Mr. President, Mr. Speaker, Members of the Congress of the United States: It looks like a good many of you have moved over to the left since I was here last! I come before you today to report on the State of the Union and, in the words of the Constitution, to recommend such measures as I judge necessary and expedient.

  I come also to welcome you as you take up your duties and to discuss with you the manner in which you and I should fulfill our obligations to the American people during the next 2 years. The power to mold the future of this Nation lies in our hands -- yours and mine, and they are joined together by the Constitution.

  If in this year, and in the next, we can find the right course to take as each issue arises, and if, in spite of all difficulties, we have the courage and the resolution to take that course, then we shall achieve a state of well-being for our people without precedent in history. And if we continue to work with the other nations of the world earnestly, patiently, and wisely, we can -- granting a will for peace on the part of our neighbors-make a lasting peace for the world.

  But, if we are to realize these ends, the Congress and the President, during the next 2 years, must work together. It is not unusual in our history that the majority of the Congress represents a party in opposition to the President's party. I am the twentieth President of the United States who, at some time during his term of office, has found his own party to be in the minority in one or both Houses of Congress.

  The first one was George Washington. Wilson was number eighteen, and Hoover was number nineteen. I realize that on some matters the Congress and the President may have honest differences of opinion. Partisan differences, however, did not cause material disagreements as to the conduct of the war. Nor, in the conduct of our international relations, during and since the war, have such partisan differences been material.

  On some domestic issues we may, and probably shall, disagree. That in itself is not to be feared. It is inherent in our form of Government. But there are ways of disagreeing; men who differ can still work together sincerely for the common good. We shall be risking the Nation's safety and destroying our opportunities for progress if we do not settle any disagreements in this spirit, without thought of partisan advantage.

  THE GENERAL DOMESTIC ECONOMY

  As the year 1947 begins, the state of our national economy presents great opportunities for all. We have virtually full employment. Our national production of goods and services is 50 percent higher than in any year prior to the war emergency. The national income in 1946 was higher than in any peacetime year.

  Our food production is greater than it has ever been. During the last 5 years our productive facilities have been expanded in almost every field. The American standard of living is higher now than ever before, and when the housing shortage can be overcome it will be even higher. During the past few months we have removed at a rapid rate the emergency controls that the Federal Government had to exercise during the war.

  The remaining controls will be retained only as long as they are needed to protect the public. Private enterprise must be given the greatest possible freedom to continue the expansion of economy. In my proclamation of December 31, 1946 I announced the termination of hostilities. This automatically ended certain temporary legislation and certain executive powers.

  Two groups of temporary laws still remain: the first are those which by Congressional mandate are to last during the "emergency"; the second are those which are to continue until the "termination of the war," I shall submit to the Congress recommendations for the repeal of certain of the statutes which by their terms continue for the duration of the "emergency." I shall at the same time recommend that others within this classification be extended until the state of war has been ended by treaty or by legislative action.

  As to those statutes which continue until the state of war has been terminated, I urge that the Congress promptly consider each statute individually, and repeal such emergency legislation where it is advisable. Now that nearly all wartime controls have been removed, the operation of our industrial system depends to a greater extent on the decisions of businessmen, farmers, and workers.

  These decisions must be wisely made with genuine concern for public welfare. The welfare of businessmen, farmers, and workers depends upon the economic well-being of those who buy their products. An important present source of danger to our economy is the possibility that prices might be raised to such an extent that the consuming public could not purchase the tremendous volume of goods and services which will be produced during 1947. We all know that recent price increases have denied to many of our workers much of the value of recent wage increases.

  Farmers have found that a large part of their increased income has been absorbed by increased prices. While some of our people have received raises in income which exceed price increases, the great majority have not. Those persons who live on modest fixed incomes -- retired persons living on pensions, for example -- and workers whose incomes are relatively inflexible, such as teachers and other civil servants -- have suffered hardship.

  In the effort to bring about a sound and equitable price structure, each group of our population has its own responsibilities. It is up to industry not only to hold the line on existing prices, but to make reductions whenever profits justify such action. It is up to labor to refrain from pressing for unjustified wage increases that will force increases in the price level.

