this purpose. It is obviously to be expected that the removal of these controls will result in individual price changes--some up, some down. But a maximum of freedom in market prices as well as in collective bargaining is characteristic of a truly free people.
1183	I believe also that material and product controls should be ended, except with respect to defense priorities and scarce and critical items essential for our defense. I shall recommend to the Congress that legislation be enacted to continue authority for such remaining controls of this type as will be necessary after the expiration of the existing statute on June 30, 1953.
1184	I recommend the continuance of the authority for Federal control over rents in those communities in which serious housing shortages exist. These are chiefly the so-called defense areas. In these and all areas the Federal Government should withdraw from the control of rents as soon as practicable. But before they are removed entirely, each legislature should have full opportunity to take over, within its own State, responsibility for this function.
1185	It would be idle to pretend that all our problems in this whole field of prices will solve themselves by mere Federal withdrawal from direct controls.
1186	We shall have to watch trends closely. If the freer functioning of our economic system, as well as the indirect controls which can be appropriately employed, prove insufficient during this period of strain and tension, I shall promptly ask the Congress to enact such legislation as may be required.
1187	In facing all these problems--wages, prices, production, tax rates, fiscal policy, deficits--everywhere we remain constantly mindful that the time for sacrifice has not ended. But we are concerned with the encouragement of competitive enterprise and individual initiative precisely because we know them to be our Nation's abiding sources of strength.
1188	VI.
1189	Our vast world responsibility accents with urgency our people's elemental right to a government whose clear qualities are loyalty, security, efficiency, economy, and integrity.
1190	The safety of America and the trust of the people alike demand that the personnel of the Federal Government be loyal in their motives and reliable in the discharge of their duties. Only a combination of both loyalty and reliability promises genuine security.
1191	To state this principle is easy; to apply it can be difficult. But this security we must and shall have. By way of example, all principal new appointees to departments and agencies have been investigated at their own request by the Federal Bureau of Investigation.
1192	Confident of your understanding and cooperation, I know that the primary responsibility for keeping out the disloyal and the dangerous rests squarely upon the executive branch. When this branch so conducts itself as to require policing by another branch of the Government, it invites its own disorder and confusion.
1193	I am determined to meet this responsibility of the Executive. The heads of all executive departments and agencies have been instructed to initiate at once effective programs of security with respect to their personnel. The Attorney General will advise and guide the departments and agencies in the shaping of these programs, designed at once to govern the employment of new personnel and to review speedily any derogatory information concerning incumbent personnel.
1194	To carry out these programs, I believe that the powers of the executive branch under existing law are sufficient. If they should prove inadequate, the necessary legislation will be requested.
1195	These programs will be both fair to the rights of the individual and effective for the safety of the Nation. They will, with care and justice, apply the basic principle that public employment is not a right but a privilege.
1196	All these measures have two clear purposes: Their first purpose is to make certain that this Nation's security is not jeopardized by false servants. Their second purpose is to clear the atmosphere of that unreasoned suspicion that accepts rumor and gossip as substitutes for evidence.
1197	Our people, of course, deserve and demand of their Federal Government more than security of personnel. They demand, also, efficient and logical organization, true to constitutional principles.
1198	I have already established a Committee on Government Organization. The Committee is using as its point of departure the reports of the Hoover Commission and subsequent studies by several independent agencies. To achieve the greater efficiency and economy which the Committee analyses show to be possible, I ask the Congress to extend the present Government Reorganization Act for a period of 18 months or 2 years beyond its expiration date of April 1, 1953.
1199	There is more involved here than realigning the wheels and smoothing the gears of administrative machinery. The Congress rightfully-expects the Executive to take the initiative in discovering and removing outmoded functions and eliminating duplication.
1200	One agency, for example, whose head has promised early and vigorous action to provide greater efficiency is the Post Office. One of the oldest institutions of our Federal Government, its service should be of the best. Its employees should merit and receive the high regard and esteem of the citizens of the Nation. There are today in some areas of the postal service, both waste and incompetence to be corrected. With the cooperation of the Congress, and taking advantage of its accumulated experience in postal affairs, the Postmaster General will institute a program directed at improving service while at the same time reducing costs and decreasing deficits.
1201	In all departments, dedication to these basic precepts of security and efficiency, integrity, and economy can and will produce an administration deserving of the trust the people have placed in it.
1202	Our people have demanded nothing less than good, efficient government. They shall get nothing less.
1203	VII.
1204	Vitally important are the water and minerals, public lands and standing timber, forage and Mid-life of this country. A fast-growing population will have vast future needs in these resources. We must more than match the substantial achievements in the half-century since President Theodore Roosevelt awakened the Nation to the problem of conservation.
1205	This calls for a strong Federal program in the field of resource development. Its major projects should be timed, where possible to assist in leveling off peaks and valleys in our economic life. Soundly planned projects already initiated should be carried out. New ones will be planned for the future.
1206	The best natural resources program for America will not result from exclusive dependence on Federal bureaucracy. It will involve a partnership of the States and local communities, private citizens, and the Federal Government, all working together. This combined effort will advance the development of the great river valleys of our Nation and the power that they can generate. Likewise, such a partnership can be effective in the expansion throughout the Nation of upstream storage; the sound use of public lands; the wise conservation of minerals; and the sustained yield of our forests.
1207	There has been much criticism, some of it apparently justified, of the confusion resulting from overlapping Federal activities in the entire field of resource-conservation. This matter is being exhaustively studied and appropriate reorganization plans will be developed.
1208	Most of these particular resource problems pertain to the Department of the Interior. Another of its major concerns is our country's island possessions. Here, one matter deserves attention. The platforms of both political parties promised immediate statehood to Hawaii. The people of that Territory have earned that status. Statehood should be granted promptly with the first election scheduled for 1954.
1209	VIII.
1210	One of the difficult problems which face the new administration is that of the slow, irregular decline of farm prices. This decline, which has been going on for almost 2 years, has occurred at a time when most nonfarm prices and farm costs of production are extraordinarily high.
1211	Present agricultural legislation provides for the mandatory support of the prices of basic farm commodities at 90 percent of parity. The Secretary of Agriculture and his associates will, of course, execute the present act faithfully and thereby seek to mitigate the consequences of the downturn in farm income.
1212	This price-support legislation will expire at the end of 1954.
1213	So we should begin now to consider what farm legislation we should develop for 1955 and beyond. Our aim should be economic stability and full parity of income for American farmers. But we must seek this goal in ways that minimize governmental interference in the farmers' affairs, that permit desirable shifts in production, and that encourage farmers themselves to use initiative in meeting changing economic conditions.
1214	A continuing study reveals nothing more emphatically than the complicated nature of this subject. Among other things, it shows that the prosperity of our agriculture depends directly upon the prosperity of the whole country--upon the purchasing power of American consumers. It depends also upon the opportunity to ship abroad large surpluses of particular commodities, and therefore upon sound economic relationships between the United States and many foreign countries. It involves research and scientific investigation, conducted on an extensive scale. It involves special credit mechanisms and marketing, rural electrification, soil conservation, and other programs.
1215	The whole complex of agricultural programs and policies will be studied by a Special Agricultural Advisory Commission, as I know it will by appropriate committees of the Congress. A nonpartisan group of respected authorities in the field of agriculture has already been appointed as an interim advisory group.
1216	The immediate changes needed in agricultural programs are largely budgetary and administrative in nature. New policies and new programs must await the completion of the far-reaching studies which have already been launched.
1217	IX.
1218	The determination of labor policy must be governed not by the vagaries of political expediency but by the firmest principles and convictions. Slanted partisan appeals to American workers, spoken as if they were a group apart, necessitating a special language and treatment, are an affront to the fullness of their dignity as American citizens.
1219	The truth in matters of labor policy has become obscured in controversy. The very meaning of economic freedom as it affects labor has become confused. This misunderstanding has provided a climate of opinion favoring the growth of governmental paternalism in labor relations. This tendency, if left uncorrected, could end only by producing a bureaucratic despotism. Economic freedom is, in fact, the requisite of greater prosperity for every American who earns his own living.
1220	In the field of labor legislation, only a law that merits the respect and support of both labor and management can help reduce the loss of wages and of production through strikes and stoppages, and thus add to the total economic strength of our Nation.
1221	We have now had 5 years' experience with the Labor Management Act of 1947, commonly known as the Taft-Hartley Act. That experience has shown the need for some corrective action, and we should promptly proceed to amend that act.
1222	I know that the Congress is already proceeding with renewed studies of this subject. Meanwhile, the Department of Labor is at once beginning work to devise further specific recommendations for your consideration.
1223	In the careful working out of legislation, I know you will give thoughtful consideration--as will we in the executive branch--to the views of labor, and of management, and of the general public. In this process, it is only human that each of us should bring forward the arguments of self-interest. But if all conduct their arguments in the overpowering light of national interest--which is enlightened self-interest--we shall get the right answers. I profoundly hope that every citizen of our country will follow with understanding your progress in this work. The welfare of all of us is involved.
1224	Especially must we remember that the institutions of trade unionism and collective bargaining are monuments to the freedom that must prevail in our industrial life. They have a century of honorable achievement behind them. Our faith in them is proven, firm, and final.
1225	Government can do a great deal to aid the settlement of labor disputes without allowing itself to be employed as an ally of either side. Its proper role in industrial strife is to encourage the processes of mediation and conciliation. These processes can successfully be directed only by a government free from the taint of any suspicion that it is partial or punitive.
1226	The administration intends to strengthen and to improve the services which the Department of Labor can render to the worker and to the whole national community. This Department was created--just 40 years ago--to serve the entire Nation. It must aid, for example, employers and employees alike in improving training programs that will develop skilled and competent workers. It must enjoy the confidence and respect of labor and industry in order to play a significant role in the planning of America's economic future. To that end, I am authorizing the Department of Labor to establish promptly a tripartite advisory committee consisting of representatives of employers, labor, and the public.
1227	X.
1228	Our civil and social rights form a central part of the heritage we are striving to defend on all fronts and with all our strength. I believe with all my heart that our vigilant guarding of these rights is a sacred obligation binding upon every citizen. To be true to one's own freedom is, in essence, to honor and respect the freedom of all others.
1229	A cardinal ideal in this heritage we cherish is the equality of rights of all citizens of every race and color and creed.
1230	We know that discrimination against minorities persists despite our allegiance to this ideal. Such discrimination--confined to no one section of the Nation--is but the outward testimony to the persistence of distrust and of fear in the hearts of men.
1231	This fact makes all the more vital the fighting of these wrongs by each individual, in every station of life, in his every deed.
1232	Much of the answer lies in the power of fact, fully publicized; of persuasion, honestly pressed; and of conscience, justly aroused. These are methods familiar to our way of life, tested and proven wise.
1233	I propose to use whatever authority exists in the office of the President to end segregation in the District of Columbia, including the Federal Government, and any segregation in the Armed Forces.
1234	Here in the District of Columbia, serious attention should be given to the proposal to develop and authorize, through legislation, a system to provide an effective voice in local self-government. While consideration of this proceeds, I recommend an immediate increase of two in the number of District Commissioners to broaden representation of all elements of our local population. This will be a first step toward insuring that this Capital provide an honored example to all communities of our Nation.
1235	In this manner, and by the leadership of the office of the President exercised through friendly conferences with those in authority in our States and cities, we expect to make true and rapid progress in civil rights and equality of employment opportunity.
1236	There is one sphere in which civil rights are inevitably involved in Federal legislation. This is the sphere of immigration.
1237	It is a manifest right of our Government to limit the number of immigrants our Nation can absorb. It is also a manifest right of our Government to set reasonable requirements on the character and the numbers of the people who come to share our land and our freedom.
1238	It is well for us, however, to remind ourselves occasionally of an equally manifest fact: we are--one and all--immigrants or sons and daughters of immigrants.
1239	Existing legislation contains injustices. It does, in fact, discriminate. I am informed by Members of the Congress that it was realized, at the time of its enactment, that future study of the basis of determining quotas would be necessary.
1240	I am therefore requesting the Congress to review this legislation and to enact a statute that will at one and the same time guard our legitimate national interests and be faithful to our basic ideas of freedom and fairness to all.
1241	In another but related area--that of social rights--we see most clearly the new application of old ideas of freedom.
1242	This administration is profoundly aware of two great needs born of our living in a complex industrial economy. First, the individual citizen must have safeguards against personal disaster inflicted by forces beyond his control; second, the welfare of the people demands effective and economical performance by the Government of certain indispensable social services.
1243	In the light of this responsibility, certain general purposes and certain concrete measures are plainly indicated now.
1244	There is urgent need for greater effectiveness in our programs, both public and private, offering safeguards against the privations that too often come with unemployment, old age, illness, and accident. The provisions of the old-age and survivors insurance law should promptly be extended to cover millions of citizens who have been left out of the social-security system. No less important is the encouragement of privately sponsored pension plans. Most important of all, of course, is renewed effort to check the inflation which destroys so much of the value of all social-security payments.
1245	Our school system demands some prompt, effective help. During each of the last 9 years, more than 1 2 million children have swelled the elementary and secondary school population of the country. Generally, the school population is proportionately higher in States with low per capita income. This whole situation calls for careful congressional study and action. I am sure that you share my conviction that the firm conditions of Federal aid must be proved need and proved lack of local income.
1246	One phase of the school problem demands special action. The school population of many districts has been greatly in- creased by the swift growth of defense activities. These activities have added little or nothing to the tax resources of the communities affected. Legislation aiding construction of schools in the districts expires on June 30. This law should be renewed; and likewise, the partial payments for current operating expenses for these particular school districts should be made, including the deficiency requirement of the current fiscal year.
1247	Public interest similarly demands one prompt specific action in protection of the general consumer. The Food and Drug Administration should be authorized to continue its established and necessary program of factory inspections. The invalidation of these inspections by the Supreme Court of December 8, 1952, was based solely on the fact that the present law contained inconsistent and unclear provisions. These must be promptly corrected.
1248	I am well aware that beyond these few immediate measures there remains much to be done. The health and housing needs of our people call for intelligently planned programs. Involved are the solvency of the whole security system; and its guarding against exploitation by the irresponsible.
1249	To bring clear purpose and orderly procedure into this field, I anticipate a thorough study of the proper relationship among Federal, State, and local programs. I shall shortly send you specific recommendations for establishing such an appropriate commission, together with a reorganization plan defining new administrative status for all Federal activities in health, education, and social security.
