The Regional Representative, Sam Smith, introduced
Dr. Altmeyer and offered the opinion that historians would give
the speaker the lion's share of the credit for the growth of the
social security program because of the vital role he played in
the early years of the program. Mr. Smith felt much of our success
has been due to the fact the program was well conceived, well
planned, well organized, and well begun.
In his opening remarks Mr. Altmeyer said he had
almost forgotten those days when he was called Dr. Altmeyer. He
explained the term came from his association with a "brain trust"
assembled to draft the original law. The tern was used by some
opponents of the proposed law in a rather sarcastic sense.
He recalled for us the conditions in our country
which gave emphasis to the need for some type of protection against
economic disaster. It was the worst time our country had ever
seen as far as a general depression was concerned. Millions were
unemployed and one of five persons was on relief. Banks and insurance
companies were going broke. All areas and all classes of people
were affected. He referred to these early planning years as the
most exciting and at the same tine most depressing of his life.
It was in this setting that President Roosevelt
said he wanted to develop a program which would guarantee this
sort of thing would never happen again. The president appointed
as Secretary of Labor the first woman ever to hold a Cabinet post,
Frances Perkins. She was given the task of developing the program
suggested by the President.
Mr. Altmeyer was Assistant Secretary of Labor, and
helped with various programs including the CCC which he compared
to the current Job Corp to some extent. Before becoming Assistant
Secretary he had represented the Labor Department as Labor Compliance
Officer under the National Recovery Administration. He described
the NRA as a great undertaking to revive industry in our country.
The task of the Labor Compliance Officer was to see that labor
standards written into various industry codes were observed.
The economic conditions in our country during the
year after President Roosevelt took office were by far the worst
in our history. As a result, Frances Perkins had to consider what
we might now call bizarre ideas on how to form and shape the program
requested by the President.
One of these, the Townsend Plan, was to provide
a revolving pension plan. The idea was conceived by an Iowa physician
who had moved to California and was struck with the plight of
older citizens in this haven for the retired. Townsend's idea
was to put as much money into circulation as soon as possible
to counteract the effects of the depression. To do this he proposed
an outright payment of a $200.00 a month pension to the elderly
whom everyone agreed should lead a happy life in retirement.
The tern revolving pension plan referred to Townsend's
theory that if this pension were spent it would accelerate economic
activity and spread purchasing power through all ranks of society.
This he felt would solve the problems of economic depression overnight.
This led him to place one restriction on the recipient of the
pension. It must all be spent in the month received or the next
months' benefit would be withheld.
Another plan with which Mrs. Perkins had to deal
was the "Every Man A King" concept proposed by Senator Huey Long
of Louisiana. His theory was to share the entire output of our
economy equally, but he was vague about how this would be accomplished.
The theory was that since everyone shared equally everyone would
have purchasing power. With increased purchasing power the Gross
National Product would increase, and increase, and increase. Mr.
Altmeyer described the Senator as a man with a keen intellect,
and as a spellbinding orator.
The former commissioner related to the group some
of his experiences while serving, as Chairman of the Technical
Council set up to advise the Cabinet committee assembled by Frances
Perkins. The term social security was not yet being used and the
group was called the Cabinet Committee on Economic Security. The
emphasis was to be on maintenance of income throughout periods
of sickness, unemployment, and disability as well as old age.
Mr. Altmeyer described the group as the fastest working committee
ever to develop a long range program. They had reported within
six months after they began this huge task.
Mr. Altmeyer had enlisted the aid of a colleague
and old friend at the University of Wisconsin to assist him in
his capacity as advisor to the Cabinet Committee. His friend,
Edwin Witte, was Professor of Economics and librarian of the Wisconsin
Legislative Library. This library was rather unique at that time,
and it was later used as a pattern for the present Library of
Congress. Its purpose was to assist members of the legislature
in writing legislative proposals. A senator, for example, could
come to the library with an idea for a new law, and got assistance
in translating his idea into appropriate language for a bill to
be presented to the Senate. The library might also provide the
senator with a summary of experiences of other countries and various
alternatives and facts concerning his proposal as well as the
probable consequences.
The existing library and the knowledge of those
who served with Mr. Altmeyer and Professor Witte played a vital
part in the effort to draft a long range comprehensive program
in such a short time. The subgroup assembled by Edwin Witte were
knowledgeable men who knew the problems, alternatives, and the
location of research materials needed for such a project.
