Address to the Representatives of Industry on N.R.A. Codes.

Eight and a half months ago when I signed the bill of the Congress creating the National Industrial Recovery Commission, I said this: "Must we go on in many groping, disorganized, separate units to defeat or shall we move as one great team to victory?"

That team is before me this morning, four or five thousand strong, leaders of six hundred or more organized industries representing, as measured by employment, more than 90 percent of the industrial field which is covered by the N.R.A. Naturally I am deeply gratified that the faith which I expressed last June is so well justified in March.

I do not undertake today to present either a broad review of all the manifold causes which led up to the distressful situation from which the Nation is emerging or a recapitulation of the events, the measures and the results of this past year. You are here as the direct representatives of only one element in our complex modern life, but at the same time because of the fine spirit you have shown I can congratulate you on an approach to your own problems which shows an understanding of the many other problems which criss-cross and dovetail into each other to make up the broad objective of the American people.

It is sufficient for me to point out once more that the difficult and dangerous situation into which the United States had got itself was due to the general attitude, "Every man for himself; thee devil take the hindmost." Individuals were seeking quick riches at the expense of other individuals. Geographical sections were seeking economic preference for themselves to the disadvantage of other sections. Cities were recklessly offering inducements to manufacturing plants to move away from other cities. Within given industries unfair competition went on unheeded or resulted in vast consolidations whose securities were peddled to the public at dishonest prices. There was little consideration for the social point of view, and no planning whatsoever to avoid the pitfalls of overproduction or of selling methods which foisted articles on a gullible public, which the family budget could not afford.

That is a strong picture but you and I, in the bottom of our hearts, know that it is a true picture. Most of us participated in the making of that picture. We did not know as much then as we know now and because our eyes have been opened it is possible that future history will call that crazy decade of 1919 to 1929 one of the greatest blessings that ever came to the American people.

It was because the situation in March, 1933, was so serious all along the line that remedies had to be applied to every phase of the illness. The objective was, as you know, to apply these remedies in the American way and not to copy those which are being tried in other countries which do not live under the same form of democratic government as ours. I am always a little amused and perhaps at times a little saddened—and I think the American people feel the same way—by those few writers and speakers who proclaim tearfully either that we are now committed to Communism and collectivism or that we have adopted Fascism and a dictatorship. The real truth of the matter is that for a number of years in our country the machinery of democracy had failed to function. Through inertia on the part of leaders and on the part of the people themselves the operations of government had fallen into the hands of special groups, some of them vociferously led by people who undertook to obtain special advantages for special classes and others led by a handful of individuals who believed in their superhuman ability to retain in their own hands the entire business and financial control over the economic and social structure of the Nation.

The fine response given by the overwhelming majority of the component parts of industry as represented here today proves to me that you have the same understanding of our broad purpose as is held by the average of the workers of the United States-and that word "workers" means almost all of the American people. You have shown sincere desire for real cooperation; you have shown prompt response to the governmental request for national unity. For this support I give you my thanks.

The National Industrial Recovery Act was drawn with the greatest good of the greatest number in mind. Its aim was to increase the buying power of wage earners and farmers so that industry, labor and the public might benefit through building up the market for farm and factory goods. Employer, wage earner and consumer groups are all represented on its boards with the Government. All three groups with the Government must have the interests of all the people as their main responsibility.

What we seek is balance in our economic system—balance between agriculture and industry, and balance between the wage earner, the employer and the consumer. We seek also balance that our internal markets be kept rich and large, and that our trade with other Nations be increased on both sides of the ledger.

You and I are now conducting a great test to find out how the business leaders in all groups of industry can develop capacity to operate for the general welfare. Personally I am convinced that with your help the test is succeeding.

The very conception of N.R.A. follows the democratic procedure of our Government itself. Its theory of self-regulation follows the American method rather than any of the experiments being tried in other Nations. The very fact that you have been in Washington to criticize and to discuss the way N.R.A. is working out is sufficient proof of this point.

There are some people, of course, who do not think things through; as, for example, the man who complained in one of yesterday morning's papers that criticism was held to be unpatriotic. Let me put the case so clearly that even his type will understand. If we admit that the Government has a specific problem to solve and undertakes to do it in a specific way, the critic is unpatriotic who contents himself with loudly proclaiming that that way, that method is no good; that it will not work; that it is wrong to do this. This critic contributes nothing; he is not constructive; he is unpatriotic because he attempts to destroy without even suggesting a way to build.

