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Committee on Economic Security


Unpublished CES Studies

pen nib   Volume IX. Committee Publications


by the Committee on Economic Security

cover of booklet on security



FRANCES PERKINS-- The Task that Lies Ahead

HARRY L. HOPKINS-- Security and Its Relation to Relief

DR. FRANK P. GRAHAM-- The Road to Recovery and Security

DANIEL C. ROPER-- Business Statesmanship Leads the Way

HAROLD B. BUTLER-- International Progress Toward Social Security
Committee on Economic Security

Secretary of Labor, Chairman.

Secretary of the Treasury.

Attorney General.

Secretary of Agriculture.

Federal Emergency Relief Administrator.

Executive Director.

Washington, D. C. December, 1934



I AM happy that there is so much interest in the problem of economic security. Last June I said that this winter we might well make a beginning in the great task of providing social insurance for the citizen and his family. I have not changed my opinion I shall have recommendations on this subject to present to the incoming Congress,

Many details are still to be settled. The Committee on Economic Security was created to advise me on this matter. It will bring to me, not any preconceived views, but a mature judgment after careful study of the problem and after consultation with the Advisory Conference and the cooperating committees.

On some points it is possible to be definite. Unemployment insurance will be in the program. I am still of the opinion expressed in my message of June eighth that this part of social insurance should be a cooperative federal-state undertaking. It is important that the federal government encourage states which are ready to take this progressive step. It is no less important that all unemployment insurance reserve funds be held and invested by the federal government, so that the use of these funds as a means of stabilization may be maintained in central management and employed on a national basis. Unemployment insurance must be set up with the purpose of decreasing rather than increasing unemployment. It is of course clear that because of their magnitude the investment and liquidation of reserve funds must be within control of the government itself.

For the administration of insurance benefits, the states are the most logical units. At this stage, while unemployment insurance is still untried in this country and there is such a great diversity of opinion on many details, there is room for some degree of difference in methods, though not in principles. That would be impossible under an exclusively national system. And so I can say to you who have come from all parts of the country that not only will there have to be a federal law on unemployment insurance, but state laws will also be needed. In January the great majority of the state legislatures will convene, as well as Congress. You who are interested in seeing that unemployment insurance is established on a nation-wide basis should make your plans accordingly.

We must not allow this type of insurance to become a dole through the mingling of insurance and relief. It is not charity. It must be financed by contributions, not taxes.

What I have said must not be understood as implying that we should do nothing further for the people now on relief. On the contrary, they must be our first concern. We must get them back into productive employment and as we do so we can bring them under the protection of the insurance system. Let us profit by the mistakes of foreign countries and keep out of unemployment insurance every element which is actuarially unsound.

There are other matters with which we must deal before we shall give adequate protection to the individual against the many economic hazards. Old age is at once the most certain, and for many people the most tragic of all hazards. There is no tragedy in growing old, but there is tragedy in growing old without means of support.

As Governor of New York, it was my pleasure to recommend passage of the Old Age Pension Act which, I am told, is still generally regarded as the most liberal in the country. In approving the bill, I expressed my opinion that full solution of this problem is possible only on insurance principles. It takes so very much money to provide even a moderate pension for everybody, that when the funds are raised from taxation only a "means test" must necessarily be made a condition of the grant of pension.

I do not know whether this is the time for any federal legislation on old age security. Organizations promoting fantastic schemes have aroused hopes which cannot possibly be fulfilled. Through their activities they have increased the difficulties of getting sound legislation; but I hope that in time we may be able to provide security for the aged--a sound and a uniform system which will provide true security.

There is also the problem of economic loss due to sickness, a very serious matter for many families with and without incomes and therefore, an unfair burden upon the medical profession. Whether we come to this form of insurance soon or later on I am confident that we can devise a system which will enhance and not hinder the remarkable progress which has been made and is being made in the practice of the professions of medicine and surgery in the United States.

In developing each component part of the broad program for economic security, we must not lose sight of the fact that there can be no security for the individual in the midst of general insecurity. Our first task is to get the economic system to function so that there will be a greater general security. Everything that we do with intent to increase the security of the individual will, I am confident, be a stimulus to recovery.

At this time, we are deciding on long-time objectives. We are developing a plan of administration into which can be fitted the various parts of the security program when it is timely to do so. We cannot work miracles or solve all our problems at once. What we can do is to lay a sound foundation on which we can build a structure to give a greater measure of safety and happiness to the individual than any we have ever known. In this task you can greatly help.


Secretary of Labor

WE, as a nation, are no longer content to ignore the rights of the individual and I believe that there is among us today a new concept of the old doctrines of liberty and equality, a new desire to make real the old ideal of brotherhood.

