“The Roots of Social Security”
by Frances Perkins
A Radio Address Delivered at Social Security Administration Headquarters–Baltimore, Maryland October 23, 1962.
TEXT OF SPEECH
(Slightly edited and revised from spoken remarks)
I must say I feel very much at home even though I just arrived. I feel at home because the Social Security Administration has, ever since it was established, been a sort of special concern of mine, although by the chicanery of politics it was not placed in the Department of Labor. I, of course, thought it should be.
As a matter of fact, one of the reasons I feel so deeply involved with the Social Security Administration is that even though it was not in the Department of Labor when it was first established, the Department of Labor had to carry it the way you carry a dependent child. It didn’t have any money. That was so unfortunate. And we didn’t have very much either. bat we did, however, was to provide the Social Security Administration with offices in the Department of Labor Building. I even gave to the Chairman of the Social Security Board (as it was called in those days) the large, handsome, red-upholstered, high-back chair out of my own office so that he could look like a king. I didn’t have to keep on looking like a queen. I found the chair somewhat uncomfortable so I made the sacrifice.
The whole Department did the same kind of thing. We gave them our best statisticians. We gave them the best of everything including Arthur Altmeyer, who was the Assistant Secretary of Labor and my real right hand, and without whom I felt very lost. It showed that we put our best people in there on loan, and we carried it for the first year and made it look like a going concern. In fact, it became a going concern in an extraordinarily short time.
When I asked what I was to speak about today, the suggestion was made I talk about the roots, or beginnings, of the Social Security Act. So I have thought about the roots. I suppose the roots–the idea that we ought to have a systematic method of taking care of the material needs of the aged–really springs from that deep well of charitableness which resides in the American people, and the efforts and the struggles of charity workers and social workers to handle the problems of people who were growing old and had no adequate means of support. Out of this impulse to be kind to the poor sprang, I suppose, a mulling of ideas about social insurance for the aged. But those people who were doing it didn’t know that it was social insurance. They just kept thinking that something definite, something that people could look forward to, would be a great asset and a great assistance to them in their work. Even De Tocqueville, in his memoirs of his visit to America, mentioned he thought was a unique state of mind of the American people: That they were so honestly concerned about their poor and did so much for them personally. It was not an organization; it was not a national action; it was not a State action; it was not Government. It was personal action that De Tocqueville mentioned as being characteristic of the American people. They were so generous, so kind, so charitably disposed.
Well, I don’t know anything about the times in which De Tocqueville visited America. That was long ago, and I know little about the psychological state of mind of the people of this country at that time. But I do know that at the time I came into the field of social work, these feelings were real. It was surprising what we were able to do through volunteer work–by the volunteer support of organizations who help the poor; and particularly the aged poor. Just look over the country At the old ladies’ homes and the old couples’ homes and the old members’ homes that sprang up because aged people had necessities that had to be met. In each case, somebody got money together and established these homes. And life went on for the aged, after a fashion, as recipients of a kind of charity. These things have been going on for years.
THE FIRST STIRRINGS
But actually, of course, the beginning of widespread interest in Social Security through the use of an insurance technique began in a serious way shortly before the great depression of 1929. When I say shortly, I mean a couple of years. It had begun as an academic subject; it was discussed by highbrows, not by politicians. It was a possible thing, you know.
We knew something about social insurance in this country–a very little–by virtue of workmen’s compensation legislation which is, of course, a form of social insurance. And that was all we knew about insuring against a known hazard through payment, by persons exposed to that hazard, into a fund from which those few could be compensated who had the particular accident that was described in the law.
Of course, workmen’s compensation met great opposition when the agitation for it began in 1908–and that was already late in our social development. They had it in Germany, in England, and in Denmark and the other Scandinavian countries for a long time. Americans going to Europe had particularly observed the German system which, in the usual German way, was much more thorough and logical than English or Scandinavian systems, although they all worked very well.
So we knew a little bit about social insurance, and even the words “social insurance” had come to be at least academic words. People who studied the matter–students and highbrows–generally could understand what it meant, but they seem never to have thought of insuring against other social hazards. Social problems were taken care of by the States, which appropriated money and provided homes or institutions for the victims of the toughest types of hazards; and by voluntary organizations which did all they could to relieve the sufferings caused by particular hazards. So we went along amiably, you know, always in our genial American optimistic way, believing that everything would turn out all right.
IT’S PEOPLE WHO SUFFER
Two or three studies (of social insurance) were started at one time or another. Nearly always a report of some sort was made, but before the report got written and filed, the crisis was over, and so we forgot about the problem. “That will never happen again,” we said. This was notably true in 1919, just after the First World War.
New York City had a terrific problem of unemployment, which was hazardous because it involved so many people. The experience was short, sharp, and painful. The unemployed and homeless were allowed to sleep in the churches, I remember. Henry Brewer and Paul Kennedy, who was then the head of the New York Association for Labor Legislation, opened a place down on the Bowery called the Hotel de Gink, which was a clean, cheap, and honest lodging-house where a man could get free lodging if necessary and could do just about as he pleased. If he was a low-down fellow, nobody ever noticed it unless he was a thief. He couldn’t steal; but almost anything else he could do. That wasn’t true, of course, of the municipal lodging-house. If he was badly behaved, he just got turned out; whereas at the Hotel de Gink, he could do anything. He could sing vulgar songs and make vulgar jokes and make a noise and all that kind of thing. On the other hand, one didn’t see the women and children, or the families dependent on other people. They were known to be part of the problem, but they did not show.
When we came to the problem of doing something for the “poorer kind of people” (as John Garner called them) in 1933 after the Roosevelt administration took office, we, of course had had a very recent experience with poverty. Since 1929 we had experienced the short, sudden drop of everything. The total economy had gone to pieces; just shook to pieces under us, beginning, of course, with the stock market crash. A banking crisis followed it. A manufacturing crisis followed it. Everybody felt it. In less than a year it was a terror.
