gain in knowledge and education; there has been continuous advance in science and invention; there has been distinct gain in public health.  Business depressions have been recurrent in the life of our country and are but transitory.  The Nation has emerged from each of them with increased strength and virility because of the enlightenment they have brought, the readjustments and the larger understanding of the realities and obligations of life and work which come from them.

NATIONAL DEFENSE

Both our Army and Navy have been maintained in a high state of efficiency.  The ability and devotion of both officers and men sustain the highest traditions of the service.  Reductions and postponements in expenditure of these departments to meet the present emergency are being made without reducing existing personnel or impairing the morale of either establishment.

The agreement between the leading naval powers for limitation of naval armaments and establishment of their relative strength and thus elimination of competitive building also implies for ourselves the gradual expansion of the deficient categories in our Navy to the parities provided in those treaties.  However, none of the other nations, parties to these agreements, is to-day maintaining the full rate of construction which the treaty size of fleets would imply.

Although these agreements secured the maximum reduction of fleets which it was at that time possible to attain, I am hopeful that the naval powers, party to these agreements, will realize that establishment of relative strength in itself offers opportunity for further reduction without injury to any of them.  This would be the more possible if pending negotiations are successful between France and Italy.  If the world is to regain its standards of life, it must further decrease both naval and other arms.  The subject will come before the General Disarmament Conference which meets in Geneva on February 2.

FOREIGN AFFAIRS

We are at peace with the world.  We have cooperated with other nations to preserve peace.  The rights of our citizens abroad have been protected.

The economic depression has continued and deepened in every part of the world during the past year.  In many countries political instability, excessive armaments, debts, governmental expenditures, and taxes have resulted in revolutions, in unbalanced budgets and monetary collapse and financial panics, in dumping of goods upon world markets, and in diminished consumption of commodities.