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| INTRODUCTORY ESSAY gggff |
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| INTRODUCTION- The New Deal was in many ways an unprecedented exercise in federal power, dramatically expanding the role of the federal government in the provision of economic security for the nation's citizens. The Social Security Act of 1935 was the milestone legislation which historians generally credit as the starting point of the modern welfare state in America. Governmental efforts in the area of economic security prior to the passage of the Social Security Act tended either to be state-level programs, or programs narrowly focused on specific segments of the population, sometimes temporary in nature. The Social Security Act was significant, and can be accorded its milestone status, because it placed the federal government in the role of ensuring a basic measure of economic security for a broad segment of the nation's citizens, through programs which were intended to be permanent features of American social provision. Specific programs of unemployment insurance and old-age insurance, as federal programs, appear in the Social Security Act for the first time. An expanded oversight and funding role in state programs also was part of the Act, along with a dramatically expanded federal commitment in the areas of aid to women and children and in public health. The essential innovation of the social insurance programs of the New Deal-as they appeared in the Social Security Act of 1935-is found in the idea that the federal government has a major role to play in the provision of economic security to partially ameliorate what President Franklin Roosevelt would call (in signing the Act) the major economic "hazards and vicissitudes of life." These hazards include old-age; disabling impairments; death of a family breadwinner; unemployment; poverty; and ill-health. Among the eight programs created in the Social Security Act of 1935, provision is made for a new or expanded federal role in each of these areas. This website examines possible connections between governmental programs in the Gilded Age/Progressive Era (GAPE)-at both the state and federal levels-and the federal policies of the New Deal. In particular, precedents for the types of programs in the Social Security Act of 1935. Broadly speaking, these are programs of social provision; programs which are based on the broad philosophical premise that government has an obligation to ensure a basic level of economic security for Americans facing what Franklin Roosevelt would come to call the economic "hazards and vicissitudes of life." In a modern industrial economy these hazards include such matters as retirement in old age; sickness and disability; unemployment; and the death of a family breadwinner. It is this idea of the federal government's involvement in the nation's economic security which was the key innovation of the New Deal's domestic programs. However, the various programs of the New Deal era may not have been entirely without precedent. This idea of government responsibility for economic security does have earlier expressions in similar programs in the Gilded Age and Progressive Era (GAPE). In one important in-depth study of the connections between the GAPE and the New Deal, Patrick Reagan examined what he takes to be a prototypical New Deal federal agency, the National Resources Planning Board (NRPB). The NRPB is significant, according to Reagan, because it is a prime example of a key innovation in New Deal public policy--the idea that the federal government should assume responsibility for centralized economic planning. Although the centrality of the NRPB to the New Deal is an arguable proposition, it was clearly a New Deal program. And Reagan shows in detail that the ideas (and even the personnel) behind the NRPB had definite and identifiable origins in the Progressive Era. (1) Reagan's main point is that the idea of the federal government taking responsibility for economic planning was in many ways a core innovation of the New Deal's approach to the problems of the Great Depression. This is certainly correct. It was Herbert Hoover's inability to break free of the constraints of the prior paradigm of minimal federal involvement in the economy which doomed his efforts to cope with the Depression. And it was indeed FDR's willingness to intervene in the economy in manifold ways which was what the New Deal was all about. Professor Reagan uses the NRPB as a symbol of this idea of the government intervening in the economy. Although it is a convenient symbol of this larger idea, the NRPB itself was not very important in the New Deal. Its brief life, its origins in the failed National Industrial Recovery Act, and its general ineffectiveness, meant that it really played a very small role in actual New Deal policymaking. But as a symbol, we can use the NRPB to represent the very large idea of government intervention in economic planning, and thereby show another point of origin for the New Deal in the GAPE. Another example of GAPE precedents for New Deal policymaking is the long-running debate over the Gold Standard as the basis of federal monetary policy. The idea of removing the government from the gold standard and shifting to silver as an alternative (or to a joint gold/silver standard) as the basis for issuing paper money, dates back to the Populist movement of the Gilded Age. Following the de facto shift to the gold standard with the Coinage Act of 1873, and the subsequent monetary deflation, hard-pressed debtors (often farmers) began the clamor for "bimetalism" or "free silver." In some ways, this was the defining issue of the Populist movement. This issue runs as a thread through the Progressive Era and into the New Deal. Indeed, it was Franklin Roosevelt who, in 1933, finally took America off the gold standard and shifted to a currency based implicitly on silver-at last realizing the "easy money" monetary policy advocated by the Populists. Although there are important continuities between the GAPE and the New Deal in such broad areas as monetary policy and central planning, this website does not examine these types of connections. Instead, the issues discussed stay closely tethered to the Social Security Act of 1935 and to programs in the GAPE which bear at least some family resemblance to the programs found in the 1935 law. A flexible definition of both the GAPE and the New Deal stretches backward in time a bit to encompass the system of Civil War pensions, which actually have their origin in the earliest years of the War, but which are clearly the largest and most important form of federal social provision of the late nineteenth and early twentieth centuries. For the purposes of this website, the Progressive Era began roughly around 1900 and continued up to the passage of the Social Security Act. This of course does considerable violence to the standard chronology-but it is not, I hope, senseless violence. The purpose of stretching the Progressive Era in this way is so we might identify precedents for the Social Security Act which emerge in the New Deal itself, bur which have their orgins in earlier policymaking. For example, certain state-level programs appear during the early New Deal which were not driven by the Roosevelt Administration but serve as precedents for what developed at the federal level within the New Deal. I intend to be equally imprecise about the periodicity of the New Deal itself. I shall start the New Deal with the inauguration of Franklin Delano Roosevelt (FDR) and end it symbolically with his death in April 1945 (although I will argue that in a couple of areas there was some continuing momentum which did not fully play itself out until early in the Truman presidency). Historians of course make many finer distinctions within this period as well, distinguishing between a First New Deal (from 1933 through 1934) and a Second New Deal (starting in 1935 and ending by 1937). Some historians even identify a Third New Deal (from 1937 on). (2) Many would also observe that the New Deal, as an emblem of a certain set of public policy values, could well be described as having ended long before FDR's death, as the Roosevelt Administration entered a more conservative phase following FDR's reelection in 1936, and became more deeply embedded in an alternative focus with the mobilization for World War II. Roosevelt famously flagged this change of emphasis retrospectively in his 1943 press conference, after returning from the Teheran meeting on wartime planning. He pronounced that "Dr. New Deal" had been replaced by "Dr. Win the War." Not withstanding all of these important distinctions, this website shall skate lightly over the surface of the issues of chronology and historical periods, not denying the presence or importance of the finer gradations, but merely glossing over them to better highlight possible connections. President Roosevelt believed that the Social Security Act was the cornerstone of his domestic agenda. It was, according to Frances Perkins, his proudest domestic political achievement. (3) The question of its precedents are thus of some significance. There were precendents in seven broad areas: 1) Civil War pensions; 2) the activities of federal Children's Bureau; 3) the state-level movement for mothers' pensions; 4) the War Risk Insurance program of World War I; 5) the state-level adoption of old-age pensions; 6) state and federal labor reforms; and 7) the general political and philosophical movement during this period for the adoption of federal social insurance.
