TEXT OF SPEECH
(Slightly edited and revised from spoken remarks)
I must say I feel very much at home even though I just arrived.
I feel at home because the Social Security Administration has, ever
since it was established, been a sort of special concern of mine,
although by the chicanery of politics it was not
placed in the Department of Labor. I, of course, thought it should
be.
As a matter of fact, one of the reasons I feel
so deeply involved with the Social Security Administration is that
even though it was not in the Department of Labor when it was first
established, the Department of Labor had to carry it the way you
carry a dependent child. It didn't have any money. That was so unfortunate.
And we didn't have very much either. bat we did, however, was to
provide the Social Security Administration with offices in the Department
of Labor Building. I even gave to the Chairman of the Social Security
Board (as it was called in those days) the large, handsome, red-upholstered,
high-back chair out of my own office so that he could look like
a king. I didn't have to keep on looking like a queen. I found the
chair somewhat uncomfortable so I made the sacrifice.
The whole Department did the same kind of thing. We gave them our
best statisticians. We gave them the best of everything including
Arthur Altmeyer, who was the Assistant Secretary of Labor and my
real right hand, and without whom I felt very lost. It showed that
we put our best people in there on loan, and we carried it for the
first year and made it look like a going concern. In fact, it became
a going concern in an extraordinarily short time.
When I asked what I was to speak about today, the suggestion was
made I talk about the roots, or beginnings, of the Social Security
Act. So I have thought about the roots. I suppose the roots--the
idea that we ought to have a systematic method of taking care of
the material needs of the aged--really springs from that deep well
of charitableness which resides in the American people, and the
efforts and the struggles of charity workers and social workers
to handle the problems of people who were growing old and had no
adequate means of support. Out of this impulse to be kind to the
poor sprang, I suppose, a mulling of ideas about social insurance
for the aged. But those people who were doing it didn't know that
it was social insurance. They just kept thinking that something
definite, something that people could look forward to, would be
a great asset and a great assistance to them in their work. Even
De Tocqueville, in his memoirs of his visit to America, mentioned
he thought was a unique state of mind of the American people: That
they were so honestly concerned about their poor and did so much
for them personally. It was not an organization; it was not a national
action; it was not a State action; it was not Government. It was
personal action that De Tocqueville mentioned as being characteristic
of the American people. They were so generous, so kind, so charitably
disposed.
Well, I don't know anything about the times in which De Tocqueville
visited America. That was long ago, and I know little about the
psychological state of mind of the people of this country at that
time. But I do know that at the time I came into the field of social
work, these feelings were real. It was surprising what we were able
to do through volunteer work--by the volunteer support of organizations
who help the poor; and particularly the aged poor. Just look over
the country At the old ladies' homes and the old couples' homes
and the old members' homes that sprang up because aged people had
necessities that had to be met. In each case, somebody got money
together and established these homes. And life went on for the aged,
after a fashion, as recipients of a kind of charity. These things
have been going on for years.
THE FIRST STIRRINGS
But actually, of course, the beginning of widespread interest in
Social Security through the use of an insurance technique began
in a serious way shortly before the great depression of 1929. When
I say shortly, I mean a couple of years. It had begun as an academic
subject; it was discussed by highbrows, not by politicians. It was
a possible thing, you know.
We knew something about social insurance in this country--a very
little--by virtue of workmen's compensation legislation which is,
of course, a form of social insurance. And that was all we knew
about insuring against a known hazard through payment, by persons
exposed to that hazard, into a fund from which those few could be
compensated who had the particular accident that was described in
the law.
Of course, workmen's compensation met great opposition when the
agitation for it began in 1908--and that was already late in our
social development. They had it in Germany, in England, and in Denmark
and the other Scandinavian countries for a long time. Americans
going to Europe had particularly observed the German system which,
in the usual German way, was much more thorough and logical than
English or Scandinavian systems, although they all worked very well.
So we knew a little bit about social insurance, and even the words
"social insurance" had come to be at least academic words.
People who studied the matter--students and highbrows--generally
could understand what it meant, but they seem never to have thought
of insuring against other social hazards. Social problems were taken
care of by the States, which appropriated money and provided homes
or institutions for the victims of the toughest types of hazards;
and by voluntary organizations which did all they could to relieve
the sufferings caused by particular hazards. So we went along amiably,
you know, always in our genial American optimistic way, believing
that everything would turn out all right.
IT'S PEOPLE WHO SUFFER
Two or three studies (of social insurance) were started at one
time or another. Nearly always a report of some sort was made, but
before the report got written and filed, the crisis was over, and
so we forgot about the problem. "That will never happen again,"
we said. This was notably true in 1919, just after the First World
War.
New York City had a terrific problem of unemployment, which was
hazardous because it involved so many people. The experience was
short, sharp, and painful. The unemployed and homeless were allowed
to sleep in the churches, I remember. Henry Brewer and Paul Kennedy,
who was then the head of the New York Association for Labor Legislation,
opened a place down on the Bowery called the Hotel de Gink, which
was a clean, cheap, and honest lodging-house where a man could get
free lodging if necessary and could do just about as he pleased.
If he was a low-down fellow, nobody ever noticed it unless he was
a thief. He couldn't steal; but almost anything else he could do.
That wasn't true, of course, of the municipal lodging-house. If
he was badly behaved, he just got turned out; whereas at the Hotel
de Gink, he could do anything. He could sing vulgar songs and make
vulgar jokes and make a noise and all that kind of thing. On the
other hand, one didn't see the women and children, or the families
dependent on other people. They were known to be part of the problem,
but they did not show.
When we came to the problem of doing something for the "poorer
kind of people" (as John Garner called them) in 1933 after
the Roosevelt administration took office, we, of course had had
a very recent experience with poverty. Since 1929 we had experienced
the short, sudden drop of everything. The total economy had gone
to pieces; just shook to pieces under us, beginning, of course,
with the stock market crash. A banking crisis followed it. A manufacturing
crisis followed it. Everybody felt it. In less than a year it was
a terror.
