I deeply appreciate the welcome which you have given me this evening. I am unable to speak of the depth of feeling that I have for the reception which I have received from the hour that I stepped foot on my native State.
I am glad, as a son of the soil of this State, to come back to where I was born and where I spent the first 10 years of my boyhood. My parents and my grandparents came to Iowa in the covered wagon--' pioneers in this community. They lie buried in your soil. They broke the prairie into homes of independent living. They worshiped God; they did their duty to their neighbors. They toiled to bring to their children greater comfort, better education, and to open to them a wider opportunity than had been theirs.
It was my destiny in the solicitude for an orphaned family to be taken by the old emigrant railway train westward to the Pacific coast and ultimately to fix my home and hopes in California. My sons fly those journeys in a span of daylight.
These contrasts of a half century are a vivid picture of the change and the progress of American life.
My experiences of later years have in no way diminished my memories and my gratitude to my native State. It was here that the doors of opportunity were first opened to me. It was here that I was given that tender care of mind and body, those first steps in education, that knowledge of poverty and struggle for family betterment which contribute to a real understanding of American life.
And with it all, even in those days, a boy had his first contact with the wider life of the Nation. Not that childhood grasps or understands these questions, but great forces, then as now, touched every home and farm in our country.
As a boy I walked alongside the torchlight procession in the Garfield campaign. I was awed by the whispered anxiety when the President was shot by an assassin and by the genuine grief of every person in that village when the flag was placed at half-mast on his passing.
I have been accorded the highest honor which my country can bestow--that is to lead it amongst the nations of the world in the paths of peace and to serve in the stern duty of the battle against the invisible forces of a great world calamity.
It was in this community, in this State that I came in contact with my first economic depression. I was born in the midst of the terrible times of the seventies, with their poverty and their difficulties. And only in that period has our Nation had to meet a situation in any degree comparable with that with which we now contend. That was the economic storm which broke upon us when the aftermath of the Civil War coincided with the wars of Europe. But in those days agriculture and industry were less dependent upon each other, and there was far less interdependence amongst the nations of the world, and thus the violence of the storm in human suffering and loss was infinitely less disastrous.
Not that I would suggest that at that age I knew what an economic depression was or that I had ever heard the words, but I do vividly recollect a Christmas upon that farm when the sole resources of joy were popcorn balls, sorghum, and hickory nuts; when for a flock of disappointed children there were no store toys, no store clothes; when it was carefully explained that because of the hard times everything must be saved for the mortgage. The word "mortgage" became for me a dreaded and haunting fear from that day to this.
I know now from reading history that that Christmas was also a time when the country was coming out of a great depression. The Democratic Party was still coquetting with the panacea of that time--greenbacks. I did not then know what greenbacks were, but I do know that that family tightened its belt and, with confidence, voted for James A. Garfield, a Republican President.
My purpose tonight is to deal with some of the problems of the day. Seldom in our history have we gone through greater dangers, or have the difficulties before the Nation been of such gravity. They attain this gravity not only because of the unprecedented dislocation in our domestic life but because our problems are worldwide.
Aside from the value of truth, the causes and origins of this unparalleled storm are of importance only as they indicate the policies we must pursue to attain our safety. I say to you that a storm which embraces the whole world, which ramifies to every village in China, every sheep ranch in patagonia, every factory in Germany, every mine in Australia, every countinghouse in England, every farm in the State of Iowa, is the result of a terrific disruption in civilization itself. Something infinitely deeper and of greater portent has happened in the world than any reaction from our own reckless speculation and our own reckless exploitation. We are contending today with forces at home and abroad that still threaten the very safety of civilization.
I know it seems a far cry to the village home of America from the effect of the 40 million people who were killed, starved, or maimed in the Great War, with all its loss in skill and character. It seems a far cry from the increase in debt of governments from $20 billion before the war to $220 billion immediately after or an amount equal to nearly two-thirds the value of the whole United States. It seems a far cry from the effect of an increase in the peace armies of the world in 20 years from 2 million of men to 5 million of men with the hate and suspicion that they excite. It seems a far cry from the last 12 years of frantic political and financial policies of foreign nations, with the ultimate collapse of governments and revolutions and dictatorships.
You can test the part which the Great War played in the difficulties in your own home and their relation to the gravity of the situation today right at your own doors.
You will recollect that the values of land in this State doubled and trebled under the transitory demands of the Great War. You will recollect the expansion of mortgages, the collapse in values immediately thereafter, the doubling of taxation, the aftermaths--all of which are still a part of the problems you are struggling with. You know the stifling of your markets from the collapse of other nations under the calamities they have inherited from the war.
Now, we have fought an unending war against the effect of these calamities upon our people in America. This is no time to recount the battles on a thousand fronts. We have fought the fight to protect our people in a thousand cities from hunger and cold.
We have carried on an unceasing campaign to protect the Nation from those unhealing class bitternesses which arise from strikes and lockouts and industrial conflict. We have accomplished this through the willing agreement of employer and labor which placed humanity before money through the sacrifice of profits and dividends before wages.
We have defended millions from the tragic result of droughts. We have mobilized a vast expansion of public construction to make work for the unemployed. We fought the battle to balance the budget. We have defended the country from being forced off the gold standard, with its crushing effect upon all who might be in debt. We have battled to provide a supply of credits to merchants and farmers and industries. We have fought to retard falling prices. We have struggled to save homes and farms from foreclosure of mortgages, battled to save millions of depositors and borrowers from the ruin caused by the failure of banks, fought to assure the safety of millions of policyholders from failure of their insurance companies, and fought to save commerce and employment from the failure of railways.
