It is gratifying to report that for the fourth consecutive year the state of the Union in general is good.  We are at peace.  The country as a whole has had a prosperity never exceeded.  Wages are at their highest range, employment is plentiful.  Some parts of agriculture and industry have lagged; some localities have suffered from storm and flood.  But such losses have been absorbed without serious detriment to our great economic structure.  Stocks of goods are moderate and a wholesome caution is prevalent.  Rates of interest for industry, agriculture, and government have been reduced.  Savers and investors are providing capital for new construction in industry and public works.  The purchasing power of agriculture has increased.  If the people maintain that confidence which they are entitled to have in themselves, in each other, and in America, a comfortable prosperity will continue.

CONSTRUCTIVE ECONOMY

Without constructive economy in Government expenditures we should not now be enjoying these results or these prospects.  Because we are not now physically at war, some people are disposed to forget that our war debt still remains.  The Nation must make financial sacrifices, accompanied by a stern self-denial in public expenditures, until we have conquered the disabilities of our public finance.  While our obligation to veterans and dependents is large and continuing, the heavier burden of the national debt is being steadily eliminated.  At the end of this fiscal year it will be reduced from about $26,600,000,000 to about $17,975,000,000.  Annual interest, including war savings, will have been reduced from $1,055,000,000 to $670,0001,000.  The sacrifices of the people, the economy of the Government, are showing remarkable results.  They should be continued for the purpose of relieving the Nation of the burden of interest and debt and releasing revenue for internal improvements and national development.

Not only the amount, but the rate, of Government interest has been reduced.  Callable bonds have been refunded and paid, so that during this year the average rate of interest on the present public debt for the first time fell below 4 per cent.  Keeping the credit of the Nation high is a tremendously profitable operation.

TAX REDUCTION

The immediate fruit of economy and the retirement of the public debt is tax reduction.  The annual saving in interest between 1925 and 1929 is $212,000,000.  Without this no bill to relieve the taxpayers would be worth proposing.  The three measures already enacted leave our Government revenues where they are not oppressive.  Exemptions, have been increased until 115,000,000 people make but 2,500,000 individual taxable returns, so that further reduction should be mainly for the purpose of removing inequalities.  The Secretary of the Treasury has recommended a measure which would give us a much better balanced system of taxation and without oppression produce sufficient revenue.  It has my complete support.