As President Roosevelt has said, "Our task of reconstruction does not require the creation of new and strange values. It is rather the finding of the way once more to known, but to some degree forgotten, ideals and values. If the means and details are in some instances new, the objectives are as permanent as human' nature."

We are today fighting for freedom--freedom from insecurity and uncertainty. The shadow of insecurity that at all times hangs over the lives of fully ninety percent of the American people threatens at any moment to deprive them of the possessive rights they hold most dear. The battle is no less real because the forces against which we struggle are frequently intangible, elusive and difficult to grasp.

It is hardly necessary to emphasize the great need of our people for protection against the circumstances and hazards of life over which they have no control.

At the present time over four million families have been driven, for lack of that protection, to seek public aid, and it is estimated there are today eighteen million people on our public relief rolls, of whom over seven million are children.

Figures and statistics are cold and colorless, but it takes very little imagination to picture the distress and suffering which has come so intimately into the lives of those four million families, of those eighteen million separate and individual human beings. What has been the effect, what will be the effect, not only in physical terms, but in terms of psychology, of dwarfed and ruined lives, on those seven million children and young people who know no other living but the meager dole of public charity? How can we expect to build up a sound and stable citizenry on a foundation of such appalling insecurity as these figures indicate?

Provision against unemployment and the distress occasioned by it is obviously, then, the major problem which confronts us in any plan for social security. At the same time, it is one of the most complex and difficult of solution.

Unemployment insurance alone is , not a cure-all. It will not put men back to work and it does not eliminate the necessity for relief. Obviously, we need more than unemployment insurance. We need work programs and well conceived plans for economic rehabilitation. We need to revive the construction and other durable goods industries and to stimulate increased production by private industry.

But we also need unemployment insurance. While it is not a panacea for all our ills, it is a measure of great value to the largest single group in our population--the steady industrial workers. In our concern for the twenty percent who are unemployed--and we should have great concern about this twenty percent--let us not forget the eighty percent who are working.

We cannot make progress by bringing down that eighty percent to the level of the twenty percent. We must raise the twenty percent who are unemployed from their status of dependency and at the same time take measures that will protect the eighty percent who are now employed from falling into that same situation.

That is the fundamental purpose of unemployment insurance. It affords protection for a limited period during which the unemployed worker, as a matter of contractual right, receives cash benefits which bear a direct relation to his previous employment. This will, in normal times, usually be enough to tide the worker over any period of unemployment and, even in depressions, will afford protection while there is still a reasonable prospect of getting back to the old job. But when unemployment benefits are exhausted, relief, preferably in the form of work, must be provided on some means test basis.

Unemployment insurance is not new. It has behind it European experience which on the whole has been successful. In no country except Russia has unemployment insurance, once started, been abandoned or even suspended. Despite all the talk of the insolvency of the foreign unemployment insurance funds, all these systems are paying benefits today. Not only that, but the government assistance to these funds has cost far less than our payments for relief.

We cannot build solely on European experience. Conditions in this country are quite different and we must develop our own methods and techniques. We also must proceed on the basis of the governmental structure we have in this country and with due regard to our great diversity of conditions. These considerations all suggest the advisability of the cooperative federal-state system of unemployment which the President outlined.

The President's expressed preferences will guide our Committee--not only because they are the wishes of the President, but because they appeal to us as sound. On all other points our views are not yet crystallized; we still welcome suggestions from those who have long been interested in these problems.

The Committee on Economic Security has gathered many able advisers. We have a staff composed of some of the best known specialists in the several fields of social insurance. We are also assisted by a Technical Board of government employees and officials who likewise are experts in this field and who are generously devoting much time to our problems in addition to their regular duties. Then there is the Advisory Council, recently appointed by the President, composed of representative citizens from all parts of the country, whose first meetings will be held this week, immediately following this conference. We also have created special advisory committees in the fields of medicine, dentistry, public health and hospital service, and have a strong group of actuarial consultants. We also have had some very good suggestions from private citizens interested in the great problem of economic security.

It has been, and still is, our thought that every phase of the problem should be studied, and a comprehensive program formulated, although only a part of it can be put into operation at once. We should at this time, if possible, determine definitely what we want to do, and lay a sound foundation on which we can build further in the years to come. And we must make a real beginning now.

Unemployment looms large in our thoughts and plans, and naturally so, for it is the greatest single cause of that insecurity we are seeking to abolish. But we have not neglected to consider the other hazards.

It has been estimated that well over two and a half million of the six and half million of our people who are over 65 years of age are dependent either entirely or very largely on others for support. Many of them have been brought to this condition of dependency through the loss of their life time savings in the past few years. But for most of the others, it has simply been a matter of the impossibility of their laying aside, from their meager earnings, enough to provide for their old age. With men and women being forced out of industry while they are still in middle age, that situation grows constantly more serious.