We have fought to secure the disarmament and to maintain the peace of the world. We have fought for stability in other countries whose failure would inevitably injure us. And, above all, we have fought to preserve the safety, the principles, and the ideals of American life. We have builded the foundations of recovery.
Now, all these battles, related and unrelated, have had a single strategy and a single purpose. That was to protect your living, your comfort, and the safety of your fireside. They have been waged and have succeeded in protecting you from infinitely greater harm that might have come to you.
Thousands of our people in their bitter distress and losses today are saying that "things could not be worse." No person who has any remote understanding of the forces which confronted this country during these last 18 months ever utters that remark. Had it not been for the immediate and unprecedented actions of our Government things would be infinitely worse today.
Instead of moving forward we would be degenerating for years to come, even if we had not gone clear over the precipice, with the total destruction of every ideal we hold dear.
Let no man tell you that it could not be worse. It could be so much worse that these days now, distressing as they are, would look like veritable prosperity.
In all these great efforts there has been a constant difficulty of translating the daily action into terms of public understanding. The forces in motion have been so gigantic, so complex in character, the instrumentalities and actions that we must undertake to deal with them have been so involved, the figures we must use are so astronomical as to seem to have but little relation to the family in the apartment or the cottage or on the farm.
Many of these battles have had to be fought in silence, without the cheers of the limelight or the encouragement of public support, because the very disclosure of the forces opposed to us would have undermined the courage of the weak and induced panic in the timid and would have destroyed the very basis of success.
Hideous misrepresentation and unjustified complaint have had to be accepted in silence for the national good. It has been as if a great battle in war should be fought without public knowledge of any incident except the stream of the dead and the wounded from the front. There has indeed been much of tragedy, but there has been but little public evidence of the dangers and enormous risks from which a great national victory has been achieved.
I have every confidence that the whole American people know in their hearts that there has been but one test in my mind, one supreme object in the measures and policies we have forged to win in this war against depression: that test was the interest of the people in the homes and at the firesides of our country. I have had before me but one vision: that is, the vision of the millions of homes of the type which I knew as a boy in this State.
I wish to describe one of the battles we have fought to save this Nation from a defeat that would have dragged farmers and city dwellers alike down to a common ruin. I know that it is the most involved of economics and the most complex of descriptions to attempt. But I shall try it if you will have patience. That battle was fought parallel with other battles on other fronts. Much of what I will tell you has been hitherto undisclosed. It had to be fought in silence, for it will be evident to you that had the whole of the forces in motion been made public at that time there would have been no hope of victory because of the panic through fear and the destruction of confidence that very disclosure would have brought. Happily we have won this battle. There is no longer any danger from disclosure.
Our own speculative boom had weakened our own economic structure, but the critical assaults and dangers swept upon us from foreign countries. We were therefore plunged into a battle against invading forces of destruction from abroad, a battle to preserve the financial integrity of our Government, to counteract the terrific forces of deflation aligned against us, to protect the debtor class who were being strangled by the contraction of credit and the demands for payment of debt, to prevent our being pushed off the gold standard, which in our country would have meant disaster to every person who owed money, and finally to preserve the savings of the American people.
We were fighting to hold the Gibraltar of world stability, because only by holding this last fortress could we be saved from a crashing world with a decade of misery and the very destruction of our form of government and our ideals of national life.
When 18 months ago the financial systems of Europe were no longer able to stand the strain of their war inheritances and of their after-war economic and political policies, of their debt and their political and military actions, an earthquake ran through 40 nations. Financial panics; governments unable to meet their obligations; banks unable to pay their depositors; their citizens, fearing inflation of currency, seeking to export their savings to foreign countries for safety; citizens of other nations demanding payment of their loans; financial and monetary systems either in collapse or remaining only in appearance. The shocks of that earthquake ran from Vienna to Berlin, from Berlin to London, from London to Asia and to South America. From all those countries they came to this country, to every city and farm in it.
First one and then another of those 40 nations either abandoned payment in gold of their obligations to other countries, or restricted payments by their citizens to foreign countries, so as to practically amount to at least a temporary or a partial repudiation of public and private debts. Every one of them, in a frantic endeavor to reduce the expenditures of their citizens, imposed drastic restrictions upon their imports of goods. These events were not as children playing with blocks. They brought revolutions, mutinies, riots, downfalls of governments, and a seething of despair which threatened civilization itself.
In order to prevent total collapse of the German people and its inevitable effect upon us, I brought about the German moratorium and the so-called German standstill agreements by which Europe was given a breathing spell in which to arrange and stabilize its affairs. But the shocks grew in violence, and finally, at the end of September a year ago, the difficulties of Europe culminated with the suspension of gold payments by the Bank of England, followed by many other nations. With no stability in foreign currencies trade again slackened because merchants could not calculate. the amount they might realize when they shipped their goods.
Now, an amazing statement was made a few days ago in this State that the passage of the Tariff Act of 1930 "started such a drain on the gold reserves of the principal commercial countries as to force practically all of them off the gold standard." The facts are that the Tariff Act was not passed until nearly a year after this depression began.
This earthquake started in Europe. The gold of Europe was not drained and never has been drained. It has increased in total every year since the passage of the Tariff Act and is right now $1,500 million greater than when the act was passed, and the tariff is still operating. It has been my daily task to analyze and to know the forces which brought these calamities. I have to look them in the face. They require far more penetration than such assertions as this would indicate.