  And it is up to Government to do everything in its power to encourage high-volume Production, for that is what makes possible good wages, low prices, and reasonable profits. In a few days there will be submitted to the Congress the Economic Report of the President, and also the Budget Message. Those messages will contain many recommendations.

  Today I shall outline five major economic policies which I believe the Government should pursue during 1947. These policies are designed to meet our immediate needs and, at the same time, to provide for the long-range welfare of our free enterprise system: First, the promotion of greater harmony between labor and management.

  Second, restriction of monopoly and unfair business practices; assistance to small business; and the promotion of the free competitive system of private enterprise. Third, continuation of an aggressive program of home construction. Fourth, the balancing of the budget in the next fiscal year and the achieving of a substantial surplus to be applied to the reduction of the public debt.

  Fifth, protection of a fair level of return to farmers in post-war agriculture.

  LABOR AND MANAGEMENT

  The year just past -- like the year after the first World War -- was marred by labor management strife. Despite this outbreak of economic warfare in 1946, we are today producing goods and services in record volume.

  Nevertheless, it is essential to improve the methods for reaching agreement between labor and management and to reduce the number of strikes and lockouts. We must not, however, adopt punitive legislation. We must not in order to punish a few labor leaders, pass vindictive laws which will restrict the proper rights of the rank and file of labor.

  We must not, under the stress of emotion, endanger our American freedoms by taking ill-considered action which will lead to results not anticipated or desired. We must remember, in reviewing the record of disputes in 1946, that management shares with labor the responsibility for failure to reach agreements which would have averted strikes.

  For that reason, we must realize that industrial peace cannot be achieved merely by laws directed against labor unions. During the last decade and a half, we have established a national labor policy in this country based upon free collective bargaining as the process for determining wages and working conditions.

  That is still the national policy. And it should continue to be the national policy! But as yet, not all of us have learned what it means to bargain freely and fairly. Nor have all of us learned to carry the mutual responsibilities that accompany the right to bargain. There have been abuses and harmful practices which limit the effectiveness of our system of collective bargaining.

  Furthermore, we have lacked sufficient governmental machinery to aid labor and management in resolving their differences. Certain labor-management problems need attention at once and certain others, by reason of their complexity, need exhaustive investigation and study. We should enact legislation to correct certain abuses and to provide additional governmental assistance in bargaining.

  But we should also concern ourselves with the basic causes of labor-management difficulties. In the light of these considerations, I propose to you and urge your cooperation in effecting the following four-point program to reduce industrial strife: Point number one is the early enactment of legislation to prevent certain unjustifiable practices.

  First, under this point, are jurisdictional strikes. In such strikes the public and the employer are innocent bystanders who are injured by a collision between rival unions. This type of dispute hurts production, industry, and the public -- and labor itself. I consider jurisdictional strikes indefensible.

  The National Labor Relations Act provides procedures for determining which union represents employees of a particular employer. In some jurisdictional disputes, however, minority unions strike to compel employers to deal with them despite a legal duty to bargain with the majority union. Strikes to compel an employer to violate the law are inexcusable.

  Legislation to prevent such strikes is clearly desirable. Another form of inter-union disagreement is the jurisdictional strike involving the question of which labor union is entitled to perform a particular task. When rival unions are unable to settle such disputes themselves, provision must be made for peaceful and binding determination of the issues.

  A second unjustifiable practice is the secondary boycott, when used to further jurisdictional disputes or to compel employers to violate the National Labor Relations Act. Not all secondary boycotts are unjustified. We must judge them on the basis of their objectives. For example, boycotts intended to protect wage rates and working conditions should be distinguished from those in furtherance of jurisdictional disputes.

  The structure of industry sometimes requires unions, as a matter of self-preservation, to extend the conflict beyond a particular employer. There should be no blanket prohibition against boycotts. The appropriate goal is legislation which prohibits secondary boycotts in pursuance of unjustifiable objectives, but does not impair the union's right to preserve its own existence and the gains made in genuine collective bargaining.

  A third practice that should be corrected is the use of economic force, by either labor or management, to decide issues arising out of the interpretation of existing contracts. Collective bargaining agreements, like other contracts, should be faithfully adhered to by both parties. In the most enlightened union-management relationships, disputes over the interpretation of contract terms are settled peaceably by negotiation or arbitration.