NOT HIRING
People were so alarmed that all through the rest of 1929, 1930,
and 1931, the specter of unemployment--of starvation, of hunger,
of the wandering boys, of the broken homes, of the families separated
while somebody went out to look for work--stalked everywhere. The
unpaid rent, the eviction notices, the furniture and bedding on
the sidewalk, the old lady weeping over it, the children crying,
the father out looking for a truck to move their belongings himself
to his sister's flat or some relative's already overcrowded tenement,
or just sitting there bewilderedly waiting for some charity officer
to come and move him somewhere. I saw goods stay on the sidewalk
in front of the same house with the same children weeping on top
of the blankets for 3 days before anybody came to relieve the situation!
These were the years in which developed, you remember, in New York
City--and later in other cities--the pattern of the apple sellers.
Some kindhearted man who had a surplus of apples--because the farmers
were in this depression, too--thought of getting rid of his apples
(which he couldn't sell) by giving them to the unemployed to sell.
So they got them every morning somewhere down in the market. Nobody
asked them to prove they were unemployed. I'm sure they were because
no man in his right mind would have taken a big basket of apples
to try and sell at 5 cents apiece in a poverty-stricken community--out
of which he would make just a little bit of pocket money--unless
he had been out of work, out of wages, out of money, out of everything.
Some of you may remember how strange the ideas of the public were
about the apples. I tell you this because it's a clue to the public
mentality of the times--1929 to 1935. In the New Yorker magazine
there was a cartoon of two sort of prissy-looking ladies with their
hands crossed, walking down the street and looking as if they were
not unemployed themselves. Here was the big basket of apples, and
here was the man selling them with a little sign saying: "Unemployed--Apples
5 cents." As they looked at the apples, one lady said to the
other, "They look perfectly delicious." "Oh, they
do, indeed," said the other, "I wish I could have one."
"oh no, you mustn't," said the first. "They're for
the unemployed."
Though you may find it difficult to believe, ideas as silly as
that were actually broadcast in the community. And many other strange
notions added to the confused situation.
I've always said, and I still think we have to admit, that no matter
how much fine reasoning there was about the old-age insurance system
and the unemployment insurance prospects--no matter how many people
were studying it, or how many committees had ideas on the subject,
or how many college professors had written theses on the subject--and
there were an awful lot of them--the real roots of the Social Security
Act were in the great depression of 1929. Nothing else would have
bumped the American people into a social security system except
something so shocking, so terrifying, as that depression.
The wandering boys were a source of terror. But it was the most
natural thing in the world for a great big grownup boy 14 to 17
years old to go wandering. Consider the case of a boy who found
himself in a family where the breadwinner was unemployed, where
there were other children around, where his mother was distracted
by the lack of anything to buy food with, and to feel himself, not
unwanted, but one more mouth to feed, and a great big mouth at that.
"I ate so much," one boy said to me, "I couldn't
stand it. The kids, the little children were hungry. So I went out
to find a job, and I went out of town."
This is what the boys did--not a few of them--thousands of them.
They wandered around the country and were a problem to every charity
and relief organization, to every State aid or Federal-and-State
relief station; and the railroads were terrified of them. These
boys, following the road, would steal a ride under the bumpers,
and the railroads were frightened all the time that there would
be accidents; that somebody would be killed; and I believe some
were. It's a dangerous business to ride the rods. I remember I went
out to see some of the boys. They finally gathered them in--the
railroaders did. They sort of herded many of them into the St. Louis
yards, and let them pitch a camp. Well, there they lived in the
camp--in the St. Louis railroad yards--a hazard to the community--picking
up whatever they could. I'm sure some of them learned to steal.
Some of them learned be panhandlers. All kinds of things happened.
These were really alarming situations. They were alarm because of
the demoralization an because of the general hazards t the community
and to the total economy.
But everything was down. Nobody could get a job. The grocer didn't
employ the young boys to deliver goods any more. He couldn't afford
to. The grocer himself finally went bankrupt and closed up. He had
given too much credit. I mean the people who were out of work ha
credit at the grocery store at fir and they could eat; but they
couldn't pay their bills, and finally, the grocer couldn't pay his
bills; and eventually somebody came and sold him out. It went on
like that all the time. One thing led to another, and we began to
realize how cruel, how very deep, how almost irreversible this situation
had come to be. This was the situation which faced people who began
to be aware of the problem early as 1930.
THE PEOPLE SPEAK
A lot of private thinking went on. When I got to my office as Secretary
of Labor in 1933, I found on desk over 2,000 plans. These were "plans"
for curing the depression. All kinds of people with nothing else
to do, being out of work, began to plan--to think. This was social
planning. It was extraordinary how many people in their social plans
had hit upon something that sounded like social insurance. Often
the planners were almost illiterate; often the work wasn't very
thoroughly done. Often, however, they were good; well set up, typewritten,
sharply organized-A, B, C; 1, 2, 3, under it, you know--very good
plans. But the extraordinary thing was that there should have been
2,000 of them filed with the Secretary of Labor in the previous
year. And many more--thousands more--on the President's desk, because
everybody had apparently taken to making a social plan. This, I
think, was stimulated by the Townsend Plan. The word "plan"
had never been a political word before, but the Townsend Plan was
wonderful. I mean it sounded so good--"$30 every Thursday;
but you would have to spend it right away. This was for everybody
over 65. This was to cure the Depression effects upon the aged.
Thirty dollars every Thursday would do it, and if they spent it
all before the next Thursday, it would penetrate the market. It
would revive the market for goods. That would establish and strengthen
the manufacture industries. Industrial concerns would need money
from the banks. That would revive the banking industry. Everything
would be fine--$30. (Ed. note: $30 every Thursday was the rival
"Ham & Eggs" plan; the Townsend Plan promised $200
per month.)
