GENTLEMEN OF THE CONGRESS:

The year that has elapsed since I last stood before you to fulfil my
constitutional duty to give to the Congress from time to time information
on the state of the Union has been so crowded with great events, great
processes, and great results that I cannot hope to give you an adequate
picture of its transactions or of the far-reaching changes which have been
wrought of our nation and of the world. You have yourselves witnessed these
things, as I have. It is too soon to assess them; and we who stand in the
midst of them and are part of them are less qualified than men of another
generation will be to say what they mean, or even what they have been. But
some great outstanding facts are unmistakable and constitute, in a sense,
part of the public business with which it is our duty to deal. To state
them is to set the stage for the legislative and executive action which
must grow out of them and which we have yet to shape and determine.

A year ago we had sent 145,918 men overseas. Since then we have sent
1,950,513, an average of 162,542 each month, the number in fact rising, in
May last, to 245,951, in June to 278,760, in July to 307,182, and
continuing to reach similar figures in August and September, in August
289,570 and in September 257,438. No such movement of troops ever took
place before, across three thousand miles of sea, followed by adequate
equipment and supplies, and carried safely through extraordinary dangers of
attack,-dangers which were alike strange and infinitely difficult to guard
against. In all this movement only seven hundred and fifty-eight men were
lost by enemy attack, six hundred and thirty of whom were upon a single
English transport which was sunk near the Orkney Islands.

I need not tell you what lay back of this great movement of men and
material. It is not invidious to say that back of it lay a supporting
organization of the industries of the country and of all its productive
activities more complete, more thorough in method and effective in result,
more spirited and unanimous in purpose and effort than any other great
belligerent had been able to effect. We profited greatly by the experience
of the nations which had already been engaged for nearly three years in the
exigent and exacting business, their every resource and every executive
proficiency taxed to the utmost. We were their pupils. But we learned
quickly and acted with a promptness and a readiness of cooperation that
justify our great pride that we were able to serve the world with
unparalleled energy and quick accomplishment.

But it is not the physical scale and executive efficiency of preparation,
supply, equipment and despatch that I would dwell upon, but the mettle and
quality of the officers and men we sent over and of the sailors who kept
the seas, and the spirit of the nation that stood behind them. No soldiers
or sailors ever proved themselves more quickly ready for the test of battle
or acquitted themselves with more splendid courage and achievement when put
to the test. Those of us who played some part in directing the great
processes by which the war was pushed irresistibly forward to the final
triumph may now forget all that and delight our thoughts with the story of
what our men did. Their officers understood the grim and exacting task they
had undertaken and performed it with an audacity, efficiency, and
unhesitating courage that touch the story of convoy and battle with
imperishable distinction at every turn, whether the enterprise were great
or small, from their great chiefs, Pershing and Sims, down to the youngest
lieutenant; and their men were worthy of them,-such men as hardly need to
be commanded, and go to their terrible adventure blithely and with the
quick intelligence of those who know just what it is they would accomplish.
I am proud to be the fellow-countryman of men of such stuff and valor. Those
of us who stayed at home did our duty; the war could not have been won or
the gallant men who fought it given their opportunity to win it otherwise;
but for many a long day we shall think ourselves "accurs'd we were not
there, and hold our manhoods cheap while any speaks that fought" with these
at St. Mihiel or Thierry. The memory of those days of triumphant battle
will go with these fortunate men to their graves; and each will have his
favorite memory. "Old men forget; yet all shall be forgot, but hell
remember with advantages what feats he did that day!"

What we all thank God for with deepest gratitude is that our men went in
force into the line of battle just at the critical moment when the whole
fate of the world seemed to hang in the balance and threw their fresh
strength into the ranks of freedom in time to turn the whole tide and sweep
of the fateful struggle,-turn it once for all, so that thenceforth it was
back, back, back for their enemies, always back, never again forward! After
that it was only a scant four months before the commanders of the Central
Empires knew themselves beaten; and now their very empires are in
liquidation!

