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Townsend Plan

TOWNSEND PLAN

TOWNSEND PLAN, a plan for an Old-Age Revolving Pension, prompted one of the most astonishing social movements of the New Deal period. Combining the American traditions of pressure politics, reform by monetary manipulation, and evangelical utopianism, the Townsend Plan was one of the most popular of several such movements produced by the social distress and insecurity following the panic of 1929. Dr. Francis E. Townsend, the plan's originator, announced it on 1 January 1934, and speedily enrolled millions of supporters. As embodied in a bill endorsed by Townsend, the plan entitled all people sixty years of age or over who had been U.S. citizens for at least five years, to an annuity of up to


$200 a month, provided they did not earn any money, and spent all of each month's annuity, within the United States, by the fifth day of the following month. To finance the plan, advocates sought to raise $20 billion annually through a general sales tax of two percent. The plan's authors regarded it as no mere old-age pension but rather, a solution to virtually all U.S. economic ills, including budget deficits. Appealing largely to the lower middle class during a period of great social unrest, the leaders defended the profit system as central to progress and denounced tendencies toward collectivism. Its disciplined voters were instrumental in electing to Congress several outspoken opponents of the New Deal. However, Congress repeatedly rejected bills putting forth the Townsend Plan, mainly because critics, including economists, charged that such a high sales tax would cause wholesale inflation. The Townsend Plan movement died out during the beginnings of economic recovery in the late 1930s.

BIBLIOGRAPHY

Bennett, David H. "The Year of the Old Folks' Revolt." American Heritage 16, no. 1 (1964).

Dorman, Morgan J. Age before Booty; an Explanation of the Townsend Plan. New York: Putnam, 1936.

Mitchell, Daniel J. B. "Townsend and Roosevelt: Lessons from the Struggle for Elderly Income Support." Labor History 42, no. 3 (2001).

C. VannWoodward/m. b.

See alsoNew Deal ; Old Age ; Pension Plans ; Share-the-Wealth Movements ; Social Security .

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Townsend plan

Townsend plan: see under Townsend, Francis Everett.

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Townsend Plan

TOWNSEND PLAN

The Townsend Plan was a scheme of old-age pensions devised by Dr. Francis E. Townsend in an effort to alleviate the desperate economic circumstances of the elderly in America and to stimulate a general economic recovery during the Great Depression. The Townsend Plan was one of many utopian social panaceas that emerged during the early 1930s, and it played a major role in third party politics during the election of 1936. Although the plan never had a serious chance of being written into law, it did focus people's attention on the pension problem facing the nation and helped generate momentum for the passage of the Roosevelt administration's Social Security Act of 1935.

Townsend frequently recounted the story of how one evening late in 1933 as he was looking out the rear window of his home in Long Beach, California, he saw three old women picking through garbage for food. That incident compelled the 66-year-old doctor to devote the remaining years of his life to working for adequate pensions for the aged. Apocryphal or not, the story embodied the profound concern Townsend harbored for the elderly, with whom he had been working as assistant director of the city health office, where he observed the distress inflicted on old people by the economic crisis. Only twenty-eight states had any kind of pension plan in operation by the early 1930s, and all of them were woefully inadequate. Three had already gone bankrupt, and the others ranged from Montana's monthly allowance of $7.28 to Maryland's payment of less than $30. Approximately 7.5 million Americans (6 percent of the population) were sixty-five or older, many of them destitute and on government relief.

Francis Townsend was born on January 13, 1867, and grew up in a family of seven on a farm near Fairbury, Illinois. His parents, George and Sarah Ann Townsend, were poor but deeply religious. Seeking more fertile soil to farm, they moved to Nebraska, where Francis completed his secondary schooling. After a brief, unsuccessful effort to take advantage of the southern California land boom, he attempted homesteading in Kansas, worked as an itinerant laborer in Colorado, and tried his luck as a salesman back in Kansas. In 1899, he enrolled in Omaha Medical College, graduating four years later and starting a medical practice in the Black Hills of South Dakota. When the United States entered World War I, Townsend, at the age of fifty, joined the Army medical corps. An attack of acute peritonitis after the war led him to move his family in 1919 to Long Beach in search of more healthful conditions. For the next fourteen years his practice languished, and with the onset of the Depression, most of his savings disappeared. The plight of the elderly that became his crusade was thus one with which he could deeply identify on a personal level.

After losing his political post in the Long Beach health service, Townsend conceived a plan that would provide adequate pensions for elderly people like himself. It called for a $150 monthly benefit (later raised to $200) paid by the federal government to every citizen over the age of sixty. The money to pay for the plan would be raised by a 2 percent tax on all wholesale and retail transactions. In order to receive the pension, people over sixty who held jobs would be required to quit them to open up opportunities for the unemployed. Townsend decided that recipients would also have to spend their stipends within thirty days as a means of stimulating the economy. Thus, he spoke about the velocity of money as it circulated from hand to hand and began emphasizing the revolving aspect of the plan.