1250	I repeat that there are many important subjects of which I make no mention today. Among these is our great and growing body of veterans. America has traditionally been generous in caring for the disabled--and the widow and the orphan of the fallen. These millions remain close to all our hearts. Proper care of our uniformed citizens and appreciation of the past service of our veterans are part of our accepted governmental responsibilities.
1251	We have surveyed briefly some problems of our people and a portion of the tasks before us.
1252	The hope of freedom itself depends, in real measure, upon our strength, our heart, and our wisdom.
1253	We must be strong in arms. We must be strong in the source of all our armament, our productivity. We all--workers and farmers, foremen and financiers, technicians and builders--all must produce, produce more, and produce yet more.
1254	We must be strong, above all, in the spiritual resources upon which all else depends. We must be devoted with all our heart to the values we defend. We must know that each of these values and virtues applies with equal force at the ends of the earth and in our relations with our neighbor next door. We must know that freedom expresses itself with equal eloquence in the right of workers to strike in the nearby factory, and in the yearnings and sufferings of the peoples of Eastern Europe.
1255	As our heart summons our strength, our wisdom must direct it.
1256	There is, in world affairs, a steady course to be followed between an assertion of strength that is truculent and a confession of helplessness that is cowardly.
1257	There is, in our affairs at home, a middle way between untrammeled freedom of the individual and the demands for the welfare of the whole Nation. This way must avoid government by bureaucracy as carefully as it avoids neglect of the helpless.
1258	In every area of political action, free men must think before they can expect to win.
1259	In this spirit must we live and labor: confident of our strength, compassionate in our heart, clear in our mind.
1260	In this spirit, let us together turn to the great tasks before us.@
1261	Dwight D. Eisenhower|Annual Message to the Congress on the State of the Union|1954-01-07|@Mr. President, Mr. Speaker, Members of the Eighty-third Congress:
1262	It is a high honor again to present to the Congress my views on the state of the Union and to recommend measures to advance the security, prosperity, and well-being of the American people.
1263	All branches of this Government--and I venture to say both of our great parties--can support the general objective of the recommendations I make today, for that objective is the building of a stronger America. A nation whose every citizen has good reason for bold hope; where effort is rewarded and prosperity is shared; where freedom expands and peace is secure--that is what I mean by a stronger America.
1264	Toward this objective a real momentum has been developed during this Administration's first year in office. We mean to continue that momentum and to increase it. We mean to build a better future for this nation.
1265	Much for which we may be thankful has happened during the past year.
1266	First of all we are deeply grateful that our sons no longer die on the distant mountains of Korea. Although they are still called from our homes to military service, they are no longer called to the field of battle.
1267	The nation has just completed the most prosperous year in its history. The damaging effect of inflation on the wages, pensions, salaries and savings of us all has been brought under control. Taxes have begun to go down. The cost of our government has been reduced and its work proceeds with some 183,000 fewer employees; thus the discouraging trend of modern governments toward their own limitless expansion has in our case been reversed.
1268	The cost of armaments becomes less oppressive as we near our defense goals; yet we are militarily stronger every day. During the year, creation of the new Cabinet Department of Health, Education, and Welfare symbolized the government's permanent concern with the human problems of our citizens.
1269	Segregation in the armed forces and other Federal activities is on the way out. We have also made progress toward its elimination in the District of Columbia. These are steps in the continuing effort to eliminate inter-racial difficulty.
1270	Some developments beyond our shores have been equally encouraging. Communist aggression, halted in Korea, continues to meet in Indo-china the vigorous resistance of France and the Associated States, assisted by timely aid from our country. In West Germany, in Iran, and in other areas of the world, heartening political victories have been won by the forces of stability and freedom. Slowly but surely, the free world gathers strength. Meanwhile, from behind the iron curtain, there are signs that tyranny is in trouble and reminders that its structure is as brittle as its surface is hard.
1271	There has been in fact a great strategic change in the world during the past year. That precious intangible, the initiative, is becoming ours. Our policy, not limited to mere reaction against crises provoked by others, is free to develop along lines of our choice not only abroad, but also at home. As a major theme for American policy during the coming year, let our joint determination be to hold this new initiative and to use it.
1272	We shall use this initiative to promote three broad purposes: First, to protect the freedom of our people; second, to maintain a strong, growing economy; third, to concern ourselves with the human problems of the individual citizen.
1273	Only by active concern for each of these purposes can we be sure that we are on the forward road to a better and a stronger America. All my recommendations today are in furtherance of these three purposes.
1274	I. FOREIGN AFFAIRS
1275	American freedom is threatened so long as the world Communist conspiracy exists in its present scope, power and hostility. More closely than ever before, American freedom is interlocked with the freedom of other people. In the unity of the free world lies our best chance to reduce the Communist threat without war. In the task of maintaining this unity and strengthening all its parts, the greatest responsibility falls naturally on those who, like ourselves, retain the most freedom and strength.
1276	We shall, therefore, continue to advance the cause of freedom on foreign fronts.
1277	In the Far East, we retain our vital interest in Korea. We have negotiated with the Republic of Korea a mutual security pact, which develops our security system for the Pacific and which I shall promptly submit to the Senate for its consent to ratification. We are prepared to meet any renewal of armed aggression in Korea. We shall maintain indefinitely our bases in Okinawa. I shall ask the Congress to authorize continued material assistance to hasten the successful conclusion of the struggle in Indo-china. This assistance will also bring closer the day when the Associated States may enjoy the independence already assured by France. We shall also continue military and economic aid to the Nationalist Government of China.
1278	In South Asia, profound changes are taking place in free nations which are demonstrating their ability to progress through democratic methods. They provide an inspiring contrast to the dictatorial methods and backward course of events in Communist China. In these continuing efforts, the free peoples of South Asia can be assured of the support of the United States.
1279	In the Middle East, where tensions and serious problems exist, we will show sympathetic and impartial friendship.
1280	In Western Europe our policy rests firmly on the North Atlantic Treaty. It will remain so based as far ahead as we can see. Within its organization, the building of a united European community, including France and Germany, is vital to a free and self-reliant Europe. This will be promoted by the European Defense Community which offers assurance of European security. With the coming of unity to Western Europe, the assistance this Nation can render for the security of Europe and the free world will be multiplied in effectiveness.
1281	In the Western Hemisphere we shall continue to develop harmonious and mutually beneficial cooperation with our neighbors. Indeed, solid friendship with all our American neighbors is a cornerstone of our entire policy.
1282	In the world as a whole, the United Nations, admittedly still in a state of evolution, means much to the United States. It has given uniquely valuable services in many places where violence threatened. It is the only real world forum where we have the opportunity for international presentation and rebuttal. It is a place where the nations of the world can, if they have the will, take collective action for peace and justice. It is a place where the guilt can be squarely assigned to those who fail to take all necessary steps to keep the peace. The United Nations deserves our continued firm support.
1283	In the practical application of our foreign policy, we enter the field of foreign assistance and trade.
1284	Military assistance must be continued. Technical assistance must be maintained. Economic assistance can be reduced. However, our economic programs in Korea and in a few other critical places of the world are especially important, and I shall ask Congress to continue them in the next fiscal year.
1285	The forthcoming Budget Message will propose maintenance of the Presidential power of transferability of all assistance funds and will ask authority to merge these funds with the regular defense funds. It will also propose that the Secretary of Defense have primary responsibility for the administration of foreign military assistance in accordance with the policy guidance of the Secretary of State.
1286	The fact that we can now reduce our foreign economic assistance in many areas is gratifying evidence that its objectives are being achieved. By continuing to surpass her prewar levels of economic activity, Western Europe gains self-reliance. Thus our relationship enters a new phase which can bring results beneficial to our taxpayers and our allies alike, if still another step is taken.
1287	This step is the creation of a healthier and freer system of trade and payments within the free world--a system in which our allies can earn their own way and our own economy can continue to flourish. The free world can no longer afford the kinds of arbitrary restraints on trade that have continued ever since the war. On this problem I shall submit to the Congress detailed recommendations, after our Joint Commission on Foreign Economic Policy has made its report.
1288	ATOMIC ENERGY PROPOSAL
1289	As we maintain our military strength during the coming year and draw closer the bonds with our allies, we shall be in an improved position to discuss outstanding issues with the Soviet Union. Indeed we shall be glad to do so whenever there is a reasonable prospect of constructive results. In this spirit the atomic energy proposals of the United States were recently presented to the United Nations General Assembly. A truly constructive Soviet reaction will make possible a new start toward an era of peace, and away from the fatal road toward atomic war.
1290	DEFENSE
1291	Since our hope is peace, we owe ourselves and the world a candid explanation of the military measures we are taking to make that peace secure.
1292	As we enter this new year, our military power continues to grow. This power is for our own defense and to deter aggression. We shall not be aggressors, but we and our allies have and will maintain a massive capability to strike back.
1293	Here are some of the considerations in our defense planning:
1294	First, while determined to use atomic power to serve the usages of peace, we take into full account our great and growing number of nuclear weapons and the most effective means of using them against an aggressor if they are needed to preserve our freedom. Our defense will be stronger if, under appropriate security safeguards, we share with our allies certain knowledge of the tactical use of our nuclear weapons. I urge the Congress to provide the needed authority.
1295	Second, the usefulness of these new weapons creates new relationships between men and materials. These new relationships permit economies in the use of men as we build forces suited to our situation in the world today. As will be seen from the Budget Message on January 21, the airpower of our Navy and Air Force is receiving heavy emphasis.
1296	Third, our armed forces must regain maximum mobility of action. Our strategic reserves must be centrally placed and readily deployable to meet sudden aggression against ourselves and our allies.
1297	Fourth, our defense must rest on trained manpower and its most economical and mobile use. A professional corps is the heart of any security organization. It is necessarily the teacher and leader of those who serve temporarily in the discharge of the obligation to help defend the Republic. Pay alone will not retain in the career service of our armed forces the necessary numbers of long-term personnel. I strongly urge, therefore, a more generous use of other benefits important to service morale. Among these are more adequate living quarters and family housing units and medical care for dependents.
1298	Studies of military manpower have just been completed by the National Security Training Commission and a Committee appointed by the Director of the Office of Defense Mobilization. Evident weaknesses exist in the state of readiness and organization of our reserve forces. Measures to correct these weaknesses will be later submitted to the Congress.
1299	Fifth, the ability to convert swiftly from partial to all-out mobilization is imperative to our security. For the first time, mobilization officials know what the requirements are for 1,000 major items needed for military uses. These data, now being related to civilian requirements and our supply potential, will show us the gaps in our mobilization base. Thus we shall have more realistic plant-expansion and stockpiling goals. We shall speed their attainment. This Nation is at last to have an up-to-date mobilization base--the foundation of a sound defense program.
1300	Another part of this foundation is, of course, our continental transport system. Some of our vital heavy materials come increasingly from Canada. Indeed our relations with Canada, happily always close, involve more and more the unbreakable ties of strategic interdependence. Both nations now need the St. Lawrence Seaway for security as well as for economic reasons. I urge the Congress promptly to approve our participation in its construction.
1301	Sixth, military and non-military measures for continental defense must be and are being strengthened. In the current fiscal year we are allocating to these purposes an increasing portion of our effort, and in the next fiscal year we shall spend nearly a billion dollars more for them than in 1953.
1302	An indispensable part of our continental security is our civil defense effort. This will succeed only as we have the complete cooperation of State Governors, Mayors, and voluntary citizen groups. With their help we can advance a cooperative program which, if an attack should come, would save many lives and lessen destruction.
1303	The defense program recommended in the 1955 Budget is consistent with all of the considerations which I have just discussed. It is based on a new military program unanimously recommended by the Joint Chiefs of Staff and approved by me following consideration by the National Security Council. This new program will make and keep America strong in an age of peril. Nothing should bar its attainment.
1304	The international and defense policies which I have outlined will enable us to negotiate from a position of strength as we hold our resolute course toward a peaceful world. We now turn to matters which are normally characterized as domestic, well realizing that what we do abroad affects every problem at home--from the amount of taxes to our very state of mind.
1305	INTERNAL SECURITY
1306	Under the standards established for the new employee security program, more than 2,200 employees have been separated from the Federal government. Our national security demands that the investigation of new employees and the evaluation of derogatory information respecting present employees be expedited and concluded at the earliest possible date. I shall recommend that the Congress provide additional funds where necessary to speed these important procedures.
1307	From the special employment standards of the Federal government I turn now to a matter relating to American citizenship. The subversive character of the Communist Party in the United States has been clearly demonstrated in many ways, including court proceedings. We should recognize by law a fact that is plain to all thoughtful citizens-that we are dealing here with actions akin to treason--that when a citizen knowingly participates in the Communist conspiracy he no longer holds allegiance to the United States.
1308	I recommend that Congress enact legislation to provide that a citizen of the United States who is convicted in the courts of hereafter conspiring to advocate the overthrow of this government by force or violence be treated as having, by such act, renounced his allegiance to the United States and forfeited his United States citizenship.
1309	In addition, the Attorney General will soon appear before your Committees to present his recommendations for needed additional legal weapons with which to combat subversion in our country and to deal with the question of claimed immunity.
1310	II. STRONG ECONOMY
1311	I turn now to the second great purpose of our government: Along with the protection of freedom, the maintenance of a strong and growing economy.
1312	The American economy is one of the wonders of the world. It undergirds our international position, our military security, and the standard of living of every citizen. This Administration is determined to keep our economy strong and to keep it growing.
1313	At this moment we are in transition from a wartime to a peacetime economy. I am confident that we can complete this transition without serious interruption in our economic growth. But we shall not leave this vital matter to chance. Economic preparedness is fully as important to the nation as military preparedness.
1314	Subsequent special messages and the economic report on January 28 will set forth plans of the Administration and its recommendations for Congressional action. These will include flexible credit and debt management policies; tax measures to stimulate consumer and business spending; suitable lending, guaranteeing, insuring, and grant-in-aid activities; strengthened old-age and unemployment insurance measures; improved agricultural programs; public-works plans laid well in advance; enlarged opportunities for international trade and investment. This mere enumeration of these subjects implies the vast amount of study, coordination, and planning, to say nothing of authorizing legislation, that altogether make our economic preparedness complete.
1315	If new conditions arise that require additional administrative or legislative action, the Administration will still be ready. A government always ready, as this is, to take well-timed and vigorous action, and a business community willing, as ours is, to plan ,boldly and with confidence, can between them develop a climate assuring steady economic growth.
