The Waterbury Democrat., 1931-12-08
By RAYMOND CHAPTER (United Press Stan Correspondent,


 Washington, Dec S.-tUP)- President Hoover to-day asked the people to accept a two-year in- crease in taxes and urged congress to form a huge national recon struction finance corporation to aid in rehabilitation of business.
 Those two proposals were the cornerstones of the presidents pro- gram given to congress to-day in the most momentous annual mes- sage a chief executive has deliver ed since the war.
 The time has come for aggres- sive, forward action, the president maintained. The nations resources are greater than ever before, he said, expressing confidence in the countTy's ability largely to over come the depression regardless of conditions in other parts of the world.
 All that is needed, he said, is to revive confidence, summon cour- age and determination, loosen credit and put to work the coun- try's huge resources and stores Of money.
 Taxes, along lines of the higher
 
 to meet growing deficits.
 He emphasized that aid to the railroads must form a part of the reconstruction program as they af-. feet the vitals of the country's eco- homie life.
 The reconstruction finance cor poration suggestion was only In outline, with details expected later. This corporation, mapped along lines of the former War Finance Corporation, would have reason AblS capital aid from the govern meat, and would serve to aid in financing exports, agriculture, in- Austry, railways and financial in- gtitutions.
 The president proposed a tenn porary tax increase to end July 1, 1894 which, it is unofficially esti- mated, would amount to almost 00,000,000 year. Details were reserved for a later time, but Mr Hoover gave general warning that the country must prepare to take on an increased emergency burden due to the sharp declines in tax revenues.
 '.The first requirements of confi- dence and of economic recovery is financial stability of the United Sattes government" he said. "I must at this time call attention to the magnitude of the deficits which have developed and the resulting necessity for determined and cour- ageous policies"
 He said there must be insistent and determined reduction in gov- ernment expenses and the deficit must be partially met by borrow ing, for an attempt to cover them by increased taxes would retard recovery"
 He would fix the tax increase so as to balance the budget for the year beginning next July 1 except for statutory debt retirement. This would require about $921, ,000,00 A net increase in the national debt of $1,711, 100000 exclusive of debt retirement is indicated for the cur rent fiscal year, now almost half over, so the proposed tax Increase is not expected to cover that amount in full.
 "The additional taxation should be imposed solely as an emergency measure terminating definitely two years from July next" MT Hoover said.
 Such basis will give confidence fin the determination of the gov ernment to stabilize it's finance and will assure taxpayers of its tenn porary character. Even with in creased taxation, the government z will reach the utmost safe limit of its borrowing capacity by the ex- penditures for which we are al- ready obligated and the recom- mendatiops here proposed. To go further than these limits in either expenditures, taxes, or borrowing will destroy confidence, denude commerce and industry of its re- sources, jeopardize the financial system, and actually extend unem- ployment and demoralize agricul- ture rather than relieve it.
 The emergency reconstruction corporation" he suggested should be liquidated after two years. He proposed the federal government subscribe reasonable capital" to it. The amount of capital con- templated was not revealed, though unofficial reports have been that it would be about $1,00O, ,000, 000. It would not overlap the recently formed S500,OOO,O00 National Credit Corporation organized to aid banks. |.
 'We must put some steel beams in the foundation of our credit structure,' the president said.
 This recommendation, MT Hoover said. was made "in order that the public may be absolutely assured and that the government may be in position to meet any public necessity"
 MT Hoover added that it might not be necessary to use this in- strumentality very extensively.
 "The very existence of such a bulwark will strengthen con- fidence," he said. Its purpose is that by strengthening the weak spots to thus liberate the full strength of the nations resources
 Without making predictions. Mir Hoover indicated confidence in the future.
 "The time is ripe for forward action to expedite our recovery he said. "If we can put our finan- cial resources to work and can ameloriate the financial situation in the railways. I am confident we can make a large measure of re-