A balanced budget is an essential first measure in checking further depreciation in the buying power of the dollar.  This is one of the critical steps to be taken to bring an end to planned inflation.  Our purpose is to manage the Government’s finances so as to help and not hinder each family in balancing its own budget.

Reduction of taxes will be justified only as we show we can succeed in bringing the budget under control.  As the budget is balanced and inflation checked, the tax burden that today stifles initiative can and must be eased.

Until we can determine the extent to which expenditures can be reduced, it would not be wise to reduce our revenues.

Meanwhile, the tax structure as a whole demands review.  The Secretary of the Treasury is undertaking this study immediately.  We must develop a system of taxation which will impose the least possible obstacle to the dynamic growth of the country.  This includes particularly real opportunity for the growth of small businesses.  Many readjustments in existing taxes will be necessary to serve these objectives and also to remove existing inequities.  Clarification and simplification in the tax laws as well as the regulations will be undertaken.

In the entire area of fiscal policy—­which must, in its various aspects, be treated in recommendations to the Congress in coming weeks—­there can now be stated certain basic facts and principles.

First.  It is axiomatic that our 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.