State of the Union | Page 5

economy is a highly complex and
sensitive mechanism. Hasty and ill-considered action of any kind could
seriously upset the subtle equation that encompasses debts, obligations,
expenditures, defense demands, deficits, taxes, and the general
economic health of the Nation. Our goals can be clear, our start toward
them can be immediate--but action must be gradual.
Second. It is clear that too great a part of the national debt comes due in
too short a time. The Department of the Treasury will undertake at
suitable times a program of extending part of the debt over longer
periods and gradually placing greater amounts in the hands of
longer-term investors.
Third. Past differences in policy between the Treasury and the Federal
Reserve Board have helped to encourage inflation. Henceforth, I expect
that their single purpose shall be to serve the whole Nation by policies
designed to stabilize the economy and encourage the free play of our
people's genius for individual initiative.

In encouraging this initiative, no single item in our current problems
has received more thoughtful consideration by my associates, and by
the many individuals called into our counsels, than the matter of price
and wage control by law.
The great economic strength of our democracy has developed in an
atmosphere of freedom. The character of our people resists artificial
and arbitrary controls of any kind. Direct controls, except those on
credit, deal not with the real causes of inflation but only with its
symptoms. In times of national emergency, this kind of control has a
role to play. Our whole system, however, is based upon the assumption
that, normally, we should combat wide fluctuations in our price
structure by relying largely on the effective use of sound fiscal and
monetary policy, and upon the natural workings of economic law.
Moreover, American labor and American business can best resolve
their wage problems across the bargaining table. Government should
refrain from sitting in with them unless, in extreme cases, the public
welfare requires protection.
We are, of course, living in an international situation that is neither an
emergency demanding full mobilization, nor is it peace. No one can
know how long this condition will persist. Consequently, we are forced
to learn many new things as we go along-clinging to what works,
discarding what does not.
In all our current discussions on these and related facts, the weight of
evidence is clearly against the use of controls in their present forms.
They have proved largely unsatisfactory or unworkable. They have not
prevented inflation; they have not kept down the cost of living.
Dissatisfaction with them is wholly justified. I am convinced that
now--as well as in the long run--free and competitive prices will best
serve the interests of all the people, and best meet the changing,
growing needs of our economy.
Accordingly, I do not intend to ask for a renewal of the present wage
and price controls on April 30, 1953, when present legislation expires.
In the meantime, steps will be taken to eliminate controls in an orderly
manner, and to terminate special agencies no longer needed for this
purpose. It is obviously to be expected that the removal of these
controls will result in individual price changes--some up, some down.
But a maximum of freedom in market prices as well as in collective

bargaining is characteristic of a truly free people.
I believe also that material and product controls should be ended,
except with respect to defense priorities and scarce and critical items
essential for our defense. I shall recommend to the Congress that
legislation be enacted to continue authority for such remaining controls
of this type as will be necessary after the expiration of the existing
statute on June 30, 1953.
I recommend the continuance of the authority for Federal control over
rents in those communities in which serious housing shortages exist.
These are chiefly the so-called defense areas. In these and all areas the
Federal Government should withdraw from the control of rents as soon
as practicable. But before they are removed entirely, each legislature
should have full opportunity to take over, within its own State,
responsibility for this function.
It would be idle to pretend that all our problems in this whole field of
prices will solve themselves by mere Federal withdrawal from direct
controls.
We shall have to watch trends closely. If the freer functioning of our
economic system, as well as the indirect controls which can be
appropriately employed, prove insufficient during this period of strain
and tension, I shall promptly ask the Congress to enact such legislation
as may be required.
In facing all these problems--wages, prices, production, tax rates, fiscal
policy, deficits--everywhere we remain constantly mindful that the time
for sacrifice has not ended. But we are concerned with the
encouragement of competitive enterprise and individual initiative
precisely because