Following the Civil War, there were hundreds of thousands of widows and orphans, and hundreds of thousands of disabled veterans. Of the slightly more than 2 million men in the Union military, more than 500,000 either died or were wounded in the war. In fact, immediately following the Civil War a much higher proportion of the population was disabled or survivors of deceased breadwinners than at any time in America's history. This circumstance led to the development of a generous pension program for Union soldiers and their families, with interesting similarities to later developments in Social Security. (The first national pension program for soldiers was actually passed in early 1776, prior even to the signing of the Declaration of Independence. Throughout America's ante-bellum period pensions of limited types were paid to veterans of America's various wars. But the creation of Civil War pensions established a full-fledged pension system in America for the first time.) The Civil War Pension program began shortly after the start of the war, with the first legislation in 1862 providing for benefits linked to disabilities "incurred as a direct consequence of . . .military duty." Widows and orphans could receive pensions equal in amount to that which would have been payable to their deceased solider if he had been disabled. In 1890 the link with service-connected disability was broken, and any disabled Civil War veteran qualified for benefits. In 1906, old-age was made a sufficient qualification for benefits. So that by 1910, Civil War veterans and their survivors enjoyed a program of disability, survivors and old-age benefits similar in some ways to the later Social Security programs. By 1910, over 90% of the remaining Civil War veterans from the Union side were receiving benefits under this program. (5) Civil War pensions were also an asset that attracted young wives to elderly veterans whose pensions they could inherit as the widow of a war veteran. Indeed, there were still surviving widows of Civil War veterans receiving Civil War pensions as late as 2003! The last surviving Union Civil War pension widow, Gertrude Janeway, of Blaine, Tennessee, died at age 93 in January 2003. She had married her Civil War husband in 1928 when he was 81 and she was 18. Mrs. Janeway collected a Civil War Widow's Pension for more than 60 years following the death of her husband. She was collecting a pension of $70 per month at the time of her death. In a final symbolic gesture of defiance, the last Union Civil War widow was in fact outlived by the last remaining Confederate Civil War widow. Alberta Martin, 96 year-old widow of Confederate veteran William Jasper Martin, received the news of Mrs. Janeway's passing in her nursing home in Enterprise, Alabama. Mrs. Martin married William Martin in 1927, when she was 21 and he 81. William fathered one child with Alberta and after his death Alberta married one of William's grandsons by a previous marriage. In 1895 the state of Alabama enacted special state pensions for Confederate veterans and their widows--funded by a one mil state tax. The tax was still in effect and the pension fund contained $30 million in January 2003, even though Martin was the sole surviving recipient. Martin did not receive her pension until 1996 when she was discovered to be the sole surviving Confederate widow. The state of Alabama, desirous of bestowing special recognition upon Martin, awarded her a monthly pension of $3,500, which she was still receiving at the time her Union counterpart passed away. (6) Alberta Martin herself passed away during the observance of Memorial Day, 2004. (7) In the aggregate, military pensions were an important source of economic security in the early years of the nation. In 1893, for example, the $165 million spent on military pensions was the largest single expenditure made up to that time by the federal government. Indeed, this expenditure consumed 42% of the government's revenues that year, driving the overall federal budget into a 20% deficit. For comparative purposes, Social Security benefits have never consumed more than 23% of federal revenues, and the projected federal deficit for 2003 is 26% of revenues (the highest one-year federal deficit ever, during the peak of the Reagan Administration deficits in 1983, hit 35%). (8) But these figures based on the federal budget exaggerate the role of military pensions in providing overall economic security since the federal government's share of the economy was much smaller prior to the New Deal. Also, there were features of the system which meant that many veterans did not receive any benefits. For example, former Confederate soldiers and their families were barred from receiving Civil War pensions. So in 1910 the per capita average military pension expenditure for residents of Ohio was $3.36 and for Indiana it was $3.90. By contrast, the per capita average for the Southern states was less than 50 cents (it was 17 cents in South Carolina). (9) Despite the fact that America had a "social security" program in the form of Civil War pensions since 1862, this precedent did not extend itself to the general society. The expansion of these types of benefit programs to the general population, under Social Security, would have to await additional social and historical developments.
Federal social welfare programs for children (and their mothers) prior to the Social Security Act, were the province of a special federal agency created in 1912 expressly for this purpose-the U. S. Children's Bureau. The creation of the Bureau, quite apart from its programs, was a major reform achievement of the Progressive Era. The officials of the Children's Bureau, like most Progressive Era reformers, had faith in a structured, scientific, and bureaucratic approach to improving the conditions of their world. We might even describe this as the essential idea of the Progressive viewpoint. And the Children's Bureau applied this Progressive viewpoint to the matter of raising children, just as their colleagues in other areas applied it to public sanitation, or labor reform, or the emerging social sciences. Since it lacked regulatory or other authority or funds to carry-out any extensive federal programs of direct social provision, the Children's Bureau main role was that of research organization and publisher of information judged helpful to the welfare of children. The Bureau's efforts on behalf of helping parents raise their children mainly took the form of the distribution of millions of pamphlets and instructional booklets which provided detailed instructions in the seemingly natural business of raising children. One of the most remarkable aspects of these documents is the incredible degree of detailed instruction offered to parents. At first blush it seems rather audacious of the government to intervene in the business of child-rearing in such detailed and personal ways. One would have to wonder how parents managed prior to appearance of the Progressive Era reformers! In defense of the reformers' efforts, however, child-rearing, like any other life-skill, probably requires a great deal of instruction. And while this type of instruction was no doubt given in the past by the family and local cultural units, it might be plausible to argue that modern scientific knowledge had shown some of this earlier informal instruction to be old-fashioned and less than ideal. Certainly, some such belief motivated much of the reform efforts of the Progressive Era. It is also significant that the target audience for many of the Children's Bureau's child-rearing publications were the immigrants rapidly populating the cities in turn-of-the century America. To some degree these immigrants had cut themselves adrift from their traditional cultural and social contexts and many believed they needed extra help in their new lives--even help with such fundamental human activities as child-rearing. Some historians complain that the Bureau's publications were patronizing or condescending; or that they somehow were oppressive in that they were predicated on white middle-class social norms. Be that as it may, millions of American women were in fact anxious to receive the information and help of the Bureau and the files of the Bureau, located at the National Archives, are replete with letters of gratitude from recipients of the Bureau's efforts. These efforts seem to have had a salutary effect in helping a generation of American parents raise healthier babies--however they may offend the sensibilities of contemporary historians. So in early twentieth century America the faith of the Progressive reformers was applied to virtually every aspect of modern life--from the design of sewer systems to how to give a baby a bath. Historians since the early 1980s-with some exceptions-have been highly critical of the work of the Children's Bureau, complaining that Bureau officials uncritically adopted the gender, racial and social-structure prejudices of their era. (10) Describing the approach of the Children's Bureau as "maternalist" reform, political scientists such as Gwendolyn Mink complain "The roots of women's inequality in the welfare state can be found in maternalist social policy. . ." because this policy "made women's 'universal' gender role the conduit for cultural reform." By "cultural reform" Mink means the nasty business of suppressing diversity: "Whether through mothers' pensions or infancy protection policy, maternalist reform denied the possibility of equality under conditions of persistent diversity: the maternalist philosophy implied that inferiority and inequality inhered in cultural difference." Sexism too is laid at the door of the Children's Bureau: "They thereby embraced a gender essentialism that conferred political significance upon women's difference from men . . ."(11) Mink does not exactly call the women reformers of the Children's Bureau racists and the lackeys of misogynists, but she highly critical of their reform efforts. It seems unreasonable to demand of the bureaucrats of the Children's Bureau that they be far ahead of their times concerning their attitudes toward race or ethnicity or gender roles. They were in the vanguard of reformers seeking to make the world a better place for America's children. They challenged in progressive ways some of the many obstacles blocking the pathway to that better world. It is of course pertinent to point out that the publications and programs of the Bureau show the earmarks of the attitudes and values of their time. However, the heart of the matter--the successful reform work undertaken by the Bureau--is most important in this history. (I develop this theme at greater length in my book review of Kriste Lindenmeyer's "A Right to Childhood." See the section of this website entitled "Book Reviews.") One objective measure of the value of the efforts of the Children's Bureau is the huge progress made against the long-standing problem of infant mortality in America. An indirect way of measuring this effort can be seen in the remarkable facts that in the first three decades ofthe twentieth century life expectancy at birth increased more than it had in all of recorded human history up to that time. This was due almost entirely to marked declines in infant mortality. Although the Children's Bureau cannot claim sole credit for this change (it was due to a combination of better public health and sanitation programs, as well as better maternal and infant health care and more reliable information on child care issues), their programs played a central role in this great social undertaking. A more direct measure of the effects shows the decline with more precision. At the start of the twentieth century, infant mortality in America was 100 deaths of children under 1 year of age for every 1,000 births--a staggering 10% death-rate for children in their first year of life. In some American cities, the infant death rate was 30%. Nationally, infant mortality declined 13% from 1915 to 1919; another 21% during the decade of the 1920s; and another 34% during the decade of the 1930s. (12) This accomplishment represents one of the most successful efforts of social reform in the nation's history.