The proposals of this subgroup were adopted by the
Cabinet committee and presented to the President and the Congress.
Mr. Altmeyer described the program as a very simple
one which is still essentially in the same form. He explained
that the basic proposal was to set up two distinct lines of defense
against destitution.
The first line of defense was to be a contributory
system of social insurance. The speaker recalled there were many
examples of such a system in the industrial countries of the world.
Another example for study was the Workman's Compensation (unemployment
insurance) provisions in effect in the State of Wisconsin.
The committee also recognized the possibility that
there would be a significant segment of the population who would
never acquire the necessary credits to benefit from an insurance
system. The second line of defense against destitution was established
to offer protection to those persons.
This protection which is known as Public Assistance
differed significantly from the old style relief by providing
for a cash benefit. Previously, most relief programs provided
only a bag of groceries, a bag of coal, a rent slip, etc. The
theory provided for a free choice in spending the cash benefit
once a family budget had been established.
In addition to social insurance and public assistance,
the act provided for several constructive social services. Among
these were: Public Health Service, Maternal and Child Health,
Welfare Services, Vocational Rehabilitation. The Ways and Means
Committee which reported the bill decided these various programs
made the term Economic Security entirely to narrow. They labeled
the proposal the Social Security Act and provided for a Social
Security Board to administer the law.
Mr. Altmeyer told us he had served one year as a
member of the board and about fifteen years as chairman.
Throughout his address the former commissioner referred
to magic or angel words as opposed to devil words. He explained
the importance of choosing the proper word during the early history
of the program, and went on to tell how the term social security
had been such a good choice of words, it has passed into the language
of most other countries.
Mr. Altmeyer did express some regret that the term
has narrowed in popular use to refer only to the program we administer
to the exclusion of all others. He voiced the hope that some day
in the future the term will again refer in the popular usage,
to the broad comprehensive program envisioned by those who developed
the original law.
It is ironic, he said, that the very part of the
law (retirement insurance) which now is in itself referred to
as Social Security was responsible for the great probability the
entire comprehensive proposal would be lost. It was this part
of the proposal which became the focal point of discussion. There
was so much opposition to this section of the law in Congress
that many felt it might cause the loss of the whole program.
It was at this point the speaker digressed from
his topic to compliment the Social Security Administration on
the fine spirit with which they try to administer the law. He
also said that in general, people will forgive us our mistakes
because they feel they are truly mistakes and not intended to
keep from them something which is rightfully theirs.
Social Security became a major issue in the 1936
campaign for the Presidency. It was labeled by the Republican
candidate as a "cruel fraud and a hoax on the working people",
and pledged repeal of the law if he were elected. He made this
statement only a few days before the election.
Mr. Altmeyer recalled for us one of the steps taken
to counteract this move by those opposed to the law. They had
previously printed fifty million pamphlets which described very
simply and accurately the retirement benefit system. These were
to have been used later in the year (1936) in connection with
the assignment of account numbers. They decided to release these
at once and enlisted the help of labor unions to distribute the
entire printing. Within twenty-four hours the entire stock had
been shipped to every part of the country and distributed to the
voters.
Many of the newspaper editors agreed with the Republican
candidate, and printed stories not favorable to the law. Mr. Altmeyer
read some excerpts from a copy of one of these newspapers "Here's
proof of deceit in payroll taxes--money not set aside for pension--wage
cut program includes tags and numbers for all--your personal life
will be laid bare--your religion and the church you attend will
be listed--your physical defects will go down in black and white--your
life will be an open book your former employer's reason for discharging
you will be given--your union affiliation will be stated--all
the wage you ever earned, however small, will be shown--even your
divorce if you have ever had one will be included--you are to
be regimented, cataloged--put on file--this is what the Roosevelt
Administration did not intend to have you know until after the
election."
The newspaper from which he read was dated Monday,
November 2, 1936, the day before the election. In addition to
newspaper coverage such as this, the Republican Industrial Committee
or Republican National Committee released pay envelope slips which
gave the impression of having been released by the Social Security
Board. These slips informed workers a pay deduction would be taken
from their wages beginning January 1, 1937. It did not mention
a word about future benefits.
The same opponents were also attacking the plan
as unconstitutional and there was some indication the court would
take this view. In each case where other "New Deal" measures (six
or seven) had been challenged in the Supreme Court, they had been
declared unconstitutional.
