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Dr. Townsend’s Crusade
THE CRACKPOT IDEA THAT LED TO SOCIAL SECURITY
October 2001 | Volume 52, Issue 7
Franklin Roosevelt, his exquisitely sensitive political antennae atingle, knew he had a problem. In January 1934, Townsend incorporated his movement as Old Age Revolving Pensions, Ltd. A year and a half later, Townsend’s supporters claimed there were 7,000 Townsend clubs in operation, and some 2.5 million Americans had signed petitions calling for the enactment of the plan. Townsend had to hire 95 workers to handle the mail. Many of California’s congressmen were elected with the support of the Townsendites in 1934, and one of them introduced a bill in Congress that proposed implementing Townsend’s plan virtually verbatim. Townsend, of course, was not the only person attracting a following with radical ideas. Sen. Huey Long, with his Share-the-Wealth plan, and Father Charles Coughlin were in their heydays at the time. Although Townsend relied on an anti-Establishment appeal that resembled the populist crusades of Long and Coughlin, his movement was more creative and less reliant on demonizing political and economic elites.
Roosevelt was already moving to counter the trend with what came to be known as the Second New Deal. Its principal features, outlined in his message to Congress on January 4, 1935, were a national works program to employ the able jobless, banking reform, increased taxes on high incomes and inheritances, and programs to guarantee security against the hazards of unemployment, old age, and illness. Although the Republicans naturally denounced the package as the very end of the American way of life, Roosevelt said he was trying to “save our system, the capitalist system,” from “crackpot ideas.” Which of those he had in mind were clear: “I am fighting Communism, Huey Longism, Coughlinism, Townsendism.”
IT AMOUNTED TO A MASSIVE TRANSFER OF INCOME FROM THE WORKING YOUNG TO THE RETIRED ELDERLY.
He put Secretary of Labor Frances Perkins, the first female cabinet member, in charge of designing the old-age insurance program. Roosevelt wanted a self-financed plan that would include payments by the workers themselves. His reasoning was simple: With the workers paying into the system, it wouldn’t be a dole, and they would be gaining a property right to receive their benefits when they retired. “With those taxes in there,” he said, “no damn politician can ever scrap my social security program.” In the end, of course, they were not called taxes; they were called “contributions,” although there was nothing voluntary about them. But FDR was exactly right about the political sanctity that would grow up around what was soon called Social Security.
Roosevelt would have preferred to have had the Social Security system be self-financing from the beginning. But Perkins explained that that would require either very high taxes and very small payouts or a postponement of any payouts for many years. Neither was accept- able to the President, who told Perkins, “We have to have it [payments relatively soon]. The Congress can’t stand the pressure of the Townsend Plan unless we have a real old-age insurance system.…”
The Social Security sausage that finally emerged from the political process excluded, at first, farm laborers, domestic servants, and people working at establishments with fewer than 10 employees (in other words, the very people likely to need it most). It wouldn’t begin making payments until January 1, 1942. Then the payments might be as low as $10 a month. It was a far cry from Townsend’s scheme to put everyone over 60 in the upper middle class. But hardly had the program become law, on August 14, 1935, when Congress, seeing its irresistible vote-getting potential, began to expand its benefits.
With the passage of the Social Security Act, Dr. Townsend’s time in the spotlight ended, and his plan was soon forgotten. But because he lived to be 93, dying only in 1960, he lived plenty long enough to see the essence of his vision—a measure of security for every American in old age—come true.
Not a bad fate for a “crackpot.”