When the ship is sinking and the lifeboats are being deployed, the traditional cry is "women and children first." This expresses a kind of sentimental view of women and children as contrasted with social expectations of mature males. But in all candor, we would have to say that this same sentiment made passage of social programs for women and children easier for Americans to swallow than programs for men, or generalized programs for all of society. It is yet another of those ironic ways in which some women have actually been privileged over most men in the development of the American welfare state. The previous sentence will no doubt strike many as a howler. The typical take on the American welfare state in the historiography of the last twenty years is that has been biased against women in key respects. These claims of bias against women depend on an elaborate theoretical framework in which the discovered biases are implicit and are discoverable only by a particular historical reading of events; and sometimes the perceived bias is not even in the programs of the welfare state itself but in the larger society, and the welfare state is indicted for failing to challenge prevailing orthodoxies. One major line of argument here is that the bifurcation of the American welfare state into a needs-based component and a wage-based component is inherently prejudicial to the interests of women and inherently biased in favor of white males. For example, Linda Gordon offers this sweeping generalization about the American welfare state: ". . . social insurance programs grew stronger in part by distinguishing themselves from public assistance. . . . the two welfare models were to a large extent marked by gender. Social insurance was overwhelmingly a male vision, social work a deeply feminized one." (13) This same theoretical distinction allows Gwendolyn Mink to criticize the welfare state as sexist and repressive of women: " . . . the maternalist wing of the welfare state substituted women's services for women's rights, anchored women's citizenship in maternal responsibility, and institutionalized social, economic, and political resistance to gender equality and women's independence." (14) While there may some truth in these statements, it should also be noted that in terms of the objective provisions of many social welfare programs, up until about the late 1970s, these provisions, to the extent that they made any explicit gender distinctions, invariably were structured to benefit women and disadvantage men. Prominent examples can be found in the area of labor regulation. The first constitutionally upheld federal regulations limiting hours of work (Muller v. Oregon, 1908) applied only to women, on the grounds of their gender. Indeed, as can be seen from Table 1, there were laws limiting working hours for women in 41 states by 1929 and laws setting minimum wages for the work of women in 15 states. There were no such equivalent laws for men. In the benefit programs under the Social Security Act of 1935, explicit gender distinctions were first introduced in 1939 when women were permitted to receive widows benefits on their deceased husband's Social Security record, but men were not extended the equivalent protection. In 1956, women were granted an early retirement option under Social Security; men were not extended this benefit until 1961. Under this early retirement provision alone, we can calculate that more than one million women received more than $530 million in benefits during the five years in which men were blocked from exercising this option. (15) Unquestionably, these special privileges were granted to women because of a condescending view of women as the "weaker" sex, or as in some other way, more "needy," or sometimes more "worthy," than men. Modern sensibilities tend to resent these patronizing assumptions about the nature of women. But the bare fact of the matter is that they allowed women to be privileged over men in welfare state policies in most instances in which those policies contained specific gender-based distinctions. This was certainly the case with Mothers' Pensions. Politically, much of the successful push for Mothers' Pensions came from activist clubwomen who explicitly urged enactment of such pensions as a way of "honoring motherhood." Mothers' Pensions were the first wide-spread form of social welfare provision in modern America outside of Civil War pensions. These were state-level welfare benefits provided to women with children who did not have a male breadwinner in the household. The specific factors of entitlement varied from state to state, as did benefit amounts. The first state-wide Mothers' Pension program was adopted in Illinois in 1911. By 1920, these pensions were available in 40 states. (These Mothers' pensions were precursors to the Aid to Dependent Children program under the Social Security Act of 1935.) Emerging rather suddenly onto the public agenda following a 1909 White House Conference on the Care of Dependent Children, the idea-first suggested publically by President Theodore Roosevelt at the Conference-spread like "wildfire" relative to the way most aspects of the American welfare state developed. Mothers' pensions were an alternative to institutionalization whose aim, as President Roosevelt put it, was to allow the mother to "keep her own home and keep the child in it." (16) Mothers' pensions were a significant form of social provision in the early decades of the twentieth century. In 1931, for example, 93,600 families nationwide, containing 253,300 children, were in receipt of monthly pensions benefits. The benefits were modest, and varied tremendously from state to state. The highest monthly stipend was the $69.31 per month paid in Massachusetts; the lowest, the $4.33 per month available in Arkansas. The national median grant in 1931 was $21.78. (17)
Interestingly enough, the closest analog to the Social Security Act during the GAPE is the program of allotments and allowances instituted as part of the World War I War Risk Insurance Act (WRIA). It is particularly interesting because relatively little is known about this program and very little work has been done on the subject. One might expect that historians of the welfare state would have long-ago mined this particular vein, but it is only with some very recent scholarship by K. Walter Hickel that we have begun to appreciate the significance of War Risk Insurance as a precedent for the programs of the New Deal. (18) The WRIA was enacted in October 1917 and was operative from November 1917 until the end of July 1921. Under this law, servicemen were able to purchase government-sponsored life and disability insurance, and the law contained a program of "allotments and allowances" which paid benefits to wives and widows of servicemen, as well as to their dependent parents. So in miniature, the WRIA was a fairly full-figured social insurance system, with survivors insurance, disability insurance, health care benefits, and vocational rehabilitation. The program was certainly significant in its time. Around 2.1 million beneficiaries received allowances and allotments under the program and its benefit payments ($570 million) was equivalent to about two-thirds of the entire federal budget before the war. Both the community of social insurance theorists and the proponents of federal programs for women and children pushed very hard for development and passage of the WRIA. Leading social insurance theorist Henry Seager helped draft the WRIA, as did Children's Bureau head Julia Lathrop. American Association of Labor Legislation (AALL) member Samuel McCune Lindsay argued forcefully that WRIA was a species of social insurance and that "every contract of employment, like that of Government itself with its military and naval forces, must in the future . . . contain ample insured provision against loss of income through sickness, invalidity, old age, or industrial displacement." (19) Reflecting the differing styles of the advocates for social insurance (sometimes called "paternalist" by historians) and those advocates of programs for women and children (sometimes called "materialists"), Julia Lathrop put the matter not in terms of industrial insurance concepts, but in terms of social provision, when she told the Congress: "The least a democratic nation can do, which sends men into war is to give a solemn assurance that their families will be cared for-not kept from starvation, but kept on a wholesome level of comfort." (20) Whatever differences there may have been in their approaches, both groups clearly saw the WRIA as an example of the social welfare programs they had long been advocating. As Hickel puts it,
The notion that WRI represented a precedent for the Social Security Act did not go completely unnoticed. One of the pioneers of the Social Security system, Arthur J. Altmeyer, made this connection in an oral history interview in 1967. Altmeyer observed,
The main limiting feature of the WRIA was, however, the same as its core virtue-its nature as a wartime benefit for members of the armed forces. This was its core virtue because it meant that unlike so much other proposed legislation for social provision, and in common with mothers' pensions and Civil War pensions, it was seen as conferring a benefit on an especially "worthy" group of citizens-soldiers serving their country. Thus, it was relatively easy to enact and relatively generous in its scope and provisions. The flip-side of this core virtue is that applying to an especially "worthy" subgroup in society, it lacked the wide foundation which would allow it to serve as a precedent for a generalized social welfare program encompassing large segments of American society. In a phrase, after the war ended, so too did the benefits of the War Risk Insurance Act, and in short-order this early program of social provision was too-soon and too-easily forgotten.
