Social Security Act

United States 1935

Synopsis

The creation of the Social Security Act represented a sea change in how Americans addressed issues relating to poverty, infirmity, and aging. Traditionally, the family or community volunteerism supported populations facing these issues. Before 1929 war veterans had been the only recipients of national public assistance.

Prior to the depression, resources such as accurate statistic studies were limited or nonexistent. As a result, the scope of the problems and conditions surrounding poverty were not well documented or understood. Activism and popular protest in reaction to the newly available information greatly influenced the Social Security Act legislation. Many of those who advocated for the passage of the Social Security Act were average citizens.

Although contemporary connotations of "social security" typically are synonymous with old age pensions, at its inception the Social Security Act was an umbrella for various programs including unemployment insurance, old age insurance, and mothers' aid.

Timeline

• 1920: League of Nations, based in Geneva, holds its first meetings.
• 1925: European leaders attempt to secure the peace at the Locarno Conference, which guarantees the boundaries between France and Germany, and Belgium and Germany.
• 1930: Naval disarmament treaty signed by the United States, Great Britain, France, Italy, and Japan.
• 1933: Newly inaugurated U.S. President Franklin D. Roosevelt launches the first phase of his New Deal to put depression-era America back to work.
• 1935: Germany annexes the Saar region after a plebiscite. In defiance of Versailles, the Nazis reintroduce compulsory military service. The Allies do nothing, and many western intellectuals maintain that it is only proper for Germany to retake its own territory and begin building up its army again.
• 1935: Italians invade Ethiopia, and the response by the League of Nations—which imposes sanctions but otherwise fails to act—reveals the impotence of that organization.
• 1935: Second phase of New Deal begins with the introduction of social security, farm assistance, and housing and tax reform.
• 1938: The U.S. Fair Labor Standards Act establishes a minimum wage.
• 1940: Hitler's troops sweep through Western Europe, annexing Norway and Denmark in April, and in May the Low Countries and France. At the same time, Stalin—who in this year arranges the murder of Trotsky in Mexico—takes advantage of the situation to add the Baltic republics (Latvia, Lithuania, and Estonia) to the Soviet empire, where they will remain for more than half a century.
• 1945: April sees the death of three leaders: Roosevelt passes away on 12 April; the Italians execute Mussolini and his mistress on 28 April; and Hitler (along with Eva Braun, propaganda minister Josef Goebbels, and Goebbels's family) commits suicide on 30 April.
• 1950: North Korean troops pour into South Korea, starting the Korean War. Initially the communists make impressive gains, but in September the U.S. Marines land at Inchon and liberate Seoul. China responds by sending in its troops.

Event and Its Context

Need, Poverty Preceded Depression

The Great Depression was undoubtedly America's period of greatest need. Some estimates indicated that one-third of the nation lived in substandard housing and needed food, clothing, and regular medical care. To provide these necessities, the government instituted welfare programs during the New Deal. Often referred to as the Second New Deal, the Social Security Act was among the second round reform legislation that was passed during the Roosevelt administration.

Finding adequate solutions for poverty in the United States was compounded by widespread belief that anyone who needed assistance was either not working hard enough or suffered from a fatal character flaw, even moral turpitude. The reasons behind poverty are complex, and the picture is often complicated by the fact that the poor—including children, the disabled or mentally ill, and the very old—are sometimes unable to care for or speak for themselves.

Early American welfare programs were local. State governments provided extremely limited reimbursement for services, if at all. City and county agencies offered some public assistance, but custom dictated that family members were obligated to assist other family members in times of need. This remained the practice even with federal intervention. In 1937 an estimated two-thirds of all states legally required relatives to support their poorer relations. Private agencies, notably churches, filled the gap. The system was far from ideal.

So entrenched were beliefs about welfare and its stigma that the term "relief" was often used in the Great Depression. This distinguished this form of aid from charity or a gift of assistance for which no work was demanded in return for the assistance. Programs of public assistance vary and include means-tested relief (aid provided to people who demonstrate that they do not have the means to provide for themselves and who meet specific criteria to qualify for that aid) and social insurance (entitlement programs such as old age pensions and unemployment insurance).

The Herbert Hoover administration implemented small social programs, but it was not until Franklin D. Roosevelt was sworn into office in January 1933 that substantive changes commenced. Despite opposition to the creation of a welfare state, Roosevelt reiterated that government assistance was a temporary help. "Continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber," he said. "To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit."