This was a great watchword. This was a real stimulus to thinking
in this country. Although it started out as a most crooked--I don't
mean dishonest, I mean wavering--plan, it became a political move
of considerable importance. When I saw that old Dr. Townsend had
died just this last winter, I couldn't help but say to myself, "God
rest his soul; he was a good old man!" He meant well. He didn't
have any learning, but he was sorry for himself and the other old
people, so he thought of $30 every Thursday and started us all thinking.
In particular, he startled the Congress of the United States, because
the aged have votes. The wandering boys didn't have any votes; the
evicted women and their children had very few votes. If the unemployed
didn't stay long enough in any one place, they didn't have a vote.
But the aged people lived in one place and they had votes, so every
Congressman had heard from the Townsend Plan people.
Then, of course, we had a lot of other plans: The Technocrats were
busy. Technocracy was so engaging, so interesting, that the people
used to stop and read the literature in store windows which the
Technocrats hired. Great crowds would gather around a bulletin in
the store windows all over the country to hear about the Technocrats'
plan. I have forgotten myself what it was, but it wasn't social
security, you can rest assured of that. It was a somewhat crazy,
extreme plan, but I am sure it was based upon good feeling and a
good idea.
Social planning and social thinking had begun in the American people,
whereas they never had been really vital ideas before. We had always
sort of bumped into things. A group of reformists got an idea and
our social legislation was based largely on what a group of reform
people had been able to do. Workmen's compensation legislation was
put through in the United States, State by State, under our preconceived
ideas of the relationship between the States and the Federal
Government and the regular constitutional rulings of the Supreme
Court on that matter. Thus, we took it for granted that anything
in the way of social legislation had to be done State by State.
The American Association for Labor Legislation, however, took the
lead in devising a model law on workmen's compensation insurance,
and first recommended it after the Pittsburgh survey of 1908. Compensation
was then talked about for a few years until in 1910 and 1911, the
first laws were passed in Wisconsin and the State of New York. Nearly
all social legislation has originated in one of those two States,
it seems.
Thus, out of this plan of the American Association for Labor Legislation,
sprang the beginnings of workmen's compensation. I won't bother
to go into the horrors of uncompensated industrial accidents because
many of you know all about that anyhow. And I find that many young
people are simply astonished when you say, "Oh, yes; people
used to get their arms pulled out in a laundry mangle. No, they
didn't get any money." "Didn't they get anything?"
"No; nothing." "Well, what did they do?" "I
don't know what they did," is all you can say. Somewhere or
other they buried themselves away in the general population. Girls
got scalped in the textile machinery, even in the sewing machines
of the dress industry in New York City. You'd get down under the
machine to pick up a bobbin that had fallen and the wheel would
cut your head off. It was a terrible accident. Men fell into the
molten iron pots in the Pittsburgh district and, of course, were
never seen again. This horrible situation was accepted by the American
people. They thought, "Well, this is what it is. Too bad! John
was a good man, but it was an awful dangerous trade he was in."
These things were commonly accepted, and it took the efforts of
the American Association for Labor Legislation and thousands of
individuals to start the movement toward making a systematic recompense
for injury and disability arising out of an accident in the course
of employment.
The beginnings of old-age insurance came about largely, I think,
by the crisis of the times, by the studies of some of the intellectuals
and through the impact of the old-age predicament, and of the Townsend
organizations on the politicians.
This, of course, is an important victory. Once you get the ear
of a politician, you get something real. The highbrows can talk
forever and nothing happens. People smile benignly on them and let
it go. But once the politician gets an idea, he deals in getting
things done. Many are extraordinarily able in devising political
plans that hold water, not only in the matter of votes but administratively.
THE KEY TO ACTION
Without the ability to convert the politicians and to convince
the politicians of the necessity and wisdom of making provisions
for old age, we would never have had the old-age and survivors insurance
system or any of the other social insurance systems. Sometimes a
little guidance helps them; sometimes they develop this pattern
entirely on their own account. Don't ever scorn the politicians.
They are really the key to these situations in which we now deal.
And I want to say this right now: the need for unemployment insurance
was even more critical at that time, in 1933, than the need of the
aged who could have been handled under large appropriations for
relief without having their relief come as a matter of right through
insurance. But the unemployment insurance idea was full of hazards
for many people, and particularly for the politicians, who tended
to take the old-fashioned view that there was something wrong with
people who were unemployed, and that they ought to bear the burden
of their own sins. If you go back to medieval writing, and on into
early 19th- century writings, you find this theme coming up all
the time. There are some people who won't work and, of course, they
will always be unemployed and stagger along somehow. Now you know
and I know that there are an extraordinarily few persons who will
always be unemployed and who either don't want to, or can't, because
of physical or other disabilities, get the kind of work they can
do. But it's always easy to say, "Well, he should have learned
to do, something and "No, he shouldn't be covered." Thus,
when the bill was debated in Congress there was always opposition
to the unemployment insurance based on opinions such as: "Well,
a man shouldn't be taxed with this and for that when it isn't his
fault." "The employer should not have to pay a tax into
the unemployment insurance fund because he's not to blame for it.
He can't help it."
And on the merit rating: "Well, if you don't produce any unemployment,
why should you pay a tax into the system?"
Of course, we lost on merit rating, and I've always regretted it.
I think that some time, in the wisdom of this country and some President
who's interested in the matter, we'll wipe out merit rating. You
don't have to administer it, so you don't know what a headache it
is. But this is what causes the problems in the administration of
unemployment insurance today in the various States and under the
various State laws.