On the eve of the enactment of the Social Security Act in 1935 perhaps the most active area of social welfare reform and legislation was the area of old-age pensions. Following the outbreak of the Great Depression, poverty grew dramatically among the elderly. The best estimates are that in 1934 over half of the elderly in America lacked sufficient income to be self-supporting. Despite this, state welfare pensions for the elderly were practically non-existent before 1930. A spurt of pension legislation was passed in the years immediately prior to passage of the Social Security Act, so that 30 states had some form of old-age pension program by 1935. Although old-age pensions were wide-spread, they were generally inadequate and ineffective. Only about 3% of the elderly were actually receiving benefits under these states plans, and the average benefit amount was about 65 cents a day. (23) There were many reasons for the low participation in state-run pension systems. Many elderly were reluctant to "go on relief." Restrictive eligibility criteria kept many poor seniors from qualifying. Some jurisdictions, while having state programs on the books, failed to actually implement them. Many of the state-passed pension laws provided for counties within the state to opt to participate in the pension program. As a result, in 1929, of the six states with operating pension laws on the books, only 53 of the 264 counties eligible to adopt a pension plan actually did so. After 1929, the states began enacting laws without county options. By 1932 seventeen states had old age pension laws, although none were in the south, and 87% of the money available under these laws were expended in only three states (California, Massachusetts and New York). (24) Once the Depression hit with full force, a cacophony of voices began to be raised peddling a bewildering array of schemes and plans for curing the economic calamity which had befallen the nation. Some of these were sweeping assaults on capitalism itself. Others focused on narrower issues, like old-age pensions for the elderly. Still others were a mix of nostrums covering a range of social ills. The alternative pension movements were the largest and most successful of the various mass movements during this period. Three pension movements merit particular mention for their role as precedents-even if only by dint of negative example-in the development of the old-age provisions of the Social Security Act. Huey Long was Governor of Louisiana from 1928 to 1932 and was elected to the U.S. Senate in 1930. A nominal Democrat, Huey Long was a radical populist and machine politician. He wanted the government to confiscate the wealth of the nation's rich and privileged. He called his program Share Our Wealth. It called upon the federal government to guarantee every family in the nation an annual income of $5,000, so they could have the necessities of life, including a home, a job, a radio and an automobile. He also proposed limiting private fortunes to $50 million, legacies to $5 million, and annual incomes to $1 million. Everyone over age 60 would receive an old-age pension. His slogan was "Every Man A King." The Share Our Wealth program immediately became a movement. Clubs were formed in every state in the nation. By 1935 the movement claimed 27,000 local clubs with 7.7 million members. (25) Francis E. Townsend was a lean, bespectacled doctor from Long Beach, California. In 1933 he found himself unemployed at age 66 with no savings and no prospects. This experience galvanized him to become the self-proclaimed champion of the cause of the elderly. He devised a plan known as the Townsend Old Age Revolving Pension Plan, or Townsend Plan for short. The basic idea of the Townsend Plan was that the government would provide a pension of $200 per month to every citizen age 60 and older. The pensions would be funded by a 2% national sales tax. There were three eligibility requirements:
Dr. Townsend published his plan in a local Long Beach newspaper in early 1933 and within about two years there were 7,000 Townsend Clubs around the country with more than 2.2 million members actively working to make the Townsend Plan the nation's old-age pension system. (26) Upton Sinclair was a famous novelist and social crusader from California , and an avowed Socialist, who in 1933 was asked by a dissident group of Los Angeles Democrats to help them draft a platform proposal for dealing with the state's economic problems. They were so impressed by Sinclair's plan--which he christened the End Poverty in California, or EPIC plan--that they persuaded him to change his registration to Democratic and to run for the party's nomination for governor in 1934. Sinclair's EPIC scheme was a 12-point program to remake the Californian economy. It involved the issuance of scrip currency, the creation of large state-run bartering enterprises, a tax on idle land and floating a large state bond for $300 million. Point 10 of the plan was a proposal to give pensions of $50 a month to all needy persons over 60 who had lived in California for at least three years. There was a state pension plan in operation in California at the time, but its benefits were very low, and the eligibility requirements were so severe that most elderly Californians could not qualify. (This was true of many of the state pension programs around the country.) Sinclair's pension proposal was very popular because in one fell swoop it reduced the minimum age for pensions by 10 years, almost doubled their value, and eliminated restrictive eligibility requirements. Sinclair's EPIC program, and especially its pension proposal, had a great appeal in Depression-weary California. Sinclair and his supporters organized EPIC clubs, published newsletters, formed ad hoc organizations and found a large chorus of supporters with unlimited enthusiasm for his ideas. In short order, Upton Sinclair's EPIC movement captured the Democratic party and Sinclair became the Democratic nominee for governor in the election of 1934. The party's platform became the EPIC program, including the pension plan. When the votes were counted, Upton Sinclair got 37% of the vote, the Republican candidate got 48% and a third-party progressive candidate took another 13%. Had it been a two-man race, Upton Sinclair might have become Governor of California and the EPIC pension plan might well have become the California model. (27) Following the passage of the Social Security Act in 1935, most of these alternative pension schemes disappeared as quickly as they had arisen. The Townsend Plan, however, hung around at least until the passage of the 1950 Amendments to the Social Security program, which made benefits much more generous and finally took the last of the steam out of the Townsend movement. But as late as November 1949, in the House of Representatives 179 members signed a discharge petition to force a floor vote on the Townsend Plan--barely 39 members short of the number needed to force the House to consider the final version of the Townsend Plan as a replacement for the Social Security system.
The only real labor reform provision in the Social Security Act was the unemployment insurance program. There were no provisions regarding wage rates or hours of work or working conditions, or any of the other traditional varieties of labor reform. It might well be argued that unemployment insurance was enough of an achievement to qualify as a major labor reform-indeed I suggest it was. But even beyond the unemployment insurance program, labor reform-in the broad intellectual sense of the issues of social justice for labor in the industrialized capitalist economy-was a central philosophical concern of both the GAPE and the New Deal. Labor reform was where much of the action was in the GAPE. This focus carried through well into the New Deal, and while many of the actual laws expressing this continuity during the New Deal (especially the Fair Labor Standards Act of 1938) were not part of the Social Security Act, the same philosophical attitudes informed both pieces of New Deal legislation. Indeed, the central program of the Social Security Act, the contributory social insurance system which has become synonymous with Social Security, was based on distinguishing this entirely new form of federal law from older welfare programs precisely on the ground of its connection to paid labor in the workforce. Not only that, but the architects of the Social Security Act, Frances Perkins, Edwin Witte, Arthur Altmeyer, and others, were themselves products of the labor reform movements of the Progressive Era. Witte and Altmeyer came out of the labor economics tradition at the University of Wisconsin; where Altmeyer did his graduate work under famed labor-economist John R. Commons and where Witte was one of Commons' colleagues on the Economic Department faculty. Witte was still a professor at Wisconsin when tapped to be Executive Director of Roosevelt's Committee on Economic Security, which designed the Administration's Social Security proposals. (28) Altmeyer and Witte also had associations with the workmen's compensation programs in Wisconsin during the Progressive Era-both serving as officials in the Wisconsin state Industrial Commission. Frances Perkins was Franklin Roosevelt's state Industrial Commissioner before coming to Washington to head the Department of Labor. So many of the key players in the development of the Social Security Act were themselves living embodiments of the continuity on this issue between the GAPE and the New Deal--the human bridges between the two eras. Indeed, contemporary historians now criticize the Social Security Act of 1935 precisely because of its strong connection to wage labor. So we can make a link between the GAPE and the New Deal era on the metric of labor reform, if not in a literal statutory sense, certainly in a philosophical sense. The Labor of Women & Children- An Offense to the Sensibilities Of the many strains of reform in the Progressive Era, one very successful, if somewhat conflicted, strain was that focused on women and their role as mothers and homemakers. The core idea was to promote various reforms by arguing that women and children were special cases, that something about their "natures" or their unique circumstances in society made them especially "worthy" candidates to benefit from social and political interventions. One example of this is the limited success achieved in the area of labor reform, but only for women and children. The condition of workers in modern industrial society had a kind of Dickensian grimness in the early Gilded Age. Workers in Andrew Carnegie's steel mills were at one time expected to put in 12 hour days, 364 days a year, as little more than cogs in Carnegie's industrial machinery. It may not be too strong to say of many workers in industrial America that they had become virtual "wage slaves." Certainly, as Eric Foner has pointed out, the condition of free laborers was nowhere near that of chattel slavery, but as a political metaphor this idea had great popularity among those agitating for various labor reforms. As Foner has observed, "There was, of course, nothing new, or uniquely American, in the rhetorical mobilization of chattel salver to criticize the freedom of labor relations under capitalism. . . . But in the United states, where slavery was an immediate reality, not a distant symbol . . . the idea