The right of old age to a decent and dignified existence has always evoked sympathy, and there has been for many years a growing sentiment in favor of rendering assistance to those who have reached their closing years without sufficient income to take care of their needs.

Twenty-eight of our states already have old age pension laws, largely as the result of the persistent and devoted efforts of pioneers, many of whom we are fortunate to have with us. Unfortunately, the benefits of those laws reach only a very small percentage of those who are in need of assistance, and in the financial stress of the past few years many of them are breaking down altogether. The passage of those laws, inadequate as most of them are, has shown us clearly, however, that it is the will of the people that such assistance should be given to the aged. It is our task to find a way to make that mandate more effective.

At the other end of the scale are the young children and their mothers, who through the death or invalidity of the bread-winner, are brought to a condition of dependency. As in the case of the aged, there is a strong public sentiment that this group should not be dependent on relief, and many states already have mothers' pensions laws. These, however, are also not as effective as it was evidently intended they should be, and here again our task is obviously clear.

Ill health is a hazard which may strike at any age, and is rendered particularly distressing by the economic considerations that are involved. Through its Public Health Service the government has for a long time accepted a certain measure of responsibility for the health of the people. That service, by its preventive and educational work, has played an increasingly valuable part in improving the national standards of health. But we cannot shut our eyes to the fact that vast numbers of our people in time of sickness are unable to pay the cost of necessary medical attention.

From time immemorial the members of the medical profession have cared for the needy without thought of reward. They have consistently rendered this noble and unselfish service, but we cannot in fairness ask them to carry indefinitely a burden which under the stress of modern conditions becomes daily heavier. Our problem is to bring adequate medical care within the reach of those who cannot at present afford it, and at the same time to safeguard the highest interests of that profession which has always given without stint of its services to the care of suffering and needy humanity. To this end the cooperation of the medical profession is vital and I have every confidence that such cooperation will be accorded by the profession, which has always had such fine traditions of public service.

It is evident that the country is being swept by a wave of enthusiasm for the President's promised program of social security. Our people are looking to the President and to the Congress to take measures to give them that security which has been so woefully lacking in the past. They have unbounded faith and confidence in the President's leadership.

(Perhaps it is almost superfluous to make that remark, with election week's shouts of confidence still ringing in our ears.)

The task that lies ahead of us is to plan wisely and build soundly. We are past the stage of academic research. Our task is the development of a program for action, and that program must not merely be one that looks far ahead, but one that provides for a large measure of immediate action.

As the President has said, this winter we should take a really long step towards protecting the individual against the major economic hazards of modern life.

The brief words the President addressed to the National Conference on Economic Security indicate clearly that for his part he intends prompt and definite action. I voice the sentiments of our Committee in saying that we also are interested not merely in developing a well-rounded program but in immediate and substantial progress.

As the President pointed out, we must not lose sight of the fact that economic recovery must come before everything else. Our program must be timed in relation to the progress we have made toward recovery. While the national income remains small we cannot go as far in providing security as we would like to do. But I repeat that even now we can and must lay the foundation. Let me also say again that this involves not merely federal but state action. Unemployment insurance, as well as the other parts of the economic security program, will have to be developed as a cooperative federal-state undertaking.

I think there is little question that the next Congress will enact a sane kind of an unemployment insurance law. State cooperation must be made effective and the support of the people of various states must be organized for appropriate expression to the Congress.

Upon the spirit of the nation will depend to a great extent the progress that will be made this winter towards establishing unemployment insurance and other measures of economic security on a nation-wide basis.


Administrator, Federal Emergency Relief Administration

NONE of us pretends to know the last word about economic security. I want to discuss it on two or three fronts-security and its relation to relief, the various types of security, the various types of benefits, something about how it is going to be paid for.

Now, here are some interesting things. Forty-five per cent of the eighteen million people on the relief rolls in America live in eight states, and ten per cent of all of the people that are on relief rolls in the United States live in two cities-Chicago and New York. Eighty per cent of the total group on relief live in industrial towns and cities.

There are about four million two hundred thousand families on the relief rolls, and about eight hundred thousand single people, in addition to the four million two hundred thousand families. It is our belief that about twenty-five per cent of them are unemployable, in the sense that they are old, or have no employable member of the family.

It is furthermore our belief that there are approximately four and a half million able-bodied employable people on the relief rolls looking for work.

Now there is something that I want to say in regard to relief, about the phenomena of an increase in employment, and at the same time an increase in the relief rolls. Now, there are two things that have happened. Ever since 1929 young people, grown to the age where they become employable industrial workers, have been coming up. On the other hand, a million or something over, a million and a half, go on--so you may have a net increase of somewhere between three and five hundred thousand workers each year.

