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advisory groups, representative of every interest concerned with the problems of economic security, including capital, labor, and the general public. For personnel of advisory committees, see the appendix of this report. The committee made a unanimous report to the President in January of this year, which the President transmitted to both Houses of the Congress, with his endorsement of the legislation recommended therein, in a special message on January 17, 1935, the concluding paragraphs of which were as follows:

The establishment of sound means toward a greater future economic security of the American people is dictated by a prudent consideration of the hazards involved in our national life. No one can guarantee this country against the dangers of future depressions but we can reduce these dangers. We can eliminate many of the factors that cause economic depressions, and we can provide the means of mitigating their results. This plan for economic security is at once & measure of prevention and a method of alleviation.

We pay now for the dreadful consequence of economic insecurity-and dearly. This plan presents a more equitable and infinitely less expensive means of meeting these costs. We cannot afford to neglect the plain duty before us. I strongly recommend action to attain the objectives sought in this report.

These recommendations were incorporated in H. R. 4120 on which this committee held extended hearings from January 21 to February 12, at which more than 1,000 pages of testimony were taken. Since the conclusion of the hearings the measure has received the constant attention of the committee until the present moment, and numerous changes in the content and form were agreed upon. These changes involved a complete revision resulting in the drafting and introduction of H. R. 7260, herewith recommended for passage.


The need for legislation on the subject of social security is apparent at this time. On every hand the lack of such security is evidenced by human suffering, weakened morale, and increased public expenditures.

This situation necessitates two complementary courses of action: We must relieve the existing distress and should devise measures to reduce destitution and dependency in the future.

Thus far in the depression, we have merely attempted to relieve existing distress, but the time has come for a more comprehensive and constructive attack on insecurity. The foundations of such a program are laid in the present bill.

Work for the employables on relief is contemplated in the workrelief bill; a second vital part of the program for security is presented in this bill. The bill is designed to aid the States in taking care of the dependent members of their population, and to make a beginning in the development of measures which will reduce dependency in the future. It deals with four major subjects: Old-age security, unemployment compensation, security for children, and public health. These subjects are all closely related, all being concerned with major causes of dependency. Together they constitute an important step in a well-rounded, unified, long-range program for social security.


There are now approximately 7,500,000 men and women over 65 years of age in the United States, and for decades the number and percentage of old people in the population have been increasing. This tendency is almost certain to continue throughout the century. Statisticians estimate that by 1970 there will be 15,000,000 people over 65 years of age and by the end of the century, about 19,000,000. In contrast with less than 6 percent of the entire population now over 65, more than 10 percent will fall in this age group in 1970, and above 12 percent by the end of the century. These, moreover, are minimum estimates, which may be greatly exceeded if cures are discovered for the major causes of death among old people.

Table I.-Actual and estimated number of persons aged 15 and over compared to

total population, 1860 to 2000

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Approximately 1,000,000 men and women over 65 years of age are dependent upon the public for support, the great majority of them on relief.

This number is certain to increase in the future due to (1) the rapid increase of persons over 65 years of age, (2) the fact that many of the older workers now unemployed will never be steadily employed again, (3) the disappearance during the depression of the lifetime savings of many families approaching old age, and (4) the lessened ability of children to support their parents. The social problem of old age dependency, great as it is today, is certain to become more acute in the future unless adequate measures are taken now.

Experience, both in this country and in other lands, has demonstrated that the best way to provide for old people who are dependent upon the public for support is through old-age-assistance grants, more commonly called "old-age pensions." Twenty-nine States and the Territories of Alaska and Hawaii have old-age pension laws. Approximately 200,000 old people are now in receipt of old-age assistance under these laws, and while the grants are often inadequate, the lot of the pensioners is distinctly less hard than that of old people on relief.

But due in part to restrictive provisions in the State laws, and still more to the financial embarrassment of many State and local governments, the old-age pension laws are limited in their application and do not provide adequately for all old people who are dependent upon the public for support.

To encourage States to adopt old-age pension laws and to help them carry the burden of providing support for their aged dependents, this bill proposes that the Federal government shall match the expenditures of the State and local governments for old-age pensions, except that the Federal share is not to exceed $15 per month per individual. A few standards are prescribed which the States must meet to entitle them to Federal aid, but these impose only reasonable conditions and leave the States free of arbitrary interference from Washington,


TABLE II.-Operation of old-age pension laws of the United States, 1934

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New Hampshire..
New Jersey.
New York
North Dakota.
West Virginia.



92, 972
156, 590
148, 853
94, 401
14, 377

25, 714
112, 594
373, 878

414, 836
101, 503

50, 217 6,411, 723

306, 096 420, 636 155, 525 ()

3, 320 298, 722 1, 375, 693 13, 592, 080

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.5 5.5 9.4 13.7



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do. Mandatory..