People were so alarmed that all through the rest of 1929, 1930, and 1931, the specter of unemployment–of starvation, of hunger, of the wandering boys, of the broken homes, of the families separated while somebody went out to look for work–stalked everywhere. The unpaid rent, the eviction notices, the furniture and bedding on the sidewalk, the old lady weeping over it, the children crying, the father out looking for a truck to move their belongings himself to his sister’s flat or some relative’s already overcrowded tenement, or just sitting there bewilderedly waiting for some charity officer to come and move him somewhere. I saw goods stay on the sidewalk in front of the same house with the same children weeping on top of the blankets for 3 days before anybody came to relieve the situation!
These were the years in which developed, you remember, in New York City–and later in other cities–the pattern of the apple sellers. Some kindhearted man who had a surplus of apples–because the farmers were in this depression, too–thought of getting rid of his apples (which he couldn’t sell) by giving them to the unemployed to sell. So they got them every morning somewhere down in the market. Nobody asked them to prove they were unemployed. I’m sure they were because no man in his right mind would have taken a big basket of apples to try and sell at 5 cents apiece in a poverty-stricken community–out of which he would make just a little bit of pocket money–unless he had been out of work, out of wages, out of money, out of everything.
Some of you may remember how strange the ideas of the public were about the apples. I tell you this because it’s a clue to the public mentality of the times–1929 to 1935. In the New Yorker magazine there was a cartoon of two sort of prissy-looking ladies with their hands crossed, walking down the street and looking as if they were not unemployed themselves. Here was the big basket of apples, and here was the man selling them with a little sign saying: “Unemployed–Apples 5 cents.” As they looked at the apples, one lady said to the other, “They look perfectly delicious.” “Oh, they do, indeed,” said the other, “I wish I could have one.” “oh no, you mustn’t,” said the first. “They’re for the unemployed.”
Though you may find it difficult to believe, ideas as silly as that were actually broadcast in the community. And many other strange notions added to the confused situation.
I’ve always said, and I still think we have to admit, that no matter how much fine reasoning there was about the old-age insurance system and the unemployment insurance prospects–no matter how many people were studying it, or how many committees had ideas on the subject, or how many college professors had written theses on the subject–and there were an awful lot of them–the real roots of the Social Security Act were in the great depression of 1929. Nothing else would have bumped the American people into a social security system except something so shocking, so terrifying, as that depression.
The wandering boys were a source of terror. But it was the most natural thing in the world for a great big grownup boy 14 to 17 years old to go wandering. Consider the case of a boy who found himself in a family where the breadwinner was unemployed, where there were other children around, where his mother was distracted by the lack of anything to buy food with, and to feel himself, not unwanted, but one more mouth to feed, and a great big mouth at that.
“I ate so much,” one boy said to me, “I couldn’t stand it. The kids, the little children were hungry. So I went out to find a job, and I went out of town.”
This is what the boys did–not a few of them–thousands of them. They wandered around the country and were a problem to every charity and relief organization, to every State aid or Federal-and-State relief station; and the railroads were terrified of them. These boys, following the road, would steal a ride under the bumpers, and the railroads were frightened all the time that there would be accidents; that somebody would be killed; and I believe some were. It’s a dangerous business to ride the rods. I remember I went out to see some of the boys. They finally gathered them in–the railroaders did. They sort of herded many of them into the St. Louis yards, and let them pitch a camp. Well, there they lived in the camp–in the St. Louis railroad yards–a hazard to the community–picking up whatever they could. I’m sure some of them learned to steal. Some of them learned be panhandlers. All kinds of things happened. These were really alarming situations. They were alarm because of the demoralization an because of the general hazards t the community and to the total economy.
But everything was down. Nobody could get a job. The grocer didn’t employ the young boys to deliver goods any more. He couldn’t afford to. The grocer himself finally went bankrupt and closed up. He had given too much credit. I mean the people who were out of work ha credit at the grocery store at fir and they could eat; but they couldn’t pay their bills, and finally, the grocer couldn’t pay his bills; and eventually somebody came and sold him out. It went on like that all the time. One thing led to another, and we began to realize how cruel, how very deep, how almost irreversible this situation had come to be. This was the situation which faced people who began to be aware of the problem early as 1930.
THE PEOPLE SPEAK
A lot of private thinking went on. When I got to my office as Secretary of Labor in 1933, I found on desk over 2,000 plans. These were “plans” for curing the depression. All kinds of people with nothing else to do, being out of work, began to plan–to think. This was social planning. It was extraordinary how many people in their social plans had hit upon something that sounded like social insurance. Often the planners were almost illiterate; often the work wasn’t very thoroughly done. Often, however, they were good; well set up, typewritten, sharply organized-A, B, C; 1, 2, 3, under it, you know–very good plans. But the extraordinary thing was that there should have been 2,000 of them filed with the Secretary of Labor in the previous year. And many more–thousands more–on the President’s desk, because everybody had apparently taken to making a social plan. This, I think, was stimulated by the Townsend Plan. The word “plan” had never been a political word before, but the Townsend Plan was wonderful. I mean it sounded so good–“$30 every Thursday; but you would have to spend it right away. This was for everybody over 65. This was to cure the Depression effects upon the aged. Thirty dollars every Thursday would do it, and if they spent it all before the next Thursday, it would penetrate the market. It would revive the market for goods. That would establish and strengthen the manufacture industries. Industrial concerns would need money from the banks. That would revive the banking industry. Everything would be fine–$30. (Ed. note: $30 every Thursday was the rival “Ham & Eggs” plan; the Townsend Plan promised $200 per month.)