But since 1929 they haven't been going off at the other end, except for death, in the same numbers that they did prior to 1929, because many people who would have retired, cared for by their families, have been forced to keep their employment.

The second thing that there are far more people looking for work in 1934 than there were in 1929, for the simple reason that many wives, adults in families, find it necessary to look for employment because of the cut in the total family income.

To be sure, they are not in need, not on the relief rolls, but don't forget this, that they are competing every day for their lives with the people on the relief rolls for jobs.

And so when you see these various figures about the number of unemployed in the country--none of us know how many there are--remember that there are more people looking for work than were looking for work in 1929, and a great many of them are getting these jobs. I have seen it done over and over again. I saw it done yesterday.

A man wanted to have his son put on a job. The man has an income of fifteen thousand dollars a year. The son doesn't need to work in terms of the economic picture, but he called up a big employer, and got big son a job.

And that goes on every day. I don't blame them. I would do the same thing. But don't forget that all of this group of unemployed, not on the relief rolls, are in competition every day with those on relief.

And let me say this: that no security program worth its salt can be established in America that does not encompass the families now on the relief rolls. It is unthinkable. We are talking about a program of security in this year, and not taking into consideration these families.

Now, what kind of security do these people want? What types of benefits are required for those that require a benefit? I won't go into old age. Obviously a cash benefit, and regular, coming in every week, every month, is essential. There should be some benefits for mothers' aid, for children where there is no breadwinner, that requires a cash benefit regularly.

There are the unemployed, which may require a cash benefit, or a work benefit, or both. There is sickness, which might require a totally different kind of a benefit, which might be in terms of good medical care.

There is another thing that we might think about, and aren't considering much these days in terms of security, but it is very real, and it is going to be real in America for years to come-the security which public welfare departments all over the country have got to give to tens of thousands of families in the form of what we know as public outdoor relief.

Let no one think for a moment that any type of security program that can be set up by legislation, can be a catch-all for these large numbers of people that have received benefits in the past from these county, city and state public welfare departments, and must receive them in the future.

But I think of other types of security, and I have a feeling that there are far more people than we think in America who need types of security which are not found in terms of insurance benefits, or work benefits, or pension grants, or what not. I am not sure that there aren't about as many of those as there are groups that need a cash benefit, or a work benefit.

There are thousands of stranded populations, mining towns, oil towns, lumber towns--there are tens of thousands of people now living in places where they are not going to be re-employed again. I envisage in a security program, the giving of these people, not the type of guarantees which we speak of in a cash benefit, but rather the opportunities for security. That is, the use of the land, decent houses on the land, moving these people from one place where they have no security at all to another place where there is an opportunity for security.

That cannot be encompassed altogether in legislation. That involves a nice relationship between industry, government, and people, but to me it is just as important, and perhaps more important, than some of the other types of security which we are talking about here.

I think of security in terms of housing. I believe, as a matter of social policy in America, that that policy should include the right of every person in America to live in a decent house. That type of security is just as important as the type of security that comes with a public school system.

Those types of security must be secured; and envisaged in any national program of security in America.

How are we going to pay for it? Well, in the first place, lets consider real security for the people that I know, the kind of thing they are thinking about in their own minds. The kind of security most of these people want is a real job in industry.

Therefore, any program of security that is worked out, with governmental or state or local assistance, should be so developed that it will aid the objective of getting people jobs in private industry. That is extremely important, it seems to me.

But X number of people, none of us know how many, are going to require a type of benefit, and there is no use fooling ourselves. That benefit can only come from one place. It has got to come out of the sum total of the national income.

Now, I maintain that with a national income of ninety billion dollars, which we had in 1929, which dropped to forty billion dollars, it is ridiculous to say that out of the future national income of America we cannot find the funds to provide the security benefits which the American people need.

You know, I have heard an awful lot about the demoralizing defects of people getting doles. Well, most of us have had doles. If you went to college, you certainly did. None of us paid our way through college.

I have a feeling that there are two kinds of doles. When the crowd on the lower end of the picture gets a dole, something without work, someone says, "Oh, that is terrible, it is going to ruin them. "Yet I talked to a man in New York who has never worked to my knowledge a day in his life, but every week and every month he gets a dole in the form of a check, five or six thousand dollars a year.

Well, I would like to get those two groups a little closer together. That is all I am interested in.

I have read about this sort of thing ever since I was a boy, ever since I went to school, ever since I went to college. I am convinced that now is the hour to strike for economic security. By a bold stroke we will get it, but it has got to be a bold stroke. This is no child's play, and for the life of me, I can't see why we should wait until kingdom come to give security to the workers of America.



