Mr. Vice President, Mr. Speaker, Members of the Senate and the Congress:

In Reporting on the state of the nation, I have felt it necessary on
previous occasions to advise the Congress of disturbance abroad and of the
need of putting our own house in order in the face of storm signals from
across the seas. As this Seventy-sixth Congress opens there is need for
further warning.

A war which threatened to envelop the world in flames has been averted; but
it has become increasingly clear that world peace is not assured.

All about us rage undeclared wars--military and economic. All about us grow
more deadly armaments--military and economic. All about us are threats of
new aggression military and economic.

Storms from abroad directly challenge three institutions indispensable to
Americans, now as always. The first is religion. It is the source of the
other two--democracy and international good faith.

Religion, by teaching man his relationship to God, gives the individual a
sense of his own dignity and teaches him to respect himself by respecting
his neighbors.

Democracy, the practice of self-government, is a covenant among free men to
respect the rights and liberties of their fellows.

International good faith, a sister of democracy, springs from the will of
civilized nations of men to respect the rights and liberties of other
nations of men.

In a modern civilization, all three--religion, democracy and international
good faith--complement and support each other.

Where freedom of religion has been attacked, the attack has come from
sources opposed to democracy. Where democracy has been overthrown, the
spirit of free worship has disappeared. And where religion and democracy
have vanished, good faith and reason in international affairs have given
way to strident ambition and brute force.

An ordering of society which relegates religion, democracy and good faith
among nations to the background can find no place within it for the ideals
of the Prince of Peace. The United States rejects such an ordering, and
retains its ancient faith.

There comes a time in the affairs of men when they must prepare to defend,
not their homes alone, but the tenets of faith and humanity on which their
churches, their governments and their very civilization are founded. The
defense of religion, of democracy and of good faith among nations is all
the same fight. To save one we must now make up our minds to save all.

We know what might happen to us of the United States if the new
philosophies of force were to encompass the other continents and invade our
own. We, no more than other nations, can afford to be surrounded by the
enemies of our faith and our humanity. Fortunate it is, therefore, that in
this Western Hemisphere we have, under a common ideal of democratic
government, a rich diversity of resources and of peoples functioning
together in mutual respect and peace.

That Hemisphere, that peace, and that ideal we propose to do our share in
protecting against storms from any quarter. Our people and our resources
are pledged to secure that protection. From that determination no American
flinches.

This by no means implies that the American Republics disassociate
themselves from the nations of other continents. It does not mean the
Americas against the rest of the world. We as one of the Republics
reiterate our willingness to help the cause of world peace. We stand on our
historic offer to take counsel with all other nations of the world to the
end that aggression among them be terminated, that the race of armaments
cease and that commerce be renewed.

But the world has grown so small and weapons of attack so swift that no
nation can be safe in its will to peace so long as any other powerful
nation refuses to settle its grievances at the council table.

For if any government bristling with implements of war insists on policies
of force, weapons of defense give the only safety.

In our foreign relations we have learned from the past what not to do. From
new wars we have learned what we must do.

We have learned that effective timing of defense, and the distant points
from which attacks may be launched are completely different from what they
were twenty years ago.

We have learned that survival cannot be guaranteed by arming after the
attack begins--for there is new range and speed to offense.

We have learned that long before any overt military act, aggression begins
with preliminaries of propaganda, subsidized penetration, the loosening of
ties of good will, the stirring of prejudice and the incitement to
disunion.

We have learned that God-fearing democracies of the world which observe the
sanctity of treaties and good faith in their dealings with other nations
cannot safely be indifferent to international lawlessness anywhere. They
cannot forever let pass, without effective protest, acts of aggression
against sister nations--acts which automatically undermine all of us.

Obviously they must proceed along practical, peaceful lines. But the mere
fact that we rightly decline to intervene with arms to prevent acts of
aggression does not mean that we must act as if there were no aggression at
all. Words may be futile, but war is not the only means of commanding a
decent respect for the opinions of mankind. There are many methods short of
war, but stronger and more effective than mere words, of bringing home to
aggressor governments the aggregate sentiments of our own people.

