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The New Deal

Herbert Hoover Speeches

The Confused State of the Union

Herbert H. Hoover

Lincoln Birthday Dinner Address

Portland, Oregon

In less than a year our country must make a decision no less fateful than that which confronted Abraham Lincoln.

Since the Great War Liberty has fallen in a score of nations.  In America where it blazed brightest and by its glow shed light to all others it is today impaired and endangered.

Again "we are…testing whether that nation or any nation so conceived and so dedicated can long endure.”

When that test confronted Lincoln, he carried it to the people in national debate.  No greater tribute can be paid him than that we shall devote this day of his memory to that high purpose.

If the truth and right decisions are to be found, this discussion must be held to the mold of courtesy, good humor, hard hitting, and above all to the intellectual honesty which Lincoln kept in all his fateful years.

Personalities and mud slinging never clarified a national issue.

There has lately been a new avalanche of oratory on behalf of the "common people,” the "average man,” the "economic middle class,” and the "rank and file.”  That is right.  These are the people for whom America was made.  They carry the burdens of America.  They make its moral fiber.  They are the people whose interest needs defense right now.  Mr. Lincoln said the Lord must have loved them because he created so many of them.  There are others who love their votes.

The President stated a month ago that the issue before us is "the right of the average man and woman to lead a finer, better, and happier life.”

That is an objective to which we all agree.  That is the ideal of Americans since it was first mentioned in the Declaration of Independence. That is not at issue.  The issue is the New Deal methods and objectives which are destroying this very thing.

The issue is the attempt to fasten upon the American people some sort of a system of personal government for a government of laws; a system of centralization under a political bureaucracy; a system of debt; a system of inflation; a system which would stifle the freedom and liberty of men.  And it can be examined in the cold light of three years' experience.

It would seem that since the Supreme Court decisions we have abandoned the issue of the More Abundant Life.  That was found to contain many roads to trouble.

It is the actual State of the Union that I propose to discuss this evening.

The outstanding State of this Union at this hour is a state of confusion.  Confusion in thought, confusion in government, confusion in economic life, and confusion in ideals.  Few national problems have been really solved.  I have time for only a few illustrations of this bewildering muddle which jeopardizes the liberty of a great people.

And the test of it all is, whether we are moving to the "finer, better, and happier life for the average man and woman.”

Confusion of Fear

The President in his message on the State of the Union seems to fear that fear is prevalent in the Union.  He says, "The only thing we have to fear is fear.”  He finds malevolent forces creating fear.  Just so.

The New Deal has been a veritable foundation of fear.  The day after the New Deal was given life at the election of 1932 began the Great Fear which created the bank panic of March 4.  The stock boom today is not from confidence in the future; it is partly from fear of inflation.  The unemployment of millions of men in the capital goods industries is due to fear of New Deal currency policies.  It was the Supreme Court decisions crashing through New Deal tyrannies which brought a gleam of confidence from the fears that had retarded recovery.  The guiding spirit of the alphabet has not been love.  It has been fear.

Confusion as to Greed

The President in reporting on the State of the Union also found it alive with "money-changers,” "seekers for selfish power,” "dishonest speculators,” "economic autocrats,” and "entrenched greed.”

However, that has points in confusing the public mind.  Any judge of debate would admit it.  It has merit as a call to class war, a red herring across the trail of failure, an implication that all opponents are defenders of evil, a claim that righteousness now has refuge alone in Washington, and an avoidance of facts and figures.  It is not the mold of debate of Abraham Lincoln.  It does not heal the wounds of the nation.

In any event, in opposing the New Deal you did not know you were allied with those forces of darkness.  You know it now.

No one defends such wickedness.  But it happens that after three years of the New Deal the same men direct business today that were there three years ago.  But what has become of the new laws designed to reform the wicked?  We have seen no indictments except political oratory.  That is confusing.

You will recall that three years ago the President gave the comforting assurance that "The money-changers have fled from their high seats in the temple of our civilization.”  It would appear that after three years of the New Deal they have all come back again with helpers.  Also I had the impression that the New Deal had taken over the business of changing the money.

The human animal has many primitive instincts that morals, religion, and the law have not been able wholly to eradicate.  He has two forms of greed -- the greed for money and the greed for power.  The lust for power is infinitely the worse.  The greed for money can be curbed by law, but the greed for power seizes the law itself for its ends.  At least the greed for money does not afflict us with fine phrases and slogans as to what is good for us.