The public interest in old-age insurance became very great. Earlier,
I had conceived it as New York State Commissioner of Labor to establish
some kind of old-age and unemployment insurance in the State of
New York. Where did the idea come from? I don't know. I must have
picked it up in the general reading that one does; in the general
conversation of other socially minded people; in the discussions
that went on between intelligent and educated people about the English
system and how they managed things; in the conversations with people
who had just been to England and thought it was such a nice idea
that Lady Jones' maid had a little book, and when Lady Jones paid
her, she wrote in the maid's little book and this was going to take
care of the maid when she was old--when she was 70 years old or
65 years old, she could collect something. Now wasn't that a good
idea? Thousands of people thought it was a fine idea
We looked into this, and we fell back upon the report of Mayor's
Committee on Unemployment which was written in 1919 and 1920 and
had recommended some form of unemployment insurance. We started
on a program of writing a report on unemployment insurance in 1922,
in the State of New York--on a State basis--because we were in the
midst of a depression--a little depression not a big one. At that
time I conceived the idea to stir this thing up. I got the Governor
to authorize me to go to England to study their system. The English
system was full of horrors to me because of their recordkeeping
arrangements, which I went to see at Kew.
Now you know all about recordkeeping here. I have observed this
enormous building that you have erected to keep your records in,
and it's almost as big as the one at Kew, which terrified me because
it was so big. And we have the benefit of the IBM which the British
didn't have when they began their handwritten system. I remember
seeing ladies climbing up on great high stepladders and getting
files out of shelves--dusty, dirty--many wearing gloves so they
wouldn't get their hands dirty while hunting through the files for
John Jones' record. A terrific problem of recordkeeping! You don't
do that today.
I'll never forget how startled I was when I saw the first IBM machine
throw up records in front of you. It's an amazing convenience! You
don't realize what it would be otherwise unless you have tried it.
At any rate, in the State of New York, while Roosevelt was Governor
and we were in the midst of this depression in the early twenties
I did get him sort of worked up about it. At that point education
was the whole thing, you see. We had to et people used to the idea.
American manufacturers and businessmen were coming back from England
and saying, "Oh, they have the do over there. The dole is horrid!"
Nobody then knew what the dole was. I do now. It wasn't so bad even
then, but it was getting something you yourself hadn't paid for.
When the depression came, the English put unions into the unemployment
insurance system other than those who had originally begun it and
paid into the fund.
What else were they going to do with them? They had to do something
with the unemployed. They had to provide some form of relief, but
it was greatly resented by the older, stable, skilled trades organizations,
who had thought they would get up a fund for themselves, to find
that their Government put everybody that was unemployed on that
fund. It wasn't really very nice, but it wasn't wicked, although
the American manufacturer though it was, so that we had a big group
of businessmen who would say: "Oh, no; terrible, the dole!
Don't mention unemployment insurance to me. That's nothing but the
dole."
And I would mention old-age insurance to them to make it easier,
but they would say, "No, that's the dole too. I don't believe
in the dole."
Franklin Roosevelt was greatly opposed to the dole: "Oh, we
don't want the dole; not the dole!" I had a great time to get
him quiet down and stop talking about the dole; to try to think
about the realities.
GETTING ORGANIZED
Anyhow, this was what we finally did: first, we appointed a committee
for the relief of the unemployed in New York State. That was our
first duty. Then we conceived the idea of calling a conference of
Governors of the surrounding States because at that time every study
of unemployment insurance or old-age insurance brought us up flat
against this: How can this possibly be done by one State alone?
The conditions are so different in different States. The revenue
situation is so different; the tax laws are so different; the industries
are so different; the composition of the population is so different.
There are great collections of aged people in some States and very
few aged in others. California at that time was not the prize old-age
State that it is today. But there were equally notable differences
between the States. How could Arizona, how could Alabama, how could
the State of Maine with its disproportionate population of old people,
its decline of youth (because they all left Maine to go to the city)--how
could they possibly have individual old-age insurance systems or
unemployment insurance systems? How could they rely upon their own
villages to collect enough money from the unemployed or the aged
(when they were working) to carry such a system? It was also a very
difficult thing to do with the small actuarial exposure of the various
States. We couldn't ever figure it out for New York State, which
is a large, rich State with high tax values and all that sort of
thing. There just wasn't enough exposure and there wouldn't have
been enough collected to warrant the program.
We discussed this in this Governors' meeting and we hit upon the
idea--which I think Roosevelt had already plotted in his mind--of
a possible regional pattern. The New York Port Authority had just
gone through, so that there was a treaty between New York State
and New Jersey to develop the Port of New York. These adjoining
States, these contiguous States which have similar industries and
similar population problems, might join together to form systems.
The interesting thing is, however, that we talked about unemployment
insurance and we talked about old-age insurance, as insurance, and
we talked about it for four mortal days. Paul Douglas of Chicago,
then a professor of social subjects at the University of Chicago
and now a Senator in Congress, was the guiding hand as the secretary
of this conference. We ended up with a proposal to think of some
form of unemployment insurance on a regional basis. Well, that was
as much as you could do in the winter of 1932.
In the spring of 1932, Franklin Roosevelt had gone out to Utah
to the Conference of Governors. He was, already, of course, sub
rosa, a candidate for the Presidency of the United States--although
he hadn't been nominated. Therefore, his action, I may say, was
both brave and daring, and at the same time it was subtly attractive
to the voter. He made a speech which was full of pleasant hyperbole
of one sort or another--flattery to various Governors--but at one
point he began to discuss the great problems now facing this country,
and he spoke about unemployment. Then he said, "I am for unemployment
insurance but not for the dole."
Until we heard those words come over the wires, I wasn't sure he
was going to say he was for unemployment insurance. I was afraid
he was going to say he was against the dole, and nothing else. I
wasn't sure he would come through but he did. And that, of course,
was the first time he had ever committed himself as far as that.
It created a great interest and a great enthusiasm among the voters,
which he was not slow to catch on to. He had that kind of a mind,
you know; he could feel the public pulse, and he cared about the
public pulse. This, of course, was great news to most of us, and
we bent our energies to getting something into the Democratic national
platform. We didn't get much but we got something--we got the word
mentioned.
Unemployment was mentioned as a great and outstanding problem of
the United States in the year 1932, and the Democratic Party platform
included a clause which said it was a problem. They promised to
study the causes of unemployment--as though anybody hadn't studied
them in years.
They promised to have a committee to study the causes of unemployment,
and to study and look into the whole matter of unemployment insurance.