1316	THE BUDGET
1317	I shall submit to the Congress on January 21 the first budget prepared by this Administration, for the period July 1, 1954, through June 1955. This budget is adequate to the current needs of the government. It recognizes that a Federal budget should be a stabilizing factor in the economy. Its tax and expenditure programs will foster individual initiative and economic growth.
1318	Pending the transmittal of my Budget Message, I shall mention here only a few points about our budgetary situation.
1319	First, one of our initial acts was to revise, with the cooperation of the Congress, the Budget prepared before this Administration took office. Requests for new appropriations were greatly reduced. In addition, the spending level provided in that Budget for the current fiscal year has been reduced by about $7,000,000,000. In the next fiscal year we estimate a further reduction in expenditures of more than $5,000,000,000. This will reduce the spending level over the two fiscal years by more than $12,000,000,000. We are also reducing further our requests for new appropriations.
1320	Second, despite the substantial loss of revenue in the coming fiscal year, resulting from tax reductions now in effect and tax adjustments which I shall propose, our reduced spending will move the new budget closer to a balance.
1321	Third, by keeping new appropriation requests below estimated revenues, we continue to reduce the tremendous accumulation of unfinanced obligations incurred by the Government under past appropriations.
1322	Fourth, until those claims on our Government's revenues are further reduced, the growth in the public debt cannot be entirely stopped. Because of this--because the government's bills have to be paid every month, while the tax money to pay them comes in with great unevenness within the fiscal year--and because of the need for flexibility to manage this enormous debt, I find it necessary to renew my request for an increase in the statutory debt limit.
1323	TAXES
1324	The new budget provides for a lower level of taxation than has prevailed in preceding years. Six days ago individual income taxes were reduced and the excess profits tax expired. These tax reductions are justified only because of the substantial reductions we already have made and are making in governmental expenditures. As additional reductions in expenditures are brought gradually but surely into sight, further reductions in taxes can and will be made. When budget savings and sound governmental financing are assured, tax burdens should be reduced so that taxpayers may spend their own money in their own way.
1325	While we are moving toward lower levels of taxation we must thoroughly revise our whole tax system. The groundwork for this revision has already been laid by the Committee on Ways and Means of the House of Representatives, in close consultation with the Department of the Treasury. We should now remove the more glaring tax inequities, particularly on small taxpayers; reduce restraints on the growth of small business; and make other changes that will encourage initiative, enterprise and production. Twenty-five recommendations toward these ends will be contained in my budget message.
1326	Without attempting to summarize these manifold reforms, I can here illustrate their tendency. For example, we propose more liberal tax treatment for dependent children who work, for widows or widowers with dependent children, and for medical expenses. For the business that wants to expand or modernize its plant, we propose liberalized tax treatment of depreciation, research and development expenses, and retained earnings.
1327	Because of the present need for revenue the corporation income tax should be kept at the current rate of 52% for another year, and the excise taxes scheduled to be reduced on April first, including those on liquor, tobacco, gasoline and automobiles, should be continued at present rates.
1328	Immediate extension of the Renegotiation Act of 1951 is also needed to eliminate excessive profits and to prevent waste of public funds in the purchase of defense materials.
1329	AGRICULTURE
1330	The well being of our 160 million people demands a stable and prosperous agriculture. Conversely, every farmer knows he cannot prosper unless all America prospers. As we seek to promote increases in our standard of living, we must be sure that the farmer fairly shares in that increase. Therefore, a farm program promoting stability and prosperity in all elements of our agriculture is urgently needed.
1331	Agricultural laws now in effect successfully accomplished their wartime purpose of encouraging maximum production of many crops. Today, production of these crops at such levels far exceeds present demand. Yet the laws encouraging such production are still in effect. The storage facilities of the Commodity Credit Corporation bulge with surplus stocks of dairy products, wheat, cotton, corn, and certain vegetable oils; and the Corporation's presently authorized borrowing authority--$6,750,000,000--is nearly exhausted. Some products, priced out of domestic markets, and others, priced out of world markets, have piled up in government hands. In a world in which millions of people are hungry, destruction of food would, of course, be unconscionable. Yet surplus stocks continue to threaten the market and in spite of the acreage controls authorized by present law, surpluses will continue to accumulate.
1332	We confront two alternatives. The first is to impose still greater acreage reductions for some crops and apply rigid Federal controls over the use of the diverted acres. This will regiment the production of every basic agricultural crop. It will place every producer of those crops under the domination and control of the Federal government in Washington. This alternative is contrary to the fundamental interests, not only of the farmer, but of the Nation as a whole. Nor is it a real solution to the problem facing us.
1333	The second alternative is to permit the market price for these agricultural products gradually to have a greater influence on the planning of production by farmers, while continuing the assistance of the government. This is the sound approach. To make it effective, surpluses existing when the new program begins must be insulated from the normal channels of trade for special uses. These uses would include school lunch programs, disaster relief, emergency assistance to foreign friends, and of particular importance the stockpiling of reserves for a national emergency.
1334	Building on the agricultural laws of 1948 and 1949, we should establish a price support program with enough flexibility to attract the production of needed supplies of essential commodities and to stimulate the consumption of those commodities that are flooding American markets. Transition to modernized parity must be accomplished gradually. In no case should there be an abrupt downward change in the dollar level or in the percentage level of price supports.
1335	Next Monday I shall transmit to the Congress my detailed recommendations embodying this approach. They have been developed through the cooperation of innumerable individuals vitally interested in agriculture. My special message on Monday will briefly describe the consultative and advisory processes to which this whole program has been subjected during the past ten months.
1336	I have chosen this farm program because it will build markets, protect the consumers' food supply, and move food into consumption instead of into storage. It is a program that will remove the threat to the farmer of these overhanging surpluses, a program, also, that will stimulate production when a commodity is scarce and encourage consumption when nature is bountiful. Moreover, it will promote the individual freedom, responsibility, and initiative which distinguish American agriculture. And, by helping our agriculture achieve full parity in the market, it promises our farmers a higher and steadier financial return over the years than any alternative plan.
1337	CONSERVATION
1338	Part of our Nation's precious heritage is its natural resources. It is the common responsibility of Federal, state, and local governments to improve and develop them, always working in the closest harmony and partnership.
1339	All Federal conservation and resource development projects are being reappraised. Sound projects now under way will be continued. New projects in which the Federal Government has a part must be economically sound, with local sharing of cost wherever appropriate and feasible. In the next fiscal year work will be started on twenty-three projects that meet these standards. The Federal Government will continue to construct and operate economically sound flood control, power, irrigation and water supply projects wherever these projects are beyond the capacity of local initiative, public or private, and consistent with the needs of the whole Nation.
1340	Our conservation program will also take into account the important role played by farmers in protecting our soil resources. I recommend enactment of legislation to strengthen agricultural conservation and upstream flood prevention work, and to achieve a better balance with major flood control structures in the down-stream areas.
1341	Recommendations will be made from time to time for the adoption of:
1342	A uniform and consistent water resources policy;
1343	A revised public lands policy; and
1344	A sound program for safeguarding the domestic production of critical and strategic metals and minerals.
1345	In addition we shall continue to protect and improve our national forests, parks, monuments and other natural and historic sites, as well as our fishery and wildlife resources. I hope that pending legislation to improve the conservation and management of publicly-owned grazing lands in national forests will soon be approved by the Congress.
1346	NATIONAL HIGHWAYS
1347	To protect the vital interest of every citizen in a safe and adequate highway system, the Federal Government is continuing its central role in the Federal Aid Highway Program. So that maximum progress can be made to overcome present inadequacies in the Interstate Highway System, we must continue the Federal gasoline tax at two cents per gallon. This will require cancellation of the half-cent decrease which otherwise will become effective April 1st, and will maintain revenues so that an expanded highway program can be undertaken.
1348	When the Commission on Intergovernmental Relations completes its study of the present system of financing highway construction, I shall promptly submit it for consideration by the Congress and the governors of the states.
1349	POST OFFICE
1350	It is apparent that the substantial savings already made, and to be made, by the Post Office Department cannot eliminate the postal deficit. I recommend, therefore, that the Congress approve the bill now pending in the House of Representatives providing for the adjustment of certain postal rates. To handle the long term aspects of this, I also recommend that the Congress create a permanent commission to establish fair and reasonable postal rates from time to time in the future.
1351	III. HUMAN PROBLEMS
1352	Along with the protection of freedom and maintenance of a strong and growing economy, this Administration recognizes a third great purpose of government: concern for the human problems of our citizens. In a modern industrial society, banishment of destitution and cushioning the shock of personal disaster on the individual are proper concerns of all levels of government, including the federal government. This is especially true where remedy and prevention alike are beyond the individual's capacity.
1353	LABOR AND WELFARE
1354	Of the many problems in this area, those I shall first discuss are of particular concern to the members of our great labor force, who with their heads, hearts and hands produce so much of the wealth of our country.
1355	Protection against the hazards of temporary unemployment should be extended to some 6?millions of workers, including civilian Federal workers, who now lack this safeguard. Moreover, the Secretary of Labor is making available to the states studies and recommendations in the fields of weekly benefits, periods of protection and extension of coverage. The Economic Report will consider the related matter of minimum wages and their coverage.
1356	The Labor Management Relations Act of 3947 is basically a sound law. However, six years of experience have revealed that in some respects it can be improved. On January 11, I shall forward to the Congress suggestions for changes designed to reinforce the basic objectives of the Act.
1357	Our basic social security program, the Old-Age and Survivors Insurance system, to which individuals contribute during their productive years and receive benefits based on previous earnings, is designed to shield them from destitution. Last year I recommended extension of the social insurance system to include more than 10,000,000 additional persons. I ask that this extension soon be accomplished. This and other major improvements in the insurance system will bring substantial benefit increases and broaden the membership of the insurance system, thus diminishing the need for Federal grants-in-aid for such purposes. A new formula will therefore be proposed, permitting progressive reduction in such grants as the need for them declines.
1358	Federal grant-in-aid welfare programs, now based on widely varying formulas, should be simplified. Concrete proposals on fourteen of them will be suggested to the appropriate Committees.
1359	The program for rehabilitation of the disabled especially needs strengthening. Through special vocational training, this program presently returns each year some 60,000 handicapped individuals to productive work. Far more disabled people can be saved each year from idleness and dependence if this program is gradually increased. My more detailed recommendations on this and the other social insurance problems I have mentioned will be sent to the Congress on January 14th.
1360	HEALTH
1361	I am flatly opposed to the socialization of medicine. The great need for hospital and medical services can best be met by the initiative of private plans. But it is unfortunately a fact that medical costs are rising and already impose severe hardships on many families. The Federal Government can do many helpful things and still carefully avoid the socialization of medicine.
1362	The Federal Government should encourage medical research in its battle with such mortal diseases as cancer and heart ailments, and should continue to help the states in their health and rehabilitation programs. The present Hospital Survey and Construction Act should be broadened in order to assist in the development of adequate facilities for the chronically ill, and to encourage the construction of diagnostic centers, rehabilitation facilities, and nursing homes. The war on disease also needs a better working relationship between Government and private initiative. Private and non-profit hospital and medical insurance plans are already in the field, soundly based on the experience and initiative of the people in their various communities.
1363	A limited Government reinsurance service would permit the private and non-profit insurance companies to offer broader protection to more of the many families which want and should have it. On January 18 I shall forward to the Congress a special message presenting this Administration's health program in its detail.
1364	EDUCATION
1365	Youth--our greatest resource--is being seriously neglected in a vital respect. The nation as a whole is not preparing teachers or building schools fast enough to keep up with the increase in our population.
1366	The preparation of teachers as, indeed, the control and direction of public education policy, is a state and local responsibility. However, the Federal Government should stand ready to assist states which demonstrably cannot provide sufficient school buildings. In order to appraise the needs, I hope that this year a conference on education will be held in each state, culminating in a national conference. From these conferences on education, every level of government--from the Federal Government to each local school board--should gain the information with which to attack this serious problem.
1367	HOUSING
1368	The details of a program to enlarge and improve the opportunities for our people to acquire good homes will be presented to the Congress by special message on January.
1369	This program will include:
1370	Modernization of the home mortgage insurance program of the Federal Government;
1371	Redirection of the present system of loans and grants-in-aid to cities for slum clearance and redevelopment;
1372	Extension of the advantages of insured lending to private credit engaged in this task of rehabilitating obsolete neighborhoods;
1373	Insurance of long-term, mortgage loans, with small down payment for low-income families; and, until alternative programs prove more effective,
1374	Continuation of the public housing program adopted in the Housing Act of 1949.
1375	If the individual, the community, the State and federal governments will alike apply themselves, every American family can have a decent home.
1376	VETERANS ADMINISTRATION
1377	The internal reorganization of the Veterans Administration is proceeding with my full approval. When completed, it will afford a single agency whose services, including medical facilities, will be better adapted to the needs of those 20,000,000 veterans to whom this Nation owes so much.
1378	SUFFRAGE
1379	My few remaining recommendations all relate to a basic right of our citizens--that of being represented in the decisions of the government.
1380	I hope that the States will cooperate with the Congress in adopting uniform standards in their voting laws that will make it possible for our citizens in the armed forces overseas to vote.
1381	In the District of Columbia the time is long overdue for granting national suffrage to its citizens and also applying the principle of local self-government to the Nation's Capital. I urge the Congress to move promptly in this direction and also to revise District revenue measures to provide needed public works improvements.
1382	The people of Hawaii are ready for statehood. I renew my request for this legislation in order that Hawaii may elect its State officials and its representatives in Washington along with the rest of the country this fall.
1383	For years our citizens between the ages of 18 and 21 have, in time of peril, been summoned to fight for America. They should participate in the political process that produces this fateful summons. I urge Congress to propose to the States a constitutional amendment permitting citizens to vote when they reach the age of 18.
1384	CONCLUSION
1385	I want to add one final word about the general purport of these many recommendations.
1386	Our government's powers are wisely limited by the Constitution; but quite apart from those limitations, there are things which no government can do or should try to do.
1387	A government can strive, as ours is striving, to maintain an economic system whose doors are open to enterprise and ambition--those personal qualities on which economic growth largely depends. But enterprise and ambition are qualities which no government can supply. Fortunately no American government need concern itself on this score; our people have these qualities in good measure.