that the wage earner, because of economic dependence, was less than free took on a special power." (29) However free labor is characterized in the GAPE, it was clear to many that reform was desperately needed. But old attitudes (not to mention vested interests) about laissez-faire capitalism and the endemic American distrust of government led to entrenched resistance to most reform ideas-even such simple ones as limitations on the hours of work. The only early successes in this area came in the abolition (at the state level-in a few states) of child labor, and early labor reform legislation which allowed effective laws to be enacted protecting female workers from the exploitation that all workers experienced in inhumanly long hours of work. This early victory for progressive reform was extended only to women, and was achieved only by arguing that women were by their nature weaker than men and hence more in need of this type of government protection. This reasoning was upheld in the landmark Supreme Court case Muller v. Oregon. For years men had worked to get the 8-hour day or similar reforms, only to be resisted at every turn by business and rebuffed in no uncertain terms by the courts. In a 1905 Supreme Court case (Lochner v. New York), involving male workers, the Court said: "Statutes of the nature of that under review, limiting the hours in which grown and intelligent men may labor to earn their living, are mere meddlesome interferences with the rights of the individual." (30) Barely three years later in Muller the Court upheld laws limiting working hours for women, arguing: "the physical well-being of woman becomes an object of public interest an care in order to preserve the strength and vigor of the race . . . Differentiated by these matters from the other sex, she is properly placed in a class by herself, and legislation designed for her protection may be sustained, even when like legislation is not necessary for men and could not be sustained." (31) While this type of reasoning may be seen as patronizing to modern eyes, it was in fact a key factor in the success of these early efforts to improve the economic security of women. Some historians decry this early success, focusing on the assumption about the nature of women, rather than on the successful reform in labor conditions. But as Eric Foner argues: "While the maternalist agenda built gender inequality into the early foundations of the welfare state, the very use of government to regulate working conditions called into question basic assumptions concerning laissez-faire and the sanctity of the labor contract . . . Although not all reformers were willing to take the step, it was easy to extend the idea of protecting women to demand that government better the living and working conditions of men by insuring them against the vagaries of unemployment, old age, ill health, and disability." (32) In other words, this entering wedge of social reform was only possible by playing to the prejudices of prevailing cultural norms. In a perfect world this type of "real-politic" would not be necessary; but it seems clear that labor legislation would not have been forthcoming at the time without it. Child labor was the other area of some notable success during the GAPE and the New Deal. The phenomenon of child labor as practiced at the start of the 20th century was one of the great stains of the nation's honor, an injustice which, once clearly revealed by journalists and social reformers, was not allowed to stand unmodified. In 1900 there were an estimated two million children working for wages in America. The 1900 U.S. Census found that 18.2% of the country's children between the ages of 10-15 were part of the paid labor force. There were many types of child labor being practiced in the early 20th century. Some forms were in some ways more humane, such as paper-boys, or children working as messengers, or as peddlers in family businesses. Other forms were certainly grotesque, as in the use of children in mines and factories-environments which were inherently dangerous to the children's health and safety. But even the more humane forms of child labor were far from benign. They were, if nothing else, indicators of the amorality of the naked marketplace, unconstrained by any force other than profits. Indeed, I think we could say that any society which crafted an economic system which depended on exploiting the cheap labor of children, which deprived millions of them of the opportunity of a normal childhood, and which created an economic system in which families willingly sought work for their children and were grateful to have it, was a society which had at its core a moral corruption which cried out for reform. Although the child-labor reform movement began in the mid-19th century, by around 1900 social reformers--such as the National Child Labor Committee--began to have noticeable success enacting laws at the state-level, placing various forms of regulation on the use of child labor. The heyday of this movement was roughly from 1902 through 1922. By the end of this period, it was clear that federal legislation was needed, both to smooth the inequalities from state-to-state, and to impose regulations in those regions of the country (primarily the South) where state laws were not in effect. Two major pieces of federal legislation were in fact enacted into law-the Keating-Owens law in 1916 and a second bill in 1919-only to be quickly declared unconstitutional by the Supreme Court. A constitutional amendment was even enacted by Congress in 1920 giving the federal government the power to make law in this area, but it ultimately failed to win ratification. (33) Thus by the dawn of the New Deal, children had imperfect protection from exploitative labor; women had limited protection; and men had none. Workers' Compensation- A Convergence of Interests When path-breaking researcher Crystal Eastman arrived in Allegheny County Pennsylvania in 1907, she encountered more than 140,000 industrial workers laboring in steel mills, railroads and mines. Eastman was attempting the first rigorous research into the causes and consequences of industrial accidents. The paradigm she had to break through was the ancient idea that whenever a worker was injured on the job it was almost always the worker's own fault. The common wisdom around Pittsburgh was that industrial accidents were almost always the fault of the injured worker. This idea was the first-cousin of the idea that whenever a worker was unemployed it was almost always a symptom of slough and indolence. The assumption that the worker was to blame for his own misfortune had become deeply imbedded in the system of compensation for industrial accidents-that system being recourse to the courts. The injured worker was, as a matter of law and custom, forced to sue his employer to try and establish some responsibility on the employer's part to compensate his injured worker. And the legal process was loaded against the worker by this presumption that the injury was his fault. Under the system of common-law practice that had grown up around industrial accidents, employers were required only to demonstrate "reasonable care" in setting-up their workplaces. "Reasonable care" typically meant compliance with any existing state health and safety regulations. In the event of an injury, the worker had to show that the employer's failure to exercise reasonable care was the proximate cause of his injury (the burden on both points was on the worker). In addition, the employers had three additional defenses against any claim of liability under common-law. The assumption of risk doctrine meant that if a worker knowingly undertook hazardous work, then the employer was free of liability for any injuries that might result; the fellow servant rule absolved the employer of liability if another employee somehow contributed to the worker's injury; and the rule of contributory negligence held that if the worker in any way contributed to his injury by his own negligent actions, that this let the employer off-the-hook entirely as far as legal liability was concerned. Not surprisingly, this combination of rules and practices meant that workers enjoyed little success in the courts. What Crystal Eastman found, and reported with an usual degree of scientific rigor, was that there were 526 deaths in a year-and-a-half among the 140,000 workers she studied, along with over 500 non-fatal accidents in a three-month period. Sixty percent of the dead were under the age of 30-which meant that they very often left young families behind. Looking behind the gross statistics to the detailed accident reports, Miss Eastman was able to conclude that in only about 25% of the cases could the accident be reasonably attributed to the fault of the worker; about 30% of the accidents were the fault of the employer in the form of hazardous working conditions or unsafe work demands; another 20% were the fault of fellow employers or supervisors; and in the balance the responsible party could not be determined. (34) When she looked at the economic impact of these deaths and injuries, a bleak picture emerged. In the majority of cases, the employer in fact assumed no liability whatever for the loss of income to the worker and his family. Looking only at the death cases, in 25% of the cases the deceased worker's family received nothing by way of compensation from the employers. And in those cases where something was paid for the loss of the family breadwinner, only about 9% of the cases resulted in payment to the family in excess of $2,000. Despite these small returns for the workers, the system was unsatisfactory for the employers as well. Employers were paying more than four times as much in liability premiums than their injured workers were collecting in benefits. (35) Thus, under this perverse system, employers could easily have paid much more generous compensation to their workers, at lower cost to themselves, if only they did not have to support this expensive and unproductive system of litigation. It is probably fair to say that virtually no one liked the existing system. Pressure for change came from many directions. Around the turn of the century a handful of states adopted slight changes in the common-law rules regarding liability, to even-out the playing field somewhat. Social reformers and social insurance theorists had long been agitating for a shift to a regularized system of compensation based on social insurance principles-mostly on the grounds of the social injustices the present system imposed on the workers. (There were existing workmen's compensation systems in Europe that served as sources of information and potential models for American systems.) (36) This shift, from litigation to predictable business expense, was finally accepted by the employers because they saw how it would be in their own long-term economic interest; and it was accepted by workers because it gave them a certainty of compensation with was very much absent in the system of litigation. This made workers' compensation the first widely-adopted form of social insurance in America. As Roy Lubove summarized the situation,