On the other hand, the critic is patriotic whether he be a business man, a worker, a farmer or a politician if he says, "I do not like the methods you are using to solve the problem; I believe it would be far better if we were to use the following alternate method," and if he thereupon outlines a helpful proposal for the benefit of his neighbor and his Government.

In this great evolution through which we are passing, the average American is doing splendid service by coming back at the captious critic and saying to him, "Well, old man, and what do you suggest?" One thing is very certain—we are not going back either to the old conditions or to the old methods.

And now to be more specific in regard to N.R.A. itself. You have set up representative government in industry. You are carrying it on without violation of the constitutional or the parliamentary system to which the United States has been accustomed. Your industrial groups are composed of two parts—labor and management; and the Government is a participant in this organization in order to carry out this mandate of the law, "To promote organization in industry for the purpose of cooperative action in trade groups and to induce and maintain united action of labor and management under adequate Government sanction and supervision." Somebody, of course, must strike the equitable balance between conflicting interests and especially must protect the third group—the consumer. And that word "consumer" means the whole American people.

That group has also been in Washington, invited to come here and to make known publicly any complaint as to the effects of any of the codes. I am sure it will hearten you to know that the great majority of the complaints were directed not at the codes but at errors and omissions in what has been done under codes. The great bulk of complaint or criticism of the Recovery Act does not go to the Act itself or to its basic principles, but rather to the details of mere method. In this we should feel encouraged and heartened that we are on the right track and can go forward.

In working out the balance on a national scale, of which I have spoken before, we can list certain immediate objectives. I spoke last June of the fact that wage increases will eventually raise costs, but I asked that management give first consideration to increasing the purchasing power of the public. I said, "That is good economics and good business. The aim of this whole effort is to restore our rich domestic market by raising its vast consuming capacity." Complaint has been made of a few industries and of . some companies that they have not followed this suggestion, and evidence brought forward shows that in some cases these complaints are justified. What I said was true in June and it is true now. The first task of industry today, as it was then, is to create consuming power.

We must remember that the bulk of the market for American industry is among the 90 percent of our people who live on wages and salaries, and only 10 percent of that market is among people who live on profits alone. No one is opposed to sensible and reasonable profits, but the morality of the case is that a great segment of our people is in actual distress, and that as between profits first and humanity afterwards and humanity first and profits afterwards we have no room for hesitation. With millions still unemployed the power of our people to purchase and use the products of industry is still greatly curtailed. It can be increased and sustained only by striving for the lowest schedule of prices on which higher wages and increasing employment can be maintained.

Therefore, I give to industry today this challenge: It is the immediate task of industry to reemploy more people at purchasing wages and to do it now. Only thus can we continue recovery and restore the balance we seek. It is worth while keeping in the front of our heads the thought that the people in this country whose incomes are less than $2,000 a year buy more than two-thirds of all the goods sold here. It is logical that if the total amount that goes in wages to this group of human beings is steadily increased, merchants, employers and investors will in the long run get more income from the increased volume of sales.

I want to speak for a moment directly to the public. In my initial statement of policy, I said:

"Finally, this law is a challenge to our whole people. There is no power in America that can force against the public will such action as we require. But there is no group in America that can withstand the force of an aroused public opinion. This great cooperation can succeed only if those who bravely go forward to restore jobs have aggressive public support and those who lag are made to feel the full weight of public disapproval."

You all know what happened. We gave you the Blue Eagle as a symbol of cooperation. Its display*in a shop or factory window, or upon a garment, or product, or delivery wagon, informed you that the firm with which you were dealing was doing its part in this great national cooperation to defeat depression. For the first time—so far as I know—all of the people in this country were given a part in making a law effective.

This is a law for the public benefit. Obviously an employer who pays Blue Eagle or code wages cannot compete with an employer who does not. It is, therefore, common sense for the consuming public in their own interest, as well as for labor and for industry, to join in seeing to it that the few who think only of selfish gain be made to play the game with the overwhelming majority.

