Address at the Meeting of the Business Organization of the Government: "Economy in the Interest of All"

This is the seventh regular meeting of the Business Organization of the Government. The first of these meetings was held three years ago. This marks the close of three years of action under the Budget system. At the first meeting was commenced an intensive campaign in behalf of the people who pay the taxes in our country. The foes of that campaign were extravagance and inefficiency in the public service. For three years we have waged this intensive campaign. It has been a united effort, and united effort never fails of accomplishment. The people of this Nation are beginning to win. In that short space of time we have accomplished the unbelievable. Uncoordinated procedures of official action have been coordinated. Departmental interests have been made subservient to the common interests of the Government as a whole. The business of Government has been established on an efficient basis. You have done this, and for doing it you are entitled to the thanks of the American people. This has been and is their fight.

We are often told that we are a rich country, and we are. We are often reminded that we are in the best financial condition of any of the great powers, and we are. But we must remember that we also have a broader scale of existence and a higher standard of living. We have a freer Government and a more flexible organization of society. Where more is given, more is required. A tropical state of savagery almost maintains itself. American civilization is the product of a constant and mighty effort. One of the greatest perils to an extensive republic is the disregard of individual rights. In our own country such rights do not appear to be in immediate danger from direct attack, but they are always in jeopardy through indirect action.

One of the rights which the freeman has always guarded with most jealous care is that of enjoying the rewards of his own industry. Realizing that the power to tax is the power to destroy and that the power to take a certain amount of property or of income is only another way of saying that for a certain proportion of his time a citizen must work for the Government, the authority to impose a tax on the people has been most carefully guarded. Our own Constitution requires that revenue bills should originate in the House, because that body is supposed to be more representative of the people. These precautions have been taken because of the full realization that any oppression laid upon the people by excessive taxation, any disregard of their right to hold and enjoy the property which they have rightfully acquired, would be fatal to freedom. A government which lays taxes on the people not required by urgent public necessity and sound public policy is not a protector of liberty, but an instrument of tyranny. It condemns the citizen to servitude. One of the first signs of the breaking down of free government is a disregard by the taxing power of the right of the people to their own property. It makes little difference whether such a condition is brought about through the will of a dictator, through the power of a military force, or through the pressure of an organized minority. The result is the same. Unless the people can enjoy that reasonable security in the possession of their property, which is guaranteed by the Constitution, against unreasonable taxation, freedom is at an end. The common man is restrained and hampered in his ability to secure food and clothing and shelter. His wages are decreased, his hours of labor are lengthened. Against the recurring tendency in this direction there must be interposed the constant effort of an informed electorate and of patriotic public servants. The importance of a constant reiteration of these principles can not be overestimated. They can not be denied. They must not be ignored.

There is a most urgent necessity for those who are charged with the responsibility of government administration to realize that the people of our country can not maintain their own high standards, they can not compete against the lower standards of the rest of the world, unless we are free from excessive taxes.

With us economy is imperative. It is a full test of our national character. Bound up in it is the true cause, not of the property interests, not of any privilege, but of all the people. It is preeminently the source of popular rights. It is always the people who toil that pay. It seems to me, therefore, worthy of our highest endeavor. It is this which gives the real importance to this meeting.

I would not be misunderstood. I am not advocating parsimony, I want to be liberal. Public service is entitled to a suitable reward. But there is a distinct limit to the amount of public service we can profitably employ. We require national defense, but it must be limited. We need public improvements, but they must be gradual. We have to make some capital investments, but they must be certain to give fair returns. Every dollar expended must be made in the light of all our national resources, and all our national needs. It is here that the Budget system gets its strength as a method of fiscal administration.

What progress we have made in ordering the national finances is easily shown. A comparison of our receipts and expenditures for the last four years illustrates conclusively what has been accomplished during the three years of the Budget system.