Wisconsin was part of the movement that swept the nation in the wake of the revelations in Crystal's Eastman's report; in fact, it was the first state to successfully enact compulsory state-managed workers' compensation-in 1911. The author of the 1911 Wisconsin law was University of Wisconsin economist John R. Commons. Consequently, the Wisconsin workers' compensation program embodied the philosophy of Commons and his labor economist colleagues. Their focus, unlike some other social insurance theorists, was not so much on the compensation of the worker for his loss of income, but rather, on preventing accidents in the first instance. They believed and hoped that by designing the right type of program they could craft incentives which would result in the employers in the state improving workplace safety. Commons would go so far as to say, "Insurance and compensation are secondary. [workmen's compensation] is much better described as a kind of social pressure brought to bear upon all employers in order to make them devote as much attention to the prevention of accidents . . . as they do to the manufacture and sale of their products."(38) This view of workers' compensation was simply one piece of the mosaic that was labor economics as practiced by Commons and his peers. Their general approach was to regularize and rationalize modern industrial activity in ways that minimized its potential adverse features. Thus they sought to reduce labor strife by the application of appropriate scientific labor economics principles and practices; they sought to avoid industrial accidents by designing compensation and safety programs; they sought to reduce unemployment by crafting programs containing incentives for employers to modernize their operations in the belief that unemployment was an outcome of an unscientific or inefficient mode of operating. Workers' compensation as it arose in Europe did reflect this same interest in prevention programs. The German and English programs typically joined safety campaigns with income-loss compensation and workers' compensation was "sold" to European business in part on the expectation that the safety link would result in fewer accidents and thus less expense to the business community. Commons and the U.S. labor economists assumed this same view of compensation when advocating their own versions of workers' compensation, and they sold their ideas to skeptical American businesses in much the same way-with the promise that in the long run there would be fewer deaths and accidents and thus less expense to business. The workers' compensation movement really took off in a large number of states at roughly the same time as this social policy issue appeared to ripen everywhere at once, after decades of effort. New York state, another center of labor reform activity, was very active on the issue, passing its first (unsuccessful) program in 1902 (it was found unconstitutional by New York's courts). Ohio was an important player on workers' compensation, as it would be on unemployment insurance, passing its compulsory state-run program in 1911. Wisconsin's program was also passed in 1911 and would turn out to be the first program in the nation to survive challenges to its constitutionality, and thus the first successful workers' compensation program in the country. In all, 44 states (and the Federal government-for civil servants) would enact workers' compensation programs between 1911 and 1929. (39) All of these programs (with the exception of the Federal civil service program) would be rendered moot in 1935 with the passage of the Social Security Act. Unemployment Insurance- The Little Engine Which Almost Could Unemployment has always been one of what Franklin Roosevelt calledl the "hazards and vicissitudes of life" in an industrial world. In the world of Depression-era America it was one of the greatest of the many economic tragedies afflicting the country. The official national unemployment rate was at least 25% during the trough of the Depression; and in some areas and some sectors of the economy the rate was one-third, or even greater. The effective rate was certainly greater than the national average, as many were employed only part-time, or were receiving reduced wages. Unemployment insurance, or unemployment compensation (the terms matter), was the approach taken during the Depression years to combat the hazards and vicissitudes of this threat to economic security. In 1932 the Ohio Commission on Unemployment neatly summarized the problems occasioned by unemployment when it advocated unemployment insurance "as a remedy not for the unemployment but for the distress characterized by: bread-lines, soup kitchens, loss of homes, break-up of families, overwhelming of private charity organizations and distribution of doles to the unemployed from local, state and federal treasuries." (40) Unemployment, as we understand term with our modern sensibilities, is a product of the Industrial Revolution. The idea that a worker could be willing to work, wanting to work, able to work, and yet no work could be had, was an alien notion in pre-industrial societies. In the pre-industrial world there was always work to be done-crops to be tended, brush to be cut back, stones to be moved, livestock to be tended, labor to be performed. Only the rich, the lazy, or the ne'er-do-well, did not labor for their daily bread. So for the able-bodied to be out of work was a failure of personal character. Unemployment, in this world, was the fault of the idle worker. In the modern industrial world economic conditions, sometimes with their origins in remote sectors of the economy, can produce unavoidable downturns in the local, or indeed the national, economy. Workers can frequently find themselves willing to work but with no work to do. In this kind of idleness it was not always easy to see whose failings were to blame. If the worker was able and willing, how could he be to blame? And if the firm's business declined not due to mis-management but due to a generalized recession, it was hard to blame the business owner for doing the only sensible thing he could do in the circumstances, lay-off his workers. It was almost as if unemployment was like the weather-it swept through various sectors of the economy from time to time leaving lots of suffering and economic deprivation in its wake. Although this seems obvious in retrospect, it was a slowly dawning realization during the GAPE. At the outset, unemployment was still usually blamed on the worker. At the beginning of industrialization it was assumed, as it always had been, that a failure to work was symptomatic of a defect of character on the part of the worker. As institutional historian Rufus Miles Jr. summarized it,
This idea gradually gave way, but not without resistance and not without its share of false Springs. "It has taken the community a long time," the editor of the magazine the Independent wrote in 1908, "to grasp the truth that under modern industrial conditions great numbers of working men out of work are not personally blameworthy for their misfortunes." (42) Longer than he knew, as it would be another quarter century before this "realization" manifested itself in actual legislation. As wide-scale recessions and depressions became a feature of industrial life, this easy equation of unemployment with personal character defects seemed less clear. Major depressions in the 1830s, 1840s and 1890s put the issue of unemployment squarely in the public policy agenda. Already in the 19th century, there was considerable effort to craft some sort of systematic response to the phenomenon of unemployment. Lots of ideas were proposed and debated. (43) Some of the force of the 19th century Populist revolt was expended in efforts to obtain guaranteed employment. These efforts were often more quixotic than effective. Jacob Coxey was an unsuccessful Ohio politician and industrialist who, in 1894, called on the unemployed from all over the country to join him in an "army" marching on Washington. He began his march in Ohio and as he passed through local towns and communities the unemployed inhabitants would join the swelling ranks on their way to Washington. Tens of thousands of unemployed workers started marching at various points along the way, but often their enthusiasm dwindled after a few miles as the demands of direct political action became painfully clear. By the time Coxey and his group finally made it to Washington only about 500 hard-core believers remained. Coxey himself was promptly arrested for walking on the grass of the Capitol Building and the protest fizzled out. Coxey later became an advocate of public works as a remedy for unemployment and ran for president as the Farmer-Labor party candidate in 1932 and 1936. Coxey was also an ardent proponent of the free-silver monetary policy and an opponent of the gold standard. Perhaps to demonstrate his earnestness on monetary issues he even named his son Legal Tender Coxey! (44) Although his march failed, Coxey's Army was a harbinger of an issue that would rise to prominence as unemployment insurance would become a central issue in the New Deal. (Ohio would continue to play an important role in the development of unemployment insurance as its state program was one of two looked to as models for the new federal program--the other being the program in operation in Wisconsin.) A social insurance approach to the problem of unemployment finally began to dawn around the turn of the century with the creation of the American Association of Labor Legislation (AALL) and their publication of a pioneering study on unemployment. The AALL was the organization created by John R. Commons and his colleague John Andrews to give organizational structure to the labor legislation approach of Commons and his Wisconsin school of labor economists. The Wisconsin School tended to emphasize the problem of unemployment as a problem in "industrial stabilization," meaning that the main goal was to somehow prevent unemployment by improving business methods-just as they saw the purpose of worker's compensation being to prevent industrial accidents. Concern with industrial stabilization was the focus of the labor economists like Commons; the social insurance theorists worried more about the unmet social needs attendant with unemployment. American pioneers in the social insurance movement, like Columbia Professor Henry Seager, the physician turned social scientist Isaac M. Rubinow, and the acerbic activist Abraham Epstein, all wrote and spoke persistently on the need to develop a social insurance approach to the problem of unemployment. These activists tended to emphasize the amelioration of the economic suffering of the unemployed worker more than the goal of affecting the economy in the hope of reducing macro-levels of unemployment. To some degree, they were in competition with one another as both sought to influence American policy toward unemployment. As Epstein put the matter in his classic 1936 book, Insecurity: A Challenge to America, " . . . the introduction of unemployment reserves instead of compulsory unemployment insurance . . . involves not compromise but a surrender of every important principle of social insurance and the acceptance of an entirely unrealistic and erroneous conception of the causes of unemployment. Social progress cannot be achieved by such compromises. . . To accept the workability of unemployment reserves as providing security for the unemployed is to accept a possibility of material regularization of industry, and the doctrine of original sin on the part of employers. It is not the road towards, but away from social