But it was a very weak clause which our friends were quick to pick
up, telling us that we had betrayed them and all that kind of thing.
Not having appeared before the committee that was drafting the platform,
they didn't know how bad the platform might otherwise have been
on this subject. Most of the committee members seemed to be determined
that there should be nothing said about unemployment that would
frighten people away from the Democratic Party.
But, you may remember, it didn't frighten the people at all. Actually,
nothing frightened them. They would have voted for anybody who was
running, and for any platform because they wanted d change. Everybody
was depressed; every industry was depressed; so every individual
had some sort of stake in the situation. Thus, we got the first
public mention and the first public commitment to do something or
other about unemployment--at least to study it. This was a feather
in our cap. When I say flour" cap, I mean the caps of those
who had already committed themselves in this direction; who had
already determined to help each other find some way out of the situation
and get some form of social insurance in this country.
At any rate, that was the situation when Roosevelt was elected
and we went to Washington.
Before I was appointed, I had a little conversation with Roosevelt
in which I said perhaps he didn't want me to be the Secretary, of
Labor because if I were, I should want to do this, and this, and
this. Among the things I wanted to do was find a way of getting
unemployment insurance, old-age insurance, and health insurance.
I remember he looked so startled, and he said, "Well, do you
think it can be done?"
I said, "I don't know." He said, Well, there are constitutional
problems, aren't there?" "Yes, very severe constitutional
problems," I said. "But what have we been elected for
except to solve the constitutional problems? Lots of other problems
have been solved by the people of the United States, and there is
no reason why this one shouldn't be solved."
"Well," he said, "do you think you can do it?"
"I don't know, " I said But I wanted to try. "I want
to know if I have your authorization. I won't ask you to promise
anything." He looked at me and nodded wisely. "All right,"
he said, "I will authorize you to try, and if you succeed,
that's fine."
"Well," I said, "that is all I want." I don't
want you to put any blocks in my way. We'll see what we can do.
There are plenty of people," I said, "who want it badly
and will work for it."
This was the way it all began.
Then, of course, we got into office and the relief problem was
overwhelming, and the NRA was making an awful noise. You couldn't
hear anything else. It was a little difficult to keep the idea alive,
but I took it upon myself to mention unemployment insurance at least
every second meeting of the Cabinet--just to mention it so that
it wouldn't die; so it wouldn't get out of people's minds. Finally,
the time came when the Vice President, John Garner, said, "I
think we ought to be doing something for the poorer kind of people."
He, too, was keeping it alive.
By the way, I remember that John L. Lewis called
him "that red-faced whisky-drinking old man." Garner was
an extraordinary person; although certainly no flaming radical.
But when some of these problems were discussed in cabinet meetings,
it is John N. Garner that I remember. Being a little deaf, he would
lean forward to listen with his hand cupped to his ear, and I remember
his getting awfully out of patience at the long-winded elaborate
statements that people made about the unemployment situation that
existed in those years. Finally, he would burst out and he would
say, "Mr. President, Mr. President, I think we promised to
do something for the poorer kind of people. We'd better be about
it. We'd better be about it and not talk so much." He understood
the poorer kind of people to be the people who needed something;
he didn't know what. He knew nothing about social insurance, but
the poorer kind of people were the people that had to be helped.
This, of course, was absolutely true.
By this time it was quite late. it was June 1934 before we got
to the point that the NRA was quiet enough, and relief was quiet
enough so that we could think about this thing seriously. So I mentioned
it again, and then I proposed to the President, since he was trying
to close Congress earlier than usual, that we establish our study
right now and that we get a bill ready to present the next year--the
next session--which would be the first of January 1935. This was
all right; nobody objected because it was a study problem. We discussed
it in Cabinet one day, and I remember it was interesting to see
thee views these Cabinet officers took. I remember plainly what
each of them said. Henry Wallace was the most educated of any of
them on social matters, and he said, Yes, he was in favor of it,
but this was no time to do it because it was deflationary to take
tax money from the general public and give it into government hands.
He indicated that "Tax money should be circulated to stimulate
the economy." Henry Morgenthau, Secretary to the Treasury,
agreed to that. Navy didn't have any ideas at all--at least none
they wanted to express. Harold Ickes merely said "Okay"
in a rather Ickesian tone. Secretary of War, George Durn, who had
been the Governor of Utah and was a splendid person--heart in the
right place, intelligent, and industrious, a good person--said,
"I think it's got to be done, Mr. President; the quicker the
better." And so it went around the table. Dan Roper of South
Carolina said, "I think it is a very good idea. It sounds very
good."
Anyhow, they all more or less agreed that the President should
appoint a committee, so then we had to decide how.
I suddenly became frightened as I saw what the committee might
be, you know--a regular congressional public-administration investigatory
committee--that would take 10 years to make a report. So I tried
to stop any proposals of that sort. The others had begun to say
that Senator Such-and-Such ought to be on it and Senator So and-So,
etc., and perhaps a few Governors should be on it. You know what
happens when you get a great big committee with all sorts of representative
people on it; it's a terrible job to get anything out of it.
We came to think the President should appoint just a little committee
to explore the subject. It should consist of members of the Cabinet
in order to keep this thing "close up" so that the President
could be sure they didn't get off on the wrong foot; that they didn't
go proposing some crazy ideas, you know--over-liberal--and also
so they didn't get to proposing very, very conservative ideas which
wouldn't give the unemployed and the aged much of anything. We needed
the President's stand on this, so only those who were responsible
only to the President were proposed for appointment.
The President did appoint members of the Cabinet and he called
it the Committee on Economic Security. He didn't like the word "social."
That meant the dole; he wanted that dropped out, so we dropped it
out. Semantics meant nothing to me. At any rate, we dropped the
word "social" and we had a Committee on Economic Security.