As Roosevelt stated in his June 1934 message to Congress, "Security was attained in the earlier days through the interdependence of members of families upon each other and of the families within a small community upon each other. The complexities of great communities and of organized industry make less real these simple means of security. Therefore, we are compelled to employ the active interest of the Nation as a whole through government in order to encourage a greater security for each individual who composes it."

Social Security remains the most acceptable and controversial federal assistance program. Steve Forbes, magazine publisher and sometime presidential candidate in the 1990s, called the public foment for Social Security "one of the most remarkable grass-roots movements in American history . . . an epochal bill."

Old Age Insurance

The act's keystone was provisions for old age insurance. Americans wanted a means to insure themselves against poverty, particularly in their old age. They needed government assistance and a comprehensive program. The public saw this particular as relatively conservative because it was funded by taxing employers and employees and not publicly subsidized. Workers aged 65 and older would receive an individual pension based on their own financial contributions. Pensions were not to be paid before 1942.

Since 1929 various movements, including Upton Sinclair's End Poverty in California, had wrestled with these concepts. The federally conceived plan was for workers' contributions to fund their own pensions. Their contributions would be available after retirement or as unemployment insurance in the form of Social Security. Most view the program as very practical and cost-effective because Americans, rather than the government, would be paying for their own assistance.

Dr. Francis Townsend, an unemployed physician, propelled the debate on providing pensions for the elderly. His Old-Age Revolving Pension Plan, commonly called the Townsend Plan, was first made public in 1933. This plan proposed to resolve financial problems for the elderly by giving a $200 per month pension to those older than 60. He founded his nonprofit organization, Old Age Revolving Pensions, Ltd., in 1934 to promote the plan; soon after its founding, 500,000 Townsend Club members throughout the United States were espousing the plan.

Economists balked at the plan as "unworkable and impossibly expensive." By 1935, however, these clubs had millions of members and increasing political power. There is some lingering debate over the numbers of members and supporters, but club members deluged congressional leaders and other politicians with correspondence exhorting them to enact Townsend's program.

The Townsend camp often found allies in other national movements, including the Share Our Wealth program instituted by Louisiana senator Huey P. Long, who, it was said, typically received as much mail from the public as the president. Many of Long's ideas about income redistribution were in his book, Every Man a King. Another conservative reactionary of the era was Father Charles Coughlin, whose radio shows attacked capitalists as often as he railed against Jews and communists. Several alternate plans gathered support, including the General Welfare Federation Plan, San Diego Income Idea, and Ham and Egges.

The Roosevelt administration was demonstrably threatened by the Townsend movement. Labor Secretary Frances Perkins said that the debate "both drove us and confused the issue." Edwin E. Witte, director of the Committee of Economic Security, is said to have called the Townsend Plan "a terrific menace which is likely to engulf our entire economic system" and might result in demands for "extravagant, gratuitous pensions." Witte also reputedly fueled the campaign designed to discredit Townsend. "All told," wrote author Linda Gordon, "many hours went into studying and damning his proposal."

Among those working with the cabinet to draft the old age pensions section were Barbara Armstrong, J. Douglas Brown, and Murray Latimer. Perkins referred to them as "wild horses." Regardless of their colorful reputations, they did assist in the development of the framework for old age insurance. The plan provided secure old age for many Americans but excluded agricultural workers and domestics, which left two-thirds of all African Americans without any safety net in times of unemployment or in their old age.

Creating Aid for Children

Aid to Dependent Children (ADC) was a noncontroversial part of the Social Security package. Building on decades of work by the U.S. Children's Bureau, which had been founded in 1912, social reformers pressed the Roosevelt administration to provide meaningful assistance for poor mothers and their dependent children. This portion of the bill was designed to support motherhood; however, crafting this support network was not a simple task.

In this era, men worked outside the home, and their wives typically were the family caregivers. Beginning at the turn of the century, aid had been available to widows with children. Single mothers had some relief, starting in the 1920s, with the creation of mothers' aid pensions, which were enacted in 42 states.

Single women, even those widowed with young children, faced the stigma that was attached to taking a hand-out. Plus, once that pride had been swallowed, there were strings attached. Moral fitness was often a prerequisite for aid. Relatively few women were judged morally sufficient to be granted this sorely needed help.

Representatives of the U.S. Children's Bureau, including Grace Abbott, Katharine Lenroot, and Martha Eliot, were instrumental in helping to craft the language of ADC legislation. They were cautious about minimizing their aid requests. The agency had been the target of Red-baiting and funding cuts. This bill needed to pass and was therefore initially weaker than advocates may have desired. Witte and Perkins ultimately sacrificed the bill during the tangles in Congress. To ensure the passage of the entire Social Security bill, Congress cut key portions of the Aid to Dependent Children Act.