insurance." (45) The path to unemployment assistance through social insurance was smoothed considerably by the prior passage of workmen's compensation. If the nation wanted to do something about the unmet social needs of the unemployed worker, the model ready-to-hand seemed to be the successful system of workers' compensation. But the idea of paying people not to work was alien and different than paying those whose injuries made them unable to work. By its very nature the struggle for unemployment compensation was more difficult than that for workers' compensation. The attitude of blaming the worker for his lack of work was still a barrier to unemployment programs in these early debates. This matter of who is at fault is a crucial one because it tends to affect the type of unemployment compensation one pursues. If the unemployment is the fault of mis-management on the part of business firms, then we might want to design a system of unemployment compensation which has incentives for employers to keep unemployment low. And if unemployment is the fault of business, then perhaps only business should bear the tax burden of an unemployment compensation system. But if unemployment is like the weather, the idea of designing incentives to influence employer behavior seems to make little sense. And if our purpose is to ameliorate the suffering of the unemployed worker, then we naturally what benefits to be as high as practical, which means that additional sources of revenue, such as worker contributions and state subsidies make a lot of sense. These are the very questions which split the unemployment movement into two competing camps. There was one other huge problem with the business sector embracing unemployment compensation. The push for some systematic way to cope with the economic costs of unemployment had one serious handicap not faced by the earlier movement for workers' compensation. Workers' compensation advocates argued that a regularized, predictable, limited system of compensation for industrial injury was, in the long-run, to the financial advantage of business. After all, the impact of an unpredictable legal judgment against a firm could have a catastrophic impact. All things considered, businesses were persuaded that abandoning their tort system in favor of a state-run workman's compensation program was in their financial best interests. Having come to this conclusion, businesses did not have to worry so much about the potential for competitive disadvantages in the marketplace from the business expenses of paying into a compensation system. After all, if it was in their financial interest to participate, what did it matter if their competitors in another state refused to go along? Indeed, they might well prefer that they didn't, since these competitors would then still be burdened with the costs and unpredictability of the old tort system. The situation was the opposite, however, with unemployment insurance. Unemployment was a burden borne only by the workers. While business was certainly affected by the decline in demand, it was the workers who were directly hit by the instant fact of unemployment. And there was no system of tort actions by which a worker could sue his employer for laying him off from his job. So the employers bore no immediate and direct cost from laying off workers in periods of slack demand. Indeed, laying off workers, i.e., creating unemployment, saved them money. To enter into some kind of obligation to compensate unemployed workers meant inevitably that costs to employers would increase. What then happens if Wisconsin, say, creates an unemployment compensation system and Michigan does not? From the point-of-view of Wisconsin's employers, their competitor firms in Michigan and other states would then have a competitive advantage over them since Wisconsin employers would have a new cost of doing business not borne by employers in other states. This problem of competitive disadvantages figured prominently in the political debates over unemployment insurance. Even in Wisconsin, where the push for legislation was successful, politicians were bombarded with this issue. Wisconsin's powerful and popular Governor, Phil La Follette, had signed the state's unemployment compensation program into law in January 1932 (with an effective date in 1934). Up for re-election that year, a major issue in the campaign was La Follette's support of the state's program. Governor La Follette lost the election, in part over this issue. (In 1934, the voters forgave their favorite son and returned him to office for two more terms as governor.) Franklin Roosevelt, while Governor of New York, took several steps on the road to unemployment insurance. At a national Governors' Conference in Salt Lake City at the end of June1930 he publicly came out in support of unemployment insurance as an inevitable form of social provision. He told his fellow Governors, "Some form of insurance seems to be the only answer. Unemployment insurance we shall come to in this country just a certainly as we have come to workmen's compensation for industrial injury; just as certainly as we are today in the midst of a national wave of insurance against old age want."(46) While this idea was being fairly widely discussed in academic circles, Roosevelt's embrace of the principle of unemployment insurance was one of the earliest by a political figure of national prominence. Roosevelt's speech was the headline event of the Conference in many papers around the country. In January 1931, Roosevelt invited the governors of six other industrial states to join with New York for a conferene on how they might better coordinate their responses to the crisis of unemployment. The idea was that they would all coordinate their actions so that no state would have to go first on its own. It was an attempt by Roosevelt to follow-through, on a regional level, with his bold call for unemployment insurance issued at the Salt Lake conference. Although no commitments were made at the Albany conference, the following year Governor Roosevelt's Interstate Commission on Unemployment Insurance issued a report unanimously recommending a compulsory unemployment insurance system on the model of that of the state of Wisconsin, which had passed only the month before. In the absence of a federal system of some kind, widespread unemployment presented an almost impossible dilemma for advocates of unemployment compensation. Nobody wanted to go first, for fear of putting their state at a competitive disadvantage. Nobody, that is, except Wisconsin, who braved this dilemma and pushed forward with unemployment compensation in a serious way prior to the enactment of the Federal unemployment insurance program in the Social Security Act of 1935.
Beginning near the end of the Gilded Age, a philosophical/political movement got underway in America in support of the adoption of social insurance, on the general model of the European systems already in operation. Strictly speaking, this was not yet a federal program; it was political and public policy agitation with the explicit purpose of promoting the adoption of federal programs. This stretches the definition a bit to include this category, but its relevance is compelling. Social insurance is very much a GAPE invention, although it was not invented in America. Social insurance was a European idea, appearing first in Germany in the late 19th century. Germany pioneered both industrial health insurance (in 1883) and old-age retirement pensions (in 1889). Many other European nations soon followed the German lead. (Depending upon how we define "social insurance" there were already somewhere between 20 and 34 nations operating social insurance programs by the time the U.S. got on board in 1935.) (47) Social insurance is the intellectual foundation upon which the New Deal programs of the Social Security Act were developed. As I define it, the essential idea of social insurance consists of two large principles: 1) that the federal government be involved, in programs that are national in scope, and 2) that these are programs seeking to provide a significant measure of economic security to the nation's citizens. There is room for wide variation and vast expansions or reductions in scope in this basic definition, but these are the two essential ideas. The Social Security Act of 1935 itself exhibited both these essential ideas and much variation thereon. So social insurance can include such widely separated ideas as wage-based, contributory old-age insurance; Medicare; unemployment insurance; mothers' pensions, etc. While this is certainly a broad definition, it is not nearly so broad, nor simple, as the famous definition given by Lord William Beveridge, the principal architect of the British social insurance programs of the 20th century. In a speech in Washington, D.C., as part of an important tour of the U. S. in 1943, Beveridge told his American audience that "Social Security is a job when you can work and an income when you can't." (48) I would argue that social insurance was developed to address the economic security problems of the Industrial Age. Urbanization; the shift to wage labor; the disappearance of the extended family; the emergence of structural unemployment; the increase in life-spans, all undermined more traditional approaches to economic security, making something like social insurance a necessity for all industrialized societies. So it is not surprising that social insurance appeared in Western Europe during the GAPE. What is perhaps surprising is that it failed to appear in the United states. The broad reasons why this is so, are not difficult to discern. (49) But the point to notice here, is that social insurance programs were a natural idea for the United states and we would expect there to be a substantial political and intellectual push for their adoption in the U.S. And indeed there was. In addition to such pioneering social insurance theorists as Henry Seager, Isaac M. Rubinow, Abraham Epstein, and later, Barbara Armstrong, there was a political movement which began in a serious way with the 1912 Presidential campaign of Theodore Roosevelt under the banner of the Progressive Party. TR's identification of the need for social insurance, on the European model, was the first time that a major political party (albeit a third-party) openly advocated social insurance at the national level. The role of the social insurance movement during the GAPE was to set the conceptual stage, to lay the intellectual groundwork, which could be called upon by New Deal planners once the nation came to a realization of the need for something like social insurance.
The conceptual framework provided by the social insurance movement during the GAPE, along with the few examples of nascent social insurance programs (Civil War pensions, War Risk Insurance, limited labor reform, and programs for women and children) from the era, were the seeds for the dramatic expansion of federal responsibility for economic security which appeared, with apparent suddenness, in the New Deal. Of course, it was not sudden at all. If anything, it was long overdue and far behind the times. But it is reasonable to speculate that had it not been for these GAPE antecedents, social insurance, even in the crisis of the Great Depression, might not have emerged when it did. The New Deal certainly owes a debt to the GAPE in this regard.