President, University of North Carolina and Chairman, Advisory Council on Economic Security

THERE is increasing interest not only in the economic recovery of the nation, but also in the economic security of the individual human beings for whose life, liberty and happiness the nation was founded and continues to exist. Without less emphasis on the imperative need for economic recovery we must, along with national economic recovery, lay the foundations for individual economic security. Without any let-up in the efforts in behalf of the more decent conditions of work and a fairer return for those who are doing the work of the world, the people all over America, we believe, wish to make more intelligent provision for the economic security of under-privileged children, the sick and disabled, the unemployed and the old. It is a shallow recovery that would sacrifice the security of millions of people. The economic security of the individual contributes to the recovery and the well-being of the nation, and the recovery of the nation contributes to the security and well-being of the individual. The security of the individual contributes to the security of recovery.

With partial recovery there has come in the states and nation something more of security to the homes, savings, farms, forests, schools, work and hopes of the people. But not enough. with more recovery should come more security to human beings everywhere, in childhood, youthful education and opportunity, adult work and savings, sickness and old age.

A few of the American people desire present economic recovery without any fundamental social repairs or reconstruction. A few call for a violent reconstruction regardless of present recovery. Others consider that a sound reconstruction is the only basis for a real recovery. Most of our people are opposed to a mere recovery of the old regime and a false prosperity which would bring on another cruel collapse. The President and the Congress could not have allowed the country to remain as it was. Economic society had broken down and had to be mended or it would have tended to crash in its own ruins. We must now consider ways and means of further mending so as to insure more intelligent security against the hazards of modern society.

This security is not to be achieved through tyranny and the regimentation of a dictatorship. It is not the security of the complacent privilege and power of the few, but the shared security of the many. It is to be a constitutional and lawful security through the cooperation of the government, management, and labor. Real security never comes at the sacrifice of real liberty. The people must preserve the substance and spirit of the old liberties through a new security. An increase in economic security should mean an advance in human liberty and Social well-being. Human beings in cooperating to win security against wild animals, the elements, and the wilderness did not thereby destroy their individual initiative and daring enterprise, but rather liberated for higher reaches the mind and spirit of man. With cooperation for social insurance will come a higher level of economic security. A higher level of economic security should mean a higher level of human liberty.. Raising the levels of economic security widens the areas of intellectual enterprise and spiritual aspirations of the whole human personality. The road from savagery to civilization has been marked by victories for security against the hazards of the jungle and organized society.

By the nineteenth century, man had won a large measure of security in his home, fields, workshop, savings and in his almost self-sufficient local community. With the coming of the power engine, his standard of living was, in many respects, raised and his independence and security in some respects advanced, but in a fundamental sense his security has been at times impaired and his independence often destroyed. The standard of living advanced., but on an unstable basis. Caught in the mechanical processes and social incidence of industrial society, whose unfeeling heart is the mighty power engine, are millions of helpless human beings. Industrial civilization depends on the dependence of human beings. The human casualty of an industrial society is unable alone to provide for his own security. Labor unions, fraternal organizations, and cooperative societies are necessary. Social legislation is required for minimum wages and maximum hours. But social insurance is indispensable to security against unemployment, sickness, and old age. These millions of human beings provide the life and labor necessary to industrial civilization, but our modern civilization, with its fragmentary view of human beings and human society, makes but little provision for the security of their labor, sickness and old age.

The American people, in response to a gallant but patient leadership propose to win this security for themselves without the illusions of a return to the old regime and its false prosperity and without a resort to violent revolution, dictatorship and the false security of tyranny. Neither do they propose to drift along.

The old drift of society and the nations led to the following results: The insecurity of peace in a world of armaments; the loss of homes in a society built upon homes; wide hunger in a land of plenty; child labor and sweatshops in the midst of unemployment; vast unemployment in a time of universal need; poverty and dependence after lives of faithful work, and disillusionment and despair in a world of youth and opportunity. The old social drift of a more static society does not meet the human needs of a more dynamic society.

The steam, gas, electric, and oil power engines together with the world war, the world moral confusion, the world depression and the European revolutions, have accumulated such deep moving forces as to be the focus of a great historic transition with swift repercussions around the earth. From this earth much security has gone. Earlier historic transitions have been more regional in their processes and slow in their world influence. The transitions and adjustments were processes of generations and slow centuries. Social drift did not then, as now, mean swift and wide social tragedy. The vast and dynamic mechanical framework now flung around the earth gathers up wars, revolutions, depressions and unemployment anywhere and implicates men everywhere. The pull of a trigger in a remote village or the press of a button in a financial capital may release pent-up forces that go on the wires of the world and engulf mankind in international murder or vast unemployment. Either we are to master our great industrial civilization and give human beings security or we are to see it drift into unregulated self-destruction. Americans who, with scientific knowledge and mechanical device, have won a physical mastery of this great continent, will not long stand baffled and afraid along the social frontiers of a civilization which has not yet mastered the hazards of modern society.