The Social Security Board had decided to wait until
after the election to issue account number cards and were very
concerned about the success of this phase of the program after
the bitter election campaign and the question of the constitutionality
of the law had been so widely publicized.
Mr. Altmeyer said they were again careful to select
angel words to describe the process of assigning account numbers.
They decided on the term "account numbers" because it was commonly
used at the time in many department stores to describe their credit
system. He said they also took advantage of the reputation of
the Post Office Department as well as their established system
to distribute applications for accost numbers to every family
in the nation.
Following the election in which he was re-elected,
President Roosevelt asked the Congress to approve the appointment
of additional Justices to the Supreme Court. He rationalized this
by saying that the elderly justices should be relieved of such
heavy responsibility by the additional Justices. Members of both
parties rejected the plan and the cry of court packing died down.
In the spring of 1937 following the failure to appoint
additional Justices, the court ruled the Social Security Act as
constitutional. This prompted one newspaper writer to quip "a
switch in the saved nine."
The former commissioner went on to tell us that
they now turned their attention to the problem of establishing
a central record-keeping system. They had available only what
would now be termed very crude record-keeping equipment and faced
what seemed to be an almost impossible task.
To help solve this problem they engaged one of the
outstanding experts in the field of insurance. After several months
of study, he reported his findings to the Board. It was his opinion
the system could not function and he recommended they go to the
Congress and admit frankly the system was administratively impossible.
Since the Board would not accept this, he suggested the alternative
of establishing twelve independent regional accounting systems.
Again the Board rejected his suggestion because they would have
still required a central index to provide cross reference for
those persons who moved from region to region. He told the Board
a blizzard of white slips would descend on them to bury them deeper
and deeper.
After much consideration they decided on twelve
separate production lines in one central location to be backed
up by a flying squad to assist any line which might fall behind.
Mr. Altmeyer recalled the original system provided for a separate
report for each worker. Primarily due to pressure from industry,
this system was abandoned in favor of a combined report on many
workers by one employer.
Mr. Altmeyer described for us the Coke Warehouse
which was converted to the headquarters building. He recalled
the female employees snagged hose on rough tables made of plywood
laid on saw horses. This building, known as the Candler Building,
served as our headquarters until 1958.
After meeting other challenges, the commissioner
turned his attention to establishing local offices. He appointed
a task force to study the problem and recommend the number of
local offices needed and where they should be situated. After
several months of study they presented him with colorful charts,
graphs, and data to support their finding of a need for two thousand
one hundred twenty-five local offices. Since the entire budget
was only one million dollars he immediately rejected this number
as excessive. Mr. Altmeyer smiled as he recalled his alternative
proposal. In the evening following receipt of the task forces'
recommendation he examined a map of the State of Wisconsin. After
a rather casual glance he determined there was need for perhaps
ten or eleven local offices in that state. He consulted another
reference and found that Wisconsin industrial activity accounted
for approximately one-fortieth of the nations' industrial output.
He multiplied eleven times forty, rounded the answer to five hundred
and determined there should be only that number of local offices.
He approached the Board and explained that after very careful
study and consideration, he recommended they budget for only five
hundred local offices. As the program developed, it was not until
1945 that we needed all five hundred offices.
Mr. Altmeyer told the audience they would be collecting
taxes to support the Social Security System today had those who
formed the original law been sure the Supreme Court would find
it constitutional. At that time there was no other system which
provided for a separation of the functions of paying benefits
and collecting contributions. The rationale behind this separation
was to rely on one established precedent to collect taxes and
on another to make grants. There was no precedent for a social
insurance system in United States law. Eventually, the Supreme
Court looked squarely at the issue and declared a social insurance
system constitutional. Since our system of separation of functions
has proven successful, some other countries have changed to the
system. In the early years there were some problems of coordination
between our agency and the Internal Revenue Service over interpretation
of the separate titles. These have been well handled and few remain.
He recalled that as late as 1938 or 1939 leaders in the Internal
revenue Service offered to let him take over the collection of
contributions.
In those early years they paid only very small lump
sum refunds and regular monthly benefits were not to be paid until
January, 1942. Administrative expenses were running as high as
thirty-three percent of benefits paid and Mr. Altmeyer was afraid
this would be questioned by those unfriendly to the program .