At the very least, we can and should avoid any action, or any lack of
action, which will encourage, assist or build up an aggressor. We have
learned that when we deliberately try to legislate neutrality, our
neutrality laws may operate unevenly and unfairly--may actually give aid to
an aggressor and deny it to the victim. The instinct of self-preservation
should warn us that we ought not to let that happen any more.

And we have learned something else--the old, old lesson that probability of
attack is mightily decreased by the assurance of an ever ready defense.
Since 1931, nearly eight years ago, world events of thunderous import have
moved with lightning speed. During these eight years many of our people
clung to the hope that the innate decency of mankind would protect the
unprepared who showed their innate trust in mankind. Today we are all
wiser--and sadder.

Under modern conditions what we mean by "adequate defense"--a policy
subscribed to by all of us--must be divided into three elements. First, we
must have armed forces and defenses strong enough to ward off sudden attack
against strategic positions and key facilities essential to ensure
sustained resistance and ultimate victory. Secondly, we must have the
organization and location of those key facilities so that they may be
immediately utilized and rapidly expanded to meet all needs without danger
of serious interruption by enemy attack.

In the course of a few days I shall send you a special message making
recommendations for those two essentials of defense against danger which we
cannot safely assume will not come.

If these first two essentials are reasonably provided for, we must be able
confidently to invoke the third element, the underlying strength of
citizenship--the self-confidence, the ability, the imagination and the
devotion that give the staying power to see things through.

A strong and united nation may be destroyed if it is unprepared against
sudden attack. But even a nation well armed and well organized from a
strictly military standpoint may, after a period of time, meet defeat if it
is unnerved by self-distrust, endangered by class prejudice, by dissension
between capital and labor, by false economy and by other unsolved social
problems at home.

In meeting the troubles of the world we must meet them as one people--with a
unity born of the fact that for generations those who have come to our
shores, representing many kindreds and tongues, have been welded by common
opportunity into a united patriotism. If another form of government can
present a united front in its attack on a democracy, the attack must and
will be met by a united democracy. Such a democracy can and must exist in
the United States.

A dictatorship may command the full strength of a regimented nation. But
the united strength of a democratic nation can be mustered only when its
people, educated by modern standards to know what is going on and where
they are going, have conviction that they are receiving as large a share of
opportunity for development, as large a share of material success and of
human dignity, as they have a right to receive.

Our nation's program of social and economic reform is therefore a part of
defense, as basic as armaments themselves.

Against the background of events in Europe, in Africa and in Asia during
these recent years, the pattern of what we have accomplished since 1933
appears in even clearer focus.

For the first time we have moved upon deep-seated problems affecting our
national strength and have forged national instruments adequate to meet
them.

Consider what the seemingly piecemeal struggles of these six years add up
to in terms of realistic national preparedness.

We are conserving and developing natural resources--land, water power,
forests.

We are trying to provide necessary food, shelter and medical care for the
health of our population.

We are putting agriculture--our system of food and fibre supply--on a
sounder basis.

We are strengthening the weakest spot in our system of industrial supply--
its long smouldering labor difficulties.

We have cleaned up our credit system so that depositor and investor alike
may more readily and willingly make their capital available for peace or
war.

We are giving to our youth new opportunities for work and education.

We have sustained the morale of all the population by the dignified
recognition of our obligations to the aged, the helpless and the needy.

Above all, we have made the American people conscious of their
interrelationship and their interdependence. They sense a common destiny
and a common need of each other. Differences of occupation, geography, race
and religion no longer obscure the nation's fundamental unity in thought
and in action.

We have our difficulties, true--but we are a wiser and a tougher nation than
we were in 1929, or in 1932.

Never have there been six years of such far-flung internal preparedness in
our history. And this has been done without any dictator's power to
command, without conscription of labor or confiscation of capital, without
concentration camps and without a scratch on freedom of speech, freedom of
the press or the rest of the Bill of Rights.

We see things now that we could not see along the way. The tools of
government which we had in 1933 are outmoded. We have had to forge new
tools for a new role of government operating in a democracy--a role of new
responsibility for new needs and increased responsibility for old needs,
long neglected.