The intent of this program was to assist dependent children in single-parent families, and was thus approached differently from the other Social Security Act programs. Most notably, state and local governments, rather than the federal government, were responsible for administering it. The bill was weak and did not put an end to means and moral testing as some advocated. In 1950 the program became what is now known as Aid to Families of Dependent Children (AFDC).

Unemployment Insurance

Because the direction given to the framers of Social Security was that a program of social insurance was to be a first defense against poverty with public assistance a secondary defense, the creation of unemployment insurance and the policies surrounding it received the greatest attention, according to Arthur Altmeyer, assistant secretary of the Department of Labor in the Roosevelt Administration. Roosevelt was unwavering in his mandate that work be found for those able to work and relief stopped.

The technical board of the Committee on Economic Security issued a report that conveyed three possibilities: a solely federal system, a cooperative system with federal subsidies, and a cooperative plan based on the Wagner-Lewis unemployment insurance bill. The board did not clearly support one over the other. There was no consensus and members' opinions shifted even while the bill was still being created. Harry Hopkins, director of the Federal Emergency Relief Administration (FERA), proposed that there be no more discussion of a federal plan. The committee decided to support the Wagner-Lewis framework, which advocated a federal-state tax offset plan. The president later announced his support for a federal-state plan.

The creation of unemployment insurance legislation was fraught with obstacles. As it passed through body after body, it was frequently amended. Senator Robert M. La Follette's suggestion became a permanent amendment that granted discretion to each state to institute the type of unemployment program it deemed appropriate. The president's suggestions that employers should pay into a pooled fund were ignored.

Constitutionality Concerns

There was concern that the Supreme Court would declare all or some portions of these programs unconstitutional, so the framers took great care in crafting the legislation. The fear was not unwarranted. From January 1935 through May 1936, the Supreme Court declared eight laws within the New Deal as unconstitutional. The timidity of those shaping the legislation may have hindered some programs, particularly ADC, from being more potently effective. In retrospect, the bill was regarded as far too conservative.

The initial legislative package also included public works programs and national medical insurance. Vehement opposition from big business and the medical community quickly eliminated these programs. The administration received suggestions and comments from all quarters including business, social workers, medical professionals, politicians in various parties both left and right, and the public. AFL support vacillated. William Green, the union's president, reportedly "made so many suggestions for improving the bill that he seemed to be against it."

Social workers who protested the end of FERA, which was scheduled to be replaced in 1935 by the Works Progress Administration, also caught the administration's attention. The protesters' timing, coming as the Social Security Act was under consideration, was said to have helped greatly in its eventual passage.

The varying demands and lobbying by Townsend and Long supporters served to propel the bill forward. The bill represented a national shift in how entitlement was defined for the purpose of public assistance. Ultimately, the administration seemed willing to compromise—or sacrifice—pieces of the concept just to get the act passed. It took six months to write the bill and another seven before it passed through Congress.

The president signed the Social Security Act on 14 August 1935. Since that time, Social Security has expanded with the addition of new programs, beginning with federal minimum wage and child labor laws (1938) and disability insurance (1956). Witte's diaries, which detailed the minutia of the creation of the Social Security Act of 1935, became the book, The Development-ofthe Social Security Act. Another lasting impact of the events surrounding the passage of the Social Security Act is the acknowledgement of the power of the ongoing pensioners' lobby by politicians. It is worth noting that these programs bear little resemblance to the contemporary Social Security programs.

Key Players

Altmeyer, Arthur J. (1891-1972): Born in Wisconsin, Alt-meyer first came to Washington, D.C., as the director of the Labor Compliance Division of the National Recovery Administration in 1933. He became assistant secretary of the Department of Labor in the Roosevelt administration and technical board chair, President's Cabinet Committee on Economic Security. He was a pivotal member of team that researched and developed legislation that would become the United States Social Security program. He was appointed to head the Social Security Board and served in that position from 1937 to July 1946.

Coughlin, Father Charles Edward (1891-1979): Born in Ontario, Canada, Coughlin was a Roman Catholic priest based in Michigan and was well known for his criticism of Roosevelt's New Deal policies. His ideas were popularized through radio broadcasts that he began in 1930.

Cummings, Homer Stillé (1870-1956): United States' attorney general between 1933 and 1939, he served as a member of the Committee on Economic Security, which developed legislation that would become the United States Social Security program.