ENDNOTES 1. Patrick D. Reagan, Designing a New America: the Origins of New Deal Planning, 1890-1943 (Amherst: University of Massachusetts Press, 2000). 2. John W. Jeffries, "A 'Third New Deal'?: Liberal Policy and the American state, 1937-1945," Journal of Policy History 1996 8(4): 387-409. 3. Frances Perkins, The Roosevelt I Knew, (New York, Viking Press, 1946), 301. 4. Theda Skocpol, Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United states, (Cambridge, Harvard University Press, 1992). My table is extracted from Skocpol's Table 1, page 9. 5. Skocpol, 1992, Table 2, 109. 6. "Last Union veteran's widow dies at 93 in Tennessee cabin," Baltimore Sun, Sect. A., January 20, 2003. "96-year-old is last widow of a Civil War soldier," Baltimore Sun, Sect. A, February 7, 2003. 7. "Last widow of Civil War veteran buried in Ala.," Baltimore Sun, June 14, 2004, 6A. Interestingly, after the death of Alberta Martin a new claimant has come forward alleging she too is a surviving Civil War widow of a confederate veteran. At this point, the bona fides of her claim to fame are uncertain. 8. Civil War pension data from Skocpol, Protecting Soldiers and Mothers, Chapter 2, especially Figure 3. Data for 2003 federal deficit from Mid-Session Review of the President's 2004 budget, available on the Office of Management and Budget website at: http://www.whitehouse.gov/omb/budget/fy2004/summarytables.html, accessed 12/3/03 (see Table 7). Historical budget totals are available in Table 1.1 of the 2004 President's Budget at: http://www.whitehouse.gov/omb/budget/fy2004/pdf/hist.pdf , accessed 12/13/03. Social Security figures do not include Medicare. Data on Social Security for 1940-2001 from my table on the Social Security Administration website at: http://www.ssa.gov/history/percent.html, accessed 12/13/03. Figures for 2002-2004 from projected expenditures in the President's 2004 Budget, available on the Office of Management and Budget website at: http://www.whitehouse.gov/omb/budget/fy2004/budget.html accessed 12/13/03 (see Table S1 and chapter on Social Security Administration). 9. Larry DeWitt, "A Brief History of Social Security," U.S. Social Security Administration website at: http://www.ssa.gov/history/briefhistory3.html accessed 12/14/03. 10. I have in mind here such works as Linda Gordon, Pitied But Not Entitled: Single Mothers and the History of Welfare, (New York, The Free Press, 1994) and Gwendolyn Mink, The Wages of Motherhood: Inequality in the Welfare state, 1917-1942, (Ithaca, Cornell University Press, 1995). 11. Mink, The Wages of Motherhood, 72-73. 12. Kriste Lindenmeyer, "A Right to Childhood": The U.S. Children's Bureau and Child Welfare, 1912-1946, (Urbana and Chicago, University of Illinois Press, 1997), 257-258. See also, "Achievements in Public Health, 1900-1999: Healthier Mothers and Babies," website of the U. S. Centers for Disease Control, online at: http://www.cdc.gov/epo/mmwr/preview/mmwrhtml/mm4838a2.htm accessed 12/14/03. 13. Linda Gordon, "Men, Women, and the Assumptions of American Social Provision," in Colin Gordon (ed.), Major Problems in American History 1920-1945, (Boston, Houghton-Mifflin, 1999), 329-330. 14. Gwendolyn Mink, The Wages of Motherhood, 174. 15. Larry DeWitt, "The History of Gender-Based Distinctions in the U.S. Social Security Program," unpublished manuscript, September 2003. 18. Karl Walter Hickel, Entitling Citizens: World War I, Progressivism, and the Origins of the American Welfare state, 1917-1928 (Doctoral dissertation, Columbia University: 1999); K. Walter Hickel, "War, Region, and Social Welfare: Federal Aid to Servicemen's Dependents in the South, 1917-1921," The Journal of American History, March 2001, 1362-1391. 19. Hickel, Entitling Citizens, 1367. 20. Hickel, Entitling Citizens, 1365. 21. Hickel, Entitling Citizens, 1368. 22. Arthur J. Altmeyer, "Oral History Interview: Interview with Arthur Altmeyer," by Peter A. Corning, Madison, Wisconsin, June 29, 1967. Published in its entirety on the U. S. Social Security Administration website at: http://www.ssa.gov/history/ajaoral4.html 23. "A Brief History of Social Security," U.S. Social Security Administration website at: http://www.ssa.gov/history/briefhistory3.html accessed 12/14/03. 25. William Ivy Hair, The Kingfish and His Realm: The Life and Times of Huey P. Long, (Baton Rouge, Louisiana state University Press, 1991), 272. 26. Abraham Holtzman, The Townsend Movement: A Political Study, (New York, Bookman Associates, 1963), 48. 27. This is my assessment of the potential impact of Sinclair's. For a detailed account of the rise and fall of the EPIC campaign see, Greg Mitchell, The Campaign of the Century: Upton Sinclair's Race for Governor of California and the Birth of Media Politics, (New York, Random House, 1992). 28. Edwin Witte, The Development of the Social Security Act, (Madison, University of Wisconsin Press, 1962). 29. Eric Foner, The Story of American Freedom (New York: W. W. Norton, 1998), 59-60. 30. Full text of Supreme Court decision in Lochner is available in the Labor Reform section of this website. 31. Leon Fink, (ed.), Major Problems in the Gilded Age and the Progressive Era, (Boston, Houghton-Mifflin, 2001),388-389. 32. Eric Foner, "Freedom and the Progressive state," in Leon Fink (ed.), Major Problems in the Gilded Age and Progressive Era, (Boston: Houghton-Mifflin, 2001) 408. 33. Lindenmeyer, Right to Childhood. 34. There were of course fairly widely available statistics and estimates at various levels of generalization for the number of industrial accidents in the U.S. For example, in 1915 the U.S. Bureau of Labor Statistics reported that in the year 1913 there were an estimated 25,000 deaths and 700,000 injuries among the nation's 38 million workers. In New York, the state Labor Department logged 252 deaths, 3,739 serious or permanent injuries and 12,839 temporary injuries in 1909. But Crystal Eastman's study was unique in that it tried to systematically determine who was at fault in a set of industrial accidents. 35. Roy Lubove, The Struggle for Social Security 1900-1935, (Pittsburgh, University of Pittsburgh Press, 1968), 54. 36. Issac M. Rubinow, Social Insurance, (New York, Henry Holt and Company, 1913), Part II, 49-188. 38. Quoted in Daniel Nelson, Unemployment Insurance: The American Experience 1915-1935, (Madison: University of Wisconsin Press, 1969), 105-106. 39. A serviceable summary table listing the states and types of programs they enacted can be found in Shawn Everett Kantor and Price V. Fishback, "Coalition Formation and the Adoption of Workers' Compensation: The Case of Missouri, 1911 to 1926," Table 8.1, in Claudia Goldin and Gary D. Libecap (eds.), The Regulated Economy: A Historical Approach to Political Economy, (Chicago and London, The University of Chicago Press, 1994). 40. Quoted in Epstein 1936, pg. 315. 41. Rufus E. Miles, Jr., The Department of H.E.W., (New York: Praeger Publishers, 1974) 6. 42. Quoted in Daniel Nelson, 1969, 3. 43. The sketch presented here oversimplifies a very complex history. For fuller details see Chambers 1963; Lubove 1968; Schlabach 1968; and Moss 1996.rity Act are not all that common. The most comprehensive are those produced by some of the early pioneers of the movement. Of special note worthiness are: I. M. Rubinow, Social 44. Rebecca Edwards, "The Depression of 1893," Vassar College website at: http://projects.vassar.edu/1896/depression.html [accessed 7/2/04] 45. Abraham Epstein, Insecurity: A Challenge to America, Harrison Smith and Robert Haas, New York, 1936, pgs. 314-315. 46. "President Praises Governors for Aid in Promoting Work," New York Times, July 1, 1930, 1. 47. The most rigorous and complete accounting of these foreign systems is given in a recent work by Lillian Liu, "Foreign Social Security Developments Prior to the Passage of the U. S. Social Security Act of 1935," December 2001, available online on the U. S. Social Security Administration website at: http://www.ssa.gov/history/pre1935.html Good general histories of the social insurance movement prior to the Social Security are: Henry Seager, Social Insurance, (New York: Henry Holt & Co., 1913); I. M. Rubinow, The Quest for Security (New York: Henry Holt & Co., 1934); Abraham Epstein, Facing Old Age (New York: Knopf, 1922); Barbara Nachtrieb Armstrong, Insuring the Essentials (New York: MacMillan, 1932). A more recent account of the development of social insurance in Germany is Greg Eghigian, Making Security Social (Ann Arbor: University of Michigan Press, 2000). 48. Quoted in Robert M. Ball, Social Security: Today and Tomorrow, (New York: Columbia University Press, 1978) 3. More in-depth discussions of the ins-and-outs of defining social insurance, and distinguishing it from private insurance, can be found in: Ball, op. cit., Chapter 11; Robert J. Myers, Social Security, Fourth Edition (Philadelphia: University of Pennsylvania Press, 1993) 12-20; George E. Rejda, Social Insurance and Economic Security, Sixth Edition (New Jersey: Prentice-Hall, 1999) Chapter 2. 49. Some key strains of American political and social tradition militated against the adoption of federal social insurance programs, including the old traditions of "rugged individualism" and antipathy toward the federal government. In addition, America's unique brand of federalism, in which much power is reserved for the states, made it especially difficult to expand the powers of the federal government into new areas such as broad-based social insurance. It was of course the Great Depression which served as the triggering event (not the rationale for) the adoption of social insurance in America. Not surprisingly, the 1935 Act was immediately challenged in the courts and it was not until May 1937 that the Supreme Court finally upheld the constitutionality of federal social insurance. (For the text of the three pertinent Supreme Court decisions, along with an explanatory narrative essay, see my paper Larry DeWitt, "The 1937 Supreme Court Rulings on the Social Security Act," available online on the U. S. Social Security Administration website at: http://www.ssa.gov/history/court.html |
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