To the Senate and House of Representatives:

It is my duty under the Constitution to transmit to the Congress
information on the state of the Union and to recommend for its
consideration necessary and expedient measures.

The chief influence affecting the state of the Union during the past year
has been the continued world-wide economic disturbance. Our national
concern has been to meet the emergencies it has created for us and to lay
the foundations for recovery.

If we lift our vision beyond these immediate emergencies we find
fundamental national gains even amid depression. In meeting the problems of
this difficult period, we have witnessed a remarkable development of the
sense of cooperation in the community. For the first time in the history of
our major economic depressions there has been a notable absence of public
disorders and industrial conflict. Above all there is an enlargement of
social and spiritual responsibility among the people. The strains and
stresses upon business have resulted in closer application, in saner
policies, and in better methods. Public improvements have been carried out
on a larger scale than even in normal times. The country is richer in
physical property, in newly discovered resources, and in productive
capacity than ever before. There has been constant gain in knowledge and
education; there has been continuous advance in science and invention;
there has been distinct gain in public health. Business depressions have
been recurrent in the life of our country and are but transitory. The
Nation has emerged from each of them with increased strength and virility
because of the enlightenment they have brought, the readjustments and the
larger understanding of the realities and obligations of life and work
which come from them.

NATIONAL DEFENSE

Both our Army and Navy have been maintained in a high state of efficiency.
The ability and devotion of both officers and men sustain the highest
traditions of the service. Reductions and postponements in expenditure of
these departments to meet the present emergency are being made without
reducing existing personnel or impairing the morale of either
establishment.

The agreement between the leading naval powers for limitation of naval
armaments and establishment of their relative strength and thus elimination
of competitive building also implies for ourselves the gradual expansion of
the deficient categories in our Navy to the parities provided in those
treaties. However, none of the other nations, parties to these agreements,
is to-day maintaining the full rate of construction which the treaty size
of fleets would imply.

Although these agreements secured the maximum reduction of fleets which it
was at that time possible to attain, I am hopeful that the naval powers,
party to these agreements, will realize that establishment of relative
strength in itself offers opportunity for further reduction without injury
to any of them. This would be the more possible if pending negotiations are
successful between France and Italy. If the world is to regain its
standards of life, it must further decrease both naval and other arms. The
subject will come before the General Disarmament Conference which meets in
Geneva on February 2.

FOREIGN AFFAIRS

We are at peace with the world. We have cooperated with other nations to
preserve peace. The rights of our citizens abroad have been protected.

The economic depression has continued and deepened in every part of the
world during the past year. In many countries political instability,
excessive armaments, debts, governmental expenditures, and taxes have
resulted in revolutions, in unbalanced budgets and monetary collapse and
financial panics, in dumping of goods upon world markets, and in diminished
consumption of commodities.

Within two years there have been revolutions or acute social disorders in
19 countries, embracing more than half the population of the world. Ten
countries have been unable to meet their external obligations. In 14
countries, embracing a quarter of the world's population, former monetary
standards have been temporarily abandoned. In a number of countries there
have been acute financial panics or compulsory restraints upon banking.
These disturbances have many roots in the dislocations from the World War.
Every one of them has reacted upon us. They have sharply affected the
markets and prices of our agricultural and industrial products. They have
increased unemployment and greatly embarrassed our financial and credit
system.

As our difficulties during the past year have plainly originated in large
degree from these sources, any effort to bring about our own recuperation
has dictated the necessity of cooperation by us with other nations in
reasonable effort to restore world confidence and economic stability.

Cooperation of our Federal reserve system and our banks with the central
banks in foreign countries has contributed to localize and ameliorate a
number of serious financial crises or moderate the pressures upon us and
thus avert disasters which would have affected us.

