The nation has just completed the most prosperous year in its history.  The damaging effect of inflation on the wages, pensions, salaries and savings of us all has been brought under control.  Taxes have begun to go down.  The cost of our government has been reduced and its work proceeds with some 183,000 fewer employees; thus the discouraging trend of modern governments toward their own limitless expansion has in our case been reversed.  The cost of armaments becomes less oppressive as we near our defense goals; yet we are militarily stronger every day.  During the year, creation of the new Cabinet Department of Health, Education, and Welfare symbolized the government’s permanent concern with the human problems of our citizens.

Segregation in the armed forces and other Federal activities is on the way out.  We have also made progress toward its elimination in the District of Columbia.  These are steps in the continuing effort to eliminate inter-racial difficulty.

Some developments beyond our shores have been equally encouraging.  Communist aggression, halted in Korea, continues to meet in Indo-china the vigorous resistance of France and the Associated States, assisted by timely aid from our country.  In West Germany, in Iran, and in other areas of the world, heartening political victories have been won by the forces of stability and freedom.  Slowly but surely, the free world gathers strength.  Meanwhile, from behind the iron curtain, there are signs that tyranny is in trouble and reminders that its structure is as brittle as its surface is hard.

There has been in fact a great strategic change in the world during the past year.  That precious intangible, the initiative, is becoming ours.  Our policy, not limited to mere reaction against crises provoked by others, is free to develop along lines of our choice not only abroad, but also at home.  As a major theme for American policy during the coming year, let our joint determination be to hold this new initiative and to use it.

We shall use this initiative to promote three broad purposes:  First, to protect the freedom of our people; second, to maintain a strong, growing economy; third, to concern ourselves with the human problems of the individual citizen.

Only by active concern for each of these purposes can we be sure that we are on the forward road to a better and a stronger America.  All my recommendations today are in furtherance of these three purposes.

I. FOREIGN AFFAIRS

American freedom is threatened so long as the world Communist conspiracy exists in its present scope, power and hostility.  More closely than ever before, American freedom is interlocked with the freedom of other people.  In the unity of the free world lies our best chance to reduce the Communist threat without war.  In the task of maintaining this unity and strengthening all its parts, the greatest responsibility falls naturally on those who, like ourselves, retain the most freedom and strength.