1388	A government can sincerely strive for peace, as ours is striving, and ask its people to make sacrifices for the sake of peace. But no government can place peace in the hearts of foreign rulers. It is our duty then to ourselves and to freedom itself to remain strong in all those ways--spiritual, economic, military--that will give us maximum safety against the possibility of aggressive action by others.
1389	No government can inoculate its people against the fatal materialism that plagues our age. Happily, our people, though blessed with more material goods than any people in history, have always reserved their first allegiance to the kingdom of the spirit, which is the true source of that freedom we value above all material things.
1390	But a government can try, as ours tries, to sense the deepest aspirations of the people, and to express them in political action at home and abroad. So long as action and aspiration humbly and earnestly seek favor in the sight of the Almighty, there is no end to America's forward road; there is no obstacle on it she will not surmount in her march toward a lasting peace in a free and prosperous world.@
1391	Dwight D. Eisenhower|Annual Message to the Congress on the State of the Union|1955-01-06|@Mr. President, Mr. Speaker, Members of the Congress:
1392	First, I extend cordial greetings to the 84th Congress. We shall have much to do together; I am sure that we shall get it done and, that we shall do it in harmony and good will. At the outset, I believe it would be well to remind ourselves of this great fundamental in our national life: our common belief that every human being is divinely endowed with dignity and worth and inalienable rights. This faith, with its corollary that to grow and flourish people must be free shapes the interests and aspirations of every American. From this deep faith have evolved three main purposes of our Federal Government:
1393	First, to maintain justice and freedom among ourselves and to champion them for others so that we may work effectively for enduring peace; Second, to help keep our economy vigorous and expanding, thus sustaining our international strength and assuring better jobs, better living, better opportunities for every citizen; And third, to concern ourselves with the human problems of our people so that every American may have the opportunity to lead a healthy, productive and rewarding life. Foremost among these broad purposes of government is our support of freedom, justice and peace.
1394	It is, therefore, a struggle which goes to the roots of the human spirit, and its shadow falls across the long sweep of man's destiny. This prize, so precious, so fraught with ultimate meaning, is the true object of the contending forces in the world. In the past year, there has been progress justifying hope, both for continuing peace and for the ultimate rule of freedom and justice in the world. Free nations are collectively stronger than at any time in recent years. Just as nations of this Hemisphere, in the historic Caracas and Rio conferences, have closed ranks against imperialistic Communism and strengthened their economic ties, so free nations elsewhere have forged new bonds of unity.
1395	Recent agreements between Turkey and Pakistan have laid a foundation for increased strength in the Middle East. With our understanding support, Egypt and Britain, Yugoslavia and Italy, Britain and Iran have resolved dangerous differences. The security of the Mediterranean has been enhanced by an alliance among Greece, Turkey and Yugoslavia. Agreements in Western Europe have paved the way for unity to replace past divisions which have undermined Europe's economic and military vitality. The defense of the West appears likely at last to include a free, democratic Germany participating as an equal in the councils of NATO.
1396	In Asia and the Pacific, the pending Manila Pact supplements our treaties with Australia, New Zealand, the Philippines, Korea and Japan and our prospective treaty with the Republic of China. These pacts stand as solemn warning that future military aggression and subversion against the free nations of Asia will meet united response. The Pacific Charter, also adopted at Manila, is a milestone in the development of human freedom and self-government in the Pacific area. Under the auspices of the United Nations, there is promise of progress in our country's plan for the peaceful use of atomic energy.
1397	Finally, today the world is at peace. It is, to be sure, a secure peace. Yet all humanity finds hope in the simple fact that for an appreciable time there has been no active major battlefield on earth. This same fact inspires us to work all the more effectively with other nations for the well being, the freedom, the dignity, of every human on earth. These developments are heartening indeed, and we are hopeful of continuing progress. But sobering problems remain.
1398	The massive military machines and ambitions of the Soviet-Communist bloc still create uneasiness in the world. All of us are aware of the continuing reliance of the Soviet Communists on military force, of the power of their weapons, of their present resistance to realistic armament limitation, and of their continuing effort to dominate or intimidate free nations on their periphery. Their steadily growing power includes an increasing strength in nuclear weapons. This power, combined with the proclaimed intentions of the Communist leaders to communize the world, is the threat confronting us today.
1399	To protect our nations and our peoples from the catastrophe of a nuclear holocaust, free nations must maintain countervailing military power to persuade the Communists of the futility of seeking their ends through aggression. If Communist rulers understand that America's response to aggression will be swift and decisive--that never shall we buy peace at the expense of honor or faith--they will be powerfully deterred from launching a military venture engulfing their own peoples and many others in disaster. This, of course, is merely world stalemate. But in this stalemate each of us may and must exercise his high duty to strive in every honorable way for enduring peace.
1400	The military threat is but one menace to our freedom and security. We must not only deter aggression; we must also frustrate the effort of Communists to gain their goals by subversion. To this end, free nations must maintain and reinforce their cohesion, their internal security, their political and economic vitality, and their faith in freedom. In such a world, America's course is dear: We must tirelessly labor to make the peace more just and durable. We must strengthen the collective defense under the United Nations Charter and gird ourselves with sufficient military strength and productive capacity to discourage resort to war and protect our nation's vital interests.
1401	We must continue to support and strengthen the United Nations. At this very moment, by vote of the United Nations General Assembly, its Secretary-General is in Communist China on a mission of deepest concern to all Americans: seeking the release of our never-to-be-forgotten American aviators and all other United Nations prisoners wrongfully detained by the Communist regime. We must also encourage the efforts being made in the United Nations to limit armaments and to harness the atom to peaceful rise. We must expand international trade and investment and assist friendly nations whose own best efforts are still insufficient to provide the strength essential to the security of the free world.We must be willing to use the processes of negotiation whenever they will advance the cause of just and secure peace to which the United States and other free nations are dedicated.
1402	In respect to all these matters, we must, through a vigorous information program, keep the peoples of the world truthfully advised of our actions and purposes. This problem has been attacked with new vigor during the past months. I urge that the Congress give its earnest consideration to the great advantages that can accrue to our country through the successful operations of this program.
1403	We must also carry forward our educational exchange program. This sharing of knowledge and experience between our citizens and those of free countries is a powerful factor in the development and maintenance of true partnership among free peoples. To advance these many efforts, the Congress must act in this session on appropriations, legislation, and treaties. Today I shall mention especially our foreign economic and military programs.
1404	The recent economic progress in many free nations has been most heartening. The productivity of labor and the production of goods and services are increasing in ever-widening areas. There is a growing will to improve the living standards of all men. This progress is important to all our people. It promises us allies who are strong and self-reliant; it promises a growing world market for the products of our mines, our factories, and our farms.
1405	But only through steady effort can we hope to continue this progress. Barriers still impede trade and the flow of capital needed to develop each nation's human and material resources. Wise reduction of these barriers is a long-term objective of our foreign economic policy--a policy of an evolutionary and selective nature, assuring broad benefits to our own and other peoples.
1406	We must gradually reduce certain tariff obstacles to trade. These actions should, of course, be accompanied by a similar lowering of trade barriers by other nations, so that we may move steadily toward greater economic advantage for all. We must further simplify customs administration and procedures. We must facilitate the flow of capital and continue technical assistance, both directly and through the United Nations, to less developed countries to strengthen their independence and raise their living standards. Many another step must be taken in and among the nations of the free world to release forces of private initiative. In our own nation, these forces have brought strength and prosperity; once released, they will generate rising incomes in these other countries with which to buy the products of American industry, labor and agriculture.
1407	On January 10, by special message, I shall submit specific recommendations for carrying forward the legislative phases of our foreign economic policy. Our many efforts to build a better world include the maintenance of our military strength. This is a vast undertaking. Major national security programs consume two-thirds of the entire Federal budget. Over four million Americans--servicemen and civilians--are on the rolls of the defense establishment. During the past two years, by eliminating duplication and over staffing, by improved procurement and inventory controls, and by concentrating on the essentials, many billions of dollars have been saved in our defense activities. I should like to mention certain fundamentals underlying this vast program.
1408	First, a realistic limitation of armaments and an enduring, just peace remain our national goals; we maintain powerful military forces because there is no present alternative--forces designed for deterrent and defensive purposes alone but able instantly to strike back with destructive power in response to an attack.
1409	Second, we must stay alert to the fact that undue reliance on one weapon or preparation for only one kind of warfare simply invites an enemy to resort to another. We must, therefore, keep in our armed forces balance and flexibility adequate for our purposes and objectives.
1410	Third, to keep our armed forces abreast of the advances of science, our military planning must be flexible enough to utilize the new weapons and techniques which flow ever more speedily from our research and development programs. The forthcoming military budget therefore emphasizes modern air power in the Air Force, Navy and Marine Corps and increases the emphasis on new weapons, especially those of rapid and destructive striking power. It assures the maintenance of effective, retaliatory force as the principal deterrent to overt aggression. It accelerates the continental defense program and the build-up of ready military reserve forces. It continues a vigorous program of stockpiling strategic and critical materials and strengthening our mobilization base. The budget also contemplates the strategic concentration of our strength through redeployment of certain forces. It provides for reduction of forces in certain categories and their expansion in others, to fit them to the military realities of our time. These emphases in our defense planning have been made at my personal direction after long and thoughtful study. In my judgment, they will give our nation a defense accurately adjusted to the national need.
1411	Fourth, pending a world agreement on armament limitation, we must continue to improve and expand our supplies of nuclear weapons for our land, naval and air forces, while, at the same time, continuing our encouraging progress in the peaceful use of atomic power.
1412	And fifth, in the administration of these costly programs, we must demand the utmost in efficiency and ingenuity. We must assure our people not only of adequate protection but also of a defense that can be carried forward from year to year until the threat of aggression has disappeared.
1413	To help maintain this kind of armed strength and improve its efficiency, I must urge the enactment of several important measures in this session. The first concerns the selective service act which expires next June 30th. For the foreseeable future, our standing forces must remain much larger than voluntary methods can sustain. We must, therefore, extend the statutory authority to induct men for two years of military service.
1414	The second kind of measure concerns the rapid turnover of our most experienced servicemen. This process seriously weakens the combat readiness of our armed forces and is exorbitantly expensive. To encourage more trained servicemen to remain in uniform, I shall, on the thirteenth of this month, propose a number of measures to increase the attractions of a military career. These measures will include more adequate medical care for dependents, survivors' benefits, more and better housing, and selective adjustments in military pay and other allowances.
1415	And third--also on January 13--I shall present a program to rebuild and strengthen the civilian components of our armed forces. This is a comprehensive program, designed to make better use of our manpower of military age. Because it will go far in assuring fair and equitable participation in military training and service, it is of particular importance to our combat veterans. In keeping with the historic military policy of our Republic, this program is designed to build and maintain powerful civilian reserves immediately capable of effective military service in an emergency in lieu of maintaining active duty forces in excess of the nation's immediate need.
1416	Maintenance of an effective defense requires continuance of our aggressive attack on subversion at home. In this effort we have, in the past two years, made excellent progress. FBI investigations have been powerfully reinforced by a new Internal Security Division in the Department of Justice; the security activities of the Immigration and Naturalization Service have been revitalized; an improved and strengthened security system is in effect throughout the government; the Department of Justice and the FBI have been armed with effective new legal weapons forged by the 83rd Congress.
1417	We shall continue to ferret out and to destroy Communist subversion. We shall, in the process, carefully preserve our traditions and the basic rights of our citizens. Our civil defense program is also a key element in the protection of our country. We are developing cooperative methods with State Governors, Mayors, and voluntary citizen groups, as well as among Federal agencies, in building the civil defense organization. Its significance in time of war is obvious; its swift assistance in disaster areas last year proved its importance in time of peace.
1418	An industry capable of rapid expansion and essential materials and facilities swiftly available in time of emergency are indispensable to our defense. I urge, therefore, a two-year extension of the Defense Production Act and Title II of the First War Powers Act of 1941. These are cornerstones of our program for the development and maintenance of an adequate mobilization base. At this point, I should like to make this additional observation. Our quest for peace and freedom necessarily presumes that we who hold positions of public trust must rise above self and section--that we must subordinate to the general good our partisan, our personal pride and prejudice. Tirelessly, with united purpose, we must fortify the material and spiritual foundations of this land of freedom and of free nations throughout the world. As never before, there is need for unhesitating cooperation among the branches of our government.
1419	At this time the executive and legislative branches are under the management of different political parties. This fact places both parties on trial before the American people. In less perilous days of the past, division of governmental responsibility among our great parties has produced a paralyzing indecision. We must not let this happen in our time. We must avoid a paralysis of the will for peace and international security.
1420	In the traditionally bipartisan areas--military security and foreign relations--I can report to you that I have already, with the leaders of this Congress, expressed assurances of unreserved cooperation. Yet, the strength of our country requires more than mere maintenance of military strength and success in foreign affairs; these vital matters are in turn dependent upon concerted and vigorous action in a number of supporting programs. I say, therefore, to the 84th Congress:
1421	In all areas basic to the strength of America, there will be--to the extent I can insure them--cooperative, constructive relations between the Executive and Legislative Branches of this government. Let the general good be our yardstick on every great issue of our time.
1422	Our efforts to defend our freedom and to secure a just peace are, of course, inseparable from the second great purpose of our government: to help maintain a strong, growing economy--an economy vigorous and free, in which there are ever-increasing opportunities, just rewards for effort, and a stable prosperity that is widely shared.
1423	In the past two years, many important governmental Actions helped our economy adjust to conditions of peace; these and other actions created a climate for renewed economic growth. Controls were removed from wages, prices and materials. Tax revisions encouraged increased private spending and employment. Federal expenditures were sharply reduced, making possible a record tax cut. These actions, together with flexible monetary and debt management policies, helped to halt inflation and stabilize the value of the dollar. A program of cooperation and partnership in resource development was begun. Social security and unemployment insurance laws were broadened and strengthened. New laws started the long process of balancing farm production with farm markets. Expanded shipbuilding and stockpiling programs strengthened key sectors of the economy, while improving our mobilization base. A comprehensive new housing law brought impressive progress in an area fundamental to our economic strength and closed loopholes in the old laws permitting dishonest manipulation. Many of these programs are just beginning to exert their main stimulating effect upon the economy generally and upon specific communities and industries throughout the country.
