Address Before the National Republican Club at the Waldorf Astoria Hotel in New York City

Mr. Chairman: One hundred and fifteen years ago to-day Abraham Lincoln was born. How great he became can not yet be accurately measured, although nearly sixty years have passed since his death. Probably there has been no one justly entitled to be called "the greatest man in the world." As there are many different talents, so there are many different kinds of greatness. This makes comparisons somewhat barren of results. But measured by ability, achievement, and character, America has long placed Washington and Lincoln as the two men in our history preeminently entitled to be termed "truly great." In this opinion we, have the general concurrence of mankind. While others approach them, they are not outranked by any of the other figures which all of civilization has produced throughout its record of thousands of years.

In a way all men are great. It is on that conception that American institutions have been founded. Perhaps the differences are not so much as many suppose. Yet there are differences which set off some men from their fellows. What those differences are in a particular case is a matter somewhat of personal opinion. To me the greatness of Lincoln consisted very largely of a vision by which he saw more clearly than the men of his time the moral relationship of things. His great achievement lay in bringing the different elements of his country into a more truly moral relationship. He was the commander-in-chief of the greatest armies the world had then seen. They were victorious. Yet we do not think of him as a conqueror. He directed the raising and expenditure of vast sums of money. Yet we do not think of him as a financier. The course which he followed cost many lives and desolated much territory. Yet we think of him not as placing a burden on the nation but removing one from it, not as a destroyer but as a restorer. He was a liberator. He struck the fetters not only from the bodies but from the minds of men. He was a great moral force.

When Lincoln had finished his course, he had made the foundation of freedom stronger and firmer on which to build national unity. Strengthening that principle was the chief accomplishment of his life. He pointed out that the nation could not endure half slave and half free. The mighty work which he did finally left it to endure all free. He restored national unity by restoring moral unity.

The questions which he considered in his day we need have no hesitation in concluding were finally and definitely settled. There is no difference of opinion, no argument about them now. The conclusions which he drew have long since been the settled policy of our country.

The conflicts of his time have passed away. New developments have taken place, new problems have been met. The industrial struggle which came, lasting up to the days of the World War, for increased compensation to wage earners, for the bettering of their condition, while it has never been fully settled, does not appear at present to be acute. The rewards of Labor engaged in commerce, transportation, and industry are now such as to afford the most liberal participation in all the essentials of life. What this tremendous opportunity now held by the wage earner, if wisely and justly administered, will mean to the well-being of the nation is almost beyond comprehension. It opens up the prospect of a new era in human existence. It justifies the assertion that while America has problems, it is not lacking in the ability and the courage to comprehend and solve them. It is a warrant for confidence in the future.

That national unity for which Lincoln laid the foundation requires perpetual adjustment for its maintenance. How great our country really is, how diversified are its interests, is almost beyond the comprehension of any one man. Yet great and diversified as it is, any pretense of sound morals or sound economics requires that each part, each section, and each interest, should be looked upon by the Government with like solicitude, all sharing the common burdens, all partaking of the common welfare. There is no sound policy which is narrow, or sectional, or limited. Every sound policy must be national in its scope. It is always necessary to determine what will be good for the whole country.

The necessary observance of these principles requires, at the present time, that a large amount of attention should be given to Agriculture. This is an interest on which it is estimated that more than forty millions of our people are directly or indirectly dependent. It represents an investment several times as large as that of all the railroads of the country. It has an aggregate production of over $8,000,000,000 each year. Yet with all these vast resources of production and consumption, and the vast purchasing power for the products of the farm, which is represented by the prosperity of our industry and commerce, with here and there an exception, agriculture as a whole languishes.

Production has outrun the power of distribution and consumption. The farm population is not increasing, but the improved methods of tillage and inventions in farm machinery have all contributed to increase the per capita output. It is in this direction that the agricultural schools and colleges have placed their major emphasis. Their education has been substantially all on the side of improved methods of production and none on the side of distribution, consumption, and marketing.

When there is a difficulty which affects so large a population, so large an area, and so important an interest as that of agriculture, it is distinctly a national problem. It scarcely needs to be pointed out that agriculture is of vital importance to the country. It is the primary source of sustenance, enterprise, industry, and wealth. Everyone ought to know that it is basic and fundamental. Without a healthy, productive, and prosperous Agriculture, there can be no real national prosperity. It is perfectly obvious that there is something radically wrong when Agriculture is found in its present state of depression at a time when manufacturing, transportation, and commerce are on the whole in a remarkable state of prosperity.