The shocks which rocked these nations came from profound depths; their spread gave fearful blows to our own system, finally culminating October last in what, had they not been courageously met with unprecedented measures, would, because of our peculiar situation, have brought us to greater collapse than many of the countries of Europe.
The first effect of these shocks on us was from foreign dumping of American securities on our markets which demoralized prices upon our exchanges, depreciated the securities and investments held by our insurance companies and our trusts, foreign buying power stagnated because of their internal paralysis and this in turn stifled the markets for our farms and factories; it increased our unemployment and by piling up our surpluses demoralized our agricultural prices even further.
The frantic restrictive measures on exchanges which they took and the abandonment of gold standards made it impossible for American citizens to collect billions of the moneys due to us for goods which our citizens had sold abroad, or short-term loans they had made to facilitate commerce. At the same time citizens of those foreign countries demanded payment from our citizens of the moneys due for goods which they had sold to our merchants and for securities they had sold in our country.
Before the end foreign countries drained nearly a billion dollars of gold and a vast amount of other exchange from our coffers.
We had also to meet an attack upon our own flank from some of our own people who, becoming infected with world fear and panic, withdrew vast sums from our own banks and hoarded it from the use of our own people, to the amount of nearly $1,500 million. This brought its own train of failures and bankruptcies. Even worse, many of our less patriotic citizens started to export their money to foreign countries for fear we should be forced onto a paper money basis.
Now, all this cataclysm did not develop at once. It came blow by blow. Its effect upon us grew steadily, and our difficulties mounted higher day by day.
This is no time to trace its effect stage by stage. No statement of mine is needed to portray the effects which you have felt at your own door. No statement could portray the full measure of perils which threatened us as a nation.
Three of the great perils were invisible except to those who had the responsibility of dealing with the situation.
The first of these perils was the steady strangulation of credit through the removal of $3 billions of gold and currency by foreign drains and by the hoarding of our own citizens from the channels of our commerce and business. And let me remind you that credit is the lifeblood of business, the lifeblood of prices and of jobs.
Had the consequences of this action, of that drain been allowed to run their full extent, it would have resulted, under our system of currency and banking, in the deflation of credit anywhere from $20 to $25 billions, or the destruction of nearly one-half of the immediate working capital of the country. There would have been almost a universal call for the payment of debts which would have brought about inevitable universal bankruptcy because property could not be converted into cash, no matter what its value.
There .were other forces equally dangerous. The tax income of the Federal Government is largely based upon profits and income. As these profits and income disappeared, the Federal resources fell by nearly one-half, and thus the very stability of the Federal Treasury was imperiled. The Government was compelled to borrow enormous sums to meet current expenses.
The third peril, which we escaped only by the most drastic action, was that of being forced off of the gold standard. I would like to make clear to you what that would have meant had we failed in that sector of the battle. Going off the gold standard in the United States would have been a most crushing blow to most of those with savings and those who owed money, and it was these we were fighting to protect.
Going off the gold standard is no academic matter. By going off that standard, gold goes to a premium, and the currency dollar becomes depreciated. In our country, largely as a result of fears generated by the experience after the Civil War and by the Democratic free-silver campaign in 1896, our people have long insisted upon writing a large part of their long-term debtor documents as payable in gold.
A considerable part of farm mortgages, most of our industrial and all of our Government, most of our State and municipal bonds, and most other long-term obligations are written as payable in gold.
This is not the case in foreign countries. They have no such practice. Their obligations are written in currency. When they abandon the gold standard and gold goes to a premium, the relation of their domestic debtors and creditors is unchanged because both he who pays and he who receives use the same medium. But if the United States had been forced off the gold standard, you in this city would have sold your produce for depreciated currency. You would be paid your bank deposits and your insurance policy in currency, but you would have to pay a premium on such of your debts as are written in gold. The Federal Government, many of the States, the municipalities, to meet their obligations, would either need to increase taxes which are payable in currency, or alternatively, to have repudiated their obligations.
Now, I believe I can also make it clear to you why we were in danger of being forced off the gold standard, even with our theoretically large stocks of gold. I have told you of the enormous sums of gold and exchange that were drained from us by foreigners. You will realize also that our citizens who hoard Federal Reserve and our other forms of currency are in effect hoarding gold because under the law we must maintain 40 percent gold reserve behind such currency. Owing to the lack in the Federal Reserve System of the kind of securities required by the law for the additional 60 percent of coverage of the currency, the Reserve System was forced to increase their gold reserve up to 75 percent. Thus with $1,500 million of hoarded currency, there was in effect over $1 billion of gold hoarded by our own citizens.
These drains had at one moment reduced the amount of gold we could spare for current payments to a point where the Secretary of the Treasury informed me that, unless we could put into effect a remedy, we could not hold to the gold standard in the United States for 2 weeks longer because of inability to meet the demands of foreigners and our own citizens for gold.
Being forced off the gold standard in the United States means chaos. Never was our Nation in greater peril, not alone in banks and financial systems, money and currency, but that forebode dangers--moral and social--with years of conflict and disarrangement.
In the midst of this hurricane the Republican administration kept a cool head, and it rejected every counsel of weakness and cowardice. Some of the reactionary economists urged that we should allow the liquidation to take its course until it had found its own bottom. Some people talked of vast issues of paper money. Some talked of suspending payments of Government issues. Some talked of setting up a Council of National Defense. Some talked foolishly of dictatorship--any one of which ideas would have produced panic in itself. Some assured me that no administration could propose increased taxes in the United States to balance the budget in the midst of a depression and survive an election.