Of course, everybody since then has pointed out that it wasn't
"economic security" at all; and even before we got around
to making the report, we regretted the idea that we had ever had
the name because it was really social. Everybody was talking about
how the economy was busted and we needed a good economic program,
so this was the Committee on Economic Security. Congress hastily
received the President's report and authorized the committee, but
adjourned without making any appropriation to support the committee.
Well, here again was a problem. I remember talking to the President,
and he said, "Well, look, Harry Hopkins has got all that money.
They just made enormous appropriations for Harry Hopkins' relief
problem. Go get some of Harry's money."
"Well, I said, "I don't think that's legal, is it? It
belongs to Harry." "Oh, well, you can get it," he
said.
It was a bright idea really. I don't know why they don't do it
more in the Government now. "Borrow people; just borrow what
you need for staff. Why, there are all kinds of people working in
Washington-thousands of them. Borrow them. The Army's got them;
the Navy's got them; Agriculture's got them; Labor's got them; everybody's
got thousands of people working for them. They don't really need
all of them," he said.
So we borrowed them. Mostly it was Agriculture and Labor who contributed
to the staff, and the Attorney General gave us half a dozen lawyers
whom he didn't know what to do with otherwise. They were good people,
it so happened, and I had the pick of them.
Then we took $125,000 from Harry Hopkins, but on a promise. We
promised that we would employ only the unemployed with that $125,000.
But that was all right, because plenty of statisticians, plenty
of college professors, plenty of people who knew how to dig for
facts and so forth--who were unemployed. There were stenographers,
of course, and clerks by the dozens who were unemployed. That was
a very good scheme. We used only persons otherwise unemployed and
the thing got off to a good start.
(Ed. Note: Edwin J. Witte, the Executive Director of the committee
on Economic Security, reported in his book, The Development
of the Social Security. Act, that the sum of $87,500 was
initially set aside from F.E.R.A. (Federal Emergency Relief Administration)
funds for the Committee. Because of congressional delays in enacting
the Social Security Act this allocation was insufficient and the
balance of the expenses of the Committee were carried as administrative
expenses of the F.E.R.A. The total expenses of the Committee (including
the $87,500 originally allotted) totaled $145,000.)
Well, we had a great many difficulties. If you have administered
a new program you know some of the problems we went through getting
this one organized.
We knew we had to have actuaries. Well, the Lions Club of America
and some other big service organizations put up the money for actuaries.
Think of that! It was a really a wonderful thing that they did,
because none of us had clear ideas about actuaries. But they had
a small insurance system in their own scheme of things and they
knew actuaries. So they gave us their actuaries; and the Equitable
Life Assurance Society also gave us two actuaries. That was a little
political pull inside the Equitable Assurance Co., I must admit;
but still we got two first-class actuaries from them. In addition,
we got a lot of able and willing people just as "gifts."
COMMITTEE GOES TO WORK
Of course, we had to have a driver. That was why we got Ed Witte
from the University of Wisconsin. We borrowed him, first for 3 months,
and then for the duration of the problem. He was a tower of strength
because he knew how to direct and how to get work out of people
who were scattered about in the organization. We didn't have much
time because we set ourselves January 1, 1935 as the date to report
our plan. We borrowed university people who, beginning in July,
were on summer vacation--quantities of them. I didn't know as much
about university people then as I do now, but university people--teachers
and professors--are a problem in themselves. They have great pride
of opinion, and they are quite vocal. They can give voice to their
opinions wonderfully, and they can write reports very readily. It
takes comparatively little time to write a report, but it is a different
thing to do what the report recommends.
We soon found that we had a team of very high-strung people on
our hands and somebody had to direct them, but Witte was just perfect.
He was a university man himself. He was accustomed to dealing with
irate and excited scholars who didn't want to be disputed about
things they knew, or thought they knew; and he was a very practical
man, too. He'd been in the legislative bill-drafting department
at the State of Wisconsin, and he knew how to set up a law; that
is, what you had to have in it. He knew what the situation required
and (with his superior knowledge) he could calm down those scholars
better than any of the rest of us could.
At any rate, we worked all summer. We had the Technical Board on
Economic Security made up of Government officials. We had an Advisory
Council on Economic Security which was the employers, organized
labor, and the general public. They were easier to handle because
the "general public" had been picked; you know, the way
you pick a committee. They were all perfectly good people. Even
the employers had been well picked. There was Marion Folsom of Eastman
Kodak Co. Some of us happened to know him to be a good man with
a kind of social mind; and you know what became of him. He worked
for that committee and later he turned up as head of the whole Department
of Health, Education, and Welfare. A very good person--a man of
great ability who really dedicated himself to the promotion of these
ideas. It was a terribly hot summer and everybody worked hard all
the time and finally we actually did bring forth a report on the
first of January 1935. it was a report that recommended unemployment
insurance and old-age insurance but omitted health insurance just
because the experts couldn't get through with health insurance in
time to make a report on it.
And it was true, they couldn't. Intellectual difficulties had arrived.
of course, the actuarial problem was especially difficult. The actuaries
had to know almost before we met. They had to know what we wanted
them to figure it on. It had not occurred to us until then that
the actuaries had to have something to go on. They are accustomed
to measuring the hazard and the exposure and the victims who are
involved in the insurance contract. But first they have to know
what is the exposure; that is, how many people are going to be in
this pattern. And then how many people do you expect to be victims?
To how many people will we have to give compensation? "We can't
make the actuarial tables without that. We have to know how many.
The population of the United States is 130 million. How many of
them will be involved in this?"
That was one of the funny things, you know. While the estimate
of the number of people covered by the program--on an average basis--was
substantially correct, we so desperately underestimated the number
of people that would have covered earnings at some time during the
year. The actuaries had to have one set of figures for the old-age
system and another set of figures for unemployment. We greatly underestimated
the number of persons in both categories because there simply were
no statistics on turnover of employment. We didn't know; we couldn't
know these matters, but we finally rigged up a preconceived state
of affairs. And assumed that any law would have to give a four weeks'
waiting period, and we assumed a certain number of persons covered,
and we assumed a payment of $15 a week as the minimum, but not to
exceed, I think it was one-quarter, of the weekly wages of the unemployed
person; and something about like that for the aged persons--also
one-quarter of the weekly wages of the previous earnings--the latest
earnings of the aged. This is what we gave the actuaries to figure
on, and they did a very good job, I may say.