To understand and to propose provisions for security against these social hazards is our principle purpose today. As Director Witte has said, "We have no cut-and-dried program and no specific formula". We vitally need the information and views of public-spirited citizens. We especially need the study and thought of various American authorities with special knowledge of the problems involved in proposals for social insurance against unemployment, sickness and old age. We bring, we trust, minis open for the facts and the experience of states and nations. The Advisory Committee seeks to learn before advising. We will keep our feet on the ground in the valleys of our day's work even while we look into the hills yet to be climbed. We must preserve and carry on the good in the old society. We need to be patient for facts and fair to all interests and groups. We must work an] think from day to day in a world of insecurity and grim realities and dream a bit sometime that the old society may yet become the great society of liberty and opportunity, security and happiness for more and more of the people of America and the world.


Secretary of Commerce

THE very words Economic Security suggest order, cooperation and stability, three factors which are vitally essential to human beings in all segments of society. The general objectives of economic and social security are not only worthy but highly desirable and absolutely essential for the comfort and happiness of all. Segmentary thinking and action, as related to national conditions, had its day when the various elements of industry, business and society were less dependent upon each other than at the present time when our economic and social system is characterized by an interdependence and an interrelationship of all units. We no longer have in our nation any isolated group or geographical division which can exist independently of other groups. So sensitive and complex has our entire system become that preferential treatment and advantage or disruptive forces in any one group may serve to bring about dislocation in other groups that will start a cumulative train of destructive forces throughout the entire system.

Our approach to the general problem of economic security must, therefore, be predicated upon the broadest possible base. The least common denominator of any program for economic security is the individual human being. He is at once the first and the ultimate element in life. It is of course impossible to attempt to treat economic security on an individual basis or even upon the basis of certain groups and divisions of our population. The problem, correctly appraised, encompasses employer, employee, management and capital, and specifically in relation to the particular problem of employment it must comprehend also the machine and its technological implications.

The severity of the depression may have tended in some instances to bring about an over-emphasis upon one or more of these related factors of employer, employee, management, capital and machinery. This situation requires a careful distinction between a long term program for economic security and the immediate exigencies of emergency requirements. The great vision of the founders of our nation has been crystallized in an objective which has sought to provide a framework and system within which human beings individually and in their social relationships could manifest their own initiative and work out their own destinies. The responsibility of American leadership has been and is that duty of maintaining such a system within which the maximum approximation of this ideal can be achieved.

The point of departure, therefore, that seems most logical is that of re-defining and re-orienting our thinking and action in conformity with the fundamental purposes and philosophy of democracy. A dominant characteristic of democracy is its capacity for changing and advancing with the times. Hence, even in the United States the application of democracy has undergone considerable change since its first great crystallization in the Declaration of Independence and the Constitution. The provision for constitutional amendments is in itself a specific administrative recognition of the necessity for changes in methods, laws, principles and philosophy.

Democracy can be defined more accurately in terms of principles rather than procedures. Varying conditions may require different methods to secure the same general result. It is the ultimate objective which is important. From this viewpoint we can define democracy as that state of society in which every safeguard is created to avoid preferential treatment for any group or class and every means is provided for maintaining social and economic opportunity along with an equity of legal rights and obligations.

Economic security, appraised in the light of this definition, must be given the broadest possible interpretation. It is in every sense the jewel in the setting of democracy. As such, economic security comprehends not only the provision of employment, a living wage and a future safeguarded against the complete loss of savings and sustenance for the individual but also the security of management, capital and the natural resources of our country. No one element, in our form of government and society, can have balance in economic security unless all elements have.

The agenda of the Committee for Economic Security, as outlined by the President of the United States in the Executive Order creating the Advisory Council to this Committee, appeals to all reflecting citizens and offers a real challenge to those who wish a part in properly balancing economic and social security.

I am grateful to be associated in these times with those men and women who are relating their thinking and their actions to plans for the welfare of all segments of society. It is characteristic that the comprehensive vision and courage to outline and pursue this study emanates from our great leader in the White House, Franklin D. Roosevelt. In executing the best of plans, however, it is fundamentally important that the men and women selected for these tasks shall be sympathetic with the purposes and be constructive in their services. The President and the country are therefore to be congratulated on this Committee to which he has assigned this important task of the study of economic and social security.

President Hadley, of Yale University, voiced a real truth when he said: "Better the worst form of government with character and righteousness in the rulers and the ruled than the best form of government with the rulers and the ruled indifferent to moral principles." Indeed, much depends upon the spirit and integrity and the comprehensive objectives of those charged with such important studies as devolve upon this Committee.