The economic crisis in Germany and Central Europe last June rose to the
dimensions of a general panic from which it was apparent that without
assistance these nations must collapse. Apprehensions of such collapse had
demoralized our agricultural and security markets and so threatened other
nations as to impose further dangers upon us. But of highest importance was
the necessity of cooperation on our part to relieve the people of Germany
from imminent disasters and to maintain their important relations to
progress and stability in the world. Upon the initiative of this Government
a year's postponement of reparations and other intergovernmental debts was
brought about. Upon our further initiative an agreement was made by
Germany's private creditors providing for an extension of such credits
until the German people can develop more permanent and definite forms of
relief.

We have continued our policy of withdrawing our marines from Haiti and
Nicaragua.

The difficulties between China and Japan have given us great concern, not
alone for the maintenance of the spirit of the Kellogg-Briand Pact, but for
the maintenance of the treaties to which we are a party assuring the
territorial integrity of China. It is our purpose to assist in finding
solutions sustaining the full spirit of those treaties.

I shall deal at greater length with our foreign relations in a later
message.

THE DOMESTIC SITUATION

Many undertakings have been organized and forwarded during the past year to
meet the new and changing emergencies which have constantly confronted us.

Broadly the community has cooperated to meet the needs of honest distress,
and to take such emergency measures as would sustain confidence in our
financial system and would cushion the violence of liquidation in industry
and commerce, thus giving time for orderly readjustment of costs,
inventories, and credits without panic and widespread bankruptcy. These
measures have served those purposes and will promote recovery.

In these measures we have striven to mobilize and stimulate private
initiative and local and community responsibility. There has been the least
possible Government entry into the economic field, and that only in
temporary and emergency form. Our citizens and our local governments have
given a magnificent display of unity and action, initiative and patriotism
in solving a multitude of difficulties and in cooperating with the Federal
Government.

For a proper understanding of my recommendations to the Congress it is
desirable very briefly to review such activities during the past year.

The emergencies of unemployment have been met by action in many directions.
The appropriations for the continued speeding up of the great Federal
construction program have provided direct and indirect aid to employment
upon a large scale. By organized unity of action, the States and
municipalities have also maintained large programs of public improvement.
Many industries have been prevailed upon to anticipate and intensify
construction. Industrial concerns and other employers have been organized
to spread available work amongst all their employees, instead of
discharging a portion of them. A large majority have maintained wages at as
high levels as the safe conduct of their business would permit. This course
has saved us from industrial conflict and disorder which have characterized
all previous depressions. Immigration has been curtailed by administrative
action. Upon the basis of normal immigration the decrease amounts to about
300,000 individuals who otherwise would have been added to our
unemployment. The expansion of Federal employment agencies under
appropriations by the Congress has proved most effective. Through the
President's organization for unemployment relief, public and private
agencies were successfully mobilized last winter to provide employment and
other measures against distress. Similar organization gives assurance
against suffering during the coming winter. Committees of leading citizens
are now active at practically every point of unemployment. In the large
majority they have been assured the funds necessary which, together with
local government aids, will meet the situation. A few exceptional
localities will be further organized. The evidence of the Public Health
Service shows an actual decrease of sickness and infant and general
mortality below normal years. No greater proof could be adduced that our
people have been protected from hunger and cold and that the sense of
social responsibility in the Nation has responded to the need of the
unfortunate.

To meet the emergencies in agriculture the loans authorized by Congress for
rehabilitation in the drought areas have enabled farmers to produce
abundant crops in those districts. The Red Cross undertook and
magnificently administered relief for over 2,500,000 drought sufferers last
winter. It has undertaken this year to administer relief to 100,000
sufferers in the new drought area of certain Northwest States. The action
of the Federal Farm Board in granting credits to farm cooperatives saved
many of them from bankruptcy and increased their purpose and strength. By
enabling farm cooperatives to cushion the fall in prices of farm products
in 1930 and 1931 the Board secured higher prices to the farmer than would
have been obtained otherwise, although the benefits of this action were
partially defeated by continued world overproduction. Incident to this
action the failure of a large number of farmers and of country banks was
averted which could quite possibly have spread into a major disaster. The
banks in the South have cooperated with the Farm Board in creation of a
pool for the better marketing of accumulated cotton. Growers have been
materially assisted by this action. Constant effort has been made to reduce
overproduction in relief of agriculture and to promote the foreign buying
of agricultural products by sustaining economic stability abroad.