The legal committee soon broke into a row because the legal problems
were so terrible. The constitutional problem was the greatest one.
How could you get around this business of the State-Federal relationships?
It seemed that couldn't be done.
We continued to wrangle about it' for days. But one day I went
out to tea, although not because I wanted to. In Washington you
don't go to parties just because you want to go, you know; you go
because you have to go. I had to call upon Mrs. Harlan F. Stone,
the wife of the Supreme Court Justice. She was at home on Wednesday
afternoons and so about 5:45, which is nearly the end of the day,
I went to her house and presented myself. There were a lot of other
people there. We went up to the dining room to get a cup of tea,
and there I met Mr. Justice Stone who had just come home from the
Court and was getting his cup of tea. We greeted each other and
sat down and had a little chat.
He said, "How are you getting on?" I said, "All
right." And then I said, "Well, you know, we are having
big troubles, Mr. Justice, because we don't know in this draft of
the Economic Security Act, which we are working on--we are not quite
sure, you know, what will be a wise method of establishing this
law. It is a very difficult constitutional problem, you know. We
are guided by this, that, and the other case." He looked around
to see if anyone was listening. Then he put his hand up like this,
confidentially, and he said, "The taxing power, my dear, the
taxing power. You can do anything under the taxing power."
I didn't question him any further. I went back to my committee
and I never told them how I got my great information. As far as
they knew, I went out into the wilderness and had a vision.
But, at any rate, I came back and said I was firmly for the taxing
power. We weren't going to rig up any curious constitutional relationships.
"The taxing power of the United States--you can do anything
under it, " said I. And so it proved, did it not?
Of course, some of you don't remember the anxiety with which some
of us watched the first case go before the Supreme Court; but it
came down absolutely all right. The opinion was written in elaborate,
fine social language by Mr. Justice Benjamin Cardozo--not by Mr.
Justice Stone--but he voted "Aye" on the matter and we
were safe. This is the reason, of course, that we built so strongly
on the taxing power and that the whole system of taxation is the
basis of the Social Security Act. We tax the aged when they are
young; that is, we tax all the young people for the social security
system while they are at work; and then when they retire, they are
eligible.
Well, of course, this whole thing led us into the problem of what
to do with the "half-aged"--what to do with those who
are already 55 and had never contributed. We rigged that up on a
compromise basis with all sorts of trading within the committee,
but the report finally went in and it was a good-enough report.
It was not perfect by any means. There had been trading within the
committee; there had been secret work by certain members of the
committee who didn't want to show their hands; and there had been
a great fight in the President's Economic Security Committee. It
had been really a tough fight as to whether we should have a Federal-State
system (of unemployment compensation) or pure Federal system, and
I cannot tell you how many times I changed my mind, nor can I tell
you how many times the other members changed their minds.
BEATING THE DEADLINE
We voted once to have it a pure Federal system. By the time the
others had been out of my office a couple of hours, I began to get
telephone calls from them individually saying they thought we ought
to meet again--that there was something to be said against that
and they would like to review their vote; and could we meet next
week? So we would meet and we would vote the other way the next
week--we'd vote to have it a Federal-State system. Then we would
have the same experience; people would telephone and want to review
it again, and we would meet again. This went on for weeks. We came,
really, up to the date when the report had to go in within a week.
I then took the strong measure of asking them to come to my house--not
for dinner but after dinner--and then I told them I was going to
lock the door and we would stay until we had settled it and there
would be no more review. This was the final and the last meeting--"We
have to settle it tonight."
Well, we locked the door and we had a lot of talk. I laid out a
couple of bottles of something or other to cheer their lagging spirits.
Anyhow, we stayed in session until about 2 a.m. We then voted finally,
having taken our solemn oath that this was the end; we were never
going to review it again.
We voted to make unemployment insurance a State-Federal system.
N there were reasons for that which were entirely practical. We
knew, of course, that a Federal system would have been much simpler
to operate, but the opposition in Congress to unemployment insurance
was very large, while the opposition to old-age insurance was very
small. The opposition in the Congress to unemployment insurance
too the form of being in favor of merit rating, which is a pestiferous
thing. It gives the insurer the opportunity to have his taxes reduced
if he doesn't produce much of the hazard, but that throws your whole
system into disorder. If the bill had come up on the floor of the
Senate or of the House as a Federal system, they would surely have
put in amendments here, amendments there, and amendments to the
unemployment insurance galore, until they would have gotten a good
name but the bill would not have passed. This I was sure of. I'd
seen it happen in New York State; I'd seen it happen in other places;
and the President agreed with me it was the thing they would most
certainly do. They would pass old-age insurance but they would not
pass the unemployment insurance part. So, we put it all in one bill
and then acted as though we were rigged; we wouldn't compromise
with people but insisted that it all go through in one deal: unemployment
insurance and old-age insurance. This was the reason it was done--because
of our belief that the Congress would have monkeyed with the unemployment
insurance sections so much that we would have lost the bill entirely.
It could not have been passed. But with the States coming in to
run the unemployment insurance you always had the theory that the
States could experiment in this line without ruining the whole system.
And so, we now have the matter firmly fixed, but not so firmly that
it can't be modified at some future time.
This, then, was the genesis of the whole bill. We did a great deal
of educating by one kind of propaganda or other, chiefly hearings.
Senator Wagner put it up--a bill which he called a model bill--and
held public hearings in the Senate, which attracted a great deal
of attention from the Senators. We had a number of senatorial committees
which we asked to look into this or that. We got advice. All these
actions were for the purpose, not so much of advice as of propaganda--that
is, of education of the public. I don't remember how many speeches
we made. I made over 100 speeches myself in that period, and practically
everybody else who had anything to do with the scheme made many,
many speeches. The result was a bill that finally was presented
to Congress and, as you know, was debated very briefly, really quite
briefly when you think of the problems that were involved--only
a decent amount of debate--and we gave way on all kinds of things.