One of the most encouraging features of this reconstruction period is the way in which men and women are willing to cooperate as in the case of this and other committees in bringing to our problems the representative judgment and experience of various fields of endeavor. When asked some days ago by a visiting friend from abroad whether I thought our country would be able to readjust its economic and social conditions and bring safety to society again, I replied that America always solves its problems and that there was no doubt. in my mind that necessary agreements could be reached among the related economic divisions and segments. I stated, however, that my greatest concern was in whether we would all appreciate the necessity of so undergirding these agreements, regulations and laws created to put the agreements into effect that our people would be protected against the recurrence of past experiences. That is, whether we would be able to reawaken the appreciation of the common virtues of life, integrity, love of justice, equity and righteousness. Otherwise, the best of agreements will prove fruitless. Has not the bitter experience of recent years taught us that our economic and governmental system cannot endure unless all elements in that system not only demand their rights but also insist upon fulfilling the responsibilities that are inherent in those rights? Has not the day definitely passed when any group, in the long run, can expect to win out by pursuing the policy of getting as much and giving as little as possible?

In any study as vital as that confronting this Committee I believe that due and proper consideration must be given to the scientific and technological aspects of economic security. Machines constitute a significant element in any program for unemployment protection. Goods are produced with three things: money, management and labor. Machinery, both technically and actually, is merely another form of labor. Have we explored fully the technological implications of unemployment? Can we devise any system of unemployment protection, reserves and pensions without including the machine as a prominent factor in such a program? I am not advocating any policy or method in reference to technological considerations. I am merely indicating questions which, it seems to me, must be answered factually before any lasting program of employment security an] protection can be worked out.

We speak of taxing payrolls to secure reserves to be used as insurance protection for the worker. Has the proper analysis been made as to the effect of technological advances an] improvements on unemployment and on methods that might be necessary for unemployment protection as it might be affected by such developments? Machines are inanimate laborers. Perhaps such a method would be inadvisable and would be objectionable on the ground that it might start a practice that could not be properly controlled. On the other hand, isn't it conceivable that a taxation of payrolls for unemployment purposes (and the setting aside of a percentage for this purpose is nothing more than taxation) would tend to encourage the employment of more machinery to replace more human employees whose wages and salaries make up the payroll which is taxed? Another problem is that of so investing the unemployment reserves and then realizing on them in time of need so that the translation of these funds into payments will not act as a further depressant upon general investment and securities. How these questions relating to the technological aspects of employment are to be answered is an important problem related to the entire question of economic security. Unless the problem is now recognized and worked out carefully through adaptation and experience, without the imposition of any drastic and sudden requirements, the implications will increase cumulatively until a problem of major proportions has developed.

Every nation passes through those eras when a re-definition of concepts and relationships becomes mandatory. The United States is now engaged in a re-charting program the ultimate objective of which is economic security and social well-being. Economic security, from the broadcast viewpoint, is just as important in the business group as in the labor group. It cannot be attained in one an] without regard to the other. In formulating any such program one very large and important element of our society must not be overlooked. I refer to the ten million people engaged in agriculture. The farmer is both a worker and a small capitalist. He will help pay the costs of economic security and in this relationship the farmer must be given due and proper consideration in any national plan that is devised.

Business men, through the Business Advisory and Planning Council of the Department of Commerce, are seeking constantly to fulfill their social responsibilities and in line with the broad concepts I have outlined are directing their study and analysis toward a constructive program of unemployment protection and social safeguards. This study has even taken precedence over many of the immediate and specific management problems of business. Business statesmanship recognizes that its approach must include the employee and the consumer as well as management and capital. This broad social concept has been accepted and I am convinced that business is impelled by the spirit and the desire to aid in every possible way the fulfillment of these objectives.

A program looking to the maximum maintenance of economic security, without in any way devitalizing the essential forces of individual initiative, work and rewards, constitutes what might be idealistically expressed as "planning for the greatest happiness for the greatest number." Let us reinforce this idealism with the realism of dealing with all elements concerned so as to avoid any class or group distinction or preference. In this spirit our cooperative action cannot fail.


Director, International Labor Office

IT seems to me that it might possibly be of some assistance to look back a bit and try to view the whole problem of social security in its historical setting and as it now presents itself in the world.

I believe it is the most important social problem now facing not only this country, but every country in which industry is developed. It is, of course, not a new problem. There has always been in every community a certain section living on or below the margin of economic safety. I can remember, in my own country, twenty or thirty years ago, it was common to speak of the "submerged tenth." Whether that was a tenth of the whole population, or a tenth of the industrial population, I don't know, but it was recognized that there was a proportion of the population that was living below the margin of subsistence.