Every examination I make, and all the information I receive, lead me to the inescapable conclusion that we must now consider immediate cooperation to secure increase in wages and shortening of hours. I am confident that your deliberations will lead you also to this conclusion. Reduction in hours coupled with a decrease in weekly wages will do no good at all, for it amounts merely to a forced contribution to unemployment relief by the class least able to bear it. I have never believed that we should violently impose flat, arbitrary and abrupt changes on the economic structure, but we can nevertheless work together in arriving at a common objective. The Government cannot forever continue to absorb the whole burden of unemployment. The thing to do now is to get more people to work. Your self-governing groups are not here to devise ingenious plans to circumvent the purposes of the Act. You are here in a patriotic spirit to effect these purposes. With few exceptions industry will give wholehearted compliance. It is only in the case of rare exceptions where industrial self-government may fail, that the Government itself must and will, under the law, move firmly and promptly to prevent failure.

Under the code system you and I are aware that experience must be the guide for the working out of difficulties and the prevention of abuses. For example, you on code authorities are your industrial brother's keeper, and especially are you the keeper of your small industrial brother. We must set up every safeguard against erasing the small operator from the economic scene. Many years ago anti-trust laws were passed and one of the primary reasons for their enactment was the protection of the little fellow against the big fellow. In many cases these laws failed to protect the little fellow. We do not want to maintain that condition. The essential provisions of the codes should check or reverse competitive methods by which the small business man was or is being squeezed out.

These same anti-trust laws must continue in their major purpose of retaining competition and preventing monopoly; it is only where these laws have prevented the cooperation to eliminate things like child labor and sweat shops, starvation wages and other unfair practices that there is justification in modifying them.

One more subject I call to your special attention. The law itself has provided for free choice of their own representatives by employees. Those two words "free choice" mean just what they say. It is obvious that the Government itself not only has the right but also the duty to see, first, that employees may make a choice and, secondly, that in the making of it they shall be wholly free. I ask that the letter and the spirit of free choice be accorded to its work. ers by every corporation in the United States.

We have been seeking experience in our first eight months of code making; for that same reason we have been tolerant of certain misunderstandings even when they resulted in evasions of the spirit if not of the letter of the law. Now we are moving into a period of administration when that which is law must be made certain and the letter and the spirit must be fulfilled. We cannot tolerate actions which are clearly monopolistic, which wink at unfair trade practices, which fail to give to labor free choice of their representatives or which are otherwise hostile to the public interest.

In a word, we cannot tolerate abuses of economic power-abuses against labor, abuses against employers or abuses against the consuming public—whether they persist either with the aid of codes or despite their prohibitions. This does not mean that we can at once make perfect many hundred codes covering the major trades and industries of the Nation, or that we can get a mark of perfection in a day or a month. It does mean that we have arrived at the time for taking stock for correcting manifest errors, for rooting out demonstrated evils.

One year ago we were suffering and shrinking under economic pressures so intolerable that collapse was at hand. We had arrived at the day to make our choice. We made that choice. The American people responded to the call for action with eager enlistment-enlistment in the struggle against ruthless self-seeking, reckless greed and economic anarchy. We undertook by lawful, constitutional processes to reorganize a disintegrating system of production and exchange.

The methods and details of that reorganization may and will change from year to year, but it is very certain that the American people understand that the purpose of the reorganization was not only to bring back prosperity. It was far deeper than that. The reorganization must be permanent for all the rest of our lives in that never again will we permit the social conditions which allowed the vast sections of our population to exist in an un-American way, which allowed a maldistribution of wealth and of power.

The Willingness of all elements to enter into the spirit of the New Deal becomes more and not less evident as it goes on. As an example, I have just received a telegram from Mr. Francis M. Law, the President of the American Bankers Association. In it he said: "On this your first anniversary please allow me in behalf of the country's banks to express our full confidence and our sincere desire to cooperate in your courageous efforts to bring about recovery. . . . The Banking structure of the country is sound and liquid, and banks have never been in stronger position to function effectively. Conditions have improved to the point where it is no longer necessary for banks to be super-liquid. . . .There is a definite call now for banks not to extend loose credits or to make improper loans but for a most sympathetic attitude toward legitimate credit needs and for a recognition of responsibility for their proper and vital part in the program of recovery."

If the banks go along, my friends, we shall have three great elements of American life working together: industry, agriculture, and banking; and then we cannot stop.

Think back to exactly one year ago today. You know where the banks stood at that time; you know where your own business stood. That telegram from the American Banking Association is a living illustration of the progress we have made in that year. Let us consolidate our gains and let us resolve that that consolidation shall be for the continued progress and especially for the greater happiness and well being of the American people.