To meet our domestic emergencies in credit and banking arising from the
reaction to acute crisis abroad the National Credit Association was set up
by the banks with resources of $500,000,000 to support sound banks against
the frightened withdrawals and hoarding. It is giving aid to reopen solvent
banks which have been closed. Federal officials have brought about many
beneficial unions of banks and have employed other means which have
prevented many bank closings. As a result of these measures the hoarding
withdrawals which had risen to over $250,000,000 per week after the British
crisis have substantially ceased.

FURTHER MEASURES

The major economic forces and weaknesses at home and abroad have now been
exposed and can be appraised, and the time is ripe for forward action to
expedite our recovery.

Although some of the causes of our depression are due to speculation,
inflation of securities and real estate, unsound foreign investments, and
mismanagement of financial institutions, yet our self-contained national
economy, with its matchless strength and resources, would have enabled us
to recover long since but for the continued dislocations, shocks, and
setbacks from abroad.

Whatever the causes may be, the vast liquidation and readjustments which
have taken place have left us with a large degree of credit paralysis,
which together with the situation in our railways and the conditions
abroad, are now the outstanding obstacles to recuperation. If we can put
our financial resources to work and can ameliorate the financial situation
in the railways, I am confident we can make a large measure of recovery
independent of the rest of the world. A strong America is the highest
contribution to world stability.

One phase of the credit situation is indicated in the banks. During the
past year banks, representing 3 per cent of our total deposits have been
closed. A large part of these failures have been caused by withdrawals for
hoarding, as distinguished from the failures early in the depression where
weakness due to mismanagement was the larger cause of failure. Despite
their closing, many of them will pay in full. Although such withdrawals
have practically ceased, yet $1,100,000,000 of currency was previously
withdrawn which has still to return to circulation. This represents a large
reduction of the ability of our banks to extend credit which would
otherwise fertilize industry and agriculture. Furthermore, many of our
bankers, in order to prepare themselves to meet possible withdrawals, have
felt compelled to call in loans, to refuse new credits, and to realize upon
securities, which in turn has demoralized the markets. The paralysis has
been further augmented by the steady increase in recent years of the
proportion of bank assets invested in long-term securities, such as
mortgages and bonds. These securities tend to lose their liquidity in
depression or temporarily to fall in value so that the ability of the banks
to meet the shock of sudden withdrawal is greatly lessened and the
restriction of all kinds of credit is thereby increased. The continuing
credit paralysis has operated to accentuate the deflation and liquidation
of commodities, real estate, and securities below any reasonable basis of
values.

All of this tends to stifle business, especially the smaller units, and
finally expresses itself in further depression of prices and values, in
restriction on new enterprise, and in increased unemployment.

The situation largely arises from an unjustified lack of confidence. We
have enormous volumes of idle money in the banks and in hoarding. We do not
require more money or working capital--we need to put what we have to
work.

The fundamental difficulties which have brought about financial strains in
foreign countries do not exist in the United States. No external drain on
our resources can threaten our position, because the balance of
international payments is in our favor; we owe less to foreign countries
than they owe to us; our industries are efficiently organized; our currency
and bank deposits are protected by the greatest gold reserve in history.

Our first step toward recovery is to reestablish confidence and thus
restore the flow of credit which is the very basis of our economic life. We
must put some steel beams in the foundations of our credit structure. It is
our duty to apply the full strength of our Government not only to the
immediate phases, but to provide security against shocks and the repetition
of the weaknesses which have been proven.

The recommendations which I here lay before the Congress are designed to
meet these needs by strengthening financial, industrial, and agricultural
life through the medium of our existing institutions, and thus to avoid the
entry of the Government into competition with private business.

