Message to Congress on Unemployment Relief.

To the Congress:

In my budget message of January 3, 1936, I reserved making a recommendation for an appropriation for the relief of unemployment, stating that an estimate and recommendation could be better made at a later date. I am now prepared to submit such a recommendation, and this message should be regarded as supplemental to the budget message.

In asking the Congress for an appropriation to meet the needs of the destitute unemployed during the coming fiscal year, certain facts should be clearly set forth.

(1) Since the spring of 1933, there has been a gain in reemployment in each successive year. At least 5,000,000 more people were at work in December, 1935, than in March, 1933.

(2) In spite of these great gains, there are at present approximately 5,300,000 families and unattached persons who are in need of some form of public assistance—3,800,000 families and unattached persons on the works program and 1,500,000 on local and State relief rolls. Every thinking person knows that this problem of unemployment is the most difficult one before the country.

(3) These figures, large as they are, do not of course include all those who seek work in the United States. In none of these figures are included the many unemployed who are not on relief but who are experiencing great difficulties in maintaining independent support. Neither are there included many others not on the relief rolls who are content with occasional employment; nor some who are so constituted that they do not desire to work; nor many young people who cannot get work and are obliged to share the livelihood earned by their parents. Because of the impossibility of an exact definition of what constitutes unemployment, no figures which purport to estimate the total unemployed in the Nation can be even approximately accurate.

(4) Nearly all the 1,500,000 unemployable families or unemployable unattached persons are being cared for almost wholly from State or local funds. A very small number of these families or individuals have begun to receive a comparatively small amount of Federal aid under the provisions of the Social Security Act.

The foregoing figures indicate the problem before us. It is a problem to be faced not merely by the Congress and the Executive, not merely by the representatives of Government in the States and localities, but by all of the American people. It is not exclusively the problem of the poor and the unfortunate themselves. It is more particularly the problem of those who have been more fortunate under our system of Government and our economy.

It will not do to say that these needy unemployed must or should shift for themselves. It will not be good for any of us to take that attitude. Neither will it do to say that it is a problem for the States and the localities. If we concede that it is primarily the duty of each locality to care for its destitute unemployed, and that if its resources are inadequate, it must then turn to the State for help, we must still face the fact that the credit and the resources of local governments and States have been freely drawn upon in the last few years and they have not been sufficient.

It has been said by persons ignorant or careless of the truth that Federal relief measures have encouraged States, counties and municipalities to shirk their duty and shift their financial responsibilities to the Federal Government. The fact is that during 1935 State and local governments spent $466,000,000 for emergency relief, which was 13 percent more than these governmental bodies spent in 1934; 49 percent more than they spent in 1933; and 58 percent more than they spent in 1932. Let it also be noted that the great majority of State and local governments are today taking care not only of the 1,500,000 unemployables, but are also contributing large amounts to the Federal works program.

To expect that States and municipalities should at the present time bear a vastly increased proportion of the cost of relief is to ignore the fact that there are State constitutional limitations, and the fact that most of our counties and municipalities are only now emerging from tax delinquency difficulties. Let us further remember that by far the largest part of local taxes is levied on real estate. To increase this form of tax burden on the small property owners of the Nation would be unjustified. It is true that some States, fortunately few, have taken an undue advantage of Federal appropriations, but most States have cooperated wholeheartedly in raising relief funds, even to the extent of amending State constitutions. It is not desired in the next fiscal year to encourage any States to continue to shirk. The Federal Government cannot maintain relief for unemployables in any State.

The Federal Government, then, faces the responsibility of continuing to provide work for the needy unemployed who cannot be taken care of by State and local funds.

During the current fiscal year, the cost of relief actually paid out of the Treasury will amount to approximately $3,500,000,000.

During the next fiscal year, 1937, more than $1,000,000,000 will be spent out of the Treasury from prior year appropriations. Practically all of these expenditures will be from allocations made to large projects which could not possibly be completed within this fiscal year. In addition to this amount, the budget contains estimated expenditures aggregating $600,000,000 from appropriations recommended for the Civilian Conservation Corps and various public works.

If to this total of $1,600,000,000 there were added $2,000,000,000 to be expended for relief in the fiscal year 1937, the total for this purpose would just about equal the amount that is being now expended in the fiscal year 1936. An appropriation in this amount would be within the limit set by the budget message, and would in effect provide for the third successive year a reduction in the deficit.

