In all of these efforts the government has come to the assistance of business and with the full expectation that the money used to assist these enterprises will eventually be repaid. I believe it will be.
The second step we have taken in the restoration of normal business enterprise has been to clean up thoroughly unwholesome conditions in the field of investment. In this we have had assistance from many bankers and businessmen, most of whom recognize the past evils in the banking system, in the sale of securities, in the deliberate encouragement of stock gambling, in the sale of unsound mortgages and in many other ways in which the public lost billions of dollars. They saw that without changes in the policies and methods of investment there could be no recovery of public confidence in the security of savings. The country now enjoys the safety of bank savings under the new banking laws, the careful checking of new securities under the Securities Act and the curtailment of rank stock speculation through the Securities Exchange Act. I sincerely hope that as a result people will be discouraged in unhappy efforts to get rich quick by speculating in securities. The average person almost always loses. Only a very small minority of the people of this country believe in gambling as a substitute for the old philosophy of Benjamin Franklin that the way to wealth is through work.
In meeting the problems of industrial recovery the chief agency of the government has been the National Recovery Administration. Under its guidance, trades and industries covering over 90 percent of all industrial employees have adopted codes of fair competition, which have been approved by the President. Under these codes, in the industries covered, child labor has been eliminated. The work day and the work week have been shortened. Minimum wages have been established and other wages adjusted toward a rising standard of living. The emergency purpose of the N.R.A. was to put men to work and since its creation more than four million persons have been reemployed, in great part through the cooperation of American business brought about under the codes.
Benefits of the Industrial Recovery Program have come, not only to labor in the form of new jobs, in relief from overwork and in relief from underpay, but also to the owners and managers of industry because, together with a great increase in the payrolls, there has come a substantial rise in the total of industrial profits—a rise from a deficit figure in the first quarter of 1933 to a level of sustained profits within one year from the inauguration of N.R.A.
Now it should not be expected that even employed labor and capital would be completely satisfied with present conditions. Employed workers have not by any means all enjoyed a return to the earnings of prosperous times, although millions of hitherto underprivileged workers are today far better paid than ever before. Also, billions of dollars of invested capital have today a greater security of present and future earning power than before. This is because of the establishment of fair, competitive standards and because of relief from unfair competition in wage cutting which depresses markets and destroys purchasing power. But it is an undeniable fact that the restoration of other billions of sound investments to a reasonable earning power could not be brought about in one year. There is no magic formula, no economic panacea, which could simply revive over-night the heavy industries and the trades dependent upon them.
Nevertheless the gains of trade and industry, as a whole, have been substantial. In these gains and in the policies of the administration there are assurances that hearten all forward- looking men and women with the confidence that we are definitely rebuilding our political and economic system on the lines laid down by the New Deal—lines which as I have so often made clear, are in complete accord with the underlying principles of orderly popular government which Americans have demanded since the white man first came to these shores. We count, in the future as in the past, on the driving power of individual initiative and the incentive of fair private profit, strengthened with the acceptance of those obligations to the public interest which rest upon us all. We have the right to expect that this driving power will be given patriotically and whole-heartedly to our nation.
We have passed through the formative period of code making in the National Recovery Administration and have effected a reorganization of the N.R.A. suited to the needs of the next phase, which is, in turn, a period of preparation for legislation which will determine its permanent form.
In this recent reorganization we have recognized three distinct functions: first, the legislative or policy making function; second, the administrative function of code making and revision; and, third, the judicial function, which includes enforcement, consumer complaints and the settlement of disputes between employers and employees and between one employer and another.
We are now prepared to move into this second phase, on the basis of our experience in the first phase under the able and energetic leadership of General Johnson.
We shall watch carefully the working of this new machinery for the second phase of N.R.A., modifying it where it needs modification and finally making recommendations to the Congress, in order that the functions of N.R.A. which have proved their worth may be made a part of the permanent machinery of government.