  Legislation should be enacted to provide machinery whereby unsettled disputes concerning the interpretation of an existing agreement may be referred by either party to final and binding arbitration. Point number two is the extension of facilities within the Department of Labor for assisting collective bargaining.

  One of our difficulties in avoiding labor strife arises from a lack of order in the collective bargaining process. The parties often do not have a dear understanding of their responsibility for settling disputes through their own negotiations. We constantly see instances where labor or management resorts to economic force without exhausting the possibilities for agreement through the bargaining process.

  Neither the parties nor the Government have a definite yardstick for determining when and how Government assistance should be invoked. There is need for integrated governmental machinery to provide the successive steps of mediation, voluntary arbitration, and -- ultimately in appropriate cases -- ascertainment of the facts of the dispute and the reporting of the facts to the public.

  Such machinery would facilitate and expedite the settlement of disputes. Point number three is the broadening of our program of social legislation to alleviate the causes of workers' insecurity. On June 11, 1946, in my message vetoing the Case Bill, I made a comprehensive statement of my views concerning labor-management relations.

  I said then, and I repeat now, that the solution of labor-management difficulties is to be found not only in legislation dealing directly with labor relations, but also in a program designed to remove the causes of insecurity felt by many workers in our industrial society. In this connection, for example, the Congress should consider the extension and broadening of our social security system, better housing, a comprehensive national health program, and provision for a fair minimum wage.

  Point number four is the appointment of a Temporary Joint Commission to inquire into the entire field of labor-management relations. I recommend that the Congress provide for the appointment of a Temporary Joint Commission to undertake this broad study. The President, the Congress, and management and labor have a continuing responsibility to cooperate in seeking and finding the solution of these problems.

  I therefore recommend that the Commission be composed as follows: twelve to be chosen by the Congress from members of both parties in the House and the Senate, and eight representing the public, management and labor, to be appointed by the President. The Commission should be charged with investigating and making recommendations upon certain major subjects, among others: First, the special and unique problem of nationwide strikes in vital industries affecting the public interest.

  In particular, the Commission should examine into the question of how to settle or prevent such strikes without endangering our general democratic freedoms. Upon a proper solution of this problem may depend the whole industrial future of the United States. The paralyzing effects of a nationwide strike in such industries as transportation, coal, oil, steel, or communications can result in national disaster.

  We have been able to avoid such disaster, in recent years, only by the use of extraordinary war powers. All those powers will soon be gone. In their place there must be created an adequate system and effective machinery in these vital fields. This problem will require careful study and a bold approach, but an approach consistent with the preservation of the rights of our people.

  The need is pressing. The Commission should give this its earliest attention. Second, the best methods and procedures for carrying out the collective bargaining process. This should include the responsibilities of labor and management to negotiate freely and fairly with each other, and to refrain from strikes or lockouts until all possibilities of negotiation have been exhausted.

  Third, the underlying causes of labor management disputes. Some of the subjects presented here for investigation involve long-range study. Others can be considered immediately by the Commission and its recommendations can be submitted to the Congress in the near future. I recommend that this Commission make its first report, including specific legislative recommendations, not later than March 15, 1947.

  RESTRICTION OF MONOPOLY AND PROMOTION OF PRIVATE ENTERPRISE

  The second major policy I desire to lay before you has to do with the growing concentration of economic power and the threat to free competitive private enterprise.

  In 1941 the Temporary National Economic Committee completed a comprehensive investigation into the workings of the national economy. The Committee's study showed that, despite a half century of anti-trust law enforcement, one of the gravest threats to our welfare lay in the increasing concentration of power in the hands of a small number of giant organizations.

  During the war, this long-standing tendency toward economic concentration was accelerated. As a consequence, we now find that to a greater extent than ever before, whole industries are dominated by one or a few large organizations which can restrict production in the interest of higher profits and thus reduce employment and purchasing power.

  In an effort to assure full opportunity and free competition to business we will vigorously enforce the anti-trust laws. There is much the Congress can do to cooperate and assist in this program. To strengthen and enforce the laws that regulate business practices is not enough. Enforcement must be supplemented by positive measures of aid to new enterprises.

  Government assistance, research programs, and credit powers should be designed and used to promote the growth of new firms and new industries. Assistance to small business is particularly important at this time when thousands of veterans who are potential business and industrial leaders are beginning their careers.