No one would deny, I suppose, that industrially we are very flourishing. Every standard by which prosperity is measured, whether it be production, movement of freight, corporate earnings, employment of labor, or bank clearings, all point to the same conclusion. Disregarding the abnormal war-time condition, for every important enterprise save agriculture, the year 1923 undoubtedly holds the record. Earnings have been very greatly increased, and except here and there, as in the case of some railroads, must be looked upon with a great deal of satisfaction.

But agriculture has only partially revived. Its position has been improved, and the returns for the year are nearly thirty per cent in excess of two years ago. But the great food staples do not sell on a parity with the products of industry. Their average price is little above the pre-war level, while manufactures are about 50 per cent higher. The farmer is not receiving his fair share.

The result has been a decrease in the value of farm lands, the choking of the avenues of credit with obligations which are worthless or doubtful, the foreclosure of mortgages, and the suspension of a large number of banks. To this depression there have been other contributing causes, but the main difficulty has been the price of farm produce.

Very likely you are wondering why agriculture should be discussed here in this metropolis. One reason is that I want to emphasize as forcibly as possible your very intimate dependence upon agricultural welfare. That great interest can not be affected without the necessity of your toeing affected The farm is one of the chief markets for the industries of the nation. You have a direct economic and financial interest. You can not long prosper with that great population and great area in distress. You have a political interest The people of those numerous states cast an enormous influence upon the making of the laws by which you are governed. Unsound economic conditions are not conducive to sound legislation. The farm has a social value which can not be overestimated. It is the natural home of liberty and the support of courage and character. In all the nation it is the chief abiding place of the spirit of independence. I do not need to dwell upon the moral requirement for the equitable distribution of prosperity and the relief of distress by the application of every possible and sound remedy. This problem is not merely the problem of the agricultural sections of our country; it is the problem likewise of industry, of transportation, of commerce, and of banking. I bring it to you because I know that in part it is your problem. I have already encouraged organization and cooperative marketing that organized agriculture may cope with organized industry. I have promoted tariff investigations for increased rates on wheat. I have extended relief through the War Finance Corporation and the Federal Reserve bank system.

I shall not now discuss the details of legislation or enter upon a presentation of peculiarly agricultural remedies. I made specific recommendations in my message to the Congress, and there are bills pending for carrying my suggestions into effect. What I am most anxious to impress upon the prosperous part of our country is the utmost necessity that they should be willing to make sacrifices for the assistance of the unsuccessful part. I do not mean by that any unsound device like price fixing, which I oppose, because it would not make prices higher but would in the end make them lower, it would not toe successful and would not prove a remedy, but I do mean that the resources of the country ought to come to the support of agriculture. The organization recently perfected to supply money and management for the larger aspects of agriculture ought to have your sympathetic and active support. I am glad that financial America is moving in that direction. It will be less work and less expense for you to meet this situation in this way, for you will meet it; you will be affected by its economic, political, and moral results.

When an examination is made to ascertain some of the causes of these conditions, among the first which suggest themselves is the amount and the method of national taxation. Out of an income of about $60,000,000,000 a year, the people of this country pay nearly $7,500,000,000 in taxes, which is over $68 for every inhabitant of die land. Of this amount the national Government collects about $3,200,- 000,000, and the state and local governments about $4,300,000,000. As a direct burden this is a stupendous sum, but when it is realized that in the course of our economic life it is greatly augmented when it reaches the consumer in the form of the high cost of living, its real significance begins to be appreciated. The national and local governments ought to be unremitting in their efforts to reduce expenditures and pay their debts. This the national Government is earnestly seeking to do. The war cost of more than $40,000,000,000 is already nearly half paid. Amid the disordered currencies of the warring nations our money is, and has been maintained, at the gold standard. Our budget has long since been balanced, and our debt-paying program is at the rate of $500,000,000 each year. In spite of all these expenditures, the next fiscal year has an estimated surplus revenue of over $300,000,000.