This was a great watchword. This was a real stimulus to thinking in this country. Although it started out as a most crooked–I don’t mean dishonest, I mean wavering–plan, it became a political move of considerable importance. When I saw that old Dr. Townsend had died just this last winter, I couldn’t help but say to myself, “God rest his soul; he was a good old man!” He meant well. He didn’t have any learning, but he was sorry for himself and the other old people, so he thought of $30 every Thursday and started us all thinking. In particular, he startled the Congress of the United States, because the aged have votes. The wandering boys didn’t have any votes; the evicted women and their children had very few votes. If the unemployed didn’t stay long enough in any one place, they didn’t have a vote. But the aged people lived in one place and they had votes, so every Congressman had heard from the Townsend Plan people.
Then, of course, we had a lot of other plans: The Technocrats were busy. Technocracy was so engaging, so interesting, that the people used to stop and read the literature in store windows which the Technocrats hired. Great crowds would gather around a bulletin in the store windows all over the country to hear about the Technocrats’ plan. I have forgotten myself what it was, but it wasn’t social security, you can rest assured of that. It was a somewhat crazy, extreme plan, but I am sure it was based upon good feeling and a good idea.
Social planning and social thinking had begun in the American people, whereas they never had been really vital ideas before. We had always sort of bumped into things. A group of reformists got an idea and our social legislation was based largely on what a group of reform people had been able to do. Workmen’s compensation legislation was put through in the United States, State by State, under our preconceived ideas of the relationship between the States and the Federal
Government and the regular constitutional rulings of the Supreme Court on that matter. Thus, we took it for granted that anything in the way of social legislation had to be done State by State. The American Association for Labor Legislation, however, took the lead in devising a model law on workmen’s compensation insurance, and first recommended it after the Pittsburgh survey of 1908. Compensation was then talked about for a few years until in 1910 and 1911, the first laws were passed in Wisconsin and the State of New York. Nearly all social legislation has originated in one of those two States, it seems.
Thus, out of this plan of the American Association for Labor Legislation, sprang the beginnings of workmen’s compensation. I won’t bother to go into the horrors of uncompensated industrial accidents because many of you know all about that anyhow. And I find that many young people are simply astonished when you say, “Oh, yes; people used to get their arms pulled out in a laundry mangle. No, they didn’t get any money.” “Didn’t they get anything?” “No; nothing.” “Well, what did they do?” “I don’t know what they did,” is all you can say. Somewhere or other they buried themselves away in the general population. Girls got scalped in the textile machinery, even in the sewing machines of the dress industry in New York City. You’d get down under the machine to pick up a bobbin that had fallen and the wheel would cut your head off. It was a terrible accident. Men fell into the molten iron pots in the Pittsburgh district and, of course, were never seen again. This horrible situation was accepted by the American people. They thought, “Well, this is what it is. Too bad! John was a good man, but it was an awful dangerous trade he was in.” These things were commonly accepted, and it took the efforts of the American Association for Labor Legislation and thousands of individuals to start the movement toward making a systematic recompense for injury and disability arising out of an accident in the course of employment.
The beginnings of old-age insurance came about largely, I think, by the crisis of the times, by the studies of some of the intellectuals and through the impact of the old-age predicament, and of the Townsend organizations on the politicians.
This, of course, is an important victory. Once you get the ear of a politician, you get something real. The highbrows can talk forever and nothing happens. People smile benignly on them and let it go. But once the politician gets an idea, he deals in getting things done. Many are extraordinarily able in devising political plans that hold water, not only in the matter of votes but administratively.
THE KEY TO ACTION
Without the ability to convert the politicians and to convince the politicians of the necessity and wisdom of making provisions for old age, we would never have had the old-age and survivors insurance system or any of the other social insurance systems. Sometimes a little guidance helps them; sometimes they develop this pattern entirely on their own account. Don’t ever scorn the politicians. They are really the key to these situations in which we now deal. And I want to say this right now: the need for unemployment insurance was even more critical at that time, in 1933, than the need of the aged who could have been handled under large appropriations for relief without having their relief come as a matter of right through insurance. But the unemployment insurance idea was full of hazards for many people, and particularly for the politicians, who tended to take the old-fashioned view that there was something wrong with people who were unemployed, and that they ought to bear the burden of their own sins. If you go back to medieval writing, and on into early 19th- century writings, you find this theme coming up all the time. There are some people who won’t work and, of course, they will always be unemployed and stagger along somehow. Now you know and I know that there are an extraordinarily few persons who will always be unemployed and who either don’t want to, or can’t, because of physical or other disabilities, get the kind of work they can do. But it’s always easy to say, “Well, he should have learned to do, something and “No, he shouldn’t be covered.” Thus, when the bill was debated in Congress there was always opposition to the unemployment insurance based on opinions such as: “Well, a man shouldn’t be taxed with this and for that when it isn’t his fault.” “The employer should not have to pay a tax into the unemployment insurance fund because he’s not to blame for it. He can’t help it.”
And on the merit rating: “Well, if you don’t produce any unemployment, why should you pay a tax into the system?”
Of course, we lost on merit rating, and I’ve always regretted it. I think that some time, in the wisdom of this country and some President who’s interested in the matter, we’ll wipe out merit rating. You don’t have to administer it, so you don’t know what a headache it is. But this is what causes the problems in the administration of unemployment insurance today in the various States and under the various State laws.
