Head Note: Francis E. Townsend, an unemployed doctor, introduced this plan in 1933 in a California newspaper. He and others soon started an organization called Old Age Revolving Pensions, Inc. to publicize and build support for the plan. By 1935, the organization had more than five million members and presented a petition for the plan to President Roosevelt with 20 million signatures, more than 10% of the entire American population.
The Townsend Plan
Have the National Government enact Legislation to the effect that all citizens of the United States—man or woman—over the age of 60 years may retire on a pension of $200 per month on the following conditions:
1. That they engage in no further labor, business or profession for gain.
2. That their past life is free from habitual criminality.
3. That they take oath to, and actually do spend, within the confines of the United States, the entire amount of their pension within thirty days after receiving same.
Have the National Government create the revolving fund by levying a general sales tax; have the rate just high enough to produce the amount necessary to keep the Old Age Revolving Pensions Fund adequate to pay the monthly Pensions. Have the act so drawn that such sales tax can only be used for the Old Age Revolving Pensions Fund.
OLD AGE REVOLVING PENSIONS, INC.
How would money for the revolving pensions be raised?
How is money raised for Social Security today?
Roosevelt Speech (Modified)
Some of the language and phrasing in this document has been modified from the original.
Head Note: President Franklin D. Roosevelt gave this speech on August 14, 1935 when he signed the Social Security Act.
Today a long-held hope is largely fulfilled. The civilization of the past 100 years, with its startling industrial changes, has made life insecure. Young people have come to wonder what would happen to them in old age. The man with a job has wondered how long the job would last.
This social security measure gives some protection to 30 million of our citizens who will receive direct benefits through unemployment compensation, through old-age pensions, and through increased services for the protection of children and the prevention of ill health.
We can never insure 100 percent of the population against 100 percent of the ups and downs of life, but we have tried to pass a law which will give some protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.
This law, too, represents a cornerstone in a structure which is being built but is by no means complete. It is a structure intended to lessen the force of possible future depressions. It will act as a protection to future Administrations against the necessity of going deeply into debt to help the needy. It is, in short, a law that will take care of human needs and at the same time provide the United States an economic structure of vastly greater soundness.
If the Senate and the House of Representatives in this long and difficult session had done nothing more than pass this Bill, the session would be regarded as historic for all time.
Source: August 14, 1935, excerpt from President Franklin D. Roosevelt’s speech, Washington, D.C.
List the benefits of Social Security according to FDR:
NAACP Representative Testimony
Head Note: President Roosevelt sent his Social Security bill, named the “Economic Security Act,” to Congress in January 1935. Congress held committee hearings on the bill. Here, a representative of the National Association for the Advancement of Colored People (NAACP), a group dedicated to advancing the rights of African Americans, testifies before Congress about how the bill excludes certain groups of people.
Mr. Houston: ….The point that I am making is that in order to qualify for the old-age annuity there is a provision that taxes must be paid on behalf of this person prior to the day when he reaches 60 years.
Now, for the benefit of Negroes, I want to inquire who would be benefited or excluded by that provision?
First, and very serious, Negro share croppers and cash tenants would be excluded. I take it that I do not need to argue to this committee the fact that of the Negro population and of the population of the country generally, your Negro share cropper and your Negro cash farm tenant are just about at the bottom of the economic scale. He is not employed. There is no relation necessarily of master and servant by which he gets wages on which a tax could be levied. Therefore this population is excluded from the entire benefits of the old-age annuity, and that represents approximately, according to the 1930 census, 490,000 Negroes.
Next: Domestic servants are ... excluded from the act ... because the system of employing domestic servants is so loose....
In addition to that, from the standpoint of present persons unemployed ... this old-age annuity does not provide for these ... I do not need to argue to the committee that Negroes have suffered from unemployment more than any other class of the community....
Source: Excerpt from the Statement of Charles H. Houston, representing the NAACP, to the House Ways and Means Committee on the Economic Security bill, February 1, 1935. Washington, D.C.
Summarize the main argument against Social Security.
Letter to Eleanor Roosevelt
Head Note: Americans sent thousands of letters to the White House during FDR’s presidency. On average, more than 5,000 letters arrived daily. This letter refers to the "forgotten man," the title of a radio address that FDR gave on April 17, 1932. The "forgotten man" became a phrase adopted by many Americans.
Jan 18., 1937
[Dear Mrs. Roosevelt] I...was simply astounded to think that anyone could be nitwit enough to wish to be included in the so called social security act if they could possibly avoid it. Call it by any name you wish it, in my opinion, (and that of many people I know) is nothing but downright stealing....