Hopkins, Harry Lloyd (1890-1946): As Federal Emergency Relief administrator, he became a member of the Committee on Economic Security. He was active in various roles throughout the Roosevelt administration.

Long, Huey (1893-1935): The controversial populist governor of Louisiana and United States senator, Long was critical of Roosevelt. He advocated a radical income redistribution known as the Share-Our-Wealth Plan. He had discussed running for president in 1936. He was assassinated in September 1935.

Morgenthau, Henry, Jr. (1891-1967): As secretary of the U.S. Treasury, he served as a member of the Committee on Economic Security, which had been created to develop legislation that would become the Social Security program. Morgenthau, born in New York, was a longtime Roosevelt advisor and confidant.

Perkins, Frances (1882-1965): The first female Cabinet officer in the United States government, Perkins served as secretary of labor during the Roosevelt administration. She was first a social worker, which informed her government career. She was instrumental in developing policies that would become the United States Social Security program.

Sinclair, Upton Beall, Jr. (1878-1968): Best known as the author of works such as The Jungle, Sinclair created End Poverty in California (EPIC), a reform program that also enabled him to run, although unsuccessfully, for governor.

Van Kleeck, Mary Abby (1883-1972): Born in New York, Van Kleeck criticized New Deal programs, saying they weakened both workers and unions. She was best known in her capacity as director of the Russell Sage Foundation department of industrial studies. She advocated socialism and also wrote on industrial socialization.

Wallace, Henry Agard (1888-1965): Secretary of agriculture during the first two of the four Roosevelt administrations, he was also a member of the Committee on Economic Security, which was created to develop legislation that would become the United States Social Security program. He later became vice president under Roosevelt during the third term.

Winant, John Gilbert (1889-1947): Member of the Committee on Economic Security, he was the first chairman of the Social Security Board. He was tireless in his support for Social Security. Winant resigned from the Social Security Board so that he could defend the act.

Witte, Edwin Emil (1887-1960): A labor economist, Witte was appointed executive director of the Committee on Economic Security. He was at the crux of debates regarding the constitutionality of federal Social Security programs and funding issues. He continued as an advisor in the Social Security Administration.

See also: Stock Market Crash.

Bibliography

Books

Altmeyer, Arthur J. The Formative Years of Social Security:A Chronicle of Social Security Legislation and Administration, 1934-1954. Madison: The University of Wisconsin Press, 1966.

Gordon, Linda. Pitied but Not Entitled: Single Mothers and the History of Welfare. New York: Free Press, 1994.

Graham, Jr., Otis L., and Meghan Wander, eds. Franklin D.Roosevelt, His Life and Times: An Encyclopedic View.Boston: G. K. Hall & Co., 1985.

Handlin, Oscar and Lilian Handlin. Liberty and Equality:1920-1994. New York: Harper Collins Publishers, 1994.

Katz, Michael B. In the Shadow of the Poorhouse: A Social History of Welfare in America. New York: Basic Books, Inc., 1986.

Lubove, Roy. The Struggle for Social Security, 1900-1935.Cambridge, MA: Harvard University Press, 1968.

Olasky, Marvin. The Tragedy of American Compassion.Washington, DC: Regnery Publishing, 1992.

Patterson, James T. America's Struggle Against Poverty:1900-1980. Cambridge, MA: Harvard University Press, 1981.

Watkins, T. H. The Hungry Years: A Narrative History of the Great Depression in America. New York: Henry Holt and Company, 1999.

Witte, Edwin E. The Development of the Social Security Act.Madison: The University of Wisconsin Press, 1962.

Periodicals

Davies, Gareth, and Martha Derthick. "Race and Social Welfare Policy: The Social Security Act of 1935."Political Science Quarterly 112, no. 2 (summer 1997): 217-235.

"FDR and the New Deal." The Economist 353, no. 8151 (25December 1999): 49.

Forbes, Steve. "Backhanded Godfather." Forbes 159, no. 1(13 January 1997): 259.

Hutchison, Elizabeth D., and Leanne W. Charlesworth."Securing the Welfare of Children: Policies Past, Present, and Future." Families in Society: The Journal of Contemporary Human Services 81, no. 6 (November 2000): 576.

Jacoby, Sanford. "Downsizing in the Past." Challenge 41, no.3 (May-June 1998): 100-112.

Lopez, Eduard A. "Constitutional Background to the Social Security Act of 1935." Social Security Bulletin 50, no. 1 (January 1987): 5-11.

Manza, Jeff. "Political Sociological Models of the U.S. New Deal." Annual Review of Sociology, Annual 2000: 297.

—Linda Dailey Paulson