However, we determined that we would not enter the morass of using the printing press for currency or bonds. All human experience has demonstrated that that path once taken cannot be stopped, and that the moral integrity of the Government would be sacrificed because ultimately both currency and bonds must become valueless.
We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.
We determined we would stand up like men and render the credit of the United States Government impregnable through the drastic reduction of Government expenditures and increased revenues until we balanced that budget. We determined that if necessary we should lend the full credit of the Government thus made impregnable to aid private institutions to protect the debtor and the savings of our people.
We decided, if necessary, upon changes in the Federal Reserve System which would make our gold active in commercial use, and that we would keep the American dollar ringing true in every city in America and every country in the world. We determined that we would expand credit to offset the contraction brought about by hoarding and foreign withdrawals; that we would strengthen the Federal land banks and all other mortgage institutions; that we would lend to the farmers for Production; that we would protect the insurance companies, the building and loan associations, the savings banks, the country banks, and every other point of weakness in this Nation.
We determined to place the shield of the Federal Government in front of those local communities in protection of those in distress, and that we would increase employment through profitable construction work with the aid of Government credit.
On the 3d of October last year, I called to Washington the leading bankers of the country and secured from them an agreement to combine the resources of the banks to stem the tide. They pledged themselves to $500 million for this purpose. On October 6, I called in the leaders of both political parties. I placed before them the situation at home and abroad. I asked for unity of national action. That unity was gladly given. We published a united determination to the country to meet the situation. Our people drew a breath of relief. The ship swung to a more even keel.
But by the 1st of December the storm had grown in further intensity abroad, and the menace became more serious than ever before. With the opening of Congress in December, I laid before it a program of unprecedented dimensions to meet our unprecedented situation.
Now, the battalions and regiments and armies which we thus mobilized for this great battle turned the tide toward victory by July. The foreigners drew out most of the money that they could get, but finding that the American dollar rang honest, they gained in confidence, and they are now sending it back. Since June, $275 million of gold has flowed back to us from abroad. Hoarders in our own country, finding our institutions safeguarded and safe, have returned $250 million to the useful channels of business. The securities held by our insurance companies, our savings banks, and our benevolent trusts have recovered in value.
The rills of credit are expanding. The pressure on the debtor to sacrifice his all in order to pay his debts is steadily relaxing. Men are daily being reemployed. If we calculate the values of this year's agricultural products compared with the low points, the farmers as a whole, despite the heartbreaking distress which still exists, are a billion dollars better off. Prices have a long way to go before the farmer has an adequate return, but at least the turn is toward recovery.
Now, I have been talking of gold and of currency, of credit and of banks and bonds and insurance policies and of loans. Do not think these things have no human interpretation. The happiness of 120 million people was at stake in the measure to enable the Government to meet its debts and obligations, to save the gold standard, in enabling 5,500 banks, insurance companies, building and loan associations, and a multitude of other institutions to pay their obligations and ease their pressure upon their debtors. These institutions have been rendered safe and with them several million depositors, policyholders, and borrowers.
More than half of all of them were in the Midwest--500 in your own State of Iowa. Had they gone down, the shock of their failure would have carried down with them every man and institution who owed money and the whole employment and marketing fabric of the United States into chaos.
I wish I could translate what these perils, had they not been overcome, would have meant to each person in the United States. The financial system is not alone intrusted with your savings. Its failure means that the manufacturer cannot pay his worker, the worker cannot pay his grocer, the merchant cannot buy his stock of goods, the farmer cannot sell his products. The great clock of economic life stops. Had we failed, disaster would have translated itself into despair in every home, every village, and every farm.
Now, we won this great battle to protect our people at home. We held the Gibraltar of world stability. The world today has a chance. It is growing in strength. Let that man who complains that things could not be worse thank God for this victory and make reverent acknowledgement to the courage and stamina of a great democracy.
Let him also be thankful for the presence in Washington of a Republican administration. I say this with full consideration of its portent, for I wish to call your attention to the part which the dominating leadership, the majority of the Democratic Party has played in this crisis. I wish to bring before you the real doctrines and programs of the men who then and now and in the future will dominate that party.
You will recollect that the congressional election 2 years ago gave the control of the lower House of Congress to our opponents. They were also in position to control the policies of the Senate. After that election their leaders announced to the world that their party would present a program to restore prosperity. One year later, when the new Congress assembled last December in the midst of this crisis, they presented no program.
The administration did present a program which has saved the country from disaster. That program was patriotically supported by many members of the Democratic Party who joined in enactment of these measures. To these men, who placed patriotism above party, I pay tribute, but later in that session of Congress the opposition majority of the House of Representatives could not restrain the real purposes and doctrines of their party. It is of importance to the country to realize what that program was, for the American people are asked to intrust the future of the United States into the hands of these same men and to these policies.
At a time when the most vital need was for the reduction of expenditures and the balancing of the budget to preserve the stability of the Federal Government as the keystone of all stability, they produced a program of pork-barrel legislation in the sum of $1,200 million for nonproductive and unnecessary works at the expense of the American taxpayer. They produced the cash bonus bill. They passed that through the House of Representatives by their leadership. I opposed it. It failed in the Senate. Under that bill it was proposed to expend $2,300 million. Worse still, the bill that they passed provided the bonus should be paid through the creation of sheer fiat money. They would have made our currency a football to every speculator and every vicious element in the financial world at the very time when we were fighting for the honesty of the American dollar.