FEDERAL GOVERNMENT FINANCE

The first requirement of confidence and of economic recovery is financial
stability of the United States Government. I shall deal with fiscal
questions at greater length in the Budget message. But I must at this time
call attention to the magnitude of the deficits which have developed and
the resulting necessity for determined and courageous policies. These
deficits arise in the main from the heavy decrease in tax receipts due to
the depression and to the increase in expenditure on construction in aid to
unemployment, aids to agriculture, and upon services to veterans.

During the fiscal year ending June 30 last we incurred a deficit of about
$903,000,000, which included the statutory reduction of the debt and
represented an increase of the national debt by $616,000,000. Of this,
however, $153,000,000 is offset by increased cash balances.

In comparison with the fiscal year 1928 there is indicated a fall in
Federal receipts for the present fiscal year amounting to $1,683,000,000,
of which $1,034,000,000 is in individual and corporate income taxes alone.
During this fiscal year there will be an increased expenditure, as compared
to 1928, on veterans of $255,000,000, and an increased expenditure on
construction work which may reach $520,000,000. Despite large economies in
other directions, we have an indicated deficit, including the statutory
retirement of the debt, of $2,123,000,000, and an indicated net debt
increase of about $1,711,000,000.

The Budget for the fiscal year beginning July 1 next, after allowing for
some increase of taxes under the present laws and after allowing for
drastic reduction in expenditures, still indicates a deficit of
$1,417,000,000. After offsetting the statutory debt retirements this would
indicate an increase in the national debt for the fiscal year 1933 of about
$921,000,000.

Several conclusions are inevitable. We must have insistent and determined
reduction in Government expenses. We must face a temporary increase in
taxes. Such increase should not cover the whole of these deficits or it
will retard recovery. We must partially finance the deficit by borrowing.
It is my view that the amount of taxation should be fixed so as to balance
the Budget for 1933 except for the statutory debt retirement. Such
Government receipts would assure the balance of the following year's budget
including debt retirement. It is my further view that the additional
taxation should be imposed solely as an emergency measure terminating
definitely two years from July 1 next. Such a basis will give confidence in
the determination of the Government to stabilize its finance and will
assure taxpayers of its temporary character. Even with increased taxation,
the Government will reach the utmost safe limit of its borrowing capacity
by the expenditures for which we are already obligated and the
recommendations here proposed. To go further than these limits in either
expenditures, taxes, or borrowing will destroy confidence, denude commerce
and industry of its resources, jeopardize the financial system, and
actually extend unemployment and demoralize agriculture rather than relieve
it.

FEDERAL LAND BANKS

I recommend that the Congress authorize the subscription by the Treasury of
further capital to the Federal land banks to be retired as provided in the
original act, or when funds are available, and that repayments of such
capital be treated as a fund available for further subscriptions in the
same manner. It is urgent that the banks be supported so as to stabilize
the market values of their bonds and thus secure capital for the farmers at
low rates, that they may continue their services to agriculture and that
they may meet the present situation with consideration to the farmers.

DEPOSITS IN CLOSED BANKS

A method should be devised to make available quickly to depositors some
portion of their deposits in closed banks as the assets of such banks may
warrant. Such provision would go far to relieve distress in a multitude of
families, would stabilize values in many communities, and would liberate
working capital to thousands of concerns. I recommend that measures be
enacted promptly to accomplish these results and I suggest that the
Congress should consider the development of such a plan through the Federal
Reserve Banks.

HOME-LOAN DISCOUNT BANKS

I recommend the establishment of a system of home-loan discount banks as
the necessary companion in our financial structure of the Federal Reserve
Banks and our Federal Land Banks. Such action will relieve present
distressing pressures against home and farm property owners. It will
relieve pressures upon and give added strength to building and loan
associations, savings banks, and deposit banks, engaged in extending such
credits. Such action would further decentralize our credit structure. It
would revive residential construction and employment. It would enable such
loaning institutions more effectually to promote home ownership. I
discussed this plan at some length in a statement made public November 14,
last. This plan has been warmly indorsed by the recent National Conference
upon Home Ownership and Housing, whose members were designated by the
governors of the States and the groups interested.