Some of these tools had to be roughly shaped and still need some machining
down. Many of those who fought bitterly against the forging of these new
tools welcome their use today. The American people, as a whole, have
accepted them. The Nation looks to the Congress to improve the new
machinery which we have permanently installed, provided that in the process
the social usefulness of the machinery is not destroyed or impaired.

All of us agree that we should simplify and improve laws if experience and
operation clearly demonstrate the need. For instance, all of us want better
provision for our older people under our social security legislation. For
the medically needy we must provide better care.

Most of us agree that for the sake of employer and employee alike we must
find ways to end factional labor strife and employer-employee disputes.

Most of us recognize that none of these tools can be put to maximum
effectiveness unless the executive processes of government are
revamped--reorganized, if you will--into more effective combination. And
even after such reorganization it will take time to develop administrative
personnel and experience in order to use our new tools with a minimum of
mistakes. The Congress, of course, needs no further information on this.

With this exception of legislation to provide greater government
efficiency, and with the exception of legislation to ameliorate our
railroad and other transportation problems, the past three Congresses have
met in part or in whole the pressing needs of the new order of things.

We have now passed the period of internal conflict in the launching of our
program of social reform. Our full energies may now be released to
invigorate the processes of recovery in order to preserve our reforms, and
to give every man and woman who wants to work a real job at a living wage.

But time is of paramount importance. The deadline of danger from within and
from without is not within our control. The hour-glass may be in the hands
of other nations. Our own hour-glass tells us that we are off on a race to
make democracy work, so that we may be efficient in peace and therefore
secure in national defense.

This time element forces us to still greater efforts to attain the full
employment of our labor and our capital.

The first duty of our statesmanship is to bring capital and man-power
together.

Dictatorships do this by main force. By using main force they apparently
succeed at it--for the moment. However we abhor their methods, we are
compelled to admit that they have obtained substantial utilization of all
their material and human resources. Like it or not, they have solved, for a
time at least, the problem of idle men and idle capital. Can we compete
with them by boldly seeking methods of putting idle men and idle capital
together and, at the same time, remain within our American way of life,
within the Bill of Rights, and within the bounds of what is, from our point
of view, civilization itself?

We suffer from a great unemployment of capital. Many people have the idea
that as a nation we are overburdened with debt and are spending more than
we can afford. That is not so. Despite our Federal Government expenditures
the entire debt of our national economic system, public and private
together, is no larger today than it was in 1929, and the interest thereon
is far less than it was in 1929.

The object is to put capital--private as well as public--to work.

We want to get enough capital and labor at work to give us a total turnover
of business, a total national income, of at least eighty billion dollars a
year. At that figure we shall have a substantial reduction of unemployment;
and the Federal Revenues will be sufficient to balance the current level of
cash expenditures on the basis of the existing tax structure. That figure
can be attained, working within the framework of our traditional profit
system.

The factors in attaining and maintaining that amount of national income are
many and complicated.

They include more widespread understanding among business men of many
changes which world conditions and technological improvements have brought
to our economy over the last twenty years--changes in the interrelationship
of price and volume and employment, for example--changes of the kind in
which business men are now educating themselves through excellent
opportunities like the so-called "monopoly investigation."

They include a perfecting of our farm program to protect farmers' income
and consumers' purchasing power from alternate risks of crop gluts and crop
shortages.

They include wholehearted acceptance of new standards of honesty in our
financial markets.

They include reconcilement of enormous, antagonistic interests--some of them
long in litigation--in the railroad and general transportation field.

They include the working out of new techniques--private, state and
federal--to protect the public interest in and to develop wider markets for
electric power.

They include a revamping of the tax relationships between federal, state
and local units of government, and consideration of relatively small tax
increases to adjust inequalities without interfering with the aggregate
income of the American people.

They include the perfecting of labor organization and a universal
ungrudging attitude by employers toward the labor movement, until there is
a minimum of interruption of production and employment because of disputes,
and acceptance by labor of the truth that the welfare of labor itself
depends on increased balanced out-put of goods.

To be immediately practical, while proceeding with a steady evolution in
the solving of these and like problems, we must wisely use
instrumentalities, like Federal investment, which are immediately available
to us.

Here, as elsewhere, time is the deciding factor in our choice of remedies.

