THE SOCIAL INSURANCE MOVEMENT gggff

Otto von Bismarck Pioneer of social insurance   Theodore Roosevelt and the 1912 Progressive Party campaign An important milestone in the history of social insurance and Progressive Era reforms

The Social Security program that would eventually be adopted in late 1935 relied for its core principles on the concept of "social insurance." Social insurance was a respectable and serious intellectual tradition that began in Europe in the 19th century and was an expression of a European social welfare tradition. It was first proposed in Germany in 1881 at the urging of the German Chancellor, Otto von Bismarck. Indeed, by the time America adopted social insurance in 1935, there were 34 European nations already operating some form of social insurance program. Philosophically, social insurance emphasized government-sponsored efforts to provide for the economic security of its citizens. At the time that the U. S. was considering social insurance following the onset of the Great Depression, there were many radical alternative pension movements sweeping the land. Schemes such as the Townsend Plan, Huey Long's Share the Wealth movement and novelist Upton Sinclair's EPIC plan had millions of adherents and were viewed with alarm by President Roosevelt and his advisers. [1] The tradition of social insurance would come to be seen as the reasonable, practical alternative to the radical calls to action represented by Townsend, Long, Sinclair, etc. Although the definition of social insurance can vary considerably in its particulars, its basic features are: the insurance principle under which a group of persons are "insured" in some way against a defined risk, and a social element which usually means that the program is shaped in part by broader social objectives, rather than being shaped solely by the self-interest of the individual participants. Social insurance coverage can be provided for a number of different types of insured conditions, from disability and death to old-age or unemployment. We may find it obvious to think of death, disability or unemployment as conditions causing loss of income and which can be ameliorated by pooling of risk. It is at first a little odd to think of old-age or retirement in these same terms. But that is precisely how social insurance conceives of retirement, as producing a loss of income due to cessation of work activity. So in terms of the eternal problem of economic security, social insurance endeavors to solve it by pooling risk assets from a large social group and providing income to those members of the group whose economic security is being threatened. One of the first American books on social insurance was by a Columbia University economics professor named Henry Seager. Seager explained the principle of old-age security based on social insurance in his 1910 book, "Social Insurance, A Program of Social Reform": "As changing economic conditions are rendering the dependence of old people on their descendants for support increasingly precarious, so, on the other hand, new obstacles are arising to providing for old age through voluntary saving. . . The proper method of safeguarding old age is clearly through some plan of insurance. . . for every wage earner to attempt to save enough by himself to provide for his old age is needlessly costly. The intelligent course is for him to combine with other wage earners to accumulate a common fund out of which old-age annuities may be paid to those who live long enough to need it." [2] One of the earliest American advocates of a plan that could be recognized as modern social insurance was Theodore Roosevelt. In 1912, Roosevelt addressed the convention of the Progressive Party and made a strong statement on behalf of social insurance: "We must protect the crushable elements at the base of our present industrial structure...it is abnormal for any industry to throw back upon the community the human wreckage due to its wear and tear, and the hazards of sickness, accident, invalidism, involuntary unemployment, and old age should be provided for through insurance." TR would succeed in having a plank adopted in the Progressive Party platform that stated: "We pledge ourselves to work unceasingly in state and nation for: . . .The protection of home life against the hazards of sickness, irregular employment, and old age through the adoption of a system of social insurance adapted to American use."

[1] A good brief overview of these rival pension schemes and their place in the evolving tradition of social insurance can be found in my "Brief History of Social Security," published on the Social Security Administration website at: http://www.ssa.gov/history/briefhistory3.html (accessed 11/29/02). [2] Seager, op. cit., Chapter 5 (see hyperlink to document below).

Suggestions for Additional Reading: Roy Lubove, The Struggle for Social Security, 1900-1935 (Pittsburgh: University of Pittsburgh Press, 1986) Jill Quadagno, The Transformation of Old Age Security: Class and Politics in the American Welfare State (Chicago: University of Chicago Press, 1988) Carole Haber and Brian Graffton, Old Age and the Search for Security (Bloomington: Indiana University Press, 1994) Daniel J. B. Mitchell, Pensions, Politics and the Elderly: Historic Social Movements and Their Lessons for Our Aging Society (New York: M. E. Sharpe, 2000) Source Documents: Thomas Paine Pamphlet on "Agrarian Justice" (1795) Pamphlet proposing an early form of social insurance for America. "Social Insurance, A Program of Social Reform" by Henry Seager This 1910 book by Columbia University professor Henry Seager was one of the earliest American works on the topic of social insurance. Study of development of Social Insurance from 1875-1935 This massive scholarly study by Professor Theron Schlabach reviews the social insurance movement during the GAPE from the perspective of the public pronouncements and published literature of the period.