RECONSTRUCTION FINANCE CORPORATION

In order that the public may be absolutely assured and that the Government
may be in position to meet any public necessity, I recommend that an
emergency Reconstruction Corporation of the nature of the former War
Finance Corporation should be established. It may not be necessary to use
such an instrumentality very extensively. The very existence of such a
bulwark will strengthen confidence. The Treasury should be authorized to
subscribe a reasonable capital to it, and it should be given authority to
issue its own debentures. It should be placed in liquidation at the end of
two years. Its purpose is that by strengthening the weak spots to thus
liberate the full strength of the Nation's resources. It should be in
position to facilitate exports by American agencies; make advances to
agricultural credit agencies where necessary to protect and aid the
agricultural industry; to make temporary advances upon proper securities to
established industries, railways, and financial institutions which can not
otherwise secure credit, and where such advances will protect the credit
structure and stimulate employment. Its functions would not overlap those
of the National Credit Corporation.

FEDERAL RESERVE ELIGIBILITY

On October 6th I issued a statement that I should recommend to the Congress
an extension during emergencies of the eligibility provisions in the
Federal reserve act. This statement was approved by a representative
gathering of the Members of both Houses of the Congress, including members
of the appropriate committees. It was approved by the officials of the
Treasury Department, and I understand such an extension has been approved
by a majority of the governors of the Federal reserve banks. Nothing should
be done which would lower the safeguards of the system.

The establishment of the mortgage-discount banks herein referred to will
also contribute to further reserve strength in the banks without
inflation.

BANKING LAWS

Our people have a right to a banking system in which their deposits shall
be safeguarded and the flow of credit less subject to storms. The need of a
sounder system is plainly shown by the extent of bank failures. I recommend
the prompt improvement of the banking laws. Changed financial conditions
and commercial practices must be met. The Congress should investigate the
need for separation between different kinds of banking; an enlargement of
branch banking under proper restrictions; and the methods by which enlarged
membership in the Federal reserve system may be brought about.

POSTAL SAVINGS BANKS

The Postal Savings deposits have increased from about $200,000,000 to about
$550,000,000 during the past year. This experience has raised important
practical questions in relation to deposits and investments which should
receive the attention of the Congress.

RAILWAYS

The railways present one of our immediate and pressing problems. They are
and must remain the backbone of our transportation system. Their prosperity
is interrelated with the prosperity of all industries. Their fundamental
service in transportation, the volume of their employment, their buying
power for supplies from other industries, the enormous investment in their
securities, particularly their bonds, by insurance companies, savings
banks, benevolent and other trusts, all reflect their partnership in the
whole economic fabric. Through these institutions the railway bonds are in
a large sense the investment of every family. The well-maintained and
successful operation and the stability of railway finances are of primary
importance to economic recovery. They should have more effective
opportunity to reduce operating costs by proper consolidation. As their
rates must be regulated in public interest, so also approximate regulation
should be applied to competing services by some authority. The methods of
their regulation should be revised. The Interstate Commerce Commission has
made important and far-reaching recommendations upon the whole subject,
which I commend to the early consideration of the Congress.

ANTITRUST LAWS

In my message of a year ago I commented on the necessity of congressional
inquiry into the economic action of the antitrust laws. There is wide
conviction that some change should be made especially in the procedure
under these laws. I do not favor their repeal. Such action would open wide
the door to price fixing, monopoly, and destruction of healthy competition.
Particular attention should be given to the industries rounded upon natural
resources, especially where destructive competition produces great wastes
of these resources and brings great hardships upon operators, employees,
and the public. In recent years there has been continued demoralization in
the bituminous coal, oil, and lumber industries. I again commend the matter
to the consideration of the Congress.

