For the Unemployed and the Aged - The Development of the Social Security Act In the Course of the Great Depression and Its Introduction During the New Deal

Content

1. About this paper

2. Unemployment and abject poverty envelopes the nation

3. “The great task of furthering the security of the citizen and his family”

4. A new type of legislation takes much consideration

5. “From the cradle to the grave”

6. “For the permanent well-being of the Nation as a whole”

7. Bibliography

“I am looking for a sound means which I can recommend

to provide at once security against several of the great disturbing

factors in life – especially those which relate to unemployment and old age.”^[1]

1. About this paper

The writing of this paper was initiated by a seminar on the various forms of social policy in the United States from the nineteenth century to the present day. Throughout the sessions of the seminar it became clear that the need for some public assistance has always existed in the United States. Together with three of my fellow students I prepared a presentation on the Great Depression and the introduction of Social Security during the New Deal. Doing research for our presentation in class I took notice of the enormous pressure under which the Committee on Economic Security, which became the central institution in the drafting process of the novel program, had to work and the great obstacles they had to overcome on their way to the actual passing of “their” Social Security Act in 1935.

Consequently, out of this specific encounter I attempt to discuss two main points in this paper: one is the difficulties and obstacles that needed to be overcome when the Social Security Act was first developed and the second constitutes its introduction to the American public with its particular and distinguished programs. In order to fulfill these tasks, I will start out by giving an overview of the historical background, that of the Great Depression. In this context I will also consider, for instance, public opinion or rather its change in regard to Social Security during the New Deal.

2. Unemployment and abject poverty envelopes the nation

The 1920s were the epitome of prosperity throughout the United States. “The Roaring Twenties” were a decade of thriving economy, which both agriculture and industry profited from. Americans became wealthy, consumed, and invested. Despite all the flourishing, the economy slowed down towards the end of the decade, yet investments, for instance, were still being made in the fashion of the heydays of the mid-20s. Signs toward a slow down seemed to have been ignored or underestimated, a major market correction was on its way. The stock market eventually crashed on October 24, 1929. The “Black Thursday” arranged a disastrous plan for American economy. Government was confronted with the problem of human needs that was of unspeakable vastness and force. Not only large-scale business failures and investment losses caused extensive anguish, but also deteriorating agricultural prices and extensive droughts impoverished vast numbers of the farm population. As a consequence, of course, investment froze and with it the economy fell into its extended stage of depression. Additionally, unemployment struck millions of families and corrupted them of their only source of revenue. Unemployment by far became the most severe problem of the depression. While Herbert Hoover, Republican president of the United States when the depression began, pledged for patience and faith in the recovery of the economy of the United States by itself and without any (or very little) government intervention, it became quite clear to the vast majority of the nation, that matters grew worse day by day and the called-for economic self-healing process would never come.

Such crisis called for a severe change of plan which was basically introduced with the election of the Democrat Franklin Delano Roosevelt as president of the United States in 1932. Relief was a major problem and, of course, urged the government to adopt new relief methods. Those ambitions were clearly the force behind Franklin D. Roosevelt’s first hundred days of presidency and the up to that time unknown administrative power which resulted in his programs summed up as the “New Deal”.

3. “The great task of furthering the security of the citizen and his family”

The problems mentioned before were urgent, no delay was tolerated, and the United States, along with other nations that suffered from the depression, were forced to improvise, to enact “emergency actions” (Fisher 1945: 304) in order to help relieve the nation of its misery. Since this paper is concerned with the two major achievements of the Social Security Act, namely unemployment compensation or insurance and old age assistance, I will, as a consequence, merely focus on those two aspects concerning the advent of the actual act as well. Before Social Security was established nationwide the so-called “’poor relief’ was widely considered to be a local problem, the financing and administration of public assistance was held to be the responsibility of the local government” (Burns, Williams 1971: xi). Even the vast unemployment problem during the Depression was left to the states themselves to remedy in the beginning. Trying to come by with so-called emergency relief administrations by the end of 1931, those states that established such agencies could not work around their financial problems, and so an ever-growing demand for help from the federal government arose, claiming that unemployment was a national problem and, therefore, needed to be worked out in federal cooperation with the individual states and counties (Burns, Williams 1971: xii).

As already indicated, president Hoover’s response was one of reserved and hesitant character in terms of government intervention with economy and people’s lives. Trying to cope with the depression when it first broke out he strived to find ways out of the country’s misery remote from the government. This, for instance, involved meetings with business and agricultural heads and the outspoken conviction of the economy’s ability to regulate itself and recover on its own. Wage levels, for example, should be maintained and overreactions to the economic decline should be spared. Even though some leaders of big business cooperated for a short time, ambitions and advice were forgotten and wages were dramatically cut and workers increasingly fired when the depression deepened. When it was obvious that matters would not change the least in early 1930, holding on to such policies of small government would have meant negligence of the American nation and was merely unimaginable. Hoover was forced to extend government responsibilities into the lives of US civilians. One of his actions was to introduce a tariff to safeguard the largest imports. Dexterous in its intention, honorable and benevolent for the protection of American farmers, it only resulted in other nations’ imitation and, thus, the reduction of American foreign trade. Experimenting in conservation and development, building forest roads and trails, Hoover strived to strike against unemployment. With the authorization of various loans to establish industries and financial institutions, for instance, he also tried to make temporary advances.

His ambitions, however, did not result in remarkable contributions in the field of agriculture and industry, and the unemployment issue seemed to have remained unaffected. In terms of unemployment relief he created institutions to take care of that matter indeed, but simultaneously he endowed them with limited means to actually function properly. The public’s resentment and negative verdict on the president’s policies were ultimately embodied by the demonstration of the nation’s destitute in Washington D.C., which is known as “The Shame of Anacostia Flats” (Cracraft 2005). Hoover’s inability to deal with the nation’s problems and to react to its needs properly was rather exemplified by his reaction to this demonstration: he ordered military forces to disperse the crowd. Despite the fact that federal relief committees were designed to encourage state and local action as early as in 1930 and 1931, some more significant federal aid only was given by the passage of the Emergency Relief and Construction Act in July 1932 (Burns, Williams 1971: xii). After the 300-million-dollar fund, which the act provided, was rapidly exhausted and Hoover’s overall late and little ambitions proved insufficient, however, the question no longer was if the federal government was to help financing, but how and in what numbers. With the results of the presidential elections of 1932 and the new president of the united States, Franklin Delano Roosevelt, this query was about to be worked on and attempted to be answered.

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^[1] Franklin D. Roosevelt in Witte 1963: 7.