For the fiscal year ending June 30, 1921, the last pre Budget year, our expenditures were $5,538,000,000 and our receipts $5,624,000,000. For the succeeding three years, which include the year which ends today, our expenditures were $3,795,000,000, $3,697,000,000 and $3,497,000,000 respectively. Here we show a progressive and consistent reduction in expenditures. On the other side of the ledger our receipts for 1922 were $4,109,000,000; 1923, $4,007, 000,000; and 1924, $3,995,000,000. An analysis of these figures shows that in the face of a progressive reduction in receipts we have still achieved a substantial surplus at the end of each of the fiscal years: $314,000,000 for 1922, $310,000,000 for 1923, and in excess of $500,000,000 for 1924. The amounts which I have stated as being the expenditures, receipts and surplus for the fiscal year 1924, which ends today, are only approximate. We will not have the actual figures until the books are finally balanced. The surplus accumulated at the end of each of the last three fiscal years has been applied to the reduction of the public debt in addition to the reductions required by law under the sinking fund and other acts. Without the aid of this recurring surplus the public debt would be $1,100,000,000 more than it now stands, and the interest charges would be some $45,000,000 greater next year than we shall now have to pay.

Along with this reduction in expenditures has gone a progressive reduction of the public debt with its attendant relief from the burden of interest. On June 30, 1921, the public debt was $23,976,000,000. In 1922 it had been reduced more than $1,000,000,000 to $22,964,000,000. In 1923 it had been reduced more than $600,000,000 to $22, 349,000,000. In 1924 it has been reduced again by more than $1,000,000,000, and stands at an estimated amount of $21,254,000,000, which is a reduction in three years of $2, 722,000,000, and means a saving of interest of more than $120,000,000 each year.

This shows that the intensive campaign which was commenced three years ago has been waged unrelentingly. In this campaign we have had the active cooperation and support of the Congress. The three budgets presented by the Chief Executive to the Congress have carried drastic, progressive reductions in their estimates for funds. Congress has adhered to Budget procedure in passing upon these estimates. The appropriations granted have been in harmony with the financial program of the Chief Executive.

When we met six months ago I stated to you that this fight for economy had but one purpose; that its benefits would accrue to the whole people through reduction in taxes. Taxes have now been reduced. Under the new tax law, tax receipts, as now estimated, will be approximately $6,000,000 per day less for 1925 than they were in 1921. While our immediate need is for tax reform, as distinguished from tax reduction, we must continue this campaign for economy so as to make possible further tax reduction. We owe this to the people of our Nation, to the people who must pay with their toil. The relief which has recently been afforded must be only the beginning. So in all your efforts, in all your sacrifices, you must bear in mind that you are making them for the people of our country. There could be no nobler cause or one showing higher patriotism. Bear in mind always that we are here as the servants of the people and that only as we serve them well and faithfully shall we succeed.

This insistent demand for economy and reduction in expenditures necessarily requires increasing efficiency of administration. I realize that it is making an ever increasing call upon the administrative ability of responsible officials. But this is a call for real service. It demands a most searching inquiry into the field of your activities so as to remove entirely from them all elements which are not essential and so as to curtail all those which may be reduced without prejudice to the welfare of the Nation. If there is any question as to the authority of heads of departments or establishments to discontinue or reduce any phase of existing work, it is my desire that they report the matter to me. The duty and the opportunity today of the Government's administrators is not to enter upon new fields of enterprise. On the other hand, it is their duty and opportunity to carry on approved and necessary activities with the smallest possible expenditure. In the past twenty years the Government's activities have developed and multiplied in a most extraordinary way. Certainly the initiation of new activities should be discouraged unless essential to the well being of the Nation. We, the administrators of the Government's great business interests, should have at this time only one thought and policy; to perform efficiently the functions devolving upon us under the law. And we should accomplish this with the smallest possible demand upon the Treasury. We have made real progress in this direction. Our responsibility to the taxpayers demands further progress.

