Social Security: The Wisconsin Connection
Recent interest in reforming Social Security has led
an increasing number of people to ask us for background
on the program, especially its Wisconsin connections.
We've created this page to explain how the original
Social Security program came into being in 1935 and
the prominent part Wisconsin had in designing and administering
it. Beneath each of the summary paragraphs below are
links to original documents, memoirs, speeches and
interviews that have been digitized by the Society,
the Social Security Administration or the Library
of Congress. For more information, especially about
the evolution of the program after the 1930s, consult
History" on the comprehensive website prepared
by the Social Security Administration.
- Why was a Social Security program needed?
- How was the original 1935 program created?
- What's the Wisconsin
- What did the program accomplish in its first years?
1. Why was a Social Security program needed?
Between 1890 and 1930 major shifts occurred in the
ways Americans supported themselves. Increasing numbers
of people began to live and work in cities and suburbs
rather than in small towns and on farms. Many young
people left rural areas, where multi-generational families
had always produced much of their own food, shelter
and clothing, and relocated in urban areas. In those
cities new manufacturing techniques such as assembly
lines reduced the number of jobs needed to provide
basic commodities. Instead of creating objects, by
1930 many jobs provided services such as retail sales
or cooking in restaurants. In the cities it was not
possible to grow one's own food or make one's
own clothing. Instead, large numbers of people made
money with which to buy those things.
During the 1920s these changes created great wealth
as business expanded, and to fuel that growth many
companies borrowed money from banks to expand production.
At the same time, private investors borrowed large
sums from banks to buy shares of stock and get a
piece of the action. As the Roaring '20s progressed,
demand for stocks and their prices both continued
But on October 29, 1929, many more people tried to
sell stock than tried to buy new shares. Stock prices
therefore dropped far below what people had paid for
them, and within hours investors who had owned great
wealth on paper found themselves unable to pay back
their bank loans. Over the next 90 days, the stock
market lost 40 percent of its value and $26 billion
of wealth disappeared. Businesses could not raise capital
to produce goods and services or pay workers, and employees
began to be laid off. Consumers bought less because
they had lost money in the stock market or even their
jobs. Banks began to find themselves in the same position
as individual investors, owing more money than they
possessed. When word of this leaked out, individual
depositors rush to get their cash out of their local
banks. During 1932 and 1933 banks failed by the thousands.
By the mid-1930s, the combination of these forces had
led to millions of unemployed workers, old people with
little or no help from their families, parents unable
to support their children, and businesses paralyzed.
The human suffering caused by the failure of the economic
system was on a scale never before seen in a depression.
When the Roosevelt administration took office in
1933, its major challenges were to alleviate that
suffering and to restart the gridlocked economy.
In a June 8, 1934, message to Congress, Roosevelt
expressed the need for a social security program
this way: "Among our objectives I place the security
of the men, women and children of the nation first.
This security for the individual and for the family
concerns itself primarily with three factors. People
want decent homes to live in; they want to locate
them where they can engage in productive work; and
they want some safeguard against misfortunes which
cannot be wholly eliminated in this man-made world
2. How was the original 1935 program created?
At the end of June 1934, the Roosevelt administration
convened a committee to research the problem and recommend
a solution. Called the "Committee on Economic
Security," it was chaired by University of Wisconsin
economist Edwin E. Witte, assisted by a 23-member "Advisory
Council to the Committee on Economic Security." Witte's
group met from August 1934 until January 1935, when
it submitted its report to the president, who forwarded
it to Congress.
The committee looked at a wide variety of measures
proposed or adopted in many U.S. states and foreign
countries. Its workings are recalled in the speeches
and interviews linked below. On January 17, 1935,
it recommended federal old-age insurance; joint federal-state
public assistance and unemployment insurance programs;
extension of services to people with disabilities, children
and child welfare agencies; and job training services.
Hearings quickly began before the House Ways and Means Committee and the Senate Finance Committee
to turn the recommendations of Witte's committee
into law. The original Social Security bill passed
the House by a large margin on April 19, 1935, and
was approved by the Senate Finance Committee two
months later. It was signed by President Roosevelt
on August 14, 1935. The bill provided for unemployment
compensation; old-age benefits; aid to homeless,
neglected, dependent and crippled children; and
federal aid to state and local public health agencies.
The federal government then faced the challenge of getting employers and workers to sign up for it. Social Security retirement accounts needed to be created, cards had to be issued to workers and other beneficiaries, and accounting procedures had to be established. All this required administrative work and a public education campaign that lasted throughout the 1930s.
3. What's the Wisconsin
The conceptual underpinnings of Social Security came
directly from the "Wisconsin Idea," the concept
that government and academic experts should help solve
social and economic problems, that dated from Wisconsin's
Progressive-Era administrations. The designers of the
Wisconsin Idea and the programs that expressed it,
including economists John R. Commons and Richard T.
Ely and Legislative Reference Bureau chief Charles
McCarthy, were the mentors of Witte and the other principal
authors of the Social Security Act.
The two acknowledged designers of the original Social
Security Act were Arthur Altmeyer and Edwin Witte.
Both were Wisconsin natives, Altmeyer from DePere
and Witte from rural Jefferson County. In the 1920s
Altmeyer was Secretary of the State Industrial Commission
(predecessor of the current Department of Workforce
Development), and Witte headed the Wisconsin Legislative
Reference Bureau, which drafts bills at the request
of lawmakers. Both were also on the University of
Wisconsin-Madison faculty. When President Roosevelt was elected
in 1932, he chose Altmeyer to be assistant secretary
of labor, and Altmeyer drafted the presidential executive
order which established the Committee on Economic
Security. He helped select Witte to chair that committee
and was himself a key committee member. When Witte
came to Washington to head the CES in 1934, he brought
his prize student, Wilbur Cohen of Milwaukee, along
as a research assistant.
After passage of the act, Witte returned to UW-Madison
while Altmeyer and Cohen stayed in Washington to
administer the program for more than 30 years. Altmeyer
was the administrative head of Social Security from
shortly after the act's passage until 1953, first
as chair of the Social Security Board and, after
an administrative reorganization, as Commissioner
of Social Security. Cohen became the director of
the Social Security Administration's Division of
Research and Statistics. In the 1960s Cohen became
the lead administrator for the Social Security program.
John F. Kennedy appointed him assistant secretary
of the Department of Health, Education and Welfare,
and he served as undersecretary and then secretary
of HEW under President Lyndon Johnson, in both roles
effectively running Social Security.
4. What did the program accomplish in its first years?
In August 1938, three years after the bill was signed,
the Social Security Board summed up its achievements
to that point. The pamphlet linked below concisely
evaluates the act's five main programs. It defines
the hazard or risk that each was meant to correct;
it shows what happened to people prior to 1935;
and it describes how the Social Security program addressed
problems. Its conclusion: "At
the third-year milepost, the road back shows well over
30,000,000 men and women now building up insurance
against want in their old age; 25,500,000 workers who
have earned some credit toward insurance during temporary
unemployment; about 2,350,000 of the needy receiving
assistance in their own homes; and health and welfare
services reaching out into all parts of the country."
the pamphlet shows that in Social Security's first three years:
more than 39 million workers had signed up
for social security retirement accounts;
more than 25.5 million workers had been covered
by unemployment compensation;
nearly 1.7 million old people were already
receiving monthly cash allowances;
$47.6 million had been paid by the federal
government to support dependent children;
and more than 39,000 needy blind persons were
receiving monthly cash allowances.