The public interest in old-age insurance became very great. Earlier, I had conceived it as New York State Commissioner of Labor to establish some kind of old-age and unemployment insurance in the State of New York. Where did the idea come from? I don’t know. I must have picked it up in the general reading that one does; in the general conversation of other socially minded people; in the discussions that went on between intelligent and educated people about the English system and how they managed things; in the conversations with people who had just been to England and thought it was such a nice idea that Lady Jones’ maid had a little book, and when Lady Jones paid her, she wrote in the maid’s little book and this was going to take care of the maid when she was old–when she was 70 years old or 65 years old, she could collect something. Now wasn’t that a good idea? Thousands of people thought it was a fine idea
We looked into this, and we fell back upon the report of Mayor’s Committee on Unemployment which was written in 1919 and 1920 and had recommended some form of unemployment insurance. We started on a program of writing a report on unemployment insurance in 1922, in the State of New York–on a State basis–because we were in the midst of a depression–a little depression not a big one. At that time I conceived the idea to stir this thing up. I got the Governor to authorize me to go to England to study their system. The English system was full of horrors to me because of their recordkeeping arrangements, which I went to see at Kew.
Now you know all about recordkeeping here. I have observed this enormous building that you have erected to keep your records in, and it’s almost as big as the one at Kew, which terrified me because it was so big. And we have the benefit of the IBM which the British didn’t have when they began their handwritten system. I remember seeing ladies climbing up on great high stepladders and getting files out of shelves–dusty, dirty–many wearing gloves so they wouldn’t get their hands dirty while hunting through the files for John Jones’ record. A terrific problem of recordkeeping! You don’t do that today.
I’ll never forget how startled I was when I saw the first IBM machine throw up records in front of you. It’s an amazing convenience! You don’t realize what it would be otherwise unless you have tried it.
At any rate, in the State of New York, while Roosevelt was Governor and we were in the midst of this depression in the early twenties I did get him sort of worked up about it. At that point education was the whole thing, you see. We had to et people used to the idea.
American manufacturers and businessmen were coming back from England and saying, “Oh, they have the do over there. The dole is horrid!” Nobody then knew what the dole was. I do now. It wasn’t so bad even then, but it was getting something you yourself hadn’t paid for. When the depression came, the English put unions into the unemployment insurance system other than those who had originally begun it and paid into the fund.
What else were they going to do with them? They had to do something with the unemployed. They had to provide some form of relief, but it was greatly resented by the older, stable, skilled trades organizations, who had thought they would get up a fund for themselves, to find that their Government put everybody that was unemployed on that fund. It wasn’t really very nice, but it wasn’t wicked, although the American manufacturer though it was, so that we had a big group of businessmen who would say: “Oh, no; terrible, the dole! Don’t mention unemployment insurance to me. That’s nothing but the dole.”
And I would mention old-age insurance to them to make it easier, but they would say, “No, that’s the dole too. I don’t believe in the dole.”
Franklin Roosevelt was greatly opposed to the dole: “Oh, we don’t want the dole; not the dole!” I had a great time to get him quiet down and stop talking about the dole; to try to think about the realities.
Anyhow, this was what we finally did: first, we appointed a committee for the relief of the unemployed in New York State. That was our first duty. Then we conceived the idea of calling a conference of Governors of the surrounding States because at that time every study of unemployment insurance or old-age insurance brought us up flat against this: How can this possibly be done by one State alone?
The conditions are so different in different States. The revenue situation is so different; the tax laws are so different; the industries are so different; the composition of the population is so different. There are great collections of aged people in some States and very few aged in others. California at that time was not the prize old-age State that it is today. But there were equally notable differences between the States. How could Arizona, how could Alabama, how could the State of Maine with its disproportionate population of old people, its decline of youth (because they all left Maine to go to the city)–how could they possibly have individual old-age insurance systems or unemployment insurance systems? How could they rely upon their own villages to collect enough money from the unemployed or the aged (when they were working) to carry such a system? It was also a very difficult thing to do with the small actuarial exposure of the various States. We couldn’t ever figure it out for New York State, which is a large, rich State with high tax values and all that sort of thing. There just wasn’t enough exposure and there wouldn’t have been enough collected to warrant the program.
We discussed this in this Governors’ meeting and we hit upon the idea–which I think Roosevelt had already plotted in his mind–of a possible regional pattern. The New York Port Authority had just gone through, so that there was a treaty between New York State and New Jersey to develop the Port of New York. These adjoining States, these contiguous States which have similar industries and similar population problems, might join together to form systems.
The interesting thing is, however, that we talked about unemployment insurance and we talked about old-age insurance, as insurance, and we talked about it for four mortal days. Paul Douglas of Chicago, then a professor of social subjects at the University of Chicago and now a Senator in Congress, was the guiding hand as the secretary of this conference. We ended up with a proposal to think of some form of unemployment insurance on a regional basis. Well, that was as much as you could do in the winter of 1932.
In the spring of 1932, Franklin Roosevelt had gone out to Utah to the Conference of Governors. He was, already, of course, sub rosa, a candidate for the Presidency of the United States–although he hadn’t been nominated. Therefore, his action, I may say, was both brave and daring, and at the same time it was subtly attractive to the voter. He made a speech which was full of pleasant hyperbole of one sort or another–flattery to various Governors–but at one point he began to discuss the great problems now facing this country, and he spoke about unemployment. Then he said, “I am for unemployment insurance but not for the dole.”
Until we heard those words come over the wires, I wasn’t sure he was going to say he was for unemployment insurance. I was afraid he was going to say he was against the dole, and nothing else. I wasn’t sure he would come through but he did. And that, of course, was the first time he had ever committed himself as far as that. It created a great interest and a great enthusiasm among the voters, which he was not slow to catch on to. He had that kind of a mind, you know; he could feel the public pulse, and he cared about the public pulse. This, of course, was great news to most of us, and we bent our energies to getting something into the Democratic national platform. We didn’t get much but we got something–we got the word mentioned.