This represents a great financial achievement in the past three years. In the first place, it was necessary to provide for more than $7,000,000,000 of short-term securities. These have all either been paid or refunded, so that they will become due in the future at orderly intervals, when they can foe retired or further extended. When it is realized that such large loans were made in a way that not only left business undisturbed, but was scarcely perceptible to the public, the skill with which Secretary Mellon managed them can well be appreciated.

Coincident with this was the even greater task of reducing national expenditures. Through legislative enactment and executive effort this has gone steadily forward, and is now proceeding from day to day. Under the watchful care of the Budget Bureau every department is constantly striving to eliminate all waste and discard every unnecessary expense.

Every reasonable effort has been made to secure the liquidation of our international debts. The largest, which was that of Great Britain, and which amounted with accumulated interest to $4,600,000,000, has been settled on terms that provide for its payment over a period of 62 years. Interest runs at 3 per cent until 1933, and after that 3 per cent. This calls for payments in the immediate future of $160,000,000 and more a year. They have the option to pay us in our own bonds, and in its practical working this agreement does not involve cash payments to this country, but simply a mutual cancellation of debts. The funding of the British debt was one of the greatest of international financial transactions. It had its effect on business confidence, which was world wide. It demonstrated the determination of a great empire faithfully to discharge its international obligations. In this respect it was much more than a financial transaction, it was an exhibition of the highest type of international honor. It showed that the moral standards of the world were going to be maintained.

All of this has laid the foundation for national tax reduction and reform. In time of war finances, like all else, must yield to national defense and preservation. In time of peace finances, like all else, should minister to the general welfare. Immediately upon my taking office it was determined after conference with Secretary Mellon that the Treasury Department should study the possibility of tax reduction for the purpose of securing relief to all taxpayers of the country and emancipating business from unreasonable and hampering exactions. The result was the proposed bill, which is now pending before the Congress. It is doubtful if any measure ever received more generous testimony of approval. Opposition has appeared to some of its details, but to the policy of immediate and drastic reduction of taxes, so arranged as to benefit all classes and all kinds of business, there has been the most general approbation. These recommendations have been made by the Treasury as the expert financial adviser of the Government. They follow, in their main principle of a decrease in high surtaxes, which is only another name for war taxes, the views of the two preceding Secretaries of the Treasury, both of them Democrats of pronounced ability. They are non-partisan, well thought out, and sound. They carry out the policy of reducing the taxes of everybody, especially people of moderate income. They give to the country almost a million dollars every working day.

The proposed bill maintains the fixed policy of rates graduated in proportion to ability to pay. That policy has received almost universal sanction. It is sustained by sound arguments based on economic, social, and moral grounds. But in taxation, like everything else, it is necessary to test a theory by practical results. The first object of taxation is to secure revenue. When the taxation of large incomes is approached with that in view, the problem is to find a rate which will produce the largest returns. Experience does not show that the higher rate produces the larger revenue. Experience is all in the other way. When the surtax rate on incomes of $300,000 and over was but 10 per cent, the revenue was about the same as when it was at 65 per cent. There is no escaping the fact that when the taxation of large incomes is excessive, they tend to disappear. In 1916 there were 206 incomes of $1,000,000 or more. Then the high tax rate went into effect. The next year there were only 141, and in 1918, about 67. In 1919 the number declined to 65. In 1920 it fell to 33, and in 1921 it was further reduced to 21. I am not making an argument with the man who believes that 55 per cent ought to be taken away from the man with $1,000,000 income, or 68 per cent from a $5,000,000 income; but when it is considered that in the effort to get these amounts we are rapidly approaching the point of getting nothing at all, it is necessary to look for a more practical method. That can be done only by a reduction of the high surtaxes when viewed solely as a revenue proposition, to about 25 per cent.

I agree perfectly with those who wish to relieve the small taxpayer by getting the largest possible contribution from the people with large incomes. But if the rates on large incomes are so high that they disappear, the small taxpayer will be left to bear the entire burden. If, on the other hand, the rates are placed where they will produce the most revenue from large incomes, then the small taxpayer will be relieved. The experience of the Treasury Department and the opinion of the best experts place the rate which will collect most from the people of great wealth, thus giving the largest relief to people of moderate wealth, at not over 25 per cent.

