swift and almost painless reconversion from war to peace, in 1945 and 1946; for quick reaction and recovery—­well before Korea—­from the beginnings of recession in 1949.  Above all, this live and vital economy of ours has now shown the remarkable capacity to sustain a great mobilization program for defense, a vast outpouring of aid to friends and allies all around the world—­and still to produce more goods and services for peaceful use at home than we have ever known before.

This has been our answer, up to now, to those who feared or hoped for a depression in this country.

How have we handled our national finances?  That was another question arising at war’s end.  In the administration of the Government, no problem takes more of the President’s time, year in and year out, than fashioning the Budget, and the related problem of managing the public debt.

Financing World War II left us with a tremendous public debt, which reached 279 billion dollars at its peak in February, 1946.

Beginning in July, 1946, when war and reconversion financing had ended, we have held quite closely to the sound standard that in times of high employment and high national income, the Federal Budget should be balanced and the debt reduced.

For the four fiscal years from July 1, 1946, to June 30, 1950, we had a net surplus of 4.3 billion dollars.  Using this surplus, and the Treasury’s excess cash reserves, the debt was reduced substantially, reaching a low point of 251 billion dollars in June, 1949, and ending up at 257 billion dollars on June 30, 1950.

In July of 1950, we began our rapid rearmament, and for two years held very close to a pay-as-we-go policy.  But in the current fiscal year and the next, rising expenditures for defense will substantially outrun receipts.  This will pose an immediate and serious problem for the new Congress.

Now let me turn to another question we faced at the war’s end.  Would we take up again, and carry forward, the great projects of social welfare—­so badly needed, so long overdue—­that the New Deal had introduced into our national life?  Would our Government continue to have a heart for the people, or was the progress of the New Deal to be halted in the aftermath of war as decisively as the progress of Woodrow Wilson’s New Freedom had been halted after the first world war?

This question, too, we have answered.  We have answered it by doubling old age insurance benefits and extending coverage to ten million more people.  We have answered it by increasing our minimum wage.  We have answered by the three million privately constructed homes that the Federal Government has helped finance since the war—­and the 155 thousand units of low rent public housing placed under construction since 1949.

We have answered with the 42 thousand new hospital beds provided since 1946 through the joint efforts of the Federal Government and local communities.