After proposing his idea in the People's Forum column of the local Long Beach newspaper in September 1933 and advertising for canvassers to obtain endorsements, the doctor was inundated with volunteers. Robert Earl Clements, a young real estate broker, signed on as promoter and fund-raiser, and on New Year's Day 1934 the two opened the first headquarters for their new Old Age Revolving Pensions, Ltd. In short order, the Townsend movement emerged as a political force to be reckoned with. By September, their office in Long Beach was averaging two thousand letters a day from interested people, and within a year more than a thousand Townsend clubs were functioning. By 1936, a presidential election year, the organization claimed to have more than three and a half million members, and it obtained more than twenty million signatures on petitions calling for congressional approval of the Townsend Plan. Clements proved to be a genius at organization, utilizing everything from card parties and quilting bees to box suppers and raffles to draw people out to meetings. Revenues from Townsend license plates, tire covers, buttons, badges, banners, and other novelties stoked the organization's national treasury. A weekly newspaper kept members up to date with news of the organization's activities. The movement was more than a lobbying group; it was a social movement that welded its membership into a unit much like a church or a political ideology.

Americans, who during the previous half century had experienced the transition from a ruralagrarian economy to an urban-industrial one, found comfort in the Townsend movement's insistence that they deserved appreciation and financial reward for the contribution they had made to the national welfare. Townsend appealed to the hurt pride of people who felt they had been cast aside by a system that did not value the sacrifice and hard work they had exhibited over a lifetime of labor. His program, while expensive and radical in its reliance upon governmental expenditures to solve a social problem, was not anticapitalist but rather fundamentally conservative in its approach. Club meetings featured patriotic songs, flag saluting, religious trappings, and traditional symbols. The leader of the movement was a gaunt, white-haired, softspoken man in his sixties whose appearance and demeanor oozed traditional values and ways of living. Most of the people who joined the movement were old stock Americans. It was especially strong among Protestants of British origin, and middle-class people dominated its ranks. Few wealthy businessmen joined, nor were there many professional men or unskilled factory workers. At the outset, the organization was especially strong in California and the West, many of whose residents were displaced Midwesterners. Later, the movement gained strength in the Northwest and the Midwest.

The Roosevelt administration was quick to take note of the movement's growth, and work on a Social Security bill in 1934 and 1935 accelerated as a result. Final passage of the act in August of 1935 did nothing to slow the Townsend movement, however, since its followers considered the pensions contemplated under the new law to be totally inadequate. Conversely, academic economists who scrutinized the Townsend Plan's details judged its assumptions to be fatally flawed and warned that its implementation would have disastrous effects on the economy. Calculating that the plan would cost one and a half times all local, state, and federal governmental expenditures in 1932, economists deemed it a cruel economic joke on the populace. Paul Douglas estimated that obtaining the necessary revenues to finance the plan would require as much as a 75 percent increase in retail prices and that workers' real income might be cut by as much as half. Administration officials, including relief director Harry Hopkins and Secretary of Labor Frances Perkins, turned their guns on weaknesses in both the pension and tax provisions of the plan. Oklahoma Representative Phillip Ferguson called it a racket, and Senator Kenneth McKellar of Tennessee termed it a wild-eyed scheme for looting the federal treasury. In response, Dr. Townsend turned against the New Deal, likening some of its actions to Mussolini's fascism. In hearings before a House subcommittee chaired by Missouri Democrat C. Jasper Bell in the spring of 1936, Townsend was made to look foolish and walked out of the proceedings before they finished.

The stage was set for a move into third party politics by the summer, and Townsend joined with Father Charles E. Couglin, the Detroit radio priest, in the establishment of the Union Party in June 1936. Although participating at the national convention forming the party in Cleveland and in the campaign of the party's presidential nominee, Congressman William Lemke of North Dakota, Townsend remained lukewarm toward the enterprise, even calling on followers to vote for Republican candidate Alf Landon in the fourteen states where the Union Party failed to get its name on the ballot.

After the dismal showing of the Lemke candidacy in November 1936, and the dismantling of the Union Party afterwards, Townsend continued to push for more adequate pensions for the elderly. In the 1938 off-year elections, he rallied his followers against the New Deal, calling it a snare and a delusion. Two years later he worked for Republican presidential nominee Wendell Willkie. In 1948, Townsend backed the quixotic candidacy of former Vice President Henry Wallace. Townsend continued to demand more adequate old-age pensions until his death in Los Angeles on September 1, 1960.

See Also: ELDERLY, IMPACT OF THE GREAT DEPRESSION ON THE; ELECTION OF 1936; SOCIAL SECURITY ACT; UNION PARTY.

BIBLIOGRAPHY

Bennett. David H. "The Year of the Old Folks' Revolt."American Heritage 16 (1964): 48–51, 99–107.

Bennett, David H. Demagogues in the Depression: American Radicals and the Union Party, 1932–1936. 1969.

Holtzman, Abraham. The Townsend Movement: A Political Study. 1963.

John E. Miller

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