A very important social and economic question is also involved in high rates. That is the result taxation has upon national development. Our progress in that direction depends upon two factors—personal ability and surplus income. An expanding prosperity requires that the largest possible amount of surplus income should be invested in productive enterprise under the direction of the best personal ability. This will not be done if the rewards of such action are very largely taken away by taxation. If we had a tax whereby on the first working day the Government took 5 per cent of your wages, on the second day 10 per cent, on the third day 20 per cent, on the fourth day 30 per cent, on the fifth day 50 per cent, and on the sixth day 60 per cent, how many of you would continue to work on the last two days of the week? It is the same with capital. Surplus income will go into tax-exempt securities. It will refuse to take the risk incidental to embarking in business. This will raise the rate which established business will have to pay for new capital, and result in a marked increase in the cost of living. If new capital will not flow into competing enterprise the present concerns tend toward monopoly, increasing again the prices which the people must pay.

The high prices paid and low prices received on the farm are directly due to our unsound method of taxation. I shall illustrate this by a simple example: A farmer ships a steer to Chicago. His tax, the tax on the railroad transporting the animal, and of the yards where the animal is sold, go into the price of the animal to the packer. The packer's tax goes into the price of the hide to the New England shoe manufacturer. The manufacturer's tax goes into the price to the wholesaler, and the wholesaler's tax goes into the price to the retailer, who in turn adds his tax in the price to the purchaser. So it may be said that if the farmer ultimately wears the shoes, he pays everybody's taxes from the farm to his feet. It is for these reasons that high taxes mean a high price level, and a high price level in its turn means difficulty in meeting world competition. Most of all, the farmer suffers from the effect of this high price level. In what he buys he meets domestic costs of high taxes and the high price level. In what he sells, he meets world competition with a low price level. It is essential, therefore, for the good of the people as a whole that we pay not so much attention to the tax paid directly by a certain number of the taxpayers, but we must devote our efforts to relieving the tax paid indirectly by the whole people.

Taken altogether, I think it is easy enough to see that I wish to include in the program a reduction in the high surtax rates, not that small incomes may be required to pay more and large incomes be required to pay less, but that more revenue may be secured from large incomes and taxes on small incomes may be reduced; not because I wish, to relieve the, wealthy, but because I wish to- relieve the country.

The practical working out of the proposed schedules is best summarized by the Treasury experts, who find that $92,000,000 a year will be saved to those who have incomes under $6,000; $52,000,000 to those who have incomes between $6,000 and $10,000; and that less than 3 per cent of the proposed reduction would accrue to those who have incomes of $100,000 or more. A married man with two children, having an income of $4,000, would have his tax reduced from $28 to $1:5.75; having $5,000, from $68 to $38.25; having $6,000, from $128 to $72; having $8,000, from $276 to $144; and having $10,000, from $456 to $234.

In order to secure these results, the administration bill proposes to reduce the tax on earned income 25 per cent, and the normal tax on unearned income also 25 per cent. This would apply to all incomes alike, great and small, and would provide general and extensive relief. Further reductions would be secured by increasing the amount of income, exempt from surtaxes, from $6,000 to $10,000. Such surtaxes increase progressively until on incomes of $100,000 or more they reach the maximum of 25 per cent which, with the normal tax of 6 per cent, make large incomes pay in all 31 per cent. It is also proposed to repeal many troublesome and annoying rates, such as admission taxes and sales taxes, the existence of which is reflected in the increased cost of doing business and the higher prices required from the people.

That is the tax measure which has been proposed, and which has my support. Because I wish to give to all the people all the relief which it contains, I am opposed to material alteration or to compromise. It is about as far removed as anything could be from any kind of partisanship. At least, I do riot charge that there is any party or any responsible party leadership that admits it is opposed to making taxes low and in favor of keeping taxes high. But the actions and proposals of some are liable to have just that result. I stand on the pimple proposition that the country is entitled to all the relief from the burden of taxation that it is possible to give; The proposed measure gives such relief. Other measures which have been brought forward do not meet this requirement. They have the appearance of an indirect attempt to defeat a good measure with a bad measure. You, have heard much of the Garner plan. Brought forward to have something different, it purported to relieve the greatest number of taxpayers. It gave not the slightest heed to the indirect effect of high taxes, or to the approaching drying up of the source of revenue and consequent failure of the progressive income tax, or-to the destruction of business initiative. It is political in theory. When the effect of its provisions was estimated, it meant a loss of revenue beyond the expected surplus. It is impossible in practice. The people will not be misled by such proposals. It is entirely possible to have a first-class bill. I want the country to have the best there is. I am for it because it will reduce taxes on all classes of income. I am for it because it will encourage business. I am for it because it will decrease the cost of living. I am for it because it is economically, socially, and morally sound.

