To the Senate and House of Representatives: No nation has greater resources than ours and I think it can be truthfully said that the citizens of no nation possess greater energy and industrial ability. In no nation are the fundamental business conditions sounder than in ours at this very moment; and it is foolish, when such is the case, for people to hoard money instead of keeping it in sound banks; for it is such hoarding that is the immediate occasion of money stringency. Moreover, as a rule the business of our people is conducted with honesty and probity and this applies alike to farms and factories, to railroads and banks, to all our legitimate commercial enterprises. SHOULD PUNISH RECKLESS FINANCIERS. In any large body of men, however, there are certain to be some who are dishonest and if the conditions are such that these men prosper or commit their misdeeds with impunity their example is a very evil thing for the community. Where these men are business men of great sagacity and of temperament both unscrupulous and reckless, and where the conditions are such that they act without supervision or control and at first without effective check from public opinion they delude many innocent people into making investments or embarking in kinds of business that are really unsound. When the misdeeds of these successfully dishonest men are discovered suffering comes not only upon them, but upon the innocent men whom they have misled. It is a pain-ful awakening whenever it occurs; and naturally when it does occur those who suffer are apt to forget that the longer it was deferred the more painful it would be. In the effort to punish the guilty it is both wise and proper to endeavor so far as possible to minimize the distress of those who have been misled by the guilty. Yet it is not possible to refrain because of such distress from striving to put an end to the misdeeds that are the ultimate causes of the suffering and as a means to this end where possible to punish those responsible for them. There may be honest differences of opinion as to many, governmental policies, but surely there can be no such differences as to the need of unflinching perseverance in the war against successful dishonesty.

QUOTES FROM FORMER MESSAGE.

In my message to the congress on Dec. 5, 1905, I said:

"If the folly of man mars the general well-being then those who are innocent of the folly will have to pay part of the penalty incurred by those who are guilty of the folly. A panic brought on by the speculative folly of part of the business community would hurt the whole business community; but such stoppage of welfare, though it might be severe, would not be lasting. In the long run the one vital factor in the permanent prosperity of the country is the high individual character of the average American worker, the average American citizen, no matter whether his work be mental or manual, whether he be farmer or wage worker, business man or professional man. "In our industrial and social system the interests of all men are so closely intertwined that in the immense majority of cases a straight-dealing man who by his efficiency, by his ingenuity and industry benefits himself must also benefit others. Normally the man of great productive capacity who becomes rich by guiding the labor of many other men does so by enabling them to produce more than they could produce without his guidance; and both he and they share in the benefit, which comes also to the public at large. The superficial fact that the sharing may be unequal must never blind us to the underlying fact that there is this sharing and that the benefit comes in some degree to each man concerned. Normally the wage worker, the man of small means and the average consumer as well as the average producer, are all alike helped by making conditions such that the man of exceptional business ability receives an exceptional reward for his ability.

"Something can be done by legislation to help

the general prosperity, but no such help of a permanently beneficial character can be given to the less able and less fortunate save as the results of a policy which shall inure to the advantage of all industrious and efficient people who act decently; and this is only another way of saying that any benefit which comes to the less able and less fortunate must of necessity come even more to the more able and more fortunate. If, therefore, the less fortunate man is moved by envy of his more fortunate brother to strike at the conditions under which they have both, though unequally, prospered, the result will assuredly be that while damage may come to the one struck at, it will visit with an even heavier load the one who strikes the blow. Taken as a whole, we must all go up or down together.