The abuses of liberty by greed for money are weeds which grow in the garden of productive enterprise.  If government is clean it can pull them up.  The abuse of liberty by the greed for power is a blight that destroys the garden itself.

Confusion of Dictatorship with Democracy

The President states "In thirty-four months we have built up new instruments of public power.  In the hands of the people's government this power is wholesome and proper.”  The President concedes that in other hands it would "provide shackles for the liberties of the people.”  That is confusion of dictatorship with democracy.  The very origin of this Republic was in order that nobody should possess such power over the people.

These instruments of power march to the "finer, better, and happier life” under a banner of strange device -- "Planned Economy.”  By this time you know this glittering phrase does not mean economy in government spending.  It has proved to mean Politically Dictated Economic Life.  It is of many battalions.  We have seen so far Planned Industry, Planned Farming, Planned Government in Business, Planned Relief, Planned Credit, Planned Currency, and Planned Attack on the Constitution.  And I might suggest two more.  They are Planned Deficits and Planned Politics.

I need recall only those first two builders of confusion, the NRA and AAA.  These two Towers of Babel, which the children of men built, were also to reach to Heaven.  The headlines tell us of the character of the bricks and the mortar.  Must Legislation.  No Debate.  Personal government by Proclamation.  Ballyhoo.  Codes.  Factory Production Restricted.  Competition Limited.  Monopolies Created.  Government Price Fixing.  Increasing Costs.  Increased Prices.  Decreased consumption.  Increased Cost of Living.  Strikes.  Lockouts.  Boycott.   Coercion.  Crack Down.  Jail.  Small Business Men Washed Out.  Crops Plowed Under.  Animals Slaughtered.  Housewife Strikes.  Consumption of Food Decreases.  Nation Imports Foods.  Farmers' Markets Given to Foreigners.  Economy of Scarcity.  Nation Gets Richer by Producing Less at Higher Costs.

Their language was confounded and they were scattered by the Supreme Court.

But a new confusion arises.  The spokesmen of the administration talk of the resurrection of these theories as the basis of our future economic life.  The President refuses to say that they are finished.  On the contrary in his address of January 3, after asserting the success of New Deal measures, he says:  "I recommend to Congress that we advance, that we do not retreat.”  My impression is that Napoleon used somewhat the expression when he was marching to Moscow.

The American people have a right to have this clarified.  Has the President abandoned these theories or not?

Confusion in Fiscal and Monetary Policies

The third battalion of confusion has been the spending, budget deficit debts, currency, and credit.  Within a month since the President's budget message it has become more confused by four or five billions more expenditures.

Those who judge progress by the size of figures will agree that great improvements have taken place in the National Debt since the Mechanics of Civilization came to a stop on March 4, 1933.  During the Hoover Administration the debt increased about $1,250,000,000 after allowing for recoverable loans.  That is only about 10 percent of what the New Mechanics will accomplish.  That increase will be about up to $14,000,000,000, less recoverable loans and plus large losses on guaranteed mortgages.  The National Debt now bids fair to rise to a minimum of $35,000,000,000.

I note in the budget message President Roosevelt said, "The finances of the government are in better condition than at any time in the past seven years.”  You may remember the uneasiness of the decimal point which I mentioned some months ago.  It has moved steadily to the left.

The New Deal could also report, "As a part of our fiscal policies we have set up ‘Managed Credit' under the political seizure of the Federal Reserve System.  We have set up ‘Managed Currency' under political control of the value of the dollar.  We have abandoned the gold standard.  We have repudiated government obligations.  We have made vast purchases of foreign silver at double the price of 1933.  We are glad to say we have now enough foreign silver to plate all the spoons in the world.”

Soon after assuming office three years ago President Roosevelt commented upon my partial failure to persuade a Democratic Congress to balance the budget.  He said sternly; "Too often in recent history liberal governments have been wrecked on the rocks of loose fiscal policies.  We must avoid this danger.”

Those rocks are now looming up out of this fog.  The nation has been steered into the dangerous channels of borrowing these vast deficits from the banks, by a huge cycle of bank credit inflation.  That is printing press credit.  The charts of all history show this channel leads to currency inflation.  Every democracy which entered these straits has been sunk.

The explosive forces of inflation are already being generated.  That is easily proved.  The average price of industrial common stocks today are up to the level of 1926.  But in 1926 there were no unemployed; today there are 10,000,000 unemployed.  In 1926 our foreign trade was flourishing; today it is demoralized.  In 1926 our budget was balanced, our currency was stable; today the budget is the worst unbalanced in history, the currency has its foundation in the will of one man.