Unemployment was mentioned as a great and outstanding problem of the United States in the year 1932, and the Democratic Party platform included a clause which said it was a problem. They promised to study the causes of unemployment–as though anybody hadn’t studied them in years.
They promised to have a committee to study the causes of unemployment, and to study and look into the whole matter of unemployment insurance. But it was a very weak clause which our friends were quick to pick up, telling us that we had betrayed them and all that kind of thing. Not having appeared before the committee that was drafting the platform, they didn’t know how bad the platform might otherwise have been on this subject. Most of the committee members seemed to be determined that there should be nothing said about unemployment that would frighten people away from the Democratic Party.
But, you may remember, it didn’t frighten the people at all. Actually, nothing frightened them. They would have voted for anybody who was running, and for any platform because they wanted d change. Everybody was depressed; every industry was depressed; so every individual had some sort of stake in the situation. Thus, we got the first public mention and the first public commitment to do something or other about unemployment–at least to study it. This was a feather in our cap. When I say flour” cap, I mean the caps of those who had already committed themselves in this direction; who had already determined to help each other find some way out of the situation and get some form of social insurance in this country.
At any rate, that was the situation when Roosevelt was elected and we went to Washington.
Before I was appointed, I had a little conversation with Roosevelt in which I said perhaps he didn’t want me to be the Secretary, of Labor because if I were, I should want to do this, and this, and this. Among the things I wanted to do was find a way of getting unemployment insurance, old-age insurance, and health insurance. I remember he looked so startled, and he said, “Well, do you think it can be done?”
I said, “I don’t know.” He said, Well, there are constitutional problems, aren’t there?” “Yes, very severe constitutional problems,” I said. “But what have we been elected for except to solve the constitutional problems? Lots of other problems have been solved by the people of the United States, and there is no reason why this one shouldn’t be solved.”
“Well,” he said, “do you think you can do it?” “I don’t know, ” I said But I wanted to try. “I want to know if I have your authorization. I won’t ask you to promise anything.” He looked at me and nodded wisely. “All right,” he said, “I will authorize you to try, and if you succeed, that’s fine.”
“Well,” I said, “that is all I want.” I don’t want you to put any blocks in my way. We’ll see what we can do. There are plenty of people,” I said, “who want it badly and will work for it.”
This was the way it all began.
Then, of course, we got into office and the relief problem was overwhelming, and the NRA was making an awful noise. You couldn’t hear anything else. It was a little difficult to keep the idea alive, but I took it upon myself to mention unemployment insurance at least every second meeting of the Cabinet–just to mention it so that it wouldn’t die; so it wouldn’t get out of people’s minds. Finally, the time came when the Vice President, John Garner, said, “I think we ought to be doing something for the poorer kind of people.” He, too, was keeping it alive.
By the way, I remember that John L. Lewis called him “that red-faced whisky-drinking old man.” Garner was an extraordinary person; although certainly no flaming radical. But when some of these problems were discussed in cabinet meetings, it is John N. Garner that I remember. Being a little deaf, he would lean forward to listen with his hand cupped to his ear, and I remember his getting awfully out of patience at the long-winded elaborate statements that people made about the unemployment situation that existed in those years. Finally, he would burst out and he would say, “Mr. President, Mr. President, I think we promised to do something for the poorer kind of people. We’d better be about it. We’d better be about it and not talk so much.” He understood the poorer kind of people to be the people who needed something; he didn’t know what. He knew nothing about social insurance, but the poorer kind of people were the people that had to be helped. This, of course, was absolutely true.
By this time it was quite late. it was June 1934 before we got to the point that the NRA was quiet enough, and relief was quiet enough so that we could think about this thing seriously. So I mentioned it again, and then I proposed to the President, since he was trying to close Congress earlier than usual, that we establish our study right now and that we get a bill ready to present the next year–the next session–which would be the first of January 1935. This was all right; nobody objected because it was a study problem. We discussed it in Cabinet one day, and I remember it was interesting to see thee views these Cabinet officers took. I remember plainly what each of them said. Henry Wallace was the most educated of any of them on social matters, and he said, Yes, he was in favor of it, but this was no time to do it because it was deflationary to take tax money from the general public and give it into government hands. He indicated that “Tax money should be circulated to stimulate the economy.” Henry Morgenthau, Secretary to the Treasury, agreed to that. Navy didn’t have any ideas at all–at least none they wanted to express. Harold Ickes merely said “Okay” in a rather Ickesian tone. Secretary of War, George Durn, who had been the Governor of Utah and was a splendid person–heart in the right place, intelligent, and industrious, a good person–said, “I think it’s got to be done, Mr. President; the quicker the better.” And so it went around the table. Dan Roper of South Carolina said, “I think it is a very good idea. It sounds very good.”
Anyhow, they all more or less agreed that the President should appoint a committee, so then we had to decide how.
I suddenly became frightened as I saw what the committee might be, you know–a regular congressional public-administration investigatory committee–that would take 10 years to make a report. So I tried to stop any proposals of that sort. The others had begun to say that Senator Such-and-Such ought to be on it and Senator So and-So, etc., and perhaps a few Governors should be on it. You know what happens when you get a great big committee with all sorts of representative people on it; it’s a terrible job to get anything out of it.
We came to think the President should appoint just a little committee to explore the subject. It should consist of members of the Cabinet in order to keep this thing “close up” so that the President could be sure they didn’t get off on the wrong foot; that they didn’t go proposing some crazy ideas, you know–over-liberal–and also so they didn’t get to proposing very, very conservative ideas which wouldn’t give the unemployed and the aged much of anything. We needed the President’s stand on this, so only those who were responsible only to the President were proposed for appointment.
The President did appoint members of the Cabinet and he called it the Committee on Economic Security. He didn’t like the word “social.” That meant the dole; he wanted that dropped out, so we dropped it out. Semantics meant nothing to me. At any rate, we dropped the word “social” and we had a Committee on Economic Security.