I can do no better than to quote Daniel Webster, who, 100 years ago, made one of the most prophetic statements ever made when he said:
"He who tampers with the currency robs labor of its bread. He panders, indeed, to greedy capital, which is keen-sighted and may shift for itself, but he beggars labor, which is unsuspecting and too busy with the pursuit: of the present to calculate for the future. The prosperity of the workpeople lives, moves and has its being in established credit and steady medium of payment."
The experience of scores of governments in the world since that day has confirmed Webster's statement, and yet the dominant leadership of the Democratic Party--and I am not accusing the Democratic minority who stood out against these things--but that dominant leadership passed that measure to issue paper money through the Democratic House of Representatives.
And, further, the administration proposed economy measures to bring about reduction in specialized governmental expenditures by $250 to $300 million. When those recommendations had passed through the filter of the Democratic majority of the House, only $50 million of savings were left, and yet we hear a multitude of speeches from them on the subject of governmental economy.
They passed a bill to destroy the effectiveness of the Tariff Commission. I vetoed that bill. They passed a price-fixing bill creating what might be colloquially called the "rubber dollar." I opposed that also. They passed a provision for loans to corporations and everybody else, whether they were affected and guarded by public interest or not. It would have made the Government the most gigantic pawnbroker of history. I vetoed that. They passed other measures with this same reckless disregard for the safety of the Nation.
All this undermined public confidence and delayed all the efforts of the administration and the powerful instrumentalities which we had placed in action to save the country. Those of you who will recollect will realize that last March there was a period of upward trend, and after that we descended again into the abyss through these destructive actions. These measures represented the dominant Democratic control, and they brought discouragement and delay to recovery.
That recovery began the moment when it was certain that these destructive measures of this Democratically-controlled House of Representatives had been stopped. Had that program passed, it would have been the end of recovery, and if it ever passes, it will end hope of recovery. These measures were not simply gestures for vote-catching. These ideas and measures represented the true sentiments and doctrines of the majority of the men who control the Democratic Party. A small minority of Democratic Members of the House and the Senate disapproved of these measures. These men obviously no longer voice the control of that party. This program was passed through the Democratic House of Representatives under the leadership of the gentleman who has been nominated the Democratic candidate for Vice-President, and thus these measures and policies were approved by that party.
At no time in public discussion of the vital issues of this campaign has any Democratic candidate, high or low, disavowed these destructive acts which must again emerge if they come to power. I ask you to compare this actual Democratic program and these Democratic actions with the constructive program produced by the administration to meet the emergency. And I ask: Do you propose to place these men in power and subject this country to that sort of measures and policies ? It is by their acts .in Congress and their leadership that you shall know them.
Now, of vital concern to you and to all the Nation are the difficulties of agriculture. They have been of vital concern to me for the whole of these difficult years. I have been at the post to which the first news of every disaster is delivered and to which no detail of human suffering is ever spared. I have heard the cries of distress, and not only as a sympathetic listener but as one oppressed by a deep sense of responsibility to do all that human ingenuity could devise. I wish to speak directly to those of my hearers who are farmers of what is on my mind, of what is in my heart, to tell you the conclusions that I have reached from this bitter experience of the years in dealing with these problems which affect agriculture at home and their relations abroad.
That agriculture is prostrate needs no proof. You have saved and economized and worked to reduce costs, but with all this, yours is a story of suffering and distress.
What the farmer wants and needs is higher prices, and in the meantime to keep from being dispossessed from his farm, to have a fighting chance to save his home. The immediate and pressing question is how these two things are to be attained. Every decent citizen wants to see the farmer receive higher prices and wants to see him keep his home. Every citizen realizes that the general recovery of the country cannot be attained unless these things are secured to the farmer.
Every thinking citizen knows that most of these low price levels and most of this distress, except in one or two commodities where there is an unwieldy surplus, are due to the decreased demand for farm products by our millions of unemployed and by foreign countries. Every citizen knows that part of this unemployment is due in turn to the inability of the farmer to buy the products of the factory. Every thinking citizen knows that the farmer, the worker, and the businessman are in the same boat and must all come to shore together.
Every citizen who stretches his vision across the whole United States realizes that for the last 3 years we have been on this downward spiral owing to the destructive forces some of which I have already described. If he has this vision, he today takes courage and hope because he also knows that these destructive forces have been stopped; that the spiral is now moving upward; that more men are being employed and are able to consume more agricultural products.
The policies of the Republican Party and the unprecedented instrumentalities and measures which have been put in motion--many of which are designed directly for agriculture--are winning out. If we continue to fight along these lines we shall win.
There are 12 facets of this subject, 12 parts of the problem that I should like to discuss with you. The first is that the very basis of safety to American agriculture is the protective tariff.
The Republican Party originated and proposes to maintain the protective tariff on agricultural products. We will even widen that tariff further if it is necessary to protect agriculture. Ninety percent of the farmer's market is at home, and we propose to reserve that market to him.
Now, has the Democratic Party ever proposed or supported a protective tariff on farm products ? Has it ever given one single evidence of protection of this home market to the American farmer from the products raised by peasant labor on cheap land abroad ?
The Democratic Party, as you know, took the tariff off a large part of farm products in 1913, and put them on the free list. A Republican Congress passed the emergency farm tariff in 1921, and a Democratic President vetoed it. The Democratic minority in the next Congress in 1921 voted against the revived emergency farm tariff. The Republican majority passed it, and the Republican President signed it.