And throughout it all how fine the spirit of the nation was: what unity of
purpose, what untiring zeal! What elevation of purpose ran through all its
splendid display of strength, its untiring accomplishment! I have said that
those of us who stayed at home to do the work of organization and supply
will always wish that we had been with the men whom we sustained by our
labor; but we can never be ashamed. It has been an inspiring thing to be
here in the midst of fine men who had turned aside from every private
interest of their own and devoted the whole of their trained capacity to
the tasks that supplied the sinews of the whole great undertaking! The
patriotism, the unselfishness, the thoroughgoing devotion and distinguished
capacity that marked their toilsome labors, day after day, month after
month, have made them fit mates and comrades of the men in the trenches and
on the sea. And not the men here in Washington only. They have but directed
the vast achievement. Throughout innumerable factories, upon innumerable
farms, in the depths of coal mines and iron mines and copper mines,
wherever the stuffs of industry were to be obtained and prepared, in the
shipyards, on the railways, at the docks, on the sea, in every labor that
was needed to sustain the battle lines, men have vied with each other to do
their part and do it well. They can look any man-at-arms in the face, and
say, We also strove to win and gave the best that was in us to make our
fleets and armies sure of their triumph!

And what shall we say of the women,-of their instant intelligence,
quickening every task that they touched; their capacity for organization
and cooperation, which gave their action discipline and enhanced the
effectiveness of everything they attempted; their aptitude at tasks to
which they had never before set their hands; their utter self-sacrifice
alike in what they did and in what they gave? Their contribution to the
great result is beyond appraisal. They have added a new lustre to the
annals of American womanhood.

The least tribute we can pay them is to make them the equals of men in
political rights as they have proved themselves their equals in every field
of practical work they have entered, whether for themselves or for their
country. These great days of completed achievement would be sadly marred
were we to omit that act of justice. Besides the immense practical services
they have rendered the women of the country have been the moving spirits in
the systematic economies by which our people have voluntarily assisted to
supply the suffering peoples of the world and the armies upon every front
with food and everything else that we had that might serve the common
cause. The details of such a story can never be fully written, but we carry
them at our hearts and thank God that we can say that we are the kinsmen of
such.

And now we are sure of the great triumph for which every sacrifice was
made. It has come, come in its completeness, and with the pride and
inspiration of these days of achievement quick within us, we turn to the
tasks of peace again,-a peace secure against the violence of irresponsible
monarchs and ambitious military coteries and made ready for a new order,
for new foundations of justice and fair dealing.

We are about to give order and organization to this peace not only for
ourselves but for the other peoples of the world as well, so far as they
will suffer us to serve them. It is international justice that we seek, not
domestic safety merely. Our thoughts have dwelt of late upon Europe, upon
Asia, upon the near and the far East, very little upon the acts of peace
and accommodation that wait to be performed at our own doors. While we are
adjusting our relations with the rest of the world is it not of capital
importance that we should clear away all grounds of misunderstanding with
our immediate neighbors and give proof of the friendship we really feel? I
hope that the members of the Senate will permit me to speak once more of
the unratified treaty of friendship and adjustment with the Republic of
Colombia. I very earnestly urge upon them an early and favorable action
upon that vital matter. I believe that they will feel, with me, that the
stage of affairs is now set for such action as will be not only just but
generous and in the spirit of the new age upon which we have so happily
entered.

So far as our domestic affairs are concerned the problem of our return to
peace is a problem of economic and industrial readjustment. That problem is
less serious for us than it may turn out too he for the nations which have
suffered the disarrangements and the losses of war longer than we. Our
people, moreover, do not wait to be coached and led. They know their own
business, are quick and resourceful at every readjustment, definite in
purpose, and self-reliant in action. Any leading strings we might seek to
put them in would speedily become hopelessly tangled because they would pay
no attention to them and go their own way. All that we can do as their
legislative and executive servants is to mediate the process of change
here, there, and elsewhere as we may. I have heard much counsel as to the
plans that should be formed and personally conducted to a happy
consummation, but from no quarter have I seen any general scheme of
"reconstruction" emerge which I thought it likely we could force our
spirited business men and self-reliant laborers to accept with due pliancy
and obedience.