This statement as to the budget program of course depends upon the action of the Congress with respect to the substitute taxes, the reimbursement taxes and the new taxes which I have recommended to replace the lost revenues and to supply the new revenue made necessary by the decision of the Supreme Court invalidating the Agricultural Adjustment Act and by the action of the Congress in appropriating for the immediate payment at the 1945 value of the Veterans' Adjusted Service Certificates. This latter action, as you will recall, requires additional revenue in the amount of $120,000,000 annually for nine years. The agricultural program requires annual substitute taxes of $500,000,000 and there must be raised within the next three years $517,000,000 of revenue to reimburse the Treasury for processing taxes lost in this fiscal year by reason of the Supreme Court's decision.

I am, however, not asking this Congress to appropriate $2,-000,000,000.

I am asking only for an appropriation of $1,500,000,000 to the Works Progress Administration. It will be their responsibility to provide work for the destitute unemployed. This request together with those previously submitted to the Congress to provide for the Civilian Conservation Corps and certain public works will, if acted upon favorably by the Congress, give security during the next fiscal year to those most in need, on condition, however, that private employers hire many of those now on relief rolls.

The trend of reemployment is upward. But this trend, at its present rate of progress, is inadequate. I propose, therefore, that we ask private business to extend its operations so as to absorb an increasing number of the unemployed.

Frankly, there is little evidence that large and small employers by individual and uncoordinated action can absorb large numbers of new employees. A vigorous effort on a national scale is necessary by voluntary, concerted action of private industry.

Under the National Recovery Administration, the Nation learned the value of shorter hours in their application to a whole industry. In almost every case, the shorter hours were approved by the great majority of individual operators within the industry. To the Federal Government was given the task of policing against the minority who came to be known as "chiselers." It was clear that "chiseling" by a few would undermine and eventually destroy the large, honest majority. But the public authority to require the shorter hours agreed upon has been seriously curtailed by limitations recently imposed by the Supreme Court upon Federal as well as State powers.

Nevertheless, while the provisions of the anti-trust laws, intended to prohibit restraint of trade, must and shall be fully and vigorously enforced, there is nothing in these or any other laws which would prohibit managers of private business from working together to increase production and employment. Such efforts would indeed be the direct opposite of a conspiracy in restraint of trade. Many private employers believe that if left to themselves they can accomplish the objectives we all seek.

We have learned the difficulties of attempting to reduce hours of work in all trades and industries to a common level or to increase all wage payments at a uniform rate. But in any single industry we have found that it is possible by united action to shorten hours, increase employment, and, at the same time, maintain weekly, monthly or yearly earnings of the individual. It is my belief that if the leaders in each industry will organize a common effort to increase employment within that industry, employment · will increase substantially.

In so far as their efforts are successful, the cost to the Federal Government of caring for the destitute unemployed will be lessened, and, if the employment gains are substantial enough, no additional appropriation by the next Congress for the fiscal year 1937 will be necessary.

The ultimate cost of the Federal works program will thus be determined by private enterprise. Federal assistance which arose as a result of industrial disemployment can be terminated if industry itself removes the underlying conditions. Should industry cooperatively achieve the goal of reemployment, the appropriation of $1,500,000,000, together with the unexpended balances of previous appropriations, will suffice to carry the Federal works program through the fiscal year 1937. Only if industry fails to reduce substantially the number of those now out of work will another appropriation and further plans and policies be necessary.

It is the task of industry to make further efforts toward increased output and employment; and I urge industry to accept this responsibility. I present this problem and this opportunity definitely to the managers of private business; and I offer in aid of its solution the cooperation of all the appropriate departments and agencies of the Federal Government.

My appeal is to the thinking men who are assured of their daily bread. However we may divide along the lines of economic or political faith, all right-minded Americans have a common stake in extending production, in increasing employment, and in getting away from the burdens of relief.

Those who believe that Government may be compelled to assume greater responsibilities in the operation of our industrial system can make no valid objection to a renewed effort on the part of private enterprise to insure a livelihood to all willing workers. Those, on the other hand, who believe in complete freedom of private control without any Government participation should earnestly undertake to demonstrate their effectiveness by increasing employment.