19. 06
12. 72
22. 16
13. 99

24, 000



930 2, 239

95, 599


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1.8 7.4

8. 56
16. 75
10. 79

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395, 707 83, 231

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! No information available or not computed.

Not in operation. · Not yet in effect. • Not much being done due to lack of funds.

No pensions being paid now.
• Administered by counties; no information avallable for State.

Law just being put into effect.
Source: Data collected by the Committee on Economic Security.

The provisions for Federal aid, included in title I, are designed for the support of people now old and dependent. They do not, however, furnish a completely satisfactory solution of the problem of old-age support, considered from a long-time point of view. If no other provisions are made, the cost of gratuitous old-age pensions is bound to increase very rapidly, due to the growing number of the aged and the probable increasing rate of dependency. Unless a Federal benefit system is provided, the cost of old-age pensions under title I, shared equally by the Federal Government and the States, would by 1960 amount annually to more than $2,000,000,000 and by 1980 to nearly $2,600,000,000, on the basis of an average monthly pension of $25.

To keep the cost of Federal-aided State pensions under title I from becoming extremely burdensome in future years, and to assure support for the aged as a right rather than as public charity, and in amounts which will insure not merely subsistence but some of the comforts of life, title II of the bill establishes a system of old-age benefits, paid out of the Federal Treasury, and administered directly by the Federal Government. The benefits provided for workers who have been employed during substantially all their working life, will probably be considerably larger than any Federal-aided State pen. sions could be. The benefits to be paid are related to the wages earned, but there are adjustments favoring the lower paid employees and those approaching old age. The minimum monthly benefit payable is $10, and the maximum is $85. An employee whose total wages, as defined in the act, prior to the age of 65 amount to less than $2,000 will not qualify for benefits, but he will receive 3% percent of his wages in a lump sum at the age of 65. He may be eligible also for a Federal-aided State pension under title I.

TABLE III.Illustrative monthly Federal old-age benefits under title II

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1 Lump sum payment of $52.50.

The establishment of the Federal old-age benefit system will materially reduce the cost of Federal-aided State pensions under title I in future years. It will not entirely replace that system, because not all persons will be under the Federal old-age benefit plan. It will operate, however, to reduce the total cost of old-age pensions under title I to the Federal and State Governments in the future by more than $1,000,000,000 annually. TABLE IV.-Estimated appropriations, benefit payments, and reserves under title II

(In millions of dollars)

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It is important to note that by the investment of the large reserve on hand in the old-age reserve account, the Treasury will be able to withdraw from the market outstanding Federal bonds and hold them in the account. Their withdrawal will prevent the loss in income tax receipts, which is now annually incurred due to the presence of these tax-exempt bonds in the hands of private owners.


Unemployment is an even more prevalent cause of dependency than old age; in fact, it is the most serious of all hazards confronting industrial workers. During the years 1922 to 1929 an average of 8 percent of the industrial workers in this country were unemployed, and in the four depression years, 1930 to 1933, the unemployment rate was above 25 percent. Of all urban families now on relief, more than four-fifths are destitute because of unemployment.

Unemployment is due to many causes and there is no one safeguard that is all-sufficient. It can be dealt with in a reasonably adequate fashion only through a twofold approach, similar to that recommended for dealing with the old-age problem. Provisions must be made for the relief of those now unemployed, and there should also be devised a method for dealing with the unemployment problem in a less costly and more intelligent way in future years. It should be clearly understood that State unemployment compensation plans made possible by this bill cannot take care of the present problem of unemployment. They will be designed rather to afford security against the large bulk of unemployment in the future.

For those now unemployed the best measure of protection is to give them employment, as is contemplated in the work-relief bill. To provide something better than relief on a needs basis for the unemployed of the future, the establishment by the States of unemployment compensation systems is urgently to be desired. Titles III and IX seek to encourage States to set up such systems and to keep them from being handicapped if they do so.

The essential idea in unemployment compensation, more commonly but less accurately called “unemployment insurance” is the accumulation of reserves in times of employment from which partial compensation may be paid to workers who become unemployed and are unable to find other work. Unemployment insurance cannot give complete and unlimited compensation to all who are unemployed. Any attempt to make it do so confuses unemployment insurance with relief, which it is designed to replace in large part. It can give compensation only for a limited period and for a percentage of the wage loss.

Unemployment compensation, nevertheless, is of real value to the industrial workers who are brought under its protection. In normal times it will enable most workers who lose their jobs to tide themselves over, until they get back to their old work or find other employment, without having to resort to relief. Even in depressions it will cover & considerable part of all unemployment and will be all that many workers will need. Unemployed workmen who cannot find other employment within reasonable periods will have to be cared for through work relief or other forms of assistance, but unemployment compensation will greatly reduce the necessity for such assistance. Unemployment compensation is greatly preferable to relief because it is given without any means test. It is in many respects comparable to workmen's compensation, except that it is designed to meet a different and greater hazard.

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