1424	The past year--1954--was one of the most prosperous years in our history. Business activity now surges with new strength. Production is rising. Employment is high. Toward the end of last year average weekly wages in manufacturing were higher than ever before. Personal income after taxes is at a record level. So is consumer spending. Construction activity is reaching new peaks. Export demand for our goods is strong. State and local government expenditures on public works are rising. Savings are high, and credit is readily available.
1425	So, today, the transition to a peacetime economy is largely behind us. The economic outlook is good. The many promising factors I have mentioned do not guarantee sustained economic expansion; however, they do give us a strong position from which to carry forward our economic growth. If we as a people act wisely, within ten years our annual national output can rise from its present level of about $360 billion to $500 billion, measured in dollars of stable buying power.
1426	My Budget Message on January 17, the Economic Report on the 20th of this month, and several special messages will set forth in detail major programs to foster the growth of our economy and to protect the integrity of the people's money. Today I shall discuss these programs only in general terms.
1427	Government efficiency and economy remain essential to steady progress toward a balanced budget. More than ten billion dollars were cut from the spending program proposed in the budget of January 9, 1953. Expenditures of that year were six and a half billion below those of the previous year. In the current fiscal year, government spending will be nearly four and a half billion dollars less than in the fiscal year which ended last June 30. New spending authority has been held below expenditures, reducing government obligations accumulated over the years.
1428	Last year we had a large tax cut and, for the first time in seventy-five years a basic revision of Federal tax laws. It is now clear that defense and other essential government costs must remain at a level precluding further tax reductions this year. Although excise and corporation income taxes must, therefore, be continued at their present rates, further tax cuts will be possible when justified by lower expenditures and by revenue increases arising from the nation's economic growth. I am hopeful that such reductions can be made next year.
1429	At the foundation of our economic growth are the raw materials and energy produced from our minerals and fuels, lands and forests, and water resources. With respect to them, I believe that the nation must adhere to three fundamental policies: first, to develop, wisely use and conserve basic resources from generation to generation; second, to follow the historic pattern of developing these resources primarily by private citizens under fair provisions of law, including restraints for proper conservation; and third, to treat resource development as a partnership undertaking--a partnership in which the participation of private citizens and State and local governments is as necessary as Federal participation.
1430	This policy of partnership and cooperation is producing good results, most immediately noticeable in respect to water resources. First, it has encouraged local public bodies and private citizens to plan their own power sources. Increasing numbers of applications to the Federal Power Commission to conduct surveys and prepare plans for power development, notably in the Columbia River Basin, are evidence of local response.
1431	Second, the Federal Government and local and private organizations have been encouraged to coordinate their developments. This is important because Federal hydroelectric developments supply but a small fraction of the nation's power needs. Such partnership projects as Priest Rapids in Washington, the Coosa River development in Alabama, and Markham Ferry in Oklahoma already have the approval of the Congress. This year justifiable projects of a similar nature will again have Administration support.
1432	Third, the Federal Government must shoulder its own partnership obligations by undertaking projects of such complexity and size that their success requires Federal development. In keeping with this principle, I again urge the Congress to approve the development of the Upper Colorado River Basin to conserve and assure better use of precious water essential to the future of the West.
1433	In addition, the 1956 budget will recommend appropriations to start six new reclamation and more than thirty new Corps of Engineers projects of varying size. Going projects and investigations of potential new resource developments will be continued.
1434	Although this partnership approach is producing encouraging results, its full success requires a nation-wide comprehensive water resources policy firmly based in law. Such a policy is under preparation and when completed will be submitted to the Congress.
1435	In the interest of their proper conservation, development and use, continued vigilance will be maintained over our fisheries, wildlife resources, the national parks and forests, and the public lands; and we shall continue to encourage an orderly development of the nation's mineral resources.
1436	A modern, efficient highway system is essential to meet the needs of our growing population, our expanding economy, and our national security. We are accelerating our highway improvement program as rapidly as possible under existing State and Federal laws and authorizations. However, this effort will not in itself assure our people of an adequate highway system. On my recommendation, this problem has been carefully considered by the Conference of State Governors and by a special Advisory Committee on a National Highway Program, composed of leading private citizens. I have received the recommendations of the Governors' Conference and will shortly receive the views of the special Advisory Committee. Aided by their findings, I shall submit on January 27th detailed recommendations which will meet our most pressing national highway needs.
1437	In further recognition of the importance of transportation to our economic strength and security, the Administration, through a Cabinet committee, is thoroughly examining existing Federal transportation policies to determine their effect on the adequacy of transportation services. This is the first such comprehensive review directly undertaken by the Executive Branch of the government in modern times. We are not only examining major problems facing the various modes of transport; we are also studying closely the inter-relationships of civilian and government requirements for transportation. Legislation will be recommended to correct policy deficiencies which we may find.
1438	The nation's public works activities are tremendous in scope. It is expected that more than $ 12 billion will be expended in 1955 for the development of land, water and other resources; control of floods, and navigation and harbor improvements; construction of roads, schools, and municipal water supplies, and disposal of domestic and industrial wastes. Many of the Federal, State and local agencies responsible for this work are, in their separate capacities, highly efficient. But public works activities are closely inter-related and have a substantial influence on the growth of the country. Moreover, in times of threatening economic contraction, they may become a valuable sustaining force. To these ends, efficient planning and execution of the nation's public works require both the coordination of Federal activities and effective cooperation with State and local governments.
1439	The Council of Economic Advisers, through its public works planning section, has made important advances during the past year in effecting this coordination and cooperation. In view of the success of these initial efforts, and to give more emphasis and continuity to this essential coordination, I shall request the Congress to appropriate funds for the support of an Office of Coordinator of Public Works in the Executive Office of the President.
1440	A most significant element in our growing economy is an agriculture that is stable, prosperous and free. The problems of our agriculture have evolved over many years and cannot be solved overnight; nevertheless, governmental actions last year hold great promise of fostering a better balance between production and markets and, consequently, a better and more stable income for our farmers.
1441	Through vigorous administration and through new authority provided by the 83rd Congress, surplus farm products are now moving into consumption. From February 1953 through November 1954, the rate of increase of government-held surpluses has been reduced by our moving into use more than 2.3 billion dollars' worth of government-owned farm commodities; this amount is equal to more than seven percent of a year's production of all our farms and ranches. Domestic consumption remains high, and farm exports will be higher than last year. As a result of the flexibility provided by the Agricultural Act of 1954, we can move toward less restrictive acreage controls.
1442	Thus, farm production is gradually adjusting to markets, markets are being expanded, and stocks are moving into use. We can now look forward to an easing of the influences depressing farm prices, to reduced government expenditures for purchase of surplus products, and to less Federal intrusion into the lives and plans of our farm people. Agricultural programs have been redirected toward better balance, greater stability and sustained prosperity. We are headed in the right direction. I urgently recommend to the Congress that we continue resolutely on this road.
1443	Greater attention must be directed to the needs of low-income farm families. Twenty-eight per cent of our farm-operator families have net cash incomes of less than $1,000 per year. Last year, at my request, careful studies were made of the problems of these farm people. I shall later submit recommendations designed to assure the steady alleviation of their most pressing concerns.
1444	Because drought also remains a serious agricultural problem, I shall recommend legislation to strengthen Federal disaster assistance programs. This legislation will prescribe an improved appraisal of need, better adjustment of the various programs to local conditions, and a more equitable sharing of costs between the States and the Federal Government.
1445	The prosperity of our small business enterprises is an indispensable element in the maintenance of our economic strength. Creation of the Small Business Administration and recently enacted tax laws facilitating small business expansion are but two of many important steps we have taken to encourage our smaller enterprises. I recommend that the Congress extend the Small Business Act of 1953 which is due to expire next June. We come now to the third great purpose of our government-its concern for the health, productivity and well-being of all our people.
1446	Every citizen wants to give full expression to his God-given talents and abilities and to have the recognition and respect accorded under our religious and political traditions. Americans also want a good material standard of living--not simply to accumulate possessions, but to fulfill a legitimate aspiration for an environment in which their families may live meaningful and happy lives. Our people are committed, therefore, to the creation and preservation of opportunity for every citizen to lead a more rewarding life. They are equally committed to the alleviation of misfortune and distress among their fellow citizens.
1447	The aspirations of most of our people can best be fulfilled through their own enterprise and initiative, without government interference. This Administration, therefore, follows two simple rules: first, the Federal Government should perform an essential task only when it cannot otherwise be adequately performed; and second, in performing that task, our government must not impair the self-respect, freedom and incentive of the individual. So long as these two rules are observed, the government can fully meet its obligation without creating a dependent population or a domineering bureaucracy.
1448	During the past two years, notable advances were made in these functions of government. Protection of old-age and survivors' insurance was extended to an additional ten million of our people, and the benefits were substantially increased. Legislation was enacted to provide unemployment insurance protection to some four million additional Americans. Stabilization of living costs and the halting of inflation protected the value of pensions and savings. A broad program now helps to bring good homes within the reach of the great majority of our people. With the States, we are providing rehabilitation facilities and more clinics, hospitals, and nursing homes for patients with chronic illnesses. Also with the States, we have begun a great and fruitful expansion in the restoration of disabled persons to employment and useful lives. In the areas of Federal responsibility, we have made historic progress in eliminating from among our people demeaning practices based on race or color. All of us may be proud of these achievements during the past two years. Yet essential Federal tasks remain to be done.
1449	As part of our efforts to provide decent, safe and sanitary housing for low-income families, we must carry forward the housing program authorized during the 83rd Congress. We must also authorize contracts for a firm program of 35,000 additional public housing units in each of the next two fiscal years. This program will meet the most pressing obligations of the Federal Government into the 1958 fiscal year for planning and building public housing. By that time the private building industry, aided by the Housing Act of 1954, will have had the opportunity to assume its full role in providing adequate housing for our low income families.
1450	The health of our people is one of our most precious assets. Preventable sickness should be prevented; knowledge available to combat disease and disability should be fully used. Otherwise, we as a people are guilty not only of neglect of human suffering but also of wasting our national strength.
1451	Constant advances in medical care are not available to enough of our citizens. Clearly our nation must do more to reduce the impact of accident and disease. Two fundamental problems confront us: first, high and ever-rising costs of health services; second, serious gaps and shortages in these services.
1452	By special message on January 24, I shall propose a coordinated program to strengthen and improve existing health services. This program will continue to reject socialized medicine. It will emphasize individual and local responsibility. Under it the Federal Government will neither dominate nor direct, but serve as a helpful partner. Within this framework, the program can be broad in scope.
1453	My recommendations will include a Federal health reinsurance service to encourage the development of more and better voluntary health insurance coverage by private organizations. I shall also recommend measures to improve the medical care of that group of our citizens who, because of need, receive Federal-State public assistance. These two proposals will help more of our people to meet the costs of health services.
1454	To reduce the gaps in these services, I shall propose: New measures to facilitate construction of needed health facilities and help reduce shortages of trained health personnel; Vigorous steps to combat the misery and national loss involved in mental illness; Improved services for crippled children and for maternal and child health; Better consumer protection under our existing pure food and drug laws; and, finally, Strengthened programs to combat the increasingly serious pollution of our rivers and streams and the growing problem of air pollution. These measures together constitute a comprehensive program holding rich promise for better health for all of our people. Last year's expansion of social security coverage and our new program of improved medical care for public assistance recipients together suggest modification of the formula for Federal sharing in old age assistance payments. I recommend modification of the formula where such payments will, in the future, supplement benefits received under the old age and survivors insurance system.
1455	It is the inalienable right of every person, from childhood on, to have access to knowledge. In our form of society, this right of the individual takes on a special meaning, for the education of all our citizens is imperative to the maintenance and invigoration of America's free institutions. Today, we face grave educational problems. Effective and up-to-date analyses of these problems and their solutions are being carried forward through the individual State conferences and the White House Conference to be completed this year.
1456	However, such factors as population growth, additional responsibilities of schools, and increased and longer school attendance have produced an unprecedented classroom shortage. This shortage is of immediate concern to all of our people. Positive, affirmative action must be taken now. Without impairing in any way the responsibilities of our States, localities, communities, or families, the Federal government can and should serve as an effective-catalyst in dealing with this problem. I shall forward a special message to the Congress on February 15, presenting an affirmative program dealing with this shortage.
1457	To help the States do a better and more timely job, we must strengthen their resources for preventing and dealing with juvenile delinquency. I shall propose Federal legislation to assist the States to promote concerted action in dealing with this nationwide problem. I shall carry forward the vigorous efforts of the Administration to improve the international control of the traffic in narcotics and, in cooperation with State and local agencies, to combat narcotic addiction in our country.
1458	I should like to speak now of additional matters of importance to all our people and especially to our wage earners. During the past year certain industrial changes and the readjustment of the economy to conditions of peace brought unemployment and other difficulties to various localities and industries. These problems are engaging our most earnest attention. But for the overwhelming majority of our working people, the past year has meant good jobs. Moreover, the earnings and savings of our wage earners are no longer depreciating in value. Because of cooperative relations between labor and management, fewer working days were lost through strikes in 1954 than in any year in the past decade.
1459	The outlook for our wage earners can be made still more promising by several legislative actions. First, in the past five years we have had economic growth which will support an increase in the Federal minimum wage. In the light of present economic conditions, I recommend its increase to ninety cents an hour. I also recommend that many others, at present excluded, be given the protection of a minimum wage.
1460	Second, I renew my recommendation of last year for amendment of the Labor Management Relations Act of 1947 to further the basic objectives of this statute. I especially call to the attention of the Congress amendments dealing with the right of economic strikers to vote in representation elections and the need for equalizing the obligation under the Act to file disclaimers of Communist affiliation.
1461	In considering human needs, the Federal Government must take special responsibility for citizens in its direct employ. On January 11 I shall propose a pay adjustment plan for civilian employees outside the Postal Field Service to correct inequities and increase individual pay rates. I shall also recommend voluntary health insurance on a contributory basis for Federal employees and their dependents. In keeping with the Group Life Insurance Act passed in the 83rd Congress, this protection should be provided on the group insurance principle and purchased from private facilities. Also on January 11 I shall recommend a modern pay plan, including pay increases, for postal field employees. As part of this program, and to carry forward our progress toward elimination of the large annual postal deficit. I shall renew my request for an increase in postal rates. Again I urge that in the future the fixing of rates be delegated to an impartial, independent body.