The Democratic minority voted against the increase of agricultural tariffs in the Republican tariff of 1922. Most of the Democratic Members of Congress voted against the increases in the tariff bill of 1930. Their platform enunciates the principle of "a competitive tariff for revenue." What that competition must mean is peasant labor and cheap lands. That is the kind of competition we don't want. Their candidate states that: "We sit on a high wall of a Hawley-Smoot tariff; .... sealed by the highest tariffs in the history of the world"--which incidentally isn't true--"a wicked and exorbitant tariff." He calls it: "a ghastly jest," and states that "our policy declares for lowered tariffs." This is surely a promise of reducing farm tariffs. They will reduce farm tariffs if they come to power.
When you return to your homes you can compare prices with foreign countries and count up this proposed destruction at your own firesides. There are at this minute 2 million cattle in the northern States of Mexico seeking a market. The price is about $2.50 per 100 pounds on the south bank of the Rio Grande. It is $4.50 on the north bank--and only the tariff wall in-between.
Bad as our prices are, if we take comparable prices of farm products today in the United States and abroad, I am informed by the Department of Agriculture that you will find that, except for the guardianship of the tariff, butter could be imported for 25 percent below your prices, pork products for 30 percent below your prices, lamb and beef products from 30 to 50 percent below, flaxseed for 35 percent below, beans for 40 percent below, and wool 30 percent below your prices, Both corn and wheat could be sold in New York from the Argentine at prices below yours at this moment were it not for the tariff. I suppose these are ghastly jests.
Now, the removal of or reduction of the tariff on farm products means a flood of them into the United States from every direction, and either you would be forced to further reduce your prices, or your products would rot in your barns.
The opposition party has endeavored to persuade our farmers that increased tariffs abroad are the result of reprisals against the United States. There are a half dozen suppressions of truth in that statement that are of profound interest especially to the farmer. The first is that many increases in tariffs abroad took place before, and not after, our farm tariffs were increased. The second is that the restrictions on imports in most cases are not directed at the United States. They are for the purpose of reducing all expenditure of their people during their financial crises. The third is that if we survey the growls of some nations when our tariffs were changed, we find the objections in overwhelming majority were directed at the increase in our agricultural tariffs. American farmers are entitled to know this. The very object of our increases was to protect them in our home market.
The main thing that those countries want is entrance for their surplus agricultural products into our markets. Many of those countries would decrease their tariffs against our industrial goods tomorrow in exchange for reduction on their farm products to us, but that is no help to our farmer.
Now, the Democratic Party proposes that they would enter into bargaining tariffs to secure special concessions from other countries for the entry of American goods. They represent this to be in the farmer's interest. But I may tell you here and now that the largest part of the whole world desires to make only one bargain with the United States. The bargain these countries wish to make is to lower our tariff on agricultural products in exchange for lowering their tariffs on our industrial goods. American industrial leaders, realizing the needs of the American farmer, do not want to be a part of such bargains.
Now, all tariff acts contain injustices and inequities. That is the case in the last tariff bill. I have never said that tariff bill was perfect. Some people get too much, and some people get too little. But those of you who have followed the accomplishments of this administration will recollect that I secured in the last tariff act, 25 years after it had originally been advocated by President Theodore Roosevelt, the adoption of effective flexible tariff provisions to be administered by a bipartisan body. That authority of a bipartisan Tariff Commission to revise the tariff is based upon a definite principle of protection to our people, and it is one of the most progressive acts which have been secured in the history of all American tariff legislation.
By maintaining that reform the country need no longer be faced with heartbreaking logrolling, selfishness, and greed which come to the surface on every occasion when Congress tries to revise the tariff.
This bipartisan Commission has now been engaged for over 18 months in an effective revision of the tariff. It has heard every complaint. It has found that many rates were just. It found some were too high and some too low. But if there are tariffs which are too high and result in damage to the American people, those tariffs can be readjusted by mere application to the Commission and the presentation of the evidence thereof. That tribunal is open to all the people.
Now, our opponents opposed this reform in tariff legislation. They passed a bill last session to destroy the independence of the Commission. They propose in their platform to destroy it. The reasons for this action are obvious. The bipartisan Tariff Commission has proved a serious political embarrassment to them. Either one of the Houses of Congress has the right to call upon the Tariff Commission for reconsideration of any schedule by a mere resolution. Notwithstanding their outcries against the 1930 tariff act, the Democratic-controlled House of Representatives, after being in session for 7 months, did not pass a single resolution requesting readjustment of a single commodity or a single schedule.
What the Democratic Party proposes is to reduce your farm tariffs. Aside from ruin to agriculture, such an undertaking in the midst of the depression will disturb every possibility of recovery.
Now, 4 years ago organized agriculture requested the passage of an agricultural marketing act. I called a special session of Congress to pass such an act and to increase tariffs on farm products. A distinguished board of men recommended by organized agriculture was appointed to administer the act, and they were given a capital of $500 million to use for the benefit of the American farmer. Those portions of the Board's activities which directed themselves to the support and expansion of cooperative marketing organizations have proved of great benefit to the farmer. Today over a million farm families participate in the benefits and organizations which flow from the Farm Board.
Now, I wish to state frankly the difficulties that have arisen under some other portions of the act. They arise mostly from the so-called stabilization provisions which never were and are not now the major purpose of the Farm Board. Even indirect purchase and sale of commodities is absolutely opposed to my own theory of government.
When the panic struck agricultural prices some 2 years ago, the Board determined that unless the markets were supported hundreds of thousands of farmers would be bankrupt by the sale of their products at less than the money they owed, less than the money they had already borrowed upon and that a thousand country banks would likely be closed and that a general panic was possible.