The average price of industrial stocks has been restored to 1926, but have the real incomes of farmers and labor been restored to 1926?

We may well explore a little further as to what all this confusion of national finances means to the average man or woman.  These currency and credit policies have driven men all over the nation into a scramble of buying equities to protect themselves.  These policies have made a paradise for the speculator.  He lives by shrewd anticipation in a land of confusion.  Millions have been made in the stock market.  Millions have been made by foreign speculators in silver.  At the same time millions of Americans are tramping the streets looking for work.  Speculation drains employment, it does not make it.  Having opened the channels of greed, rightly the President may be worried over the greedy. 

But worse than all that, out of these devaluation and inflation policies the cost of living inevitably and inexorably rises.  The average man and his housewife will find these policies in every package they buy.  The will find them in the decreased purchasing power of their insurance policy and their savings.  Did it ever occur to American wage earners that the devaluation was a cut in wages?  Some European statesmen were frank enough to say it when they did it.  And on top of that somebody has to pay for this spending.  Both we and our children will pay for these follies of our generation even if our liberal government escapes wreck upon the rocks of these loose fiscal policies.  Does that point the average man to a "finer, better, happier life?”

The American people have a right to know and to know now what steps the President proposes to clean up this budget and money confusion.  Unless this confusion can be quickly dissolved it will lead to one of the great tragedies of all humanity -- inflation.

Confusion in Relief

The fourth battalion of confusion is the administration of relief.  Under that guise great sociological experiments have been undertaken.  The government has gone into private business on a high scale.  These enterprises have created a million confusions and fears.  Relief run from Washington and not from home has resulted in billions of waste spread over every town and county.

It has impaired self-reliance and morals both in individuals and in local government.  The poison of politics is mixed in the bread of the helpless.  The New Deal is optimistic that with relief under political control from Washington its dependents can be persuaded in their vote.  But the ballot box is secret and the conscience of the average American man and woman may not be confused.

No Confusion in Politics

The New Deal is not confused in politics.  National Planning has been a success in that field.  But it is a moral confusion of every ideal of American government.  For fifty years it has been an aspiration of America that our government officials should be removed from the political spoils system.  The selection by merit through the Civil Service Commission was not alone to gain efficiency in government.  Its purpose as to raise the morals of public life.  It was to make impossible the bribe-taker, the invisible government of the greedy, and the corruption of elections.  Since 1880 every President has steadily builded that service.

Let us examine the record.  The Coolidge officials under the Civil Service were about 75 percent.  The Hoover increase was to over 81 percent.   The Roosevelt decrease has been to 57 percent.  This is exhibit A of New Deal idealism.

All this sometimes reminds me of the small girl who said, "Mother, you know that beautiful jug that you said had been handed down to us from generation to generation?” Mother replied, "Yes, Ann, what of it?”  And Ann answered solemnly, "This generation dropped it.”

But we may explore that still further.  During the Hoover Administration, despite the many emergency agencies needed to meet the depression, the total number of Federal officials was decreased by 10,000.  But under the New Deal, part of full-time political officials have been increased by over 335,000.  In his Jackson Day speech the President urged committees of one to support the New Deal in the campaign.  He has a good start with 335,000 committees -- and their wives.

But the average man who does not get his feet into the trough has to carry these officials on his back.

We have started upon the road of business recovery.  That began instantly upon the restoration of some degree of confidence by the Supreme Court.  But it is a confused recovery.  We have still 10,000,000 people on relief after three years.  Our durable goods industries lag behind.  That is where the bulk of the 20,000,000 on relief come from.  Our construction industries depend upon long-term confidence.  But long-term confidence is weak.  By a confused currency, men do not have confidence in what $100 may buy five years hence.

Moreover, real and permanent recovery will not take place so long as every businessman must make a blind bet on these confusions in Washington.

A balanced budget and a stable currency, would put more men to work than the whole WPA.  They need confidence, not confusion.

Confusion in Administration

These gigantic plans of dictated economy were undertaken without searching inquiry as to fact or experience.  They were undertaken without even shaping on the anvil of debate.  They were undertaken in disregard of the Constitution.  They have been without adequate administrative checks and balances.  They have been administered by political appointees of inadequate executive experience.  Despite this horde of officials there is not disintegration and confusion in the halls of government.