"Yet, while not merely admitting, but insisting upon this, it is also true that where there is no governmental restraint or supervision some of the exceptional men use their energies, not in ways that are for the common good, but in ways which tell against this common good. The fortunes amassed through corporate organization are now so large and vest such power in those that wield them as to make it a matter of necessity to give to the sovereign-that is, to the government, which represents the people as a wholesome effective power of supervision over their corporate use. In order to insure a healthy social and industrial life every big corporation should be held responsible by and be accountable to some Sovereign strong enough to control its conduct. I am in no sense hostile to corporations. This is an age of combination and any effort to prevent all combination will be not only useless but in the end vicious, because of the contempt for law which the failure to enforce law inevitably produces. We should, moreover, recognize in cordial and ample fashion the immense good effected by corporate agencies in a country such as ours and the wealth of intellect, energy and fidelity devoted to their service and therefore normally to the service of the public by their officers and directors. The corporation has come to stay, just as the trade union has come to stay. Each can do and has done great good. Each should be favored so long as it does good. But each should be sharply checked where it acts against law and justice.

66 * * * The makers of our national constitution provided especially that the regulation of interstate commerce should come within the sphere of the general government. The arguments in favor of their taking this stand were even then overwhelming. But they are far stronger to-day in view of the enormous development of great business agencies, usually corporate in form. Experience has shown conclusively that it is useless to try to get any adequate regulation and supervision of these great corporations by state action. Such regulation and supervision can only be effectively exercised by a sovereign whose jurisdiction is coextensive with the field of work of the corporations -that is, by the national government. I believe that this regulation and supervision can be obtained by the enactment of law by the congress. * * *Our steady aim should be by legislation, cautiously and carefully undertaken, but resolutely persevered in, to assert the sovereignty of the national government by affirmative action.

"This is only in form an innovation. In substance it is merely a restoration; for from the earliest time such regulation of industrial activities has been recognized in the action of the lawmaking bodies; and all that I propose is to meet the changed conditions in such manner as will prevent the commonwealth abdicating the power it has always possessed, not only in this country, but also in England before and since this country became a separate nation.

"It has been a misfortune that the national laws on this subject have hitherto been of a negative or prohibitive rather than an affirmative kind and still more that they have in part sought to prohibit what could not be effectively prohibited and have in part in their prohibitions confounded what should be allowed and what should not be allowed.

It is generally useless to try to prohibit all restraint on competition, whether this restraint be reasonable or unreasonable; and where it is not useless it is generally hurtful. * The suc

cessful prosecution of one device to evade the law immediately develops another device to accomplish the same purpose. What is needed is not sweeping prohibition of every arrangement, good or bad, which may tend to restrict competition, but such adequate supervision and regulation as will prevent any restriction of competition from being to the detriment of the public, as well as such supervision and regulation as will prevent other abuses in no way connected with restriction of competition."

I have called your attention in these quotations to what I have already said because I am satisfied that it is the duty of the national government to embody in action the principles thus expressed. CONSTITUTION AND COMMERCE.

No small part of the trouble that we have comes from carrying to an extreme the national virtue of self-reliance, of independence in initiative and action. It is wise to conserve this virtue and to provide for its fullest exercise, compatible with seeing that liberty does not become a liberty to wrong others. Unfortunately this is the kind of liberty that the lack of all effective regulation inevitably breeds. The founders of the constitution provided that the national government should have complete and sole control of interstate commerce. There was then practically no interstate business save such as was conducted by water, and this the national government at once proceeded to regulate in thoroughgoing and effective fashion. Conditions have now so wholly changed that the interstate commerce by water is insignificant compared with the amount that goes by land, and almost all big business concerns are now engaged in interstate commerce. As a result, it can be but partially and imperfectly controlled or regulated by the action of any one of the several states, such action inevitably tending to be either too drastic or else too lax, and in either case ineffective for purposes of justice. Only the national government can in thoroughgoing fashion exercise the needed control.

This does not mean that there should be any extension of federal authority, for such authority already exists under the constitution in amplest and most far-reaching form: but it does mean that there should be an extension of federal activity. This is not advocating centralization. It is merely looking facts in the face and realizing that centralization in business has already come and cannot be avoided or undone, and that the public at large can only protect itself from certain evil effects of this business centralization by providing better methods for the exercise of control through the authority already centralized in the national government by the constitution itself. There must be no halt in the healthy constructive course of action which this nation has elected to pursue and has steadily pursued during the last six years, as shown both in the legislation of the congress and the administration of the law by the department of justice.