Of course, everybody since then has pointed out that it wasn’t “economic security” at all; and even before we got around to making the report, we regretted the idea that we had ever had the name because it was really social. Everybody was talking about how the economy was busted and we needed a good economic program, so this was the Committee on Economic Security. Congress hastily received the President’s report and authorized the committee, but adjourned without making any appropriation to support the committee.
Well, here again was a problem. I remember talking to the President, and he said, “Well, look, Harry Hopkins has got all that money. They just made enormous appropriations for Harry Hopkins’ relief problem. Go get some of Harry’s money.”
“Well, I said, “I don’t think that’s legal, is it? It belongs to Harry.” “Oh, well, you can get it,” he said.
It was a bright idea really. I don’t know why they don’t do it more in the Government now. “Borrow people; just borrow what you need for staff. Why, there are all kinds of people working in Washington-thousands of them. Borrow them. The Army’s got them; the Navy’s got them; Agriculture’s got them; Labor’s got them; everybody’s got thousands of people working for them. They don’t really need all of them,” he said.
So we borrowed them. Mostly it was Agriculture and Labor who contributed to the staff, and the Attorney General gave us half a dozen lawyers whom he didn’t know what to do with otherwise. They were good people, it so happened, and I had the pick of them.
Then we took $125,000 from Harry Hopkins, but on a promise. We promised that we would employ only the unemployed with that $125,000. But that was all right, because plenty of statisticians, plenty of college professors, plenty of people who knew how to dig for facts and so forth–who were unemployed. There were stenographers, of course, and clerks by the dozens who were unemployed. That was a very good scheme. We used only persons otherwise unemployed and the thing got off to a good start.
(Ed. Note: Edwin J. Witte, the Executive Director of the committee on Economic Security, reported in his book, The Development of the Social Security. Act, that the sum of $87,500 was initially set aside from F.E.R.A. (Federal Emergency Relief Administration) funds for the Committee. Because of congressional delays in enacting the Social Security Act this allocation was insufficient and the balance of the expenses of the Committee were carried as administrative expenses of the F.E.R.A. The total expenses of the Committee (including the $87,500 originally allotted) totaled $145,000.)
Well, we had a great many difficulties. If you have administered a new program you know some of the problems we went through getting this one organized.
We knew we had to have actuaries. Well, the Lions Club of America and some other big service organizations put up the money for actuaries. Think of that! It was a really a wonderful thing that they did, because none of us had clear ideas about actuaries. But they had a small insurance system in their own scheme of things and they knew actuaries. So they gave us their actuaries; and the Equitable Life Assurance Society also gave us two actuaries. That was a little political pull inside the Equitable Assurance Co., I must admit; but still we got two first-class actuaries from them. In addition, we got a lot of able and willing people just as “gifts.”
COMMITTEE GOES TO WORK
Of course, we had to have a driver. That was why we got Ed Witte from the University of Wisconsin. We borrowed him, first for 3 months, and then for the duration of the problem. He was a tower of strength because he knew how to direct and how to get work out of people who were scattered about in the organization. We didn’t have much time because we set ourselves January 1, 1935 as the date to report our plan. We borrowed university people who, beginning in July, were on summer vacation–quantities of them. I didn’t know as much about university people then as I do now, but university people–teachers and professors–are a problem in themselves. They have great pride of opinion, and they are quite vocal. They can give voice to their opinions wonderfully, and they can write reports very readily. It takes comparatively little time to write a report, but it is a different thing to do what the report recommends.
We soon found that we had a team of very high-strung people on our hands and somebody had to direct them, but Witte was just perfect. He was a university man himself. He was accustomed to dealing with irate and excited scholars who didn’t want to be disputed about things they knew, or thought they knew; and he was a very practical man, too. He’d been in the legislative bill-drafting department at the State of Wisconsin, and he knew how to set up a law; that is, what you had to have in it. He knew what the situation required and (with his superior knowledge) he could calm down those scholars better than any of the rest of us could.
At any rate, we worked all summer. We had the Technical Board on Economic Security made up of Government officials. We had an Advisory Council on Economic Security which was the employers, organized labor, and the general public. They were easier to handle because the “general public” had been picked; you know, the way you pick a committee. They were all perfectly good people. Even the employers had been well picked. There was Marion Folsom of Eastman Kodak Co. Some of us happened to know him to be a good man with a kind of social mind; and you know what became of him. He worked for that committee and later he turned up as head of the whole Department of Health, Education, and Welfare. A very good person–a man of great ability who really dedicated himself to the promotion of these ideas. It was a terribly hot summer and everybody worked hard all the time and finally we actually did bring forth a report on the first of January 1935. it was a report that recommended unemployment insurance and old-age insurance but omitted health insurance just because the experts couldn’t get through with health insurance in time to make a report on it.
And it was true, they couldn’t. Intellectual difficulties had arrived. of course, the actuarial problem was especially difficult. The actuaries had to know almost before we met. They had to know what we wanted them to figure it on. It had not occurred to us until then that the actuaries had to have something to go on. They are accustomed to measuring the hazard and the exposure and the victims who are involved in the insurance contract. But first they have to know what is the exposure; that is, how many people are going to be in this pattern. And then how many people do you expect to be victims? To how many people will we have to give compensation? “We can’t make the actuarial tables without that. We have to know how many. The population of the United States is 130 million. How many of them will be involved in this?”