The huge reserves contemplated in the early years
gave some spark to the amendments passed in 1939. Those who favored
the program felt the need for improvements in the law, and the
estimates of these tremendous reserves helped swing some to vote
for more liberal benefits. One senator questioned what could be
done with an anticipated reserve almost three times the size of
the entire national debt. Mr. Altmeyer used this feeling to his
advantage and proposed to begin paying benefits on January 1,1940
instead of waiting until January 1, 1942 as provided in the original
law. The amendments in 1939 also provided for larger benefits
and added survivors benefits for widows and orphan children. He
recalled with amusements the difficulties he encountered in appearing
before the Ways and Means Committee which was chaired by a member
who was almost deaf. No sound system was provided and he shouted
at the top of his voice. In spite of these difficulties his proposals
were passed.
Also incorporated into the law in the 1939 amendments
was a provision for an appeals process. Although the original
Act required the states to provide an appeals process under the
Public Assistance program, none had been written into Title II.
Mr. Altmeyer expressed the opinion that a good appeals system
is vital to good administration. He also felt the elaborate provisions
written into the 1939 amendments has been partially responsible
for the good public relations our agency has maintained.
The long dry spell is the term the speaker used
to describe the years 1940 to 1950. He recalled that nothing constructive
was done during this period. The Congress did vote to delay the
proposed increase in contributions to prevent accumulation of
huge unnecessary reserves.
During the pre-election months of 1950 there were some prominent
persons who still favored the Townsend Plan. Among these was Paul
McNutt who served as Federal Security Administrator (equivalent
to present Secretary of HEW). Prior to Roosevelt's decision to
seek a third term in office, Mr. McNutt had been active in seeking
the Democratic nomination. It was during this time Mr. McNutt
sent Mr. Altmeyer an advance copy of a speech which he planned
to deliver coming out for the Townsend Plan. After a hurried conference
with the President, a messenger was dispatched to inform Mr. McNutt
he could not give the speech. The speaker recalled the incident
with a smile but expressed his sincere sympathy for Mr. McNutt
who was left in the wings only minutes before his appearance with
no prepared speech.
Mr. Altmeyer again referred to these years as the
dry spell and skipped in time to the election of President Truman.
In his opinion Mr. Truman was in favor of needed improvement in
the system but put most emphasis on Health Insurance. As a result
of the emphasis, the American Medical Association became more
active in opposition and little was accomplished.
There were two actions during Mr. Truman's first
term in office. The Gerhart Resolution substituted the more restrictive
common law definition of employee for the more liberal economic
gain concept. This had the effect of excluding from coverage several
hundred thousand persons who had formerly contributed to the system.
The second action was the appointment of an advisory committee
which later recommended liberalization of benefits and extention
of coverage.
The former commissioner referred to the 1950 amendments
as very liberal. Benefits were increased, and coverage was extended
to agricultural workers and to most self-employed persons,
Mr. Altmeyer spoke briefly of the 1952 amendments
and the "phony disability freeze." In the election of 1952 there
was a change of administration from Democratic to Republican.
During the pre-election months the Townsend Plan was still a factor
although not a major issue.
The former commissioner said that with the change
of Administration, Mrs. Hobby became Federal Security Administrator
(later Secretary of Health, Education and Welfare) and he became
an ex-bureaucrat. He recalled the re-organization to Cabinet status
also eliminated the Office of Commissioner for Social
Security and created the Office of Commissioner of Social
Security. Since he had been Commissioner for Social Security he
was at that point unemployed.
Mr. Altmeyer concluded his address by referring
to the years 1934 through 1954 as the formative years. He expressed
some pleasure in closing by quoting President Eisenhower as saying
Old Age and Survivors Insurance was the cornerstone of a Social
Security system. He seemed very happy to say that this indicated
after twenty years the Social Security System had finally become
nonpartisan.
In response to his invitation to ask questions he
was asked his opinion of what changes remain to be made in the
program. He outlined his reply as follows:
I. Raise the benefit level by one-third at once.
II. Bring all workers under coverage, excepting
only a few groups who have a separate system and truly integrate
these.
III. Establish a Federal temporary disability system.
IV. Provide health insurance coverage for all beneficiaries
at once and later to everyone.
V. Combine Health Insurance Parts A and B and pay
hospitals and physicians directly--eliminate third parties.
VI. Adjust the contribution schedule so that employees
pay on a maximum of at least $15,000 and employers on their entire
payroll.
VII. Add monies from the general revenue to contributions
to finance a really effective program.
Several other questions were answered briefly and
the session closed with a standing ovation by the group.