We gave way on washing out universal insurance; that is, universal
coverage. We let them take out one group after another; no objections,
just so we got the basis of the bill. And finally, we did get the
basic bill passed. It came through after amendments, and so forth,
and was passed in August 1935 by an extraordinary vote. There were
only nine votes against it in the Senate. One could hardly have
believed that was possible. I forget the House vote, but it was
perhaps 90 votes against or something of that sort.
(Ed. Note: The vote was 371 to 33 in the House and 77 to 6
in the Senate.)
Yes, an overwhelming vote for Social Security, and so it was established.
But of course you knew the two committee chairmen. Senator "Pat"
Harrison of Mississippi was a wonderful orator. He didn't know the
first thing about this bill. Congressman Bob Doughton of North Carolina
knew even less about it because he was deaf and couldn't hear what
was said to him about it. But there wasn't much debate in the House
anyway. Senator Harrison had to present the bill. This was the occasion,
of course, on which Mr. Thomas Eliot, now the chancellor of Washington
University in St. Louis, undertook to sit on the steps of the Senate
beside Pat Harrison and pass up to him the answers to the questions
that were asked him.
I understand Mr. Eliot says he never was a page and didn't wear
short pants. I never said he wore short pants. I just said he sat
on the steps of the Senate and gave the answers to Pat Harrison;
but I suppose Mr. Eliot is sensitive for fear somebody might think
that he masqueraded as a Senate page. However, in retrospect, these
things were funny, but they were all part of what we did in the
effort to put this thing through. Tom Eliot was then a youngster
in the legal department, and he was doing the things that help most
that he could do.
It finally went through in a blaze of glory. Harrison was congratulated
and Doughton was congratulated, and they all beamed; and I gave
a party. To my astonishment, Mr. Doughton accepted the invitation
and came. His wife said "You know, we've been in Washington
for 35 years and we never went out before where we stayed later
than 8 o'clock at night, but this is a great occasion and Bob wants
to come." So they came and stayed until half past 8! The Harrisons
stayed a little longer. It was a perfectly simple party, but it
was one of great rejoicing, which we all felt was justified.
And then began the great problem which you have taken over--the
administration of this act. Thousands of new problems arose in the
administration which had not been foreseen by those who did the
planning and the legal drafting. Of course, the Act had to be amended,
and has been amended, and amended, and amended, and amended, until
it has now grown into a large and important project, for which,
by the way, I think the people of the United States are deeply thankful.
One thing I know: Social Security is so firmly embedded in the American
psychology today that no politician, no political party, no political
group could possibly destroy this Act and still maintain our democratic
system. It is safe. It is safe forever, and for the everlasting
benefit of the people of the United States.
Selected Readings on the
Beginnings of Social Security
1. Abbott, Grace, From Relief to Social Security: The Development
of the New Public Welfare Services and Their Administration
University of Chicago Press, Chicago, 1941, 388 pp.
2. Altmeyer, Arthur J., The Formative Years of Social Security,
The University of Wisconsin Press, Madison, 1966, 314
PP.
3. Brown, J. Douglas, An American Philosophy of Social Security:
Evolution and Issues, Princeton University Press, Princeton,
1972, 244 pp.
4. Cohen, Wilbur J., "The First Twenty-Five Years of the Social
Security Act; 1935-1960", Social Work Year Book 1960,
National Association of Social Workers, New York, 1960, pp. 49-62.
5. Epstein, Abraham, Insecurity: A Challenge to America: A Study
of Social Insurance in the United States and Abroad (3rd revised
edition), Random House, New York, 1936, 821 pp.
6. Haber, William, and Cohen, Wilbur J., (eds.) Readings in
Social Security, Prentice-Hall, Inc., New York, 1948, 643 pp.
7. Lampman, Robert J., Social Security Perspectives: Essays
by Edwin E. Witte, University of Wisconsin Press, Madison, 1962,
419 pp.
8. Lubove, Roy, The Struggle for Social Security 1900-1935,
Harvard University Press, Cambridge, 1968, 276 pp.
9. McKinley, Charles, and Frase, Robert W., Launching Social
Security: A Capture-And-Record Account 1935-1937, The
University of Wisconsin Press, Madison, 1970, 519 PP.
10. Mitchell, Broadus, The Economic History of the United States,
Vol. IX, "Depression Decade: From New Era Through New Deal,
1929-1941" Rinehart and Co., New York, 1955, 463 PP.
11. Perkins, Frances, The Roosevelt I Knew, Harper and Row,
New York, 1964 (paperback edition), 409 pp.
12. Rubinow, I. M. The Quest For Security , Henry Holt and
Company, New York, 1934; 683 pp.
13. Schlabach, Theron J., Edwin E. Witte: Cautious Reformer,
State Historical Society of Wisconsin, Madison, 1969, 290 pp.
14. Schlesinger, Arthur M., Jr., The Age of Roosevelt-The Coming
of the New Deal, Houghton-Mifflin Co., Boston, 1958, 669 pp.
15. Social Security In America: The Factual Background
of the Social Security Act as Summarized From Staff Reports
to the Committee on Economic Security, Social Security
Board Publication No. 20, Government Printing Office, Washington,
1937, 592 pp.
16. Witte, Edwin E., The Development of the
Social Security Act, The University of Wisconsin Press, Madison,
1962, 220 pp.
EDITORIAL NOTE:
About 10 publications are expected to be printed in the series
captioned "The Beginnings of Social Security." This publication
is in that series. In addition, the selected, annotated bibliography
entitled Basic Readings In Social Security, published by
SSA's Office of Research and Statistics, contains many additional
readings relating to the beginnings of social security.
GOVERNMENT PRINTING OFFICE: 1974- 584-897:245 |