We are deluged with inconsistencies in action and conflict in purposes.  Statements, propaganda, and philosophy collide every day.  Many are half-truths and some are murky on that other half.

Confusion in Authorities

President Roosevelt has called upon the shades of his favorite past presidents to enliven the effervescence of righteousness which bubbles through intoxicating waters of the finer life.  He has at time recalled Jefferson, Jackson, Lincoln, and Theodore Roosevelt to justify this State of the Union.  I have not noticed any call upon the shade of Grover Cleveland.

To clear up some confusion as to their views I may also summon the shades of these favorite presidents upon the same subjects.

First, Thomas Jefferson, who said, "Where we directed from Washington when to sow and when to reap we should soon want bread.”  Apparently this was forgotten when they created the AAA.

Jefferson also said, "…the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.”  That would seem even truer to the children of this generation.

President Jackson said, "All history tells us that a free people should be watchful of delegated power.”  He did not know what it was to watch perpetual motion in delegated powers.

Jackson also believed in "To the victors belong the spoils.”  He was contented by appointing 2,000 of his followers to office.  After all, he had a moderate spirit.

Theodore Roosevelt said, "If a change in currency were so enacted as to amount to dishonesty, that is repudiation of debts, it would be very bad morally.”

The quotation was not sent to Congress with New Deal currency bills.

Any may I add one quotation from Daniel Webster, who says:  "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 present to calculate the future.  The prosperity of the working people lives, moves, and has its being in established credit and steady medium of payment.”

Theodore Roosevelt also made many remarks upon the Civil Service.  For instance; "No question of internal administration is so important…as…Civil Service Reform, because the spoils system…has been for seventy years the most potent of all the forces tending to bring about the degradation of our politics.”  That is not often quoted out loud.

Theodore Roosevelt further said, "A broken promise is bad enough in private life.  It is worse in the field of politics.  No man is worth his salt in public life who makes on the stump a pledge which he does not keep after election….”

There is more to that quotation, but I omit it lest it would create hard feelings.

The President quotes Josiah Royce.  Perhaps he overlooked this remark from that philosopher:  "The present tendency to the centralization of power in our national government seems to me, then, a distinct danger.  It is a substitution of power for loyalty.”

Just a quotation or two from Lincoln.  He asked that President Polk answer certain questions, and said, "Let him answer fully, fairly, and candidly.  Let him answer with facts and not with arguments.  Let him remember that he sits where Washington sat, and so remembering, let him answer as Washington would answer.”

That shows they used to treat Presidents less gently than we do.

Confusion of the Constitution

Beyond all this there are more somber confusions.  The ideals of liberty have been confused.

Behind all this is the great and fundamental conflict which has brought infinite confusion to the nation.  That is the conflict between a philosophy of orderly individual liberty and a philosophy of government dictation.

Ten of the assaults upon liberty have already cracked against the Constitution of the United States.  And has there been public outcry at their loss?  There has been a lift to the soul of the nation.  Millions of average men and women have given thanks to the Almighty that the forethought of great Americans has saved for them freedom itself.

But the Court cannot deal with all the assaults upon the spirit of American liberty.  It was the spirit of liberty which made our American civilization.  That spirit made the Constitution.  If that spirit is gone the Constitution is gone, even though its words remain.  The undermining of local government by centralization at Washington, the spoils system, the reduction of Congress to a rubber stamp, these monetary policies -- what of these?

The President implies he will not retreat, despite the decisions of the Court.  We have heard mutterings that the Constitution must be changed, that it is outmoded, that it was useful only in the horse and buggy days.  There was sinister invitation to Congress to "find means to protect its own prerogative.”

No progressive mind will feel that the Constitution shall not be changed to meet the needs of changing national life.

But what is the change these men harbor in their minds?  The American people have a right to know.  They have the right to know it now. 

Whatever the change may be, it must be clear of those confusions which impair the great safeguards of human liberty.  There must never be confusion in the Bill of Rights, the balance of powers, local government, and a government of laws, not of men.

Do you not conclude that the State of the Union is one of Confusion?  Is this in the interest of the average man and woman?

Does this advance our children toward a "finer, better, and happier life?”

A great American once said in application to another crisis:  "We have, as all will agree, a free government, where every man has the right to be equal with every other man.  In this great struggle, this form of government and every form of human right is endangered if our enemies succeed.  There is more involved in this contest than is realized by everyone.  There is involved in this struggle the question whether your children and my children shall enjoy the privileges we have enjoyed.”  That was Abraham Lincoln.