Message to the Special Session of the Congress on Farm Relief, Tariff, antedating Emergency Legislation.

To the Congress of the United States:

I have called this special session of Congress to redeem two pledges given in the last election--farm relief and limited changes in the tariff.

The difficulties of the agricultural industry arise out of a multitude of causes. A heavy indebtedness was inherited by the industry from the deflation processes of 1920. Disorderly and wasteful methods of marketing have developed. The growing specialization in the industry has for years been increasing the proportion of products that now leave the farm and, in consequence, prices have been unduly depressed by congested marketing at the harvest or by the occasional climatic surpluses. Railway rates have necessarily increased. There has been a growth of competition in the world markets from countries that enjoy cheaper labor or more nearly virgin soils. There was a great expansion of production from our marginal lands during the war, and upon these profitable enterprise under normal conditions cannot be maintained. Meanwhile their continued output tends to aggravate the situation. Local taxes have doubled and in some cases trebled. Work animals have been steadily replaced by mechanical appliances, thereby decreasing the consumption of farm products. There are many other contributing causes.

The general result has been that our agricultural industry has not kept pace in prosperity or standards of living with other lines of industry.

There being no disagreement as to the need of farm relief, the problem before us becomes one of method by which relief may be [p.76] most successfully brought about. Because of the multitude of causes and because agriculture is not one industry but a score of industries, we are confronted not with a single problem alone but a great number of problems. Therefore there is no single plan or principle that can be generally applied. Some of the forces working to the detriment of agriculture can be greatly mitigated by improving our waterway transportation; some of them by readjustment of the tariff; some by better understanding and adjustment of production needs; and some by improvement in the methods of marketing.

An effective tariff upon agricultural products, that will compensate the farmer's higher costs and higher standards of living, has a dual purpose. Such a tariff not only protects the farmer in our domestic market but it also stimulates him to diversify his crops and to grow products that he could not otherwise produce, and thus lessens his dependence upon exports to foreign markets. The great expansion of production abroad under the conditions I have mentioned renders foreign competition in our export markets increasingly serious. It seems but natural, therefore, that the American farmer, having been greatly handicapped in his foreign market by such competition from the younger expanding countries, should ask that foreign access to our domestic market should be regulated by taking into account the differences in our costs of production.

The Government has a special mandate from the recent election, not only to further develop our waterways and revise the agricultural tariff, but also to extend systematic relief in other directions.

I have long held that the multiplicity of causes of agricultural depression could only be met by the creation of a great instrumentality clothed with sufficient authority and resources to assist our farmers to meet these problems, each upon its own merits. The creation of such an agency would at once transfer the agricultural question from the field of politics into the realm of economics and would result in constructive action. The administration is pledged to create an instrumentality that will investigate the causes, find sound remedies, and have the authority and resources to apply those remedies.

The pledged purpose of such a Federal farm board is the reorganization of the marketing system on sounder and more stable and more economic lines. To do this the board will require funds to assist in creating and sustaining farmer-owned and farmer-controlled agencies for a variety of purposes, such as the acquisition of adequate warehousing and other facilities for marketing; adequate working capital to be advanced against commodities lodged for storage; necessary and prudent advances to corporations created and owned by farmers' marketing organizations for the purchase and orderly marketing of surpluses occasioned by climatic variations or by harvest congestion; to authorize the creation and support of clearing houses, especially for perishable products, through which, under producers' approval, cooperation can be established with distributors and processors to more orderly marketing of commodities and for the elimination of many wastes in distribution; and to provide for licensing of handlers of some perishable products so as to eliminate unfair practices. Every penny of waste between farmer and consumer that we can eliminate, whether it arises from methods of distribution or from hazard or speculation, will be a gain to both farmer and consumer.

In addition to these special provisions in the direction of improved returns, the board should be organized to investigate every field of economic betterment for the farmer so as to furnish guidance as to need in production, to devise methods for elimination of unprofitable marginal lands and their adaptation to other uses; to develop industrial byproducts and to survey a score of other fields of helpfulness.

Certain safeguards must naturally surround these activities and the instrumentalities that are created. Certain vital principles must be adhered to in order that we may not undermine the freedom of our farmers and of our people as a whole by bureaucratic and governmental domination and interference. We must not undermine initiative. There should be no fee or tax imposed upon the farmer. No governmental agency should engage in the buying and selling and price fixing of products, for such courses can lead only to bureaucracy and domination. Government funds should not be loaned or facilities duplicated where [p.78] other services of credit and facilities are available at reasonable rates. No activities should be set in motion that will result in increasing the surplus production, as such will defeat any plans of relief.

