States. This form of national leadership would be of value both to investors in the local securities and to the home builders themselves. If the work of land acquisition and construction, together with the organization of community settlements resulting therefrom, were conducted under the supervision of the State or the Federal Government it would safeguard the character of the movement from every point of view.

Therefore, I put first among the constructive things which may be done by the exercise of the Government's power of supervision and direction, with the smallest outlay of money, this matter of providing suburban homes for our millions of wage earners.

RECLAMATION BY DISTRICT ORGANIZATION.

The provision of garden homes for millions of city workers will contribute largely to the Nation's food supply and become in time a most effective influence in reducing excessive cost of living for many of our people. It will not, of course, solve the problem of increasing the number of farms and the area of cultivation to meet the needs of growing population. Neither will it enable us to expand our home market rapidly and largely enough to keep the country on an even keel of prosperity.

We must go forward with the development of natural resources as we have done for the past three centuries. And we must recognize at the outset that conditions have changed with the depletion of the public domain to the point where it offers comparatively little in the way of cultivable lands.

We have now to deal principally with lands in private ownership. This calls for a new point of view and for the application of a somewhat different principle than that which has governed our reclamation policy heretofore. Moreover, reclamation is no longer an affair of one section of the United States. The day has come when it must be nationalized and extended to all parts of the Republic.

To the deserts of the West we have brought the creative touch. of water, and we must find a way to go on with this work. But it is of equal importance that we should liberate rich areas now held in bondage by the swamp, convert millions of acres of idle cut-over lands to profitable use, and raise from the dead the once vigorous agricultural life of our abandoned farms.

One more fundamental consideration-we have outlived our day of small things. Whether we would or not, we are compelled by the inexorable law of necessity arising out of existing physical conditions to cooperate, to work together, and to employ large-scale operations, and on this principle we should move: Not what the Government can do for the people, but what the people can do for themselves under the intelligent and kindly leadership of the Government.

We have an instrument at hand in the Reclamation Service which has dealt with every phase of the problem which now confronts us, and with such high average success as to command the entire confidence of Congress and the country. It has turned rivers out of their natural beds, reared the highest dams in existence, transported water long distances by every form of canal, conduit, and tunnel, installed electric power plants, cleared land, provided drainage systems, constructed highways and even railroads, platted townsites, and erected buildings of various sorts. In this experience, obtained under a variety of physical and climatic conditions, it has developed a body of trained men equal to any constructive task which may be assigned to it in connection with reclamation and settlement in any part of the country.

True economic reclamation is a process of converting liabilities into assets of transforming dormant natural resources into agencies of living production. When such a process is intelligently applied it should be able to pay its own bills without placing fresh burdens on the national treasury. It is in the confident belief that such is actually the case that I suggest the policy of reclamation by means of local districts, financed on the basis of their own credit but with the fullest measure of encouragement and moral support of the Government, practically expressed through the Reclamation Service.

In this connection it seems worth while to recall that with a net expenditure of $119,000,000 the Reclamation Service has created taxable values of $500,000,000 in the States where it has operated. The ratio is better than three to one, and that is a wider margin of security than is usually demanded by the most conservative banking methods. There is no reason to doubt that the overflow lands of the South, the cut-over areas of the Northwest, and the abandoned farm districts of New England and New York and other States would do quite as well as the deserts of the West if handled by such an organization.

What is the legitimate function of the Government in connection with reclamation districts to be financed entirely upon their own credits without the aid of national appropriations? I should say that the Government, with great advantage to the investor, the landowner, the future settler, and the general public, might do these things:

1. Employ its trained, experienced engineers, attorneys, and economists in making a thorough investigation of all the factors involved in a given situation, to be followed by a thorough official report upon the district proposed to be formed.

2. Offer the district securities for public subscription in the open market. This, of course, would follow the actual organization of the

district and the approval of its proceedings by the Government's legal experts.

3. Construct the works of reclamation with proceeds of district bond sales, and administer the system until it becomes a 'going concern," when it may be safely confided to its local officers.

The most obvious advantage of Government cooperation is the fact that it would assure the service of a body of engineers, builders, and administrators trained in the actual work of reclamation. This advantage, as compared with the management that might be had in a sparsely settled local district, would often make all the difference between success and failure. Unquestionably it would materially reduce the interest rate on district bonds and greatly facilitate their sale in the open market.

There are other advantages less obvious but really more important. Experience has shown that great enterprises can best be handled under centralized control. This control, to be effective, must extend from the initiation to the completion of the project. There can be no assurance of this when the management is left to the electorate of a local district, and without such assurance it is difficult to command the support, first, of the landowners whose consent is essential to the formation of the district; next, of the investors who must supply the money; finally, of the settlers who must purchase and develop the land in order that the object of the enterprise may be realized. The Government can give the assurance of precisely that quality of unified, centralized, permanent, and responsible control that is required to command the confidence of all the factors in the situation.