1462	More adequate training programs to equip career employees of the government to render improved public service will be recommended, as will improvements in the laws affecting employees serving on foreign assignments. Needed improvements in survivor, disability, and retirement benefits for Federal civilian and military personnel have been extensively considered by the Committee on Retirement Policy for Federal personnel. The Committee's proposals would strengthen and improve benefits for our career people in government, and I endorse their broad objectives. Full contributory coverage under old-age and survivors' insurance should be made available to all Federal personnel, just as in private industry. For career military personnel, the protection of the old-age and survivors' insurance system would be an important and long-needed addition, especially to their present unequal and inadequate survivorship protection. The military retirement pay system should remain separate and unchanged. Certain adjustments in the present civilian personnel retirement systems will be needed to reflect the additional protection of old-age and survivors' insurance. However, these systems also are a basic part of a total compensation and should be separately and independently retained.
1463	I also urge the Congress to approve a long overdue increase in the salaries of Members of the Congress and of the Federal judiciary to a level commensurate with their heavy responsibilities.
1464	Our concern for the individual in our country requires that we consider several additional problems. We must continue our program to help our Indian citizens improve their lot and make their full contribution to national life. Two years ago I advised the Congress of injustices under existing immigration laws. Through humane administration, the Department of Justice is doing what it legally can to alleviate hardships. Clearance of aliens before arrival has been initiated, and except for criminal offenders, the imprisonment of aliens awaiting admission or deportation has been stopped. Certain provisions of law, however, have the effect of compelling action in respect to aliens which are inequitable in some instances and discriminatory in others. These provisions should be corrected in this session of the Congress. As the complex problems of Alaska are resolved, that Territory should expect to achieve statehood. In the meantime, there is no justification for deferring the admission to statehood of Hawaii. I again urge approval of this measure.
1465	We have three splendid opportunities to demonstrate the strength of our belief in the right of suffrage. First, I again urge that a Constitutional amendment be submitted to the States to reduce the voting age for Federal elections. Second, I renew my request that the principle of self-government be extended and the right of suffrage granted to the citizens of the District of Columbia. Third, I again recommend that we work with the States to preserve the voting fights of citizens in the nation's service overseas.
1466	In our determination to keep faith with those who in the past have met the highest call of citizenship, we now have under study the system of benefits for veterans and for surviving dependents of deceased veterans and servicemen. Studies will be undertaken to determine the need for measures to ease the readjustment to civilian life of men required to enter the armed forces for two years of service.
1467	In the advancement of the various activities which will make our civilization endure and flourish, the Federal Government should do more to give official recognition to the importance of the arts and other cultural activities. I shall recommend the establishment of a Federal Advisory Commission on the Arts within the Department of Health, Education and Welfare, to advise the Federal Government on ways to encourage artistic endeavor and appreciation. I shall also propose that awards of merit be established whereby we can honor our fellow citizens who make great contribution to the advancement of our civilization.
1468	Every citizen rightly expects efficient and economical administration of these many government programs I have outlined today. I strongly recommend extension of the Reorganization Act and the law establishing the Commission on Intergovernmental Relations, both of which expire this spring. Thus the Congress will assure continuation of the excellent progress recently made in improving government organization and administration. In this connection we are looking forward with great interest to the reports which will soon be going to the Congress from the Commission on Organization of the Executive Branch of the Government. I am sure that these studies, made under the chairmanship of former President Herbert Hoover with the assistance of more than two hundred distinguished citizens, will be of great value in paving the way toward more efficiency and economy in the government.
1469	And now, I return to the point at which I began--the faith of our people.
1470	The many programs here summarized are, I believe, in full keeping with their needs, interests and aspirations. The obligations upon us are clear: To labor earnestly, patiently, prayerfully, for peace, for freedom, for justice, throughout the world; To keep our economy vigorous and free, that our people may lead fuller, happier lives; To advance, not merely by our words but by our acts, the determination of our government that every citizen shall have opportunity to develop to his fullest capacity.
1471	As we do these things, before us is a future filled with opportunity and hope. That future will be ours if in our time we keep alive the patience, the courage, the confidence in tomorrow, the deep faith, of the millions who, in years past, made and preserved us this nation.
1472	A decade ago, in the death and desolation of European battlefields, I saw the courage and resolution, I felt the inspiration, of American youth. In these young men I felt America's buoyant confidence and irresistible will-to-do. In them I saw, too, a devout America, humble before God.
1473	And so, I know with all my heart--and I deeply believe that all Americans know--that, despite the anxieties of this divided world, our faith, and the cause in which we all believe, will surely prevail.@
1474	Dwight D. Eisenhower|Annual Message to the Congress on the State of the Union|1956-01-05|@To the Congress of the United States:
1475	The opening of this new year must arouse in us all grateful thanks to a kind Providence whose protection has been ever present and whose bounty has been manifold and abundant. The State of the Union today demonstrates what can be accomplished under God by a free people; by their vision, their understanding of national problems, their initiative, their self-reliance, their capacity for work--and by their willingness to sacrifice whenever sacrifice is needed.
1476	In the past three years, responding to what our people want their Government to do, the Congress and the Executive have done much in building a stronger, better America. There has been broad progress in fostering the energies of our people, in providing greater opportunity for the satisfaction of their needs, and in fulfilling their demands for the strength and security of the Republic.
1477	Our country is at peace. Our security posture commands respect. A spiritual vigor marks our national life. Our economy, approaching the 400 billion dollar mark, is at an unparalleled level of prosperity. The national income is more widely and fairly distributed than ever before. The number of Americans at work has reached an all-time high. As a people, we are achieving consuming more, building more and investing more than ever before.
1478	Virtually all sectors of our society are sharing in these good times. Our farm families, if we act wisely, imaginatively and promptly to strengthen our present farm programs, can also look forward to sharing equitably in the prosperity they have helped to create.
1479	War in Korea ended two and a half years ago. The collective security system has been powerfully strengthened. Our defenses have been reinforced at sharply reduced costs. Programs to expand world trade and to harness the atom for the betterment of mankind have been carried forward. Our economy has been freed from governmental wage and price controls. Inflation has been halted; the cost of living stabilized.
1480	Government spending has been cut by more than ten billion dollars. Nearly three hundred thousand positions have been eliminated from the Federal payroll. Taxes have been substantially reduced. A balanced budget is in prospect. Social security has been extended to ten million more Americans and unemployment insurance to four million more. Unprecedented advances in civil rights have been made. The long-standing and deep-seated problems of agriculture have been forthrightly attacked.
1481	This record of progress has been accomplished with a self-imposed caution against unnecessary and unwise interference in the private affairs of our people, of their communities and of the several States.
1482	If we of the Executive and Legislative Branches, keeping this caution ever in mind, address ourselves to the business of the year before us-- and to the unfinished business of last year--with resolution, the outlook is bright with promise.
1483	Many measures of great national importance recommended last year to the Congress still demand immediate attention--legislation for school and highway construction; health and immigration legislation; water resources legislation; legislation to complete the implementation of our foreign economic policy; such labor legislation as amendments of the Labor-Management Relations Act, extension of the Fair Labor Standards Act to additional groups not now covered, and occupational safety legislation; and legislation for construction of an atomic-powered exhibit vessel.
1484	Many new items of business likewise require our attention-- measures that will further promote the release of the energies of our people; that will broaden opportunity for all of them; that will advance the Republic in its leadership toward a just peace; measures, in short, that are essential to the building of an ever-stronger, ever-better America.
1485	Every political and economic guide supports a valid confidence that wise effort will be rewarded by an even more plentiful harvest of human benefit than we now enjoy. Our resources are too many, our principles too dynamic, our purposes too worthy and the issues at stake too immense for us to entertain doubt or fear. But our responsibilities require that we approach this year's business with a sober humility.
1486	A heedless pride in our present strength and position would blind us to the facts of the past, to the pitfalls of the future. We must walk ever in the knowledge that we are enriched by a heritage earned in the labor and sacrifice of our forebears; that, for our children's children, we are trustees of a great Republic and a time-tested political system; that we prosper as a cooperating member of the family of nations.
1487	In this light the Administration has continued work on its program for the Republic, begun three years ago. Because the vast spread of national and human interests is involved within it, I shall not in this Message attempt its detailed delineation. Instead, from time to time during this Session, there will be submitted to the Congress specific recommendations within specific fields. In the comprehensive survey required for their preparation, the Administration is guided by enduring objectives.
1488	The first is:
1489	THE DISCHARGE OF OUR WORLD RESPONSIBILITY
1490	Our world policy and our actions are dedicated to the achievement of peace with justice for all nations.
1491	With this purpose, we move in a wide variety of ways and through many agencies to remove the pall of fear; to strengthen the ties with our partners and to improve the cooperative cohesion of the free world; to reduce the burden of armaments, and to stimulate and inspire action among all nations for a world of justice and prosperity and peace. These national objectives are fully supported by both our political parties.
1492	In the past year, our search for a more stable and just peace has taken varied forms. Among the most important were the two Conferences at Geneva, in July and in the fall of last year. We explored the possibilities of agreement on critical issues that jeopardize the peace.
1493	The July meeting of Heads of Government held out promise to the world of moderation in the bitterness, of word and action, which tends to generate conflict and war. All were in agreement that a nuclear war would be an intolerable disaster which must not be permitted to occur. But in October, when the Foreign Ministers met again, the results demonstrated conclusively that the Soviet leaders are not yet willing to create the indispensable conditions for a secure and lasting peace.
1494	Nevertheless, it is clear that the conflict between international communism and freedom has taken on a new complexion. We know the Communist leaders have often practiced the tactics of retreat and zigzag. We know that Soviet and Chinese communism still poses a serious threat to the free world. And in the Middle East recent Soviet moves are hardly compatible with the reduction of international tension.
1495	Yet Communist tactics against the free nations have shifted in emphasis from reliance on violence and the threat of violence to reliance on division, enticement and duplicity. We must be well prepared to meet the current tactics which pose a dangerous though less obvious threat. At the same time, our policy must be dynamic as well as flexible, designed primarily to forward the achievement of our own objectives rather than to meet each shift and change on the Communist front. We must act in the firm assurance that the fruits of freedom are more attractive and desirable to mankind in the pursuit of happiness than the record of Communism.
1496	In the face of Communist military power, we must, of course, continue to maintain an effective system of collective security. This involves two things--a system which gives clear warning that armed aggression will be met by joint action of the free nations, and deterrent military power to make that warning effective. Moreover, the awesome power of the atom must be made to serve as a guardian of the free community and of the peace.
1497	In the last year, the free world has seen major gains for the system of collective security: the accession to the North Atlantic Treaty Organization and Western European Union of the sovereign Federal German Republic; the developing cooperation under the Southeast Asia Collective Defense Treaty; and the formation in the Middle East of the Baghdad Pact among Turkey, Iraq, Iran, Pakistan and the United Kingdom. In our own hemisphere, the inter-American system has continued to show its vitality in maintaining peace and a common approach to world problems. We now have security pacts with more than 40 other nations.
1498	In the pursuit of our national purposes, we have been steadfast in our support of the United Nations, now entering its second decade with a wider membership and ever-increasing influence and usefulness. In the release of our fifteen fliers from Communist China, an essential prelude was the world opinion mobilized by the General Assembly, which condemned their imprisonment and demanded their liberation. The successful Atomic Energy Conference held in Geneva under United Nations auspices and our Atoms for Peace program have been practical steps toward the world-wide use of this new energy source. Our sponsorship of such use has benefited our relations with other countries. Active negotiations are now in progress to create an International Agency to foster peaceful uses of atomic energy.
1499	During the past year the crucial problem of disarmament has moved to the forefront of practical political endeavor. At Geneva, I declared the readiness of the United States to exchange blueprints of the military establishments of our nation and the U.S.S.R., to be confirmed by reciprocal aerial reconnaissance. By this means, I felt mutual suspicions could be allayed and an atmosphere developed in which negotiations looking toward limitation of arms would have improved chances of success.
1500	In the United Nations Subcommittee on Disarmament last fall, this proposal was explored and the United States also declared itself willing to include reciprocal ground inspection of key points. By the overwhelming vote of 56 to 7, the United Nations on December 16 endorsed these proposals and gave them a top priority. Thereby, the issue is placed squarely before the bar of world opinion. We shall persevere in seeking a general reduction of armaments under effective inspection and control which are essential safeguards to ensure reciprocity and protect the security of all. In the coming year much remains to be done.
1501	While maintaining our military deterrent, we must intensify our efforts to achieve a just peace. In Asia we shall continue to give help to nations struggling to maintain their freedom against the threat of Communist coercion or subversion. In Europe we shall endeavor to increase not only the military strength of the North Atlantic Alliance but also its political cohesion and unity of purpose. We shall give such assistance as is feasible to the recently renewed effort of Western European nations to achieve a greater measure of integration, such as in the field of peaceful uses of atomic energy.
1502	In the Near East we shall spare no effort in seeking to promote a fair solution of the tragic dispute between the Arab States and Israel, all of whom we want as our friends. The United States is ready to do its part to assure enduring peace in that area. We hope that both sides will make the contributions necessary to achieve that purpose. In Latin America, we shall continue to cooperate vigorously in trade and other measures designed to assist economic progress in the area.
1503	Strong economic ties are an essential element in our free world partnership. Increasing trade and investment help all of us prosper together. Gratifying progress has been made in this direction, most recently by the three-year extension of our trade agreements legislation.
1504	I most earnestly request that the Congress approve our membership in the Organization for Trade Cooperation, which would assist the carrying out of the General Agreement on Tariffs and Trade to which we have been a party since 1948. Our membership in the OTC will provide the most effective and expeditious means for removing discriminations and restrictions against American exports and in making our trade agreements truly reciprocal. United States membership in the Organization will evidence our continuing desire to cooperate in promoting an expanded trade among the free nations. Thus the Organization, as proposed, is admirably suited to our own interests and to those of like-minded nations in working for steady expansion of trade and closer economic cooperation. Being strictly an administrative entity, the Organization for Trade Cooperation cannot, of course, alter the control by Congress of the tariff, import, and customs policies of the United States.
1505	We need to encourage investment overseas by avoiding unfair tax duplications, and to foster foreign trade by further simplification and improvement of our customs legislation.
1506	We must sustain and fortify our Mutual Security Program. Because the conditions of poverty and unrest in less developed areas make their people a special target of international communism, there is a need to help them achieve the economic growth and stability necessary to preserve their independence against communist threats and enticements.