That was one of the funny things, you know. While the estimate of the number of people covered by the program–on an average basis–was substantially correct, we so desperately underestimated the number of people that would have covered earnings at some time during the year. The actuaries had to have one set of figures for the old-age system and another set of figures for unemployment. We greatly underestimated the number of persons in both categories because there simply were no statistics on turnover of employment. We didn’t know; we couldn’t know these matters, but we finally rigged up a preconceived state of affairs. And assumed that any law would have to give a four weeks’ waiting period, and we assumed a certain number of persons covered, and we assumed a payment of $15 a week as the minimum, but not to exceed, I think it was one-quarter, of the weekly wages of the unemployed person; and something about like that for the aged persons–also one-quarter of the weekly wages of the previous earnings–the latest earnings of the aged. This is what we gave the actuaries to figure on, and they did a very good job, I may say.
The legal committee soon broke into a row because the legal problems were so terrible. The constitutional problem was the greatest one. How could you get around this business of the State-Federal relationships? It seemed that couldn’t be done.
We continued to wrangle about it’ for days. But one day I went out to tea, although not because I wanted to. In Washington you don’t go to parties just because you want to go, you know; you go because you have to go. I had to call upon Mrs. Harlan F. Stone, the wife of the Supreme Court Justice. She was at home on Wednesday afternoons and so about 5:45, which is nearly the end of the day, I went to her house and presented myself. There were a lot of other people there. We went up to the dining room to get a cup of tea, and there I met Mr. Justice Stone who had just come home from the Court and was getting his cup of tea. We greeted each other and sat down and had a little chat.
He said, “How are you getting on?” I said, “All right.” And then I said, “Well, you know, we are having big troubles, Mr. Justice, because we don’t know in this draft of the Economic Security Act, which we are working on–we are not quite sure, you know, what will be a wise method of establishing this law. It is a very difficult constitutional problem, you know. We are guided by this, that, and the other case.” He looked around to see if anyone was listening. Then he put his hand up like this, confidentially, and he said, “The taxing power, my dear, the taxing power. You can do anything under the taxing power.”
I didn’t question him any further. I went back to my committee and I never told them how I got my great information. As far as they knew, I went out into the wilderness and had a vision.
But, at any rate, I came back and said I was firmly for the taxing power. We weren’t going to rig up any curious constitutional relationships. “The taxing power of the United States–you can do anything under it, ” said I. And so it proved, did it not?
Of course, some of you don’t remember the anxiety with which some of us watched the first case go before the Supreme Court; but it came down absolutely all right. The opinion was written in elaborate, fine social language by Mr. Justice Benjamin Cardozo–not by Mr. Justice Stone–but he voted “Aye” on the matter and we were safe. This is the reason, of course, that we built so strongly on the taxing power and that the whole system of taxation is the basis of the Social Security Act. We tax the aged when they are young; that is, we tax all the young people for the social security system while they are at work; and then when they retire, they are eligible.
Well, of course, this whole thing led us into the problem of what to do with the “half-aged”–what to do with those who are already 55 and had never contributed. We rigged that up on a compromise basis with all sorts of trading within the committee, but the report finally went in and it was a good-enough report. It was not perfect by any means. There had been trading within the committee; there had been secret work by certain members of the committee who didn’t want to show their hands; and there had been a great fight in the President’s Economic Security Committee. It had been really a tough fight as to whether we should have a Federal-State system (of unemployment compensation) or pure Federal system, and I cannot tell you how many times I changed my mind, nor can I tell you how many times the other members changed their minds.
BEATING THE DEADLINE
We voted once to have it a pure Federal system. By the time the others had been out of my office a couple of hours, I began to get telephone calls from them individually saying they thought we ought to meet again–that there was something to be said against that and they would like to review their vote; and could we meet next week? So we would meet and we would vote the other way the next week–we’d vote to have it a Federal-State system. Then we would have the same experience; people would telephone and want to review it again, and we would meet again. This went on for weeks. We came, really, up to the date when the report had to go in within a week. I then took the strong measure of asking them to come to my house–not for dinner but after dinner–and then I told them I was going to lock the door and we would stay until we had settled it and there would be no more review. This was the final and the last meeting–“We have to settle it tonight.”
Well, we locked the door and we had a lot of talk. I laid out a couple of bottles of something or other to cheer their lagging spirits. Anyhow, we stayed in session until about 2 a.m. We then voted finally, having taken our solemn oath that this was the end; we were never going to review it again.
We voted to make unemployment insurance a State-Federal system. N there were reasons for that which were entirely practical. We knew, of course, that a Federal system would have been much simpler to operate, but the opposition in Congress to unemployment insurance was very large, while the opposition to old-age insurance was very small. The opposition in the Congress to unemployment insurance too the form of being in favor of merit rating, which is a pestiferous thing. It gives the insurer the opportunity to have his taxes reduced if he doesn’t produce much of the hazard, but that throws your whole system into disorder. If the bill had come up on the floor of the Senate or of the House as a Federal system, they would surely have put in amendments here, amendments there, and amendments to the unemployment insurance galore, until they would have gotten a good name but the bill would not have passed. This I was sure of. I’d seen it happen in New York State; I’d seen it happen in other places; and the President agreed with me it was the thing they would most certainly do. They would pass old-age insurance but they would not pass the unemployment insurance part. So, we put it all in one bill and then acted as though we were rigged; we wouldn’t compromise with people but insisted that it all go through in one deal: unemployment insurance and old-age insurance. This was the reason it was done–because of our belief that the Congress would have monkeyed with the unemployment insurance sections so much that we would have lost the bill entirely. It could not have been passed. But with the States coming in to run the unemployment insurance you always had the theory that the States could experiment in this line without ruining the whole system. And so, we now have the matter firmly fixed, but not so firmly that it can’t be modified at some future time.