There is another advantage of Government cooperation that will inure greatly to the benefit of the settler. The Government may readily apply the policy it now uses in connection with privately owned lands within reclamation projects. It requires the owners to enter into a contract by which they agree to accept a certain maximum price for their land if sold within a given period of years. This price is based upon the value of the land before reclamation. There are many instances, particularly of swamp and cut-over areas, where land that may be bought for $10 an acre and reclaimed at a cost of $25 to $50 per acre, has an actual market value of $100 to $200 per acre the moment it is put into shape for cultivation. If the Government, by means of a contract with the local district, undertakes the work of reclamation and settlement and does this work at actual cost, the settler will generally save enough to pay for all his improvements and equipment.

The crowning consideration is the fact that, because of all these advantages, the work of reclamation would actually be accomplished, while to-day it is not being done except in the far West, and accomplished without the aid of Government appropriations.

SOLDIER-SETTLEMENT LEGISLATION.

In the foregoing, attention has been called to those things which may be accomplished by the exercise of the Government's powers of supervision and direction with the smallest outlay of money. In all this I have been speaking of reclamation for the sake of reclamation.

The proposed soldier-settlement legislation stands on an entirely different footing. The primary object is not to reclaim land but to reward our returned soldiers with the opportunity to obtain employment and larger interest in the proprietorship of the country. The policy is based on a sense of gratitude for heroic service, not on economic considerations. This is the answer to those who have criticized it as class legislation or the proposal to grant special privileges to one element of our citizenship or as a plunge into socialism. Frankly, we avow our purpose to do for the soldier what we would not think of doing for anybody else and what would not be justified solely as a matter of reclamation.

Many measures of soldier legislation have been introduced into Congress. Only one of these has been favorably reported. This was introduced by Representative Mondell, of Wyoming, on the first day of the present special session, embodying the plan of reclamation and community settlement brought forward by this department in the spring of 1918.

The measure has been much misunderstood and sometimes deliberately misrepresented. In the first place, it was not put forward as the complete solution of the soldier problem. It was at no time supposed or expected that all of the 4,800,000 men and women engaged in the war with Germany would or could take advantage of its provisions. It fortunately happens that the vast majority quickly found their places in the national life. Of the remainder, a very large proportion may be classified as "city minded." They have no taste for farm life but would be better served by vocational training and opportunities to enter upon remunerative trades or professions. There is an element of "country minded," and of these some 150,000 have made application for opportunities of employment and home-making under the terms of this bill. Largely they are men who have had agricultural experience but who can not obtain farms of their own without very considerable cash advances and other assistance which the Government could render. It is for this element that the policy is designed.

It has often been said that the plan would be applied only in the West and South. The truth is that it has been the purpose from the first to extend it to every State where feasible projects

could be found, and that our preliminary investigations lead us to believe this will include every State in the Union.

The wide discussion of the measure has been highly educational to the country, and some of the criticism is of constructive character. For example, attention has been sharply called to the fact that in certain localities there are individual farms well suited to our purpose which may often be had at a price representing rather less than the value of their improvements. These are the so-called "abandoned farms" so numerous in the Northeastern States. In some cases they are interspersed with land now cultivated, so situated that it is not possible to bring together a large number of contiguous farms as the basis of a Government project.

In New England and elsewhere public sentiment strongly favors a modification of the pending measure which will enable the purchase of individual farms rather than community settlement. This would be practicable only in localities where a sufficient number of farms, even if not contiguous, could be had to make possible the necessary supervision and instruction, together with cooperative organization for the purchase of supplies and sale of products. Without these advantages the plan of soldier settlement would fail in many instances. My information is that these conditions could be met. Not only so, but it is urged that existing farm communities would be inspired by the presence of soldier settlers and benefited by the presence of soldier settlers by their cooperative buying and selling agencies.

Another criticism of the pending measure is directed to the amount of the first payment the soldier settler is required to make. As the bill now stands it calls for 5 per cent on the land, 25 per cent on improvements and live stock, and 40 per cent on implements and other equipment. It has been urged by some friends of soldier settlement that no first payment should be required, but that the Government should make advances of 100 per cent in view of the soldiers' peculiar claim upon national consideration. It might be feasible to do this in the case of community settlements. But it could not be done in the case of scattered and individual farms, at least without abandoning the principles of sound business.

In the case of community settlement the soldier literally "gets in on the ground floor." Starting with a territory that is entirely blank so far as homes and improvements are concerned, he finds himself in a place where community values remain to be created. When he buys an improved farm in a settled neighborhood the situation is precisely reversed. In both cases there is or will be "unearned increment," or society-created values; but in the one case he gets the increment, while in the other case he pays it. Obviously, a larger advance would be justified in one case than in the other.