1507	In order that our friends may better achieve the greater strength that is our common goal, they need assurance of continuity in economic assistance for development projects and programs which we approve and which require a period of years for planning and completion. Accordingly, I ask Congress to grant limited authority to make longer-term commitments for assistance to such projects, to be fulfilled from appropriations to be made in future fiscal years.
1508	These various steps will powerfully strengthen the economic foundation of our foreign policy. Together with constructive action abroad, they will maintain the present momentum toward general economic progress and vitality of the free world.
1509	In all things, change is the inexorable law of life. In much of the world the ferment of change is working strongly; but grave injustices are still uncorrected. We must not, by any sanction of ours, help to perpetuate these wrongs. I have particularly in mind the oppressive division of the German people, the bondage of millions elsewhere, and the exclusion of Japan from United Nations membership.
1510	We shall keep these injustices in the forefront of human consciousness and seek to maintain the pressure of world opinion to right these vast wrongs in the interest both of justice and secure peace.
1511	Injustice thrives on ignorance. Because an understanding of the truth about America is one of our most powerful forces, I am recommending a substantial increase in budgetary support of the United States Information Agency.
1512	The sum of our international effort should be this: the waging of peace, with as much resourcefulness, with as great a sense of dedication and urgency, as we have ever mustered in defense of our country in time of war. In this effort, our weapon is not force. Our weapons are the principles and ideas embodied in our historic traditions, applied with the same vigor that in the past made America a living promise of freedom for all mankind.
1513	To accomplish these vital tasks, all of us should be concerned with the strength, effectiveness and morale of our State Department and our Foreign Service.
1514	Another guide in the preparation of the Administration's program is:
1515	THE CONSTANT IMPROVEMENT OF OUR NATIONAL SECURITY
1516	Because peace is the keystone of our national policy, our defense program emphasizes an effective flexible type of power calculated to deter or repulse any aggression and to preserve the peace. Short of war, we have never had military strength better adapted to our needs with improved readiness for emergency use.
1517	The maintenance of this strong military capability for the indefinite future will continue to call for a large share of our national budget. Our military programs must meet the needs of today. To build less would expose the nation to aggression. To build excessively, under the influence of fear, could defeat our purposes and impair or destroy the very freedom and economic system our military defenses are designed to protect.
1518	We have improved the effectiveness and combat readiness of our forces by developing and making operational new weapons and by integrating the latest scientific developments, including new atomic weapons, into our military plans. We continue to push the production of the most modern military aircraft. The development of long-range missiles has been on an accelerated basis for some time. We are moving as rapidly as practicable toward nuclear-powered aircraft and ships. Combat capability, especially in terms of firepower, has been substantially increased. We have made the adjustments in personnel permitted by the cessation of the Korean War, the buildup of our allies and the introduction of new weapons. The services are all planning realistically on a long-term basis.
1519	To strengthen our continental defenses the United States and Canada, in the closest cooperation, have substantially augmented early warning networks. Great progress is being made in extending surveillance of the Arctic, the Atlantic and the Pacific approaches to North America.
1520	In the last analysis our real strength lies in the caliber of the men and women in our Armed Forces, active and Reserve. Much has been done to attract and hold capable military personnel, but more needs to be done. This year, I renew my request of last year for legislation to provide proper medical care for military dependents and a more equitable survivors' benefit program. The Administration will prepare additional recommendations designed to achieve the same objectives, including career incentives for medical and dental officers and nurses, and increases in the proportion of regular officers. Closely related to the mission of the Defense Department is the task of the Federal Civil Defense Administration. A particular point of relationship arises from the fact that the key to civil defense is the expanded continental defense program, including the distant early warning system. Our Federal civil defense authorities have made progress in their program, and now comprehensive studies are being conducted jointly by the Federal Civil Defense Administration, the States, and critical target case of an atomic attack. We must strengthen Federal assistance to the States and cities in devising the most effective common defense.
1521	We have a broad and diversified mobilization base. We have the facilities, materials, skills and knowledge rapidly to expand the production of things we need for our defense whenever they are required. But mobilization base requirements change with changing technology and strategy. We must maintain flexibility to meet new requirements. I am requesting, therefore, that the Congress once again extend the Defense Production Act.
1522	Of great importance to our nation's security is a continuing alertness to internal subversive activity within or without our government. This Administration will not relax its efforts to deal forthrightly and vigorously in protection of this government and its citizens against subversion, at the same time fully protecting the constitutional rights of all citizens.
1523	A third objective of the Administration is:
1524	FISCAL INTEGRITY
1525	A public office is, indeed, a public trust. None of its aspects is more demanding than the proper management of the public finances. I refer now not only to the indispensable virtues of plain honesty and trustworthiness but also to the prudent, effective and conscientious use of tax money. I refer also to the attitude of mind that makes efficient and economical service to the people a watchword in our government.
1526	Over the long term, a balanced budget is a sure index to thrifty management--in a home, in a business or in the Federal Government. When achievement of a balanced budget is for long put off in a business or home, bankruptcy is the result. But in similar circumstances a government resorts to inflation of the money supply. This inevitably results in depreciation of the value of the money, and an increase in the cost of living. Every investment in personal security is threatened by this process of inflation, and the real values of the people's savings, whether in the form of insurance, bonds, pension and retirement funds or savings accounts are thereby shriveled.
1527	We have made long strides these past three years in bringing our Federal finances under control. The deficit for fiscal year 1953 was almost 9 1/2 billion dollars. Larger deficits seemed certain--deficits which would have depreciated the value of the dollar and pushed the cost of living still higher. But government waste and extravagance were searched out. Nonessential activities were dropped. Government expenses were carefully scrutinized. Total spending was cut by 14 billion dollars below the amount planned by the previous Administration for the fiscal year 1954. This made possible--and it was appropriate in the existing circumstances of transition to a peacetime economy--the largest tax cut in any year in our history. Almost 7 1/2 billion dollars were released and every taxpayer in the country benefited. Almost two-thirds of the savings went directly to individuals. This tax cut also helped to build up the economy, to make jobs in industry and to increase the production of the many things desired to improve the scale of living for the great majority of Americans.
1528	The strong expansion of the economy, coupled with a constant care for efficiency in government operations and an alert guard against waste and duplication, has brought us to a prospective balance between income and expenditure. This is being done while we continue to strengthen our military security.
1529	I expect the budget to be in balance during the fiscal year ending June 30, 1956.
1530	I shall propose a balanced budget for the next fiscal year ending June 30, 1957.
1531	But the balance we are seeking cannot be accomplished without the continuing every-day effort of the Executive and Legislative Branches to keep expenditures under control. It will also be necessary to continue all of the present excise taxes without any reduction and the corporation income taxes at their present rates for another year beyond next April 1st.
1532	It is unquestionably true that our present tax level is very burdensome and, in the interest of long term and continuous economic growth, should be reduced when we prudently can. It is essential, in the sound management of the Government's finances, that we be mindful of our enormous national debt and of the obligation we have toward future Americans to reduce that debt whenever we can appropriately do so. Under conditions of high peacetime prosperity, such as now exist, we can never justify going further into debt to give ourselves a tax cut at the expense of our children. So, in the present state of our financial affairs, I earnestly believe that a tax cut can be deemed justifiable only when it will not unbalance the budget, a budget which makes provision for some reduction, even though modest, in our national debt. In this way we can best maintain fiscal integrity. A fourth aim of our program is:
1533	TO FOSTER A STRONG ECONOMY
1534	Our competitive enterprise system depends on the energy of free human beings, limited by prudent restraints in law, using free markets to plan, organize and distribute production, and spurred by the prospect of reward for successful effort. This system has developed our resources. It has marvelously expanded our productive capacity. Against the record of all other economic systems devised through the ages, this competitive system has proved the most creative user of human skills in the development of physical resources, and the richest rewarder of human effort.
1535	This is still true in this era when improved living standards and rising national requirements are accompanied by swift advances in technology and rapid obsolescence in machines and methods. Typical of these are the strides made in construction of plants to produce electrical energy from atomic power and of laboratories and installations for the application of this new force in industry, agriculture and the healing arts.
1536	These developments make it imperative--to assure effective functioning of our enterprise system--that the Federal Government concern itself with certain broad areas of our economic life.
1537	Most important of these is:
1538	Agriculture
1539	Our farm people are not sharing as they should in the general prosperity. They alone of all major groups have seen their incomes decline rather than rise. They are caught between two millstones-- rising production costs and declining prices. Such harm to a part of the national economy so vitally important to everyone is of great concern to us all. No other resource is so indispensable as the land that feeds and clothes us. No group is more fundamental to our national life than our farmers.
1540	In successful prosecution of the war, the nation called for the utmost effort of its farmers. Their response was superb, their contribution unsurpassed. Farmers are not now to be blamed for the mountainous, price-depressing surpluses produced in response to wartime policies and laws that were too long continued. War markets are not the markets of peacetime. Failure to recognize that basic fact by a timely adjustment of wartime legislation brought its inevitable result in peacetime--surpluses, lower prices and lower incomes for our farmers.
1541	The dimensions of government responsibility are as broad and complex as the farm problem itself. We are here concerned not only with our essential continuing supplies of food and fiber, but also with a way of life. Both are indispensable to the well-being and strength of the nation. Consideration of these matters must be above and beyond politics. Our national farm policy, so vital to the welfare of farm people and all of us, must not become a field for political warfare. Too much is at stake.
1542	Our farm people expect of us, who have responsibility for their government, understanding of their problems and the will to help solve them. Our objective must be to help bring production into balance with existing and new markets, at prices that yield farmers a return for their work in line with what other Americans get.
1543	To reach this goal, deep-seated problems must be subjected to a stepped-up attack. There is no single easy solution. Rather, there must be a many-sided assault on the stubborn problems of surpluses, prices, costs, and markets; and a steady, persistent, imaginative advance in the relationship between farmers and their government.
1544	In a few days, by special message, I shall lay before the Congress my detailed recommendations for new steps that should be taken promptly to speed the transition in agriculture and thus assist our farmers to achieve their fair share of the national income.
1545	Basic to this program will be a new attack on the surplus problem-- for even the best-conceived farm program cannot work under a multi-billion dollar weight of accumulated stocks.
1546	I shall urge authorization of a soil bank program to alleviate the problem of diverted acres and an overexpanded agricultural plant. This will include an acreage reserve to reduce current and accumulated surpluses of crops in most serious difficulty, and a conservation reserve to achieve other needed adjustments in the use of agricultural resources. I shall urge measures to strengthen our surplus disposal activities.
1547	I shall propose measures to strengthen individual commodity programs, to remove controls where possible, to reduce carryovers, and to stop further accumulations of surpluses. I shall ask the Congress to provide substantial new funds for an expanded drive on the research front, to develop new markets, new crops, and new uses. The Rural Development Program to better the lot of low-income farm families deserves full Congressional support. The Great Plains Program must go forward vigorously. Advances on these and other fronts will pull down the price-depressing surpluses and raise farm income.
1548	In this time of testing in agriculture, we should all together, regardless of party, carry forward resolutely with a sound and forward looking program on which farm people may confidently depend, now and for years to come.
1549	I shall briefly mention four other subjects directly related to the well-being of the economy, preliminary to their fuller discussion in the Economic Report and later communications.
1550	Resources Conservation
1551	I wish to re-emphasize the critical importance of the wise use and conservation of our great natural resources of land, forests, minerals and water and their long-range development consistent with our agricultural policy. Water in particular now plays an increasing role in industrial processes, in the irrigation of land, in electric power, as well as in domestic uses. At the same time, it has the potential of damage and disaster.
1552	A comprehensive legislative program for water conservation will be submitted to the Congress during the Session. The development of our water resources cannot be accomplished overnight. The need is such that we must make faster progress and without delay. Therefore, I strongly recommend that action be taken at this Session on such wholly Federal projects as the Colorado River Storage Project and the Fryingpan-Arkansas Project; on the John Day partnership project, and other projects which provide for cooperative action between the Federal Government and non-Federal interests; and on legislation, which makes provision for Federal participation in small projects under the primary sponsorship of agencies of State and local government. During the past year the areas of our National Parks have been expanded, and new wildlife refuges have been created. The visits of our people to the Parks have increased much more rapidly than have the facilities to care for them. The Administration will submit recommendations to provide more adequate facilities to keep abreast of the increasing interest of our people in the great outdoors. Disaster Assistance
1553	A modern community is a complex combination of skills, specialized buildings, machines, communications and homes. Most importantly, it involves human lives. Disaster in many forms--by flood, frost, high winds, for instance--can destroy on a massive scale in a few hours the labor of many years.
1554	Through the past three years the Administration has repeatedly moved into action wherever disaster struck. The extent of State participation in relief activities, however, has been far from uniform and, in many cases, has been either inadequate or nonexistent. Disaster assistance legislation requires overhauling and an experimental program of flood-damage indemnities should be undertaken. The Administration will make detailed recommendations on these subjects.
1555	Area Redevelopment
1556	We must help deal with the pockets of chronic unemployment that here and there mar the nation's general industrial prosperity. Economic changes in recent years have been often so rapid and far-reaching that areas committed to a single local resource or industrial activity have found themselves temporarily deprived of their markets and their livelihood.
1557	Such conditions mean severe hardship for thousands of people as the slow process of adaptation to new circumstances goes on. This process can be speeded up. Last year I authorized a major study of the problem to find additional steps to supplement existing programs for the redevelopment of areas of chronic unemployment. Recommendations will be submitted, designed to supplement, with Federal technical and loan assistance local efforts to get on with this vital job. Improving such communities must, of course, remain the primary responsibility of the people living there and of their States. But a soundly conceived Federal partnership program can be of real assistance to them in their efforts.
1558	Highway Legislation
1559	Legislation to provide a modern, interstate highway system is even more urgent this year than last, for 12 months have now passed in which we have fallen further behind in road construction needed for the personal safety, the general prosperity, the national security of the American people. During the year, the number of motor vehicles has increased from 58 to 61 million. During the past year over 38,000 persons lost their lives in highway accidents, while the fearful toll of injuries and property damage has gone on unabated.
1560	In my message of February 22, 1955, I urged that measures be taken to complete the vital 40,000 mile interstate system over a period of 10 years at an estimated Federal cost of approximately 25 billion dollars. No program was adopted.