Therefore, it does not seem logical to me, at the moment we seek to
increase production and consumption, for the Federal Government to consider
a drastic curtailment of its own investments.

The whole subject of government investing and government income is one
which may be approached in two different ways.

The first calls for the elimination of enough activities of government to
bring the expenses of government immediately into balance with income of
government. This school of thought maintains that because our national
income this year is only sixty billion dollars, ours is only a sixty
billion dollar country; that government must treat it as such; and that
without the help of government, it may some day, somehow, happen to become
an eighty billion dollar country.

If the Congress decides to accept this point of view, it will logically
have to reduce the present functions or activities of government by
one-third. Not only will the Congress have to accept the responsibility for
such reduction; but the Congress will have to determine which activities
are to be reduced.

Certain expenditures we cannot possibly reduce at this session, such as the
interest on the public debt. A few million dollars saved here or there in
the normal or in curtailed work of the old departments and commissions will
make no great saving in the Federal budget. Therefore, the Congress would
have to reduce drastically some of certain large items, very large items,
such as aids to agriculture and soil conservation, veterans' pensions,
flood control, highways, waterways and other public works, grants for
social and health security, Civilian Conservation Corps activities, relief
for the unemployed, or national defense itself.

The Congress alone has the power to do all this, as it is the appropriating
branch of the government.

The other approach to the question of government spending takes the
position that this Nation ought not to be and need not be only a sixty
billion dollar nation; that at this moment it has the men and the resources
sufficient to make it at least an eighty billion dollar nation. This school
of thought does not believe that it can become an eighty billion dollar
nation in the near future if government cuts its operations by one-third.
It is convinced that if we were to try it, we would invite disaster--and
that we would not long remain even a sixty billion dollar nation. There are
many complicated factors with which we have to deal, but we have learned
that it is unsafe to make abrupt reductions at any time in our net
expenditure program.

By our common sense action of resuming government activities last spring,
we have reversed a recession and started the new rising tide of prosperity
and national income which we are now just beginning to enjoy.

If government activities are fully maintained, there is a good prospect of
our becoming an eighty billion dollar country in a very short time. With
such a national income, present tax laws will yield enough each year to
balance each year's expenses.

It is my conviction that down in their hearts the American public--industry,
agriculture, finance--want this Congress to do whatever needs to be done to
raise our national income to eighty billion dollars a year.

Investing soundly must preclude spending wastefully. To guard against
opportunist appropriations, I have on several occasions addressed the
Congress on the importance of permanent long-range planning. I hope,
therefore, that following my recommendation of last year, a permanent
agency will be set up and authorized to report on the urgency and
desirability of the various types of government investment.

Investment for prosperity can be made in a democracy.

I hear some people say, "This is all so complicated. There are certain
advantages in a dictatorship. It gets rid of labor trouble, of
unemployment, of wasted motion and of having to do your own thinking."

My answer is, "Yes, but it also gets rid of some other things which we
Americans intend very definitely to keep--and we still intend to do our own
thinking."

It will cost us taxes and the voluntary risk of capital to attain some of
the practical advantages which other forms of government have acquired.

Dictatorship, however, involves costs which the American people will never
pay: The cost of our spiritual values. The cost of the blessed right of
being able to say what we please. The cost of freedom of religion. The cost
of seeing our capital confiscated. The cost of being cast into a
concentration camp. The cost of being afraid to walk down the street with
the wrong neighbor. The cost of having our children brought up, not as free
and dignified human beings, but as pawns molded and enslaved by a machine.

If the avoidance of these costs means taxes on my income; if avoiding these
costs means taxes on my estate at death, I would bear those taxes willingly
as the price of my breathing and my children breathing the free air of a
free country, as the price of a living and not a dead world.

Events abroad have made it increasingly clear to the American people that
dangers within are less to be feared than dangers from without. If,
therefore, a solution of this problem of idle men and idle capital is the
price of preserving our liberty, no formless selfish fears can stand in the
way.

Once I prophesied that this generation of Americans had a rendezvous with
destiny. That prophecy comes true. To us much is given; more is expected.

This generation will "nobly save or meanly lose the last best hope of
earth. . . . The way is plain, peaceful, generous, just--a way which if
followed the world will forever applaud and God must forever bless."