While the war lasted we set up many agencies by which to direct the
industries of the country in the services it was necessary for them to
render, by which to make sure of an abundant supply of the materials
needed, by which to check undertakings that could for the time be dispensed
with and stimulate those that were most serviceable in war, by which to
gain for the purchasing departments of the Government a certain control
over the prices of essential articles and materials, by which to restrain
trade with alien enemies, make the most of the available shipping, and
systematize financial transactions, both public and private, so that there
would be no unnecessary conflict or confusion,-by which, in short, to put
every material energy of the country in harness to draw the common load
and make of us one team in the accomplishment of a great task. But the
moment we knew the armistice to have been signed we took the harness off.
Raw materials upon which the Government had kept its hand for fear there
should not be enough for the industries that supplied the armies have been
released and put into the general market again. Great industrial plants
whose whole output and machinery had been taken over for the uses of the
Government have been set free to return to the uses to which they were put
before the war. It has not been possible to remove so readily or so quickly
the control of foodstuffs and of shipping, because the world has still to
be fed from our granaries and the ships are still needed to send supplies
to our men overseas and to bring the men back as fast as the disturbed
conditions on the other side of the water permit; but even there restraints
are being relaxed as much as possible and more and more as the weeks go by.

Never before have there been agencies in existence in this country which
knew so much of the field of supply, of labor, and of industry as the War
Industries Board, the War Trade Board, the Labor Department, the Food
Administration, and the Fuel Administration have known since their labors
became thoroughly systematized; and they have not been isolated agencies;
they have been directed by men who represented the permanent Departments of
the Government and so have been the centres of unified and cooperative
action. It has been the policy of the Executive, therefore, since the
armistice was assured (which is in effect a complete submission of the
enemy) to put the knowledge of these bodies at the disposal of the business
men of the country and to offer their intelligent mediation at every point
and in every matter where it was desired. It is surprising how fast the
process of return to a peace footing has moved in the three weeks since the
fighting stopped. It promises to outrun any inquiry that may be instituted
and any aid that may be offered. It will not be easy to direct it any
better than it will direct itself. The American business man is of quick
initiative.

The ordinary and normal processes of private initiative will not, however,
provide immediate employment for all of the men of our returning armies.
Those who are of trained capacity, those who are skilled workmen, those who
have acquired familiarity with established businesses, those who are ready
and willing to go to the farms, all those whose aptitudes are known or will
be sought out by employers will find no difficulty, it is safe to say, in
finding place and employment. But there will be others who will be at a
loss where to gain a livelihood unless pains are taken to guide them and
put them in the way of work. There will be a large floating residuum of
labor which should not be left wholly to shift for itself. It seems to me
important, therefore, that the development of public works of every sort
should be promptly resumed, in order that opportunities should be created
for unskilled labor in particular, and that plans should be made for such
developments of our unused lands and our natural resources as we have
hitherto lacked stimulation to undertake.

I particularly direct your attention to the very practical plans which the
Secretary of the Interior has developed in his annual report and before
your Committees for the reclamation of arid, swamp, and cutover lands which
might, if the States were willing and able to cooperate, redeem some three
hundred million acres of land for cultivation. There are said to be fifteen
or twenty million acres of land in the West, at present arid, for whose
reclamation water is available, if properly conserved. There are about two
hundred and thirty million acres from which the forests have been cut but
which have never yet been cleared for the plow and which lie waste and
desolate. These lie scattered all over the Union. And there are nearly
eighty million acres of land that lie under swamps or subject to periodical
overflow or too wet for anything but grazing, which it is perfectly
feasible to drain and protect and redeem. The Congress can at once direct
thousands of the returning soldiers to the reclamation of the arid lands
which it has already undertaken, if it will but enlarge the plans and
appropriations which it has entrusted to the Department of the Interior. It
is possible in dealing with our unused land to effect a great rural and
agricultural development which will afford the best sort of opportunity to
men who want to help themselves and the Secretary of the Interior has
thought the possible methods out in a way which is worthy of your most
friendly attention.