NATIONAL LICENSE FOR RAILROADS. The most vital need is in connection with the railroads. As to these, in my judgment there should now be either a ational incorporation act or a law licensing railway companies to engage in interstate commerce upon certain conditions. The law should be so framed as to give to the interstate-commerce commission power to pass upon the future issue of securities, while ample means should be provided to enable the commission, whenever in its judgment it is necessary, to make a physical valuation of any railroad.

As I stated in my message to the congress a year ago, railroads should be given power to enter into agreements, subject to these agreements being made public in minute detail and to the consent of the interstate-commerce commission being first obtained. Until the national government assumes proper control of interstate commerce, in the exercise of the authority it already possesses, it will be impossible either to give or to get from the

railroads full justice. The railroads and all other great corporations will do well to recognize that this control must come: the only question is as to what governmental body can most wisely exercise it. The courts will determine the limits within which the federal authority can exercise it and there will still remain ample work within each state for the railway commission of that state, and the national interstate-commerce commission will work in harmony with the several state commissions, each within its own province, to achieve the desired end.

CONTROL OF CORPORATIONS.

Moreover, in my judgement there should be additional legislation looking to the proper control of the great business concerns engaged in interstate business, this control to be exercised for their own benefit and prosperity no less than for the protection of investors and of the general public. As I have repeatedly said in messages to the congress and elsewhere, experience has definitely shown not merely the unwisdom but the futility of endeavoring to put a stop to all business combinations. Modern industrial conditions are such that combination is not only necessary but inevitable. It is so in the world of business just as it is so in the world of labor, and it is as idle to desire to put an end to all corporations, to all big combinations of capital, as to desire to put an end to combinations of labor. Corporation and labor union alike have come to stay. Each if properly managed is a source of good and not evil. Whenever in either there is evil it should be promptly held to account, but it should receive hearty encouragement so long as it is properly managed. It is profoundly immoral to put or keep on the statute books a law, nominally in the interest of public morality that really puts a premium upon public immorality, by undertaking to forbid honest men from doing what must be done under modern business conditions, so that the law itself provides that its own infraction must be the condition precedent upon business success.

TO AIM AT TOO MUCH HARMFUL.

To aim at the accomplishment of too much usually means the accomplishment of too little, and often the doing of positive damage. In my message to the congress a year ago, in speaking of the antitrust laws, I said:

"The actual working of our laws has shown that the effort to prohibit all combination, good or bad, is noxious where it is not ineffective. Combination of capital, like combination of labor, is a necessary element in our present industrial system. It is not possible completely to prevent it, and if it were possible such complete prevention would do damage to the body polític. What we need is not vainly to try to prevent all combination, but to secure such rigorous and adequate control and supervision of the combinations as to prevent their injuring the public or existing in such forms as inevitably to threaten injury. * * * It is unfortunate that our present laws should forbid all combinations instead of sharply discriminating between those combinations which do good and those combinations which do evil. Often railroads would like to combine for the purpose of preventing a big shipper from maintaining improper advantages at the expense of small shippers and of the general public. Such a combination, instead of being forbidden by law, should be favored.. * * *

*

"It is a public evil to have on the statute books a law incapable of full enforcement, because both judges and juries realize that its full enforcement would destroy the business of the country, for the result is to make decent men violators of the law against their will and to put a premium on the behavior of the willful wrongdoers. Such a result in turn tends to throw the decent man and the willful wrongdoer into close association, and in the end to drag down the former to the latter's level, for the man who becomes a lawbreaker in one way unhappily tends to lose all respect for law and to be willing to break it in many ways. No more scathing condemnation could be visited upon a law than is contained in the words of the interstatecommerce commission when, in commenting upon