Personally, I had my savings so invested that I would have had a satisfactory provision for old age. Now thanks to his [FDR’s] desire to "get" the utilities I cannot be sure of anything, being a stockholder, as after business has survived his merciless attacks (if it does) insurance will probably be no good either....
Then the president tells them they should hire more men and work shorter hours so that the laborers, who are getting everything now raises etc. can have a "more abundant life." That simply means taking it from the rest of us in the form of taxes or otherwise....
Believe me, the only thing we want from the president ... is for him to balance the budget and reduce taxes. That, by the way, is a "mandate from the people" that isn’t getting much attention.
I am not an "economic royalist," just an ordinary white collar worker at $1600 per. Please show this to the president and ask him to remember the wishes of the forgotten man, that is, the one who dared to vote against him. We expect to be tramped on but we do wish the stepping would be a little less hard.
Security at the price of freedom is never desired by intelligent people.
Source: Excerpt from a letter sent to Eleanor Roosevelt by an anonymous woman, January 18, 1937.
Summarize the main argument against Social Security. Compare it to the previous.
Social Security: Interpretation 1
"The Third American Revolution"
Historian Carl Degler argued that the New Deal was revolutionary. He believed that the New Deal represented a drastic change in how Americans viewed government and its role in the economy. Rather than expecting economic troubles to be solved by market forces (a faith in "laissez-faire economics"), Americans began to expect the government to act in times of economic trouble and intervene to help make things better.
Degler saw Social Security as a piece of this change, signaling that Americans viewed the government as responsible for ensuring that older Americans would live decent lives. This was a shift from thinking that this responsibility lay only with individuals and families. Degler also argued that Social Security demonstrated FDR’s flexibility and willingness to experiment when the public demanded it. The American public was ready for a change after experiencing the severe conditions during the Great Depression, when banks were failing, industries were faltering, people were unemployed, and feelings of fear, uneasiness, and dissatisfaction were widespread. Degler argued that the New Deal constituted a permanent shift in the American public’s expectations: they now wanted the government to be an active player in the economy.
Carl N. Degler (1959). "The Third American Revolution." In Out of Our Past: The Forces that Shaped Modern America.
Social Security: Interpretation 2
"The Conservative Achievements of Liberal Reform"
Historian Barton Bernstein, writing in the late 1960’s, argued that the New Deal was no revolution, and that the changes suggested by Degler and others had been exaggerated. Bernstein argued that President Roosevelt protected the existing political system and that changes in attitude and policy regarding laissez-faire policies were less a break from the preceding years than earlier historians had characterized them. The New Deal was a narrow program of limited reform that excluded millions of Americans. Equality and justice for the poor and Blacks were not advanced by the New Deal; middle-class people and the American system of corporate capitalism got further protection. Bernstein saw the New Deal as fundamentally a conservative program partly motivated by a fear of more radical ideas.
Specifically, Bernstein saw the Social Security Act as a response to the more radical ideas and programs attractive to many Americans, like those proposed by Huey Long and Francis Townsend. The Act, he wrote, was more symbol than substance. Workers had to contribute to their old age pensions and could not depend on government contributions: thus, it was a limited kind of aid. More than one of every five workers was excluded from the pension plan, including those who worked on farms and as domestic help and this workforce was disproportionately black or female. Bernstein argued that while the New Deal reduced suffering, it did not deserve the praise for revolutionizing America that others lavished upon it. It was a limited and safe reform program couched in inflated rhetoric that actually did little to change the country’s economic and political structure and even less to reform American race relations.
Barton Bernstein (1968). "The Conservative Achievements of Liberal Reform" in Towards a New Past.
Social Security: Interpretation 3
The New Deal
Historian Anthony Badger, writing in 1989, disagreed with Degler’s celebration of the New Deal as transforming American ideas about government and the economy. Likewise, he found arguments like Bernstein’s overly gloomy about the New Deal. He argued that the New Deal was a “holding operation” that helped people and businesses survive until WWII transformed the American economy. Badger argued that FDR’s goal was to maintain the American system and help it survive rather than to transform it, and that the administration’s vision was inconsistent and ambiguous.
Badger characterized the New Deal as a practical program and used Social Security as an example of this practicality. He argued that the Act could not have been more extensive or it would have lost Congressional support. Badger pointed to several factors that limited the scope and extent of New Deal programs including conservative congressional opposition and a reliance on local governments that did not necessarily work in democratic ways or in ways consistent with what program designers had hoped. Most important, "the ultimate constraint" on Social Security was "the underlying conservative response of the people themselves to the Depression." Badger argued that FDR’s New Deal was what the American public and system would tolerate and not the revolution that Degler saw nor the one that Bernstein imagined. Rather, Social Security was legislation that preserved the system the only way it knew how.
Anthony Badger (1989). The New Deal: The Depression Years, 1933-1940.