I have spoken of the control which must yet for a while, perhaps for a long
long while, be exercised over shipping because of the priority of service
to which our forces overseas are entitled and which should also be accorded
the shipments which are to save recently liberated peoples from starvation
and many devastated regions from permanent ruin. May I not say a special
word about the needs of Belgium and northern France? No sums of money paid
by way of indemnity will serve of themselves to save them from hopeless
disadvantage for years to come. Something more must be done than merely
find the money. If they had money and raw materials in abundance to-morrow
they could not resume their place in the industry of the world
to-morrow,-the very important place they held before the flame of war swept
across them. Many of their factories are razed to the ground. Much of their
machinery is destroyed or has been taken away. Their people are scattered
and many of their best workmen are dead. Their markets will be taken by
others, if they are not in some special way assisted to rebuild their
factories and replace their lost instruments of manufacture. They should
not be left to the vicissitudes of the sharp competition for materials and
for industrial facilities which is now to set in. I hope, therefore, that
the Congress will not be unwilling, if it should become necessary, to grant
to some such agency as the War Trade Board the right to establish
priorities of export and supply for the benefit of these people whom we
have been so happy to assist in saving from the German terror and whom we
must not now thoughtlessly leave to shift for themselves in a pitiless
competitive market.

For the steadying, and facilitation of our own domestic business
readjustments nothing is more important than the immediate determination of
the taxes that are to be levied for 1918, 1919, and 1920. As much of the
burden of taxation must be lifted from business as sound methods of
financing the Government will permit, and those who conduct the great
essential industries of the country must be told as exactly as possible
what obligations to the Government they will be expected to meet in the
years immediately ahead of them. It will be of serious consequence to the
country to delay removing all uncertainties in this matter a single day
longer than the right processes of debate justify. It is idle to talk of
successful and confident business reconstruction before those uncertainties
are resolved.

If the war had continued it would have been necessary to raise at least
eight billion dollars by taxation payable in the year 1919; but the war has
ended and I agree with the Secretary of the Treasury that it will be safe
to reduce the amount to six billions. An immediate rapid decline in the
expenses of the Government is not to be looked for. Contracts made for war
supplies will, indeed, be rapidly cancelled and liquidated, but their
immediate liquidation will make heavy drains on the Treasury for the months
just ahead of us. The maintenance of our forces on the other side of the
sea is still necessary. A considerable proportion of those forces must
remain in Europe during the period of occupation, and those which are
brought home will be transported and demobilized at heavy expense for
months to come. The interest on our war debt must of course be paid and
provision made for the retirement of the obligations of the Government
which represent it. But these demands will of course fall much below what a
continuation of military operations would have entailed and six billions
should suffice to supply a sound foundation for the financial operations of
the year.

I entirely concur with the Secretary of the Treasury in recommending that
the two billions needed in addition to the four billions provided by
existing law be obtained from the profits which have accrued and shall
accrue from war contracts and distinctively war business, but that these
taxes be confined to the war profits accruing in 1918, or in 1919 from
business originating in war contracts. I urge your acceptance of his
recommendation that provision be made now, not subsequently, that the taxes
to be paid in 1920 should be reduced from six to four billions. Any
arrangements less definite than these would add elements of doubt and
confusion to the critical period of industrial readjustment through which
the country must now immediately pass, and which no true friend of the
nation's essential business interests can afford to be responsible for
creating or prolonging. Clearly determined conditions, clearly and simply
charted, are indispensable to the economic revival and rapid industrial
development which may confidently be expected if we act now and sweep all
interrogation points away.