1561	If we are ever to solve our mounting traffic problem, the whole interstate system must be authorized as one project, to be completed approximately within the specified time. Only in this way can industry efficiently gear itself to the job ahead. Only in this way can the required planning and engineering be accomplished without the confusion and waste unavoidable in a piecemeal approach. Furthermore, as I pointed out last year, the pressing nature of this problem must not lead us to solutions outside the bounds of sound fiscal management. As in the case of other pressing problems, there must be an adequate plan of financing. To continue the drastically needed improvement in other national highway systems, I recommend the continuation of the Federal Aid Highway Program.
1562	Aside from agriculture and the four subjects specifically mentioned, an integral part of our efforts to foster a strong and expanding free economy is keeping open the door of opportunity to new and small enterprises, checking monopoly, and preserving a competitive environment. In this past year the steady improvement in the economic health of small business has reinforced the vitality of our competitive economy. We shall continue to help small business concerns to obtain access to adequate financing and to competent counsel on management, production, and marketing problems.
1563	Through measures already taken, opportunities for small-business participation in government procurement programs, including military procurement, are greatly improved. The effectiveness of these measures will become increasingly apparent. We shall continue to make certain that small business has a fair opportunity to compete and has an economic environment in which it may prosper.
1564	In my message last year I referred to the appointment of an advisory committee to appraise and report to me on the deficiencies as well as the effectiveness of existing Federal transportation policies. I have commended the fundamental purposes and objectives of the committee's report. I earnestly recommend that the Congress give prompt attention to the committee's proposals.
1565	Essential to a prosperous economic environment for all business, small and large--for agriculture and industry and commerce--is efficiency in Government. To that end, exhaustive studies of the entire governmental structure were made by the Commission on Intergovernmental Relations and the Commission on the Organization of the Executive Branch of the Government--the reports of these Commissions are now under intensive review and already in the process of implementation in important areas.
1566	One specific and most vital governmental function merits study and action by the Congress. As part of our program of promoting efficiency in Government and getting the fiscal situation in hand, the Post Office Department in the past three years has been overhauled. Nearly one thousand new post offices have been provided. Financial practices have been modernized, and transportation and operating methods are being constantly improved. A new wage and incentive plan for the half million postal employees has been established. Never before has the postal system handled so much mail so quickly and so economically. The Post Office Department faces two serious problems. First, much of its physical plant--post offices and other buildings--is obsolete and inadequate. Many new buildings and the modernization of present ones are essential if we are to have improved mail service. The second problem is the Department's fiscal plight. It now faces an annual deficit of one-half billion dollars.
1567	Recommendations on postal facilities and on additional postal revenues will be submitted to the Congress.
1568	A final consideration in our program planning is:
1569	THE RESPONSE TO HUMAN CONCERNS
1570	A fundamental belief shines forth in this Republic. We believe in the worth and dignity of the individual. We know that if we are to govern ourselves wisely--in the tradition of America--we must have the opportunity to develop our individual capacities to the utmost.
1571	To fulfill the individual's aspirations in the American way of life, good education is fundamental. Good education is the outgrowth of good homes, good communities, good churches, and good schools. Today our schools face pressing problems--problems which will not yield to swift and easy solutions, or to any single action. They will yield only to a continuing, active, informed effort by the people toward achieving better schools.
1572	This kind of effort has been spurred by the thousands of conferences held in recent months by half a million citizens and educators in all parts of the country, culminating in the White House Conference on Education. In that Conference, some two thousand delegates, broadly representative of the nation, studied together the problems of the nation's schools.
1573	They concluded that the people of the United States must make a greater effort through their local, State, and Federal Governments to improve the education of our youth. This expression from the people must now be translated into action at all levels of government.
1574	So far as the Federal share of responsibility is concerned, I urge that the Congress move promptly to enact an effective program of Federal assistance to help erase the existing deficit of school classrooms. Such a program, which should be limited to a five-year period, must operate to increase rather than decrease local and State support of schools and to give the greatest help to the States and localities with the least financial resources. Federal aid should in no way jeopardize the freedom of local school systems. There will be presented to the Congress a recommended program of Federal assistance for school construction.
1575	Such a program should be accompanied by action to increase services to the nation's schools by the Office of Education and by legislation to provide continuation of payments to school districts where Federal activities have impaired the ability of those districts to provide adequate schools.
1576	Under the 1954 Amendments to the old-age and survivors' insurance program, protection was extended to some 10 million additional workers and benefits were increased. The system now helps protect 9 out of 10 American workers and their families against loss of income in old age or on the death of the breadwinner. The system is sound. It must be kept so. In developing improvements in the system, we must give the most careful consideration to population and social trends, and to fiscal requirements. With these considerations in mind, the Administration will present its recommendations for further expansion of coverage and other steps which can be taken wisely at this time.
1577	Other needs in the area of social welfare include increased child welfare services, extension of the program of aid to dependent children, intensified attack on juvenile delinquency, and special attention to the problems of mentally retarded children. The training of more skilled workers for these fields and the quest for new knowledge through research in social welfare are essential. Similarly the problems of our aged people need our attention.
1578	The nation has made dramatic progress in conquering disease-- progress of profound human significance which can be greatly accelerated by an intensified effort in medical research. A well-supported, well-balanced program of research, including basic research, can open new frontiers of knowledge, prevent and relieve suffering, and prolong life. Accordingly I shall recommend a substantial increase in Federal funds for the support of such a program. As an integral part of this effort, I shall recommend a new plan to aid construction of non-Federal medical research and teaching facilities and to help provide more adequate support for the training of medical research manpower.
1579	Finally, we must aid in cushioning the heavy and rising costs of illness and hospitalization to individuals and families. Provision should be made, by Federal reinsurance or otherwise, to foster extension of voluntary health insurance coverage to many more persons, especially older persons and those in rural areas. Plans should be evolved to improve protection against the costs of prolonged or severe illness. These measures will help reduce the dollar barrier between many Americans and the benefits of modern medical care. The Administration health program will be submitted to the Congress in detail.
1580	The response of government to human concerns embraces, of course, other measures of broad public interest, and of special interest to our working men and women. The need still exists for improvement of the Labor Management Relations Act. The recommendations I submitted to the Congress last year take into account not only the interests of labor and management but also the public welfare. The needed amendments should be enacted without further delay.
1581	We must also carry forward the job of improving the wage-hour law. Last year I requested the Congress to broaden the coverage of the minimum wage. I repeat that recommendation, and I pledge the full resources of the Executive Branch to assist the Congress in finding ways to attain this goal. Moreover, as requested last year, legislation should be passed to clarify and strengthen the eight-hour laws for the benefit of workers who are subject to Federal wage standards on Federal and Federally-assisted construction and other public works.
1582	The Administration will shortly propose legislation to assure adequate disclosure of the financial affairs of each employee pension and welfare plan and to afford substantial protection to their beneficiaries in accordance with the objectives outlined in my message of January 11, 1954. Occupational safety still demands attention, as I pointed out last year, and legislation to improve the Longshoremen's and Harbor Workers' Compensation Act is still needed. The improvement of the District of Columbia Unemployment Insurance Law and legislation to provide employees in the District with non-occupational disability insurance are no less necessary now than 12 months ago. Legislation to apply the principle of equal pay for equal work without discrimination because of sex is a matter of simple justice. I earnestly urge the Congress to move swiftly to implement these needed labor measures.
1583	In the field of human needs, we must carry forward the housing program, which is contributing so greatly to the well-being of our people and the prosperity of our economy. Home ownership is now advanced to the point where almost three of every five families in our cities, towns, and suburbs own the houses they live in.
1584	For the housing program, most of the legislative authority already exists. However, a firm program of public housing is essential until the private building industry has found ways to provide more adequate housing for low-income families. The Administration will propose authority to contract for 35 thousand additional public housing units in each of the next 2 fiscal years for communities which will participate in an integrated attack on slums and blight.
1585	To meet the needs of the growing number of older people, several amendments to the National Housing Act will be proposed to assist the private homebuilding industry as well as charitable and non-profit organizations.
1586	With so large a number of the American people desiring to modernize and improve existing dwellings, I recommend that the Title I program for permanent improvements in the home be liberalized.
1587	I recommend increases in the general FHA mortgage insurance authority; the extension of the FHA military housing program; an increase in the authorization for Urban Planning grants; in the special assistance authority of the Federal National Mortgage Association; and continued support of the college housing program in a way that will not discourage private capital from helping to meet the needs of our colleges.
1588	The legislation I have recommended for workers in private industry should be accompanied by a parallel effort for the welfare of Government employees. We have accomplished much in this field, including a contributory life insurance program; equitable pay increases and a fringe benefits program, covering many needed personnel policy changes, from improved premium pay to a meaningful incentive award program.
1589	Additional personnel management legislation is needed in this Session. As I stated last year, an executive pay increase is essential to efficient governmental management. Such an increase, together with needed adjustments in the pay for the top career positions, is also necessary to the equitable completion of the Federal pay program initiated last year. Other legislation will be proposed, including legislation for prepaid group health insurance for employees and their dependents and to effect major improvements in the Civil Service retirement system.
1590	All of us share a continuing concern for those who have served this nation in the Armed Forces. The Commission on Veterans Pensions is at this time conducting a study of the entire field of veterans' benefits and will soon submit proposed improvements.
1591	We are proud of the progress our people have made in the field of civil rights. In Executive Branch operations throughout the nation, elimination of discrimination and segregation is all but completed. Progress is also being made among contractors engaged in furnishing Government services and requirements. Every citizen now has the opportunity to fit himself for and to hold a position of responsibility in the service of his country. In the District of Columbia, through the voluntary cooperation of the people, discrimination and segregation are disappearing from hotels, theaters, restaurants and other facilities.
1592	It is disturbing that in some localities allegations persist that Negro citizens are being deprived of their right to vote and are likewise being subjected to unwarranted economic pressures. I recommend that the substance of these charges be thoroughly examined by a Bipartisan Commission created by the Congress. It is hoped that such a commission will be established promptly so that it may arrive at findings which can receive early consideration.
1593	The stature of our leadership in the free world has increased through the past three years because we have made more progress than ever before in a similar period to assure our citizens equality in justice, in opportunity and in civil rights. We must expand this effort on every front. We must strive to have every person judged and measured by what he is, rather than by his color, race or religion. There will soon be recommended to the Congress a program further to advance the efforts of the Government, within the area of Federal responsibility, to accomplish these objectives.
1594	One particular challenge confronts us. In the Hawaiian Islands, East meets West. To the Islands, Asia and Europe and the Western Hemisphere, all the continents, have contributed their peoples and their cultures to display a unique example of a community that is a successful laboratory in human brotherhood.
1595	Statehood, supported by the repeatedly expressed desire of the Islands' people and by our traditions, would be a shining example of the American way to the entire earth. Consequently, I urgently request this Congress to grant statehood for Hawaii.
1596	Also, in harmony with the provisions I last year communicated to the Senate and House Committees on Interior and Insular Affairs, I trust that progress toward statehood for Alaska can be made in this Session.
1597	Progress is constant toward full integration of our Indian citizens into normal community life. During the past two years the Administration has provided school facilities for thousands of Indian children previously denied this opportunity. We must continue to meet the needs of increased numbers of Indian children. Provision should also be made for the education of adult Indians whose schooling in earlier years was neglected.
1598	In keeping with our responsibility of world leadership and in our own self interest, I again point out to the Congress the urgent need for revision of the immigration and nationality laws. Our nation has always welcomed immigrants to our shores. The wisdom of such a policy is clearly shown by the fact that America has been built by immigrants and the descendants of immigrants. That policy must be continued realistically with present day conditions in mind.
1599	I recommend that the number of persons admitted to this country annually be based not on the 1920 census but on the latest, the 1950 census. Provision should be made to allow for greater flexibility in the use of quotas so if one country does not use its share, the vacancies may be made available for the use of qualified individuals from other countries.
1600	The law should be amended to permit the Secretary of State and the Attorney General to waive the requirements of fingerprinting on a reciprocal basis for persons coming to this country for temporary visits. This and other changes in the law are long overdue and should be taken care of promptly. Detailed recommendations for revision of the immigration laws will be submitted to the Congress.
1601	I am happy to report substantial progress in the flow of immigrants under the Refugee Relief Act of 1953; however, I again request this Congress to approve without further delay the urgently needed amendments to that act which I submitted in the last Session. Because of the high prosperity in Germany and Austria, the number of immigrants from those countries will be reduced. This will make available thousands of unfilled openings which I recommend be distributed to Greece and Italy and to escapees from behind the Iron Curtain.
1602	Once again I ask the Congress to join with me in demonstrating our belief in the right of suffrage. I renew my request that the principle of self-government be extended and the right of suffrage granted to the citizens of the District of Columbia.
1603	To conclude: the vista before us is bright. The march of science, the expanding economy, the advance in collective security toward a just peace--in this threefold movement our people are creating new standards by which the future of the Republic may be judged.
1604	Progress, however, will be realized only as it is more than matched by a continuing growth in the spiritual strength of the nation. Our dedication to moral values must be complete in our dealings abroad and in our relationships among ourselves. We have single-minded devotion to the common good of America. Never must we forget that this means the well-being, the prosperity, the security of all Americans in every walk of life.
1605	To the attainment of these objectives, I pledge full energies of the Administration, as in the Session ahead, it works on a program for submission to you, the Congress of the United States.@
1606	Dwight D. Eisenhower|Annual Message to the Congress on the State of the Union|1957-01-10|@To the Congress of the United States:
1607	I appear before the Congress today to report on the State of the Union and the relationships of the Union to the other nations of the world. I come here, firmly convinced that at no time in the history of the Republic have circumstances more emphatically underscored the need, in all echelons of government, for vision and wisdom and resolution.
1608	You meet in a season of stress that is testing the fitness of political systems and the validity of political philosophies. Each stress stems in part from causes peculiar to itself. But every stress is a reflection of a universal phenomenon.
1609	In the world today, the surging and understandable tide of nationalism is marked by widespread revulsion and revolt against tyranny, injustice, inequality and poverty. As individuals, joined in a common hunger for freedom, men and women and even children pit their spirit against guns and tanks. On a larger scale, in an ever more persistent search for the self-respect of authentic sovereignty and the economic base on which national independence must rest, peoples sever old ties; seek new alliances; experiment--sometimes dangerously--in their struggle to satisfy these human aspirations.
1610	Particularly, in the past year, this tide has changed the pattern of attitudes and thinking among millions. The changes al

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