UNEMPLOYMENT

As an aid to unemployment the Federal Government is engaged in the greatest
program of public-building, harbor, flood-control, highway, waterway,
aviation, merchant and naval ship construction in all history. Our
expenditures on these works during this calendar year will reach about
$780,000,000 compared with $260,000,000 in 1928. Through this increased
construction, through the maintenance of a full complement of Federal
employees, and through services to veterans it is estimated that the
Federal taxpayer is now directly contributing to the livelihood of
10,000,000 of our citizens.

We must avoid burdens upon the Government which will create more
unemployment in private industry than can be gained by further expansion of
employment by the Federal Government. We can now stimulate employment and
agriculture more effectually and speedily through the voluntary measures in
progress, through the thawing out of credit, through the building up of
stability abroad, through the home loan discount banks, through an
emergency finance corporation and the rehabilitation of the railways and
other such directions.

I am opposed to any direct or indirect Government dole. The breakdown and
increased unemployment in Europe is due in part to such practices. Our
people are providing against distress from unemployment in true American
fashion by a magnificent response to public appeal and by action of the
local governments.

GENERAL LEGISLATION

There are many other subjects requiring legislative action at this session
of the Congress. I may list the following among them:

VETERANS' SERVICES

The law enacted last March authorizing loans of 50 per cent upon
adjusted-service certificates has, together with the loans made under
previous laws, resulted in payments of about $1,260,000,000. Appropriations
have been exhausted. The Administrator of Veterans' Affairs advises that a
further appropriation of $200,000,000 is required at once to meet the
obligations made necessary by existing legislation.

There will be demands for further veterans' legislation; there are
inequalities in our system of veterans' relief; it is our national duty to
meet our obligations to those who have served the Nation. But our present
expenditure upon these services now exceeds $1,000,000,000 per annum. I am
opposed to any extension of these expenditures until the country has
recovered from the present situation.

ELECTRICAL-POWER REGULATION

I have recommended in previous messages the effective regulation of
interstate electrical power as the essential function of the reorganized
Federal Power Commission. I renew the recommendation. It is urgently needed
in public protection.

MUSCLE SHOALS

At my suggestion, the Governors and Legislatures of Alabama and Tennessee
selected three members each for service on a committee to which I appointed
a representative of the farm organizations and two representatives of the
War Department for the purpose of recommending a plan for the disposal of
these properties which would be in the interest of the people of those
States and the agricultural industry throughout the country. I shall
transmit the recommendations to the Congress.

REORGANIZATION OF FEDERAL DEPARTMENTS

I have referred in previous messages to the profound need of further
reorganization and consolidation of Federal administrative functions to
eliminate overlap and waste, and to enable coordination and definition of
Government policies now wholly impossible in scattered and conflicting
agencies which deal with parts of the same major function. I shall lay
before the Congress further recommendations upon this subject, particularly
in relation to the Department of the Interior. There are two directions of
such reorganization, however, which have an important bearing upon the
emergency problems with which we are confronted.

SHIPPING BOARD

At present the Shipping Board exercises large administrative functions
independent of the Executive. These administrative functions should be
transferred to the Department of Commerce, in keeping with that single
responsibility which has been the basis of our governmental structure since
its foundation. There should be created in that department a position of
Assistant Secretary for Merchant Marine, under whom this work and the
several bureaus having to do with merchant marine may be grouped.

The Shipping Board should be made a regulatory body acting also in advisory
capacity on loans and policies, in keeping with its original conception.
Its regulatory powers should be amended to include regulation of coastwise
shipping so as to assure stability and better service. It is also worthy of
consideration that the regulation of rates and services upon the inland
waterways should be assigned to such a reorganized board.

REORGANIZATION OF PUBLIC WORKS ADMINISTRATION

I recommend that all building and construction activities of the Government
now carried on by many departments be consolidated into an independent
establishment under the President to be known as the "Public Works
Administration" directed by a Public Works Administrator. This agency
should undertake all construction work in service to the different
departments of the Government (except naval and military work). The
services of the Corps of Army Engineers should be delegated in rotation for
military duty to this administration in continuation of their supervision
of river and harbor work. Great economies, sounder policies, more effective
coordination to employment, and expedition in all construction work would
result from this consolidation.