But the people of the nation must understand that this is their fight. They alone can win it. Unless they make their wishes known to the Congress without regard to party this bill will not pass. I urge them to renewed efforts.

Since August, 1919, the public debt has been decreasing. About $4,500,000,000 has been paid off. This means a reduction in interest pf almost $200,000,000. It is of the utmost importance, in order to be able to meet a fast approaching foreign competition, that to keep business good and prevent depression we reduce our debt and keep our expenditures as low as possible. These are the economic reasons why the granting of a bonus would jeopardize the welfare of the whole country. It is estimated that under the bonus bill which was vetoed, if all the beneficiaries had taken the certificates which it was proposed to issue, the plan would have cost $225,000,000 annually for the first four years, and a total of $5,400,000,000. This would more than destroy all the great labor which the country has gone through for the purpose of reducing its debt. It would mean the indefinite postponement of any tax reduction, another increase in the cost of living, more drying up of the sources of credit, and a probable raising of the rates of interest; all of which would result in inflation and higher prices, with the grave danger of ultimate disaster to our financial system. We have been through one period of deflation. Nearly all the men on the farms and many of the men in business have not yet recovered from it, and the country certainly does not want to take the risk of another like experience. A few months of good times are worth more to the service men themselves than anything they could receive in the way of a bonus.

But this question goes deeper than that. I am aware that some men made money out of the war. Most of them lost what they made, but not all. No doubt there are some such who are justly to be criticized for greed and selfishness. Unfortunately they would not pay the bonus. It would have to be paid by the country. I have already undertaken to demonstrate that taxes are paid by the great mass of the people. It is necessary to consider whether there be any moral justification for placing all the people under this great burden, in order to pay some money to a part of the people, many of whom do not want it and are offering pronounced objection to it. A very large body of the service men do not want the bonus, and object to being taxed in order that it may be paid. Their request is entitled to just as much consideration as the request of those who do want it. They are just as eager now to save their country from financial disaster as they were formerly to save it from military disaster. They are entitled to be heard. This question ought to be decided in accordance with the welfare of the whole country.

No one doubts the patriotism of those who advocate the bonus. No one denies that the country owes a debt which it never can pay to those who were in the service. Their disabilities must be recompensed, their health restored, their dependents supported; all at public expense.

They are entitled to the highest honor. But the service they rendered was of such a nature that it can not be recompensed to them by a payment of money. America was not waging war for the purpose of securing spoils. The American soldier did not enter the service for the purpose of securing personal gain.

I have lately undertaken to define the outline of the foreign policy of the present Government. Nothing has occurred since my message to the Congress that requires any change in that policy. The prospect - of a European settlement, however, has arisen, which holds some promise. Three Americans of outstanding and well-seasoned ability have been called to give their expert assistance and advice. They do not represent our Government. Their only official standing comes from their being agents of the Reparation Commission. Yet they can not help being Americans, and will bring to their problem not the point of view of the American Government but, what may be more effective, the point of view of the American mind. Without doubt any settlement would call for a European funding and financing, which would be of doubtful success without American participation. The export of such capital as is not required for domestic business, and which the American people feel can be profitably done, having in view the financial returns, enlargement of our trade, and the discharge of the moral obligation of bearing our share of the burdens of the world, entirely in accordance with the choice of our own independent judgment, ought to be encouraged.

Our Government does not want war anywhere. It wants peace everywhere. It does not look with sympathy upon the manufacture or sale of arms and munitions by which one country might make war upon another country. It recognizes, however, that every government must necessarily maintain some military establishment for national defense and the policing of its own domain. For such incidental purposes there could be little criticism for our Government or private interests, having the necessary equipment, to furnish it. But it is a traffic which we wish to discourage, rather than encourage. We do not believe in great armaments. Especially are we opposed to anything like competitive armaments. While the present time does not appear propitious for a further effort at limitation, should a European settlement be accomplished, something might be hoped for in that direction. The United States stands ready to join with the other great Powers, whenever there appears to be reasonable prospect of agreement, in a further limitation of competitive armaments.