Tomorrow we commence a new fiscal year. We will have a smaller revenue by reason of the lessening of the burden of the taxpayer under the new tax law. On the other hand, we will have an increase in our fixed charges The World War adjusted compensation act alone adds approximately $132,000,000 to our fixed charges for 1925. A real battle faces us, but we are organized for the fight. The best estimate today indicates a surplus of approximately $25,000,000 for the next fiscal year. This estimate is predicated on an expenditure program which, exclusive of the redemption of the public debt, amounts to $3,083,000,000 I desire that this expenditure program be reduced by $83, 000,000. I do not contemplate total expenditures for the next fiscal year which will exceed $3,000,000,000, exclusive of the redemption of the public debt. This will give us a surplus at the end of 1925 of $108,000,000. This, or a greater surplus, should be our aim. The people have faith in us. We must preserve this faith. Our efforts and our accomplishments are also serving as inspiration to the other nations of the world. We are setting the example for reduction in the cost of government and for return to ordinary peacetime conditions. There can be no faltering. Our duty is plain. As we have progressed in these last three years, so we must continue.

You, with your intimate knowledge of the details of your work, know where further practical economies can be effected. I desire, however, that you give especial attention to the matter of personnel. This is by far the most costly item in our expenditures. We must reduce the Government payroll. I am satisfied that it will lead to greater efficiency. And in this same connection I desire careful scrutiny of travel orders. Our travel expense item is too great. An order for travel should be given only when absolutely necessary. You can effect economy in this item. A further fertile field for economy is the item of printing and binding. I am sometimes startled at the number of Government publications which come to my attention. It can not be that all are necessary.

In this effort for economy and efficiency in the Federal service the coordinating agencies created by Executive order have played a most important part. The necessity and value of coordination have been clearly demonstrated. It has brought the departments and establishments into intimate contact. Contradictory plans, conflicting procedures, have been supplanted by common plans and harmonious procedures. It is essential that this work go on. I realize the heavy demands upon the members of the several coordinating boards. They have also their departmental work to perform. This calls again for a real sacrifice, but for a sacrifice in the interest of the taxpayers.

You are now preparing your preliminary estimates for the fiscal year 1926. For that fiscal year it will be my purpose to transmit to Congress estimates of appropriations which, excluding the interest on and reduction in the public debt, and the Postal Service, will not exceed a total of $1,800,000,000. This tentative limitation is in furtherance of my program for a progressive reduction in the cost of government.

I regret that there are still some officials who apparently feel that the estimates transmitted to the Bureau of the Budget are the estimates which they are authorized to advocate before the committees of the Congress. Let me say here that under the budget and accounting act the only lawful estimates are those which the Chief Executive transmits to the Congress. It is these estimates that call for your loyal support. Unless such support be given, you are not fulfilling your obligations to your office. I trust that neither the Chief Executive nor the Appropriations Committees of Congress again will have occasion to call your attention to the provisions of the budget and accounting act. This law must be observed not only in its letter but in its spirit. I herewith serve notice again as Chief Executive that I propose to protect the integrity of my budget.

We must have no carelessness in our dealings with public property or the expenditure of public money. Such a condition is characteristic either of an undeveloped people, or of a decadent civilization. America is neither. It stands out strong and vigorous and mature. We must have an administration which is marked, not by the inexperience of youth, or the futility of age, but by the character and ability of maturity. We have had the self control to put into effect the Budget system, to live under it and in accordance with it. It is an accomplishment in the art of self government of the very highest importance. It means that the American Government is not a spendthrift, and that it is not lacking in the force or disposition to organize and administer its finances in a scientific way. To maintain this condition puts us constantly on trial. It requires us to demonstrate whether we are weaklings, or whether we have strength of character. It is not too much to say that it is a measure of the power and integrity of the civilization which we represent. I have a firm faith in your ability to maintain this position, and in the will of the American people to support you in that determination. In that faith in you and them, I propose to persevere. I am for economy. After that I am for more economy. At this time and under present conditions that is my conception of serving all the people.

I will now turn this meeting over to General Lord, the Director of the Bureau of the Budget. He is human. He hates to say no. But he is a brave man, and he does his duty without fear or favor. This Nation is his debtor. He will tell you more in detail of the things which have been accomplished and of the work which lies before you under the financial program which I have outlined to you. But let me leave this final word with you. So far as it is within my power I will not permit increases in expenditures that threaten to prevent further tax reduction or that contemplate such an unthinkable thing as increase in taxes. If with increasing business our revenues increase, such increase should not be absorbed in new ways of spending. They should be applied to the lowering of taxes. In that direction lies the public welfare.