LAW ENFORCEMENT

I shall present some recommendations in a special message looking to the
strengthening of criminal-law enforcement and improvement in judicial
procedure connected therewith.

INLAND WATERWAY AND HARBOR IMPROVEMENT

These improvements are now proceeding upon an unprecedented scale. Some
indication of the volume of work in progress is conveyed by the fact that
during the current year over 380,000,000 cubic yards of material have been
moved--an amount equal to the entire removal in the construction of the
Panama Canal. The Mississippi waterway system, connecting Chicago, Kansas
City, Pittsburgh, and New Orleans, will be in full operation during 1933.
Substantial progress is being made upon the projects of the upper Missouri,
upper Mississippi, etc.

Negotiations are now in progress with Canada for the construction of the
St. Lawrence Waterway.

THE TARIFF

Wages and standards of living abroad have been materially lowered during
the past year. The temporary abandonment of the gold standard by certain
countries has also reduced their production costs compared to ours.
Fortunately any increases in the tariff which may be necessary to protect
agriculture and industry from these lowered foreign costs, or decreases in
items which may prove to be excessive, may be undertaken at any time by the
Tariff Commission under authority which it possesses by virtue of the
tariff act of 1930. The commission during the past year has reviewed the
rates upon over 254 items subject to tariff. As a result of vigorous and
industrious action, it is up to date in the consideration of pending
references and is prepared to give prompt attention to any further
applications. This procedure presents an orderly method for correcting
inequalities. I am opposed to any general congressional revision of the
tariff. Such action would disturb industry, business, and agriculture. It
would prolong the depression.

IMMIGRATION AND DEPORTATION

I recommend that immigration restriction now in force under administrative
action be placed upon a more definite basis by law. The deportation laws
should be strengthened. Aliens lawfully in the country should be protected
by the issuance of a certificate of residence.

PUBLIC HEALTH

I again call attention to my previous recommendations upon this subject,
particularly in its relation to children. The moral results are of the
utmost importance.

CONCLUSION

It is inevitable that in these times much of the legislation proposed to
the Congress and many of the recommendations of the Executive must be
designed to meet emergencies. In reaching solutions we must not jeopardize
those principles which we have found to be the basis of the growth of the
Nation. The Federal Government must not encroach upon nor permit local
communities to abandon that precious possession of local initiative and
responsibility. Again, just as the largest measure of responsibility in the
government of the Nation rests upon local self-government, so does the
largest measure of social responsibility in our country rest upon the
individual. If the individual surrenders his own initiative and
responsibilities, he is surrendering his own freedom and his own liberty.
It is the duty of the National Government to insist that both the local
governments and the individual shall assume and bear these responsibilities
as a fundamental of preserving the very basis of our freedom.

Many vital changes and movements of vast proportions are taking place in
the economic world. The effect of these changes upon the future can not be
seen clearly as yet. Of this, however, we are sure: Our system, based upon
the ideals of individual initiative and of equality of opportunity, is not
an artificial thing. Rather it is the outgrowth of the experience of
America, and expresses the faith and spirit of our people. It has carried
us in a century and a half to leadership of the economic world. If our
economic system does not match our highest expectations at all times, it
does not require revolutionary action to bring it into accord with any
necessity that experience may prove. It has successfully adjusted itself to
changing conditions in the past. It will do so again. The mobility of our
institutions, the richness of our resources, and the abilities of our
people enable us to meet them unafraid. It is a distressful time for many
of our people, but they have shown qualities as high in fortitude, courage,
and resourcefulness as ever in our history. With that spirit, I have faith
that out of it will come a sounder life, a truer standard of values, a
greater recognition of the results of honest effort, and a healthier
atmosphere in which to rear our children. Ours must be a country of such
stability and security as can not fail to carry forward and enlarge among
all the people that abundant life of material and spiritual opportunity
which it has represented among all nations since its beginning.

The White House,

December 8, 1931