As a result of emergency purchases which they undertook, the prices of farm commodities were temporarily held and their fall cushioned. The farmers secured hundreds of millions of dollars of income which they would not otherwise have received.
Experience has shown that the patent weakness of such actions is the damaging aftermath which accompanies disposal of these products. I am convinced that the act should be revised in the interest of the farmer, in the light of our 3 years of experience, and that this particular provision should be repealed.
Now, for several years the United States Department of Agriculture has studied the complex social and economic problems which lie bedded in the general problem of land use. About a year ago these studies had reached such a point that the Secretary of Agriculture felt justified in calling a nationwide conference of farm leaders, economists, agricultural college authorities, to formulate a practical means of action. The broad objective of such a program is to promote the reorganization of agriculture so as to divert lands from unprofitable to Profitable use and to avoid the cultivation of lands the chief return on which is the poverty and misery of those who live upon them. The Republican platform contains a plank which constitutes the first declaration upon that subject. I shall be happy to support any sound program.
Now, 4 years ago, in this State, I gave assurance to the farmers and to our own people at large that one of the first policies of my administration would be the vigorous prosecution and completion of the inland waterway system and advancement of the Great Lakes-St. Lawrence seaway as a fundamental relief to Midwest business and agriculture. I am glad to report to you that more than twice the amount of work has been done on the waterways in the last 3 years than in any similar period in the history of the United States. I am also glad to report that after 20 years of discussion, of examination, and intermittent negotiation a treaty has been signed with Canada which only awaits ratification of the United States Senate and the Dominion Parliament for us to undertake that great contribution to the strengthening of the Midwest in its reaching out to world markets.
We have suffered from unprecedented droughts both to the north and to the south of you. Some other sections have been unable to obtain credit for seed and feed for livestock. Through various governmental agencies loans to the amount of about $120 million have been made to over 900,000 of our families to rehabilitate their production and ameliorate that situation. Some of these families are in difficulties in making immediate repayment because of demoralized prices. I have seen to it that they are not unduly pressed.
Last April, I delivered an address to the conference of the Governors of the various States. I stated in effect that the most inflexible tax in our country is the tax on land and on real property generally. It is the least adaptable to the varying income of the taxpayers. I stated that in the present situation the taxes upon farms and homes and real property have become almost unbearable and that such taxes are wholly out of proportion to other forms of taxes. I stated then emphatically that there is no farm relief more needed today than readjustment of land taxes.
Now, the Federal Government collects no direct property taxes, but at that meeting I proposed that we should review the whole relations of our tax system between the Federal, State, and local governments and seek a basis of taxation for each that would give opportunity for readjustments between our different forms of government. Such readjustments should be found which would enable the States to find other sources of tax revenue and would more equitably distribute the burden over the whole people. I announced last April that I would call tax experts of the Nation together to determine the methods we should pursue. I shall do so as soon as the national election is out of the way, and I shall then recommend methods to Congress.
The very first necessity in preventing collapse and securing recovery in agriculture is to keep open to the farmer the banking and other sources from which to make short-term loans for planting, harvesting, feeding livestock, and other production necessities. That has been accomplished indirectly in a large measure through the increased authority to the Federal Reserve System and its expansion of credits-also indirectly through the Reconstruction Corporation loans to your banks. It has been aided directly through the intermediate credit banks and especially through the 10 new agricultural credit associations which alone can command over $300 million credit and which are now being erected and within the next week will be operating in all parts of the country. We are thus rapidly everywhere restoring normal short-term credits to agriculture.
In another direction upon my recommendation the Reconstruction Corporation has been authorized to make credit available to processors to purchase and carry their usual stocks of agricultural products and thus relieve a burden which was resting on farm prices because the farmer was forced to carry these stocks himself. But even more important than that, at my recommendation that Corporation has been authorized to make credits available for sales of farm products in new markets abroad. This is today and will, with increasing activity, I believe, extend immediate markets in relief of farmers and the price of products.
Now, the mortgage situation--that is, long-term credits--is one of our most difficult problems. On the 6th of October a year ago, I secured and published an undertaking from the leaders of both political parties that we should extend aid in this situation. In December we appropriated $125 million directly to increase the capital of the Federal land banks, and we provided further capital to these banks through the authority of the Reconstruction Corporation to purchase their bonds when needed. The purpose was to enable the Federal land banks to expand their activities and to give humane and constructive consideration to those indebted to them who were in difficulties. In the large sense, it has pursued that policy. A little over 1 percent of the farms held under mortgage by the Federal land bank system today are under foreclosure, and these are mostly cases where men wished to give up.
The character of the organization of the joint stock land banks whose business methods are not controlled by the Federal Farm Loan Board has resulted in unjust pressure for payments in some of those banks. The basis of that organization should be remedied. We have sought to further aid the whole mortgage situation by loans from the Reconstruction Corporation to banks, mortgage companies, and insurance companies generally, to enable them to transmit consideration to their borrowing farmers. Indeed, as a result of these actions hundreds of thousands of foreclosures have been prevented.
But despite the relief afforded by these measures, the mortgage situation has become more acute. There must be more effective relief. In it lies a primary social problem.
I conceive that in this civilization of ours, and more particularly under our distinctive American system, there is one primary necessity to its permanent success. That is, we must build up men and women in their own homes, on their own farms, where they may find their own security and express their own individuality.