A situation has recently arisen in Mexico which has caused some solicitude. We recognize that the people of that country have a perfect right to set up and pull down government without any interference from us, so long as there is no interference with the lawful rights of our Government or our citizens within their territory. We do not harbor the slightest desire to dictate to them in the smallest degree. We have every wish to be friendly and helpful. After a long period of shifting and what appeared to us to be unsubstantial governments in that country, we recently reached the opinion that President Obregon has established a Government which is stable and effective, and disposed to observe international obligations. We therefore recognized it. When disorder arose there, President Obregon sought the purchase of a small amount of arms and munitions from our Government for the purpose of insuring his own domestic tranquillity. We had either to refuse or to comply. To refuse would have appeared to be equivalent to deciding that a friendly government, which we had recognized, ought not to be permitted to protect itself. Stated in another way, it would mean that we had decided that it ought to be overthrown, and that the very agency which we had held out as able to protect the interests of our citizens within its borders ought not to be permitted to have the means to make such protection effective. My decision ran in a counter direction.

It was not a situation of our making, but one which came and bad to be met. In meeting it, I did what I thought was necessary to discharge the moral obligation of one friendly government to another. The supremacy of the Obregon Government now appears to be hopeful. Whatever may be the outcome, we are not responsible for it. We did what I believed was right to do under the circumstances. It was done, not for the purpose of protecting any particular individuals or interests, but to exercise a legal right, while at the same time throwing our influence in favor of orderly procedure and evidencing our friendship toward the friendly Government of Mexico. Any other course would appear to me to be unworthy of our country.

I propose to continue whatever course of action is customary between friendly governments. While I trust no further action may be necessary, I shall continue to afford protection in accordance with the requirements of international law. I propose to protect American lives and American rights.

Lately there have been most startling revelations concerning the leasing of Government oil lands. It is my duty to extend to every individual the constitutional right to the presumption of innocence until proven guilty. But I have another duty equally constitutional, and even more important, of securing the enforcement of the law. In that duty I do not intend to fail.

Character is the only secure foundation of the State., We know well that all plans for improving the machinery of government and all measures for social betterment fail, and the hopes of progress wither, when corruption touches administration. At the revelation of greed making its subtle approaches to public officers, of the prostitution of high place to private profit, we are filled with scorn and with indignation. We have a deep sense of humiliation at such gross betrayal of trust, and we lament the undermining of public confidence in official integrity. But we can not rest with righteous wrath; still less can we permit ourselves to give way to cynicism. The heart of the American people is sound. Their officers with rare exception are faithful and high-minded. For us, we propose to follow the clear, open path of justice. There will be immediate, adequate, unshrinking prosecution, criminal and civil, to punish the guilty and to protect every national interest. In this effort there will be no politics and no partisanship. It will be speedy, it will be just. I am a Republican, but I can not on that account shield anyone because he is a Republican. I am a Republican, but I can not on that account prosecute anyone because he is a Democrat.

I want no hue and cry, no mingling of innocent and guilty in unthinking condemnation, no confusion of mere questions of law with questions of fraud and corruption. It is at such a time that the quality of our citizenry is tested—unrelenting toward evil, fair-minded and intent upon the requirements of due process, the shield of the innocent and the safeguard of society itself. I ask the support of our people, as Chief Magistrate, intent on the enforcement of our laws without fear and without favor, no matter who is hurt or what the consequences.

Distressing as this situation has been, it has its reassuring side. The high moral standards of the people were revealed by their instant reaction against wrongdoing. The officers of the Government, without respect to party, have demonstrated a common purpose to protect Government property and to bring guilt to justice. We have the trials and perplexities of our day, but they seem insignificant compared with those which taxed the genius of Lincoln. The Government maintained itself then; the Government will maintain itself now. The forces of evil do not long triumph. The power of justice can not long be delayed. The moral force of Lincoln is with us still. "He that keepeth Israel shall neither slumber nor sleep."