This, then, was the genesis of the whole bill. We did a great deal of educating by one kind of propaganda or other, chiefly hearings. Senator Wagner put it up–a bill which he called a model bill–and held public hearings in the Senate, which attracted a great deal of attention from the Senators. We had a number of senatorial committees which we asked to look into this or that. We got advice. All these actions were for the purpose, not so much of advice as of propaganda–that is, of education of the public. I don’t remember how many speeches we made. I made over 100 speeches myself in that period, and practically everybody else who had anything to do with the scheme made many, many speeches. The result was a bill that finally was presented to Congress and, as you know, was debated very briefly, really quite briefly when you think of the problems that were involved–only a decent amount of debate–and we gave way on all kinds of things. We gave way on washing out universal insurance; that is, universal coverage. We let them take out one group after another; no objections, just so we got the basis of the bill. And finally, we did get the basic bill passed. It came through after amendments, and so forth, and was passed in August 1935 by an extraordinary vote. There were only nine votes against it in the Senate. One could hardly have believed that was possible. I forget the House vote, but it was perhaps 90 votes against or something of that sort.
(Ed. Note: The vote was 371 to 33 in the House and 77 to 6 in the Senate.)
Yes, an overwhelming vote for Social Security, and so it was established. But of course you knew the two committee chairmen. Senator “Pat” Harrison of Mississippi was a wonderful orator. He didn’t know the first thing about this bill. Congressman Bob Doughton of North Carolina knew even less about it because he was deaf and couldn’t hear what was said to him about it. But there wasn’t much debate in the House anyway. Senator Harrison had to present the bill. This was the occasion, of course, on which Mr. Thomas Eliot, now the chancellor of Washington University in St. Louis, undertook to sit on the steps of the Senate beside Pat Harrison and pass up to him the answers to the questions that were asked him.
I understand Mr. Eliot says he never was a page and didn’t wear short pants. I never said he wore short pants. I just said he sat on the steps of the Senate and gave the answers to Pat Harrison; but I suppose Mr. Eliot is sensitive for fear somebody might think that he masqueraded as a Senate page. However, in retrospect, these things were funny, but they were all part of what we did in the effort to put this thing through. Tom Eliot was then a youngster in the legal department, and he was doing the things that help most that he could do.
It finally went through in a blaze of glory. Harrison was congratulated and Doughton was congratulated, and they all beamed; and I gave a party. To my astonishment, Mr. Doughton accepted the invitation and came. His wife said “You know, we’ve been in Washington for 35 years and we never went out before where we stayed later than 8 o’clock at night, but this is a great occasion and Bob wants to come.” So they came and stayed until half past 8! The Harrisons stayed a little longer. It was a perfectly simple party, but it was one of great rejoicing, which we all felt was justified.
And then began the great problem which you have taken over–the administration of this act. Thousands of new problems arose in the administration which had not been foreseen by those who did the planning and the legal drafting. Of course, the Act had to be amended, and has been amended, and amended, and amended, and amended, until it has now grown into a large and important project, for which, by the way, I think the people of the United States are deeply thankful. One thing I know: Social Security is so firmly embedded in the American psychology today that no politician, no political party, no political group could possibly destroy this Act and still maintain our democratic system. It is safe. It is safe forever, and for the everlasting benefit of the people of the United States.
Selected Readings on the Beginnings of Social Security
1. Abbott, Grace, From Relief to Social Security: The Development of the New Public Welfare Services and Their Administration University of Chicago Press, Chicago, 1941, 388 pp.
2. Altmeyer, Arthur J., The Formative Years of Social Security, The University of Wisconsin Press, Madison, 1966, 314 PP.
3. Brown, J. Douglas, An American Philosophy of Social Security: Evolution and Issues, Princeton University Press, Princeton, 1972, 244 pp.
4. Cohen, Wilbur J., “The First Twenty-Five Years of the Social Security Act; 1935-1960”, Social Work Year Book 1960, National Association of Social Workers, New York, 1960, pp. 49-62.
5. Epstein, Abraham, Insecurity: A Challenge to America: A Study of Social Insurance in the United States and Abroad (3rd revised edition), Random House, New York, 1936, 821 pp.
6. Haber, William, and Cohen, Wilbur J., (eds.) Readings in Social Security, Prentice-Hall, Inc., New York, 1948, 643 pp.
7. Lampman, Robert J., Social Security Perspectives: Essays by Edwin E. Witte, University of Wisconsin Press, Madison, 1962, 419 pp.
8. Lubove, Roy, The Struggle for Social Security 1900-1935, Harvard University Press, Cambridge, 1968, 276 pp.
9. McKinley, Charles, and Frase, Robert W., Launching Social Security: A Capture-And-Record Account 1935-1937, The University of Wisconsin Press, Madison, 1970, 519 PP.
10. Mitchell, Broadus, The Economic History of the United States, Vol. IX, “Depression Decade: From New Era Through New Deal, 1929-1941” Rinehart and Co., New York, 1955, 463 PP.
11. Perkins, Frances, The Roosevelt I Knew, Harper and Row, New York, 1964 (paperback edition), 409 pp.
12. Rubinow, I. M. The Quest For Security , Henry Holt and Company, New York, 1934; 683 pp.
13. Schlabach, Theron J., Edwin E. Witte: Cautious Reformer, State Historical Society of Wisconsin, Madison, 1969, 290 pp.
14. Schlesinger, Arthur M., Jr., The Age of Roosevelt-The Coming of the New Deal, Houghton-Mifflin Co., Boston, 1958, 669 pp. 15. Social Security In America: The Factual Background of the Social Security Act as Summarized From Staff Reports to the Committee on Economic Security, Social Security Board Publication No. 20, Government Printing Office, Washington, 1937, 592 pp.
16. Witte, Edwin E., The Development of the Social Security Act, The University of Wisconsin Press, Madison, 1962, 220 pp.
Source: Social Security History Online: http://www.ssa.gov/history/history.html