I take it for granted that the Congress will carry out the naval programme
which was undertaken before we entered the war. The Secretary of the Navy
has submitted to your Committees for authorization that part of the
programme which covers the building plans of the next three years. These
plans have been prepared along the lines and in accordance with the policy
which the Congress established, not under the exceptional conditions of the
war, but with the intention of adhering to a definite method of development
for the navy. I earnestly recommend the uninterrupted pursuit of that
policy. It would clearly be unwise for us to attempt to adjust our
programmes to a future world policy as yet undetermined.

The question which causes me the greatest concern is the question of the
policy to be adopted towards the railroads. I frankly turn to you for
counsel upon it. I have no confident judgment of my own. I do not see how
any thoughtful man can have who knows anything of the complexity of the
problem. It is a problem which must be studied, studied immediately, and
studied without bias or prejudice. Nothing can be gained by becoming
partisans of any particular plan of settlement.

It was necessary that the administration of the railways should be taken
over by the Government so long as the war lasted. It would have been
impossible otherwise to establish and carry through under a single
direction the necessary priorities of shipment. It would have been
impossible otherwise to combine maximum production at the factories and
mines and farms with the maximum possible car supply to take the products
to the ports and markets; impossible to route troop shipments and freight
shipments without regard to the advantage or-disadvantage of the roads
employed; impossible to subordinate, when necessary, all questions of
convenience to the public necessity; impossible to give the necessary
financial support to the roads from the public treasury. But all these
necessities have now been served, and the question is, What is best for the
railroads and for the public in the future?

Exceptional circumstances and exceptional methods of administration were
not needed to convince us that the railroads were not equal to the immense
tasks of transportation imposed upon them by the rapid and continuous
development of the industries of the country. We knew that already. And we
knew that they were unequal to it partly because their full cooperation was
rendered impossible by law and their competition made obligatory, so that
it has been impossible to assign to them severally the traffic which could
best be carried by their respective lines in the interest of expedition and
national economy.

We may hope, I believe, for the formal conclusion of the war by treaty by
the time Spring has come. The twenty-one months to which the present control
of the railways is limited after formal proclamation of peace shall have
been made will run at the farthest, I take it for granted, only to the
January of 1921. The full equipment of the railways which the federal
administration had planned could not be completed within any such period.
The present law does not permit the use of the revenues of the several
roads for the execution of such plans except by formal contract with their
directors, some of whom will consent while some will not, and therefore
does not afford sufficient authority to undertake improvements upon the
scale upon which it would be necessary to undertake them. Every approach to
this difficult subject-matter of decision brings us face to face,
therefore, with this unanswered question: What is it right that we should
do with the railroads, in the interest of the public and in fairness to
their owners?

Let me say at once that I have no answer ready. The only thing that is
perfectly clear to me is that it is not fair either to the public or to the
owners of the railroads to leave the question unanswered and that it will
presently become my duty to relinquish control of the roads, even before
the expiration of the statutory period, unless there should appear some
clear prospect in the meantime of a legislative solution. Their release
would at least produce one element of a solution, namely certainty and a
quick stimulation of private initiative.

I believe that it will be serviceable for me to set forth as explicitly as
possible the alternative courses that lie open to our choice. We can simply
release the roads and go back to the old conditions of private management,
unrestricted competition, and multiform regulation by both state and
federal authorities; or we can go to the opposite extreme and establish
complete government control, accompanied, if necessary, by actual
government ownership; or we can adopt an intermediate course of modified
private control, under a more unified and affirmative public regulation and
under such alterations of the law as will permit wasteful competition to be
avoided and a considerable degree of unification of administration to be
effected, as, for example, by regional corporations under which the
railways of definable areas would be in effect combined in single systems.