The most progressive movement in all agriculture has been the upbuilding of the farmer's own marketing organizations, which now embrace nearly two million farmers in membership and annually distribute nearly $2,500,000,000 worth of farm products. These organizations have acquired experience in virtually every branch of their industry, and furnish a substantial basis upon which to build further organization. Not all these marketing organizations are of the same type, but the test of them is whether or not they are farmer owned or farmer controlled. In order to strengthen and not to undermine them, all proposals for governmental assistance should originate with such organizations and be the result of their application. Moreover by such bases of organization the Government will be removed from engaging in the business of agriculture.

The difficulties of agriculture cannot be cured in a day; they cannot all be cured by legislation; they cannot be cured by the Federal Government alone. But farmers and their organizations can be assisted to overcome these inequalities. Every effort of this character is an experiment, and we shall find from our experience the way to further advance. We must make a start. With the creation of a great instrumentality of this character, of a strength and importance equal to that of those which we have created for transportation and banking, we give immediate assurance of the determined purpose of the Government to meet the difficulties of which we are now aware, and to create an agency through which constructive action for the future will be assured.

In this treatment of this problem we recognize the responsibility of the people as a whole, and we shall lay the foundations for a new day in agriculture, from which we shall preserve to the Nation the great values of its individuality and strengthen our whole national fabric.

In considering the tariff for other industries than agriculture, we find that there have been economic shifts necessitating a readjustment of some of the tariff schedules. Seven years of experience under the tariff [p.79] bill enacted in 1922 have demonstrated the wisdom of Congress in the enactment of that measure. On the whole it has worked well. In the main our wages have been maintained at high levels; our exports and imports have steadily increased; with some exceptions our manufacturing industries have been prosperous. Nevertheless, economic changes have taken place during that time, which have placed certain domestic products at a disadvantage and new industries have come into being, all of which creates the necessity for some limited changes in the schedules and in the administrative clauses of the laws as written in 1922.

It would seem to me that the test of necessity for revision is in the main whether there has been a substantial slackening of activity in an industry during the past few years, and a consequent decrease of employment due to insurmountable competition in the products of that industry. It is not as if we were setting up a new basis of protective duties. We did that seven years ago. What we need to remedy now is whatever substantial loss of employment may have resulted from shifts since that time.

No discrimination against any foreign industry is involved in equalizing the difference in costs of production at home and abroad and thus taking from foreign producers the advantages they derive from paying lower wages to labor. Indeed, such equalization is not only a measure of social justice at home, but by the lift it gives to our standards of living we increase the demand for those goods from abroad that we do not ourselves produce. In a large sense we have learned that the cheapening of the toiler decreases rather than promotes permanent prosperity because it reduces the consuming power of the people.

In determining changes in our tariff we must not fail to take into account the broad interests of the country as a whole, and such interests include our trade relations with other countries. It is obviously unwise protection which sacrifices a greater amount of employment in exports to gain a less amount of employment from imports.

I am impressed with the fact that we also need important revision in some of the administrative phases of the tariff. The Tariff [p.80] Commission should be reorganized and placed upon a basis of higher salaries in order that we may at all times command men of the broadest attainments. Seven years of experience have proved the principle of flexible tariff to be practical, and in the long view a most important principle to maintain. However, the basis upon which the Tariff Commission makes its recommendations to the President for administrative changes in the rates of duty should be made more automatic and more comprehensive, to the end that the time required for determinations by the Tariff Commission shall be greatly shortened. The formula upon which the commission must now act often requires that years be consumed in reaching conclusions where it should require only months. Its very purpose is defeated by delays. I believe a formula can be found that will insure rapid and accurate determination of needed changes in rates. With such strengthening of the Tariff Commission and of its basis for action many secondary changes in tariff can well be left to action by the commission, which at the same time will give complete security to industry for the future.

Furthermore, considerable weaknesses on the administrative side of the tariff have developed, especially in the valuations for assessments of duty. There are cases of undervaluations that are difficult to discover without access to the books of foreign manufacturers, which they are reluctant to offer. This has become also a great source of friction abroad. There is increasing shipment of goods on consignment, particularly by foreign shippers to concerns that they control in the United States, and this practice makes valuations difficult to determine. I believe it is desirable to furnish to the Treasury a sounder basis for valuation in these and other cases.

It is my understanding that it is the purpose of the leaders of Congress to confine the deliberations of the session mainly to the questions of farm relief and tariff. In this policy I concur. There are, however, certain matters of emergency legislation that were partially completed in the last session, such as the decennial census, the reapportionment of congressional representation, and the suspension of the national origins clause of the immigration act of 1924, [p.81] together with some minor administrative authorizations. I understand that these measures can be reundertaken without unduly extending the session. I recommend their consummation as being in the public interest.

HERBERT HOOVER

The White House,

April 16, 1929.