Now, a nation on such foundations is a nation where the real satisfactions of life and happiness thrive. It is where real freedom of mind and aspiration secure that individual progress in morals, in spirit and accomplishment, the sum of which makes up the greatness of American life. Some will say this is a mere ideal. I am not ashamed of ideals. America was rounded upon them, but they must be the premise for practical action.
And for prompt and practical action I have, during the last month, or at least in the developments of the last 2 months, finally secured definite and positive steps in coordination of the policies not only of the Federal agencies but of the important private mortgage agencies as well. These agencies have undertaken to give you their help in the solution of this problem.
But further and more definitely than this, I shall propose to Congress at the next session that we further reorganize the Federal land banks, and that we give to them the resources and liberty of action, which they do not today possess, which may be necessary to enable them definitely and positively to expand in the refinancing of the farm-mortgage situation where it is necessary to give men who want to fight for it a chance to hold their homes.
I cannot overemphasize the importance of the element of world stability in the recovery and expansion of our agricultural and other markets. This involves the promotion of good will, of disarmament, and of maintenance of peace. It requires the rebuilding of the credit structure within nations which have been forced off the gold standard or compelled to default or to restrict exchange. Until that is done there is a definite blockade upon the movement of commodities and upon the market for farm products. We have given aid in these things. That we may get to grips with these questions in the interest of agriculture and all of our industry and in the interest of world progress itself, I am participating in the organization of a world economic conference to be held late this year. Every intelligence the world can command will be concentrated on the rehabilitation of economic stability.
I shall send a representative of agriculture as a member of that world conference.
And in connection with agriculture, I may mention the question of war debts. I do not approve cancellation of these debts. I certainly do not approve the proposal of our opponents to lower our tariffs in order that by profits gained from a flood of goods into the United States this debt should be transferred to our workers by putting them out of employment and to our farmers by forcing their produce to rot in their barns. It would be better to cancel the debts than to do that.
In my acceptance address I stated the reverse of that proposal. I said that:
"If for some particular annual payment we are offered some other tangible form of compensation, such as the expansion of markets for American agriculture and labor and the restoration and maintenance of our prosperity, then I am sure our citizens would consider such a proposal."
I am prepared to go farther. I am prepared to recommend that any annual payment on the foreign debt be used for the specific purpose of securing an expansion and an opening of the foreign markets for American agricultural products. There is justice in that, for the difficulties inherited from the war are part of the agricultural difficulties at this moment. Now, that is a proposal of more importance to the farmer than many a panacea.
In the advancement of agricultural prices from the depression the first fortress to 'take and to hold was the increased tariffs on farm products. This is, of course, what would be surrendered if our opponents had their way. The next move in the battle for improved prices was to stop the general deflation. By deflation I mean the lessening of market values and prices for land, products of the land, manufactures, and securities and everything we possess. That battle has been won. The next attack on this front is to reverse these processes of deflation and bring things back to their real values. That battle is in progress, and we must all move together.
The Government is giving aid by its vast constructive program for agriculture, for commerce, and for industry. Through the renewed flow of credit for industry and by direct measures of employment, by the great cooperative movements which we have instituted in commerce and industry, for attacks all along the line, we are returning men to work. Every new man reemployed is a greater purchaser of farm products. Wherever we properly can, without entangling ourselves in political difficulties, we are and should join in the rehabilitation of the world and thereby the foreign markets for agricultural products. Now, I come to you with no economic patent medicine especially compounded for farmers. I refuse to offer the counterfeit currency or false hopes. I will not make any pledge which I cannot fulfill.
As I have stated often before, in the shifting battle against depression we shall need to adopt new measures and new tactics as the battle moves on. The essential thing is that we should build solidly and soundly for the future. My solicitude and willingness to advance and protect the interests of agriculture is shown by the record. Protection and advancement of this industry will have my continued deepest concern, for in it lies the progress of all America. It was in this industry that I was born.
The battle against depression is making progress. We are still faced with forces which render 10 million men idle and agriculture prostrate. We have forged new weapons, we have turned the tide from defense to attack. I shall continue that fight. It calls for that cooperation, for that courage and patience and fortitude with which our fathers conquered these prairies.
Now, in conclusion, my friends, there are many other subjects of vast importance to our country. The farmers of America are not selfishly interested in their own industry alone. They are Americans with the same concern for the welfare of the Nation in its multitude of other problems at home and abroad. Time does not permit of their exposition tonight. The issues are grave; the stake is great.
These issues rise above the concern of an ordinary campaign. Our cause is not alone the restoration of prosperity. It is to soundly and sanely correct the weaknesses in our system which this depression has brought to the surface. It is the maintenance of courageous integrity in political action and in government. It is the holding of this Nation to the principles and ideals which it has had from its very beginning. It is to make a nation of free men and women.
Finally, let me deal for a moment with an ultimate reality. I have had to describe the complicated processes of currencies and taxation and other dreary things. They are but the tools we use to manage the processes by which we answer the old, old question, wherewithal shall we live? They are necessary tools, but they are not an end in themselves. Our toils and cares are for a higher purpose.
We are not a nation of 120 million solitary individuals, we are a nation of 25 million families dwelling in 25 million homes, each warmed by the fires of affection and cherishing within it a mutual solicitude for kinfolk and children. Their safety is what we are striving for. Their happiness is our real concern. Our most solemn hope for them is that they may share richly in a spiritual life as well, that puts them not only at peace with their fellows but also in harmony with the will of a beneficent Providence.
Out of our strivings for material blessings must come safety for homes and schools and churches and holding of national ideals and the forming of national character. These are the real aspirations of the American people. These are the promises of America, and these promises must be fulfilled.