The one conclusion that I am ready to state with confidence is that it
would be a disservice alike to the country and to the owners of the
railroads to return to the old conditions unmodified. Those are conditions
of restraint without development. There is nothing affirmative or helpful
about them. What the country chiefly needs is that all its means of
transportation should be developed, its railways, its waterways, its
highways, and its countryside roads. Some new element of policy, therefore,
is absolutely necessary--necessary for the service of the public, necessary
for the release of credit to those who are administering the railways,
necessary for the protection of their security holders. The old policy may
be changed much or little, but surely it cannot wisely be left as it was. I
hope that the Con will have a complete and impartial study of the whole
problem instituted at once and prosecuted as rapidly as possible. I stand
ready and anxious to release the roads from the present control and I must
do so at a very early date if by waiting until the statutory limit of time
is reached I shall be merely prolonging the period of doubt and uncertainty
which is hurtful to every interest concerned.

I welcome this occasion to announce to the Congress my purpose to join in
Paris the representatives of the governments with which we have been
associated in the war against the Central Empires for the purpose of
discussing with them the main features of the treaty of peace. I realize
the great inconveniences that will attend my leaving the country,
particularly at this time, but the conclusion that it was my paramount duty
to go has been forced upon me by considerations which I hope will seem as
conclusive to you as they have seemed to me.

The Allied governments have accepted the bases of peace which I outlined to
the Congress on the eighth of January last, as the Central Empires also
have, and very reasonably desire my personal counsel in their
interpretation and application, and it is highly desirable that I should
give it in order that the sincere desire of our Government to contribute
without selfish purpose of any kind to settlements that will be of common
benefit to all the nations concerned may be made fully manifest. The peace
settlements which are now to be agreed upon are of transcendent importance
both to us and to the rest of the world, and I know of no business or
interest which should take precedence of them. The gallant men of our armed
forces on land and sea have consciously fought for the ideals which they
knew to be the ideals of their country; I have sought to express those
ideals; they have accepted my statements of them as the substance of their
own thought and purpose, as the associated governments have accepted them;
I owe it to them to see to it, so far as in me lies, that no false or
mistaken interpretation is put upon them, and no possible effort omitted to
realize them. It is now my duty to play my full part in making good what
they offered their life's blood to obtain. I can think of no call to
service which could transcend this.

I shall be in close touch with you and with affairs on this side the water,
and you will know all that I do. At my request, the French and English
governments have absolutely removed the censorship of cable news which
until within a fortnight they had maintained and there is now no censorship
whatever exercised at this end except upon attempted trade communications
with enemy countries. It has been necessary to keep an open wire constantly
available between Paris and the Department of State and another between
France and the Department of War. In order that this might be done with the
least possible interference with the other uses of the cables, I have
temporarily taken over the control of both cables in order that they may be
used as a single system. I did so at the advice of the most experienced
cable officials, and I hope that the results will justify my hope that the
news of the next few months may pass with the utmost freedom and with the
least possible delay from each side of the sea to the other.

May I not hope, Gentlemen of the Congress, that in the delicate tasks I
shall have to perform on the other side of the sea, in my efforts truly and
faithfully to interpret the principles and purposes of the country we love,
I may have the encouragement and the added strength of your united support?
I realize the magnitude and difficulty of the duty I am undertaking; I am
poignantly aware of its grave responsibilities. I am the servant of the
nation. I can have no private thought or purpose of my own in performing
such an errand. I go to give the best that is in me to the common
settlements which I must now assist in arriving at in conference with the
other working heads of the associated governments. I shall count upon your
friendly countenance and encouragement. I shall not be inaccessible. The
cables and the wireless will render me available for any counsel or service
you may desire of me, and I shall be happy in the thought that I am
constantly in touch with the weighty matters of domestic policy with which
we shall have to deal. I shall make my absence as brief as possible and
shall hope to return with the happy assurance that it has been possible to
translate into action the great ideals for which America has striven.