Those were the days too when it was thought that there was nothing that could be done about it. It was thought that social insecurity was one of the inevitable consequences of the economic system, and that though it undoubtedly brought hardship on individuals, there was nothing effective which society could do except perhaps to organize charitable relief.

It was also held, in those days, as part of the economic philosophy of the Nineteenth Century, that it was even undesirable to do anything, that any interference with what were called the economic laws would be positively harmful, and that, therefore, whatever might be the condition of individuals, it was a matter which must be left severely alone, except in so far as it was provided for by private charity.

I have never been able to understand the distinction which was drawn in those days between the economic effect of money that was paid out through private organizations, and the same money, derived from the same people, publicly administered and paid out.

But since that time, a considerable change has come over the whole problem--a double change. In the first place, it is a change in magnitude. Whatever the truth may have been before the War, it is quite certain that the incidence of unemployment is very much greater now, and I believe that is true not only of the last five years of the depression, but during the whole post-war period in a more limited degree. The problem has now assumed sufficient magnitude to have demanded the attention of every industrial country. The quantitative basis has been definitely altered, and it is significant that in all of the various calculations that have been made in Great Britain of what is called the normal incidence of unemployment, the calculations have steadily risen. In the second place, there has developed an altered approach to the problem, the moral approach. People are no longer ready to accept the view that nothing can be done about it, or should be done about it, and we have now got to the point when in practically every industrial community, the state has assumed the obligation of taking care of the unemployed in some shape or form.

It struck me as significant, that in the World Economic Survey of last year, which is edited by a number of very impartial and competent economists, the opinion was definitely expressed that one of the most striking features of the present depression has been the general recognition of the principle of the right to work or the provision of maintenance.

In an ideal society, anything of that kind would be totally unnecessary. If everyone were able to provide for himself; that is to say, if everybody were assured of sufficient regularity and continuity of employment to make provision out of his own income against the hazards of life, it wouldn't be necessary to be talking about social security here. But, unfortunately, our society is not yet ideal. In fact, there is some reason for thinking that the number of persons, or the proportion of persons in any given community, whose livelihood is perhaps increasingly secure, is no greater than it was twenty or thirty years ago.

There are one or two quite evident reasons for that. It is evident enough that when you get great masses of population concentrated in urban communities, those people no longer have the independence, the power of changing their mode of life, that exists in simpler communities. They are dependent for their livelihood on the fluctuations of industry, not merely the fluctuations of industry in general, but very often on the fluctuations of either some particular industry or some one industry located in the place where they live. That has brought about a general change, and a general lack of security, which did not exist to the same extent in earlier times.

And then there is another aspect to which attention is often being called by economists in this country, and that is the growing uncertainty of economic demand itself. As our industrial civilization has developed, it has put within our reach a much greater variety of articles, a much greater choice from which the consumer can select. That has meant that instead of demand being comparatively stable, as it was in the past, it is now liable to easy shift in such matters as diet, clothing, amusement, in a great many other matters on which industry and employment depend. That, I think, is another element in the situation which has to be taken account of.

And then there is yet one more difficulty, namely, the rapid change in the economic balance produced by the discoveries of science. It is not necessary for me to enlarge upon this point, but when we think of one basic commodity, coal, when one thinks of what the history of coal has been during the last fifteen years, and how every coal producing country in the world is now facing a situation that a large number of its miners no longer have a steady occupation or even any occupation at all open to them--we have but one illustration among many which could be given of the growing insecurity arising from the complexity and the rapid development of industrial technique.

When one looks at the situation from the point of view of the individual, one realizes that he may, and now frequently is, in grave straits. Even if new occupations are developed, as no doubt they will be, and are being--that doesn't alter the case of the individual man whose profession or craft may have been completely destroyed by the march of progress. The transition in any case is bound to be painful, and it may, in many cases, be fatal to the prospects of life of particular individuals.

Not long ago I was in Czechoslovakia. This is a great glass producing country. The Bohemian glass blowers have traditionally been among the best in the world. There is now no employment for them since glass is now made almost wholly by automatic machinery.

I could give other instances of that kind, to illustrate the point that so far from there being greater security than in the past, there is a good deal of reason for thinking that it is actually diminishing.

On the other hand at the very moment when security is diminishing, the demands on life in civilized communities--in communities whose standards of civilization have been rising steadily over the last one hundred years are naturally much greater than they were in the past. The workers feel they have a claim to the standards once reached, standards which the multiplication of production, the mastery over disease, and higher education have made both possible and necessary. It is for this reason that I think the tragedy of unemployment is greater now than it has been at any previous time in history. When a man loses his job, the fall is farther and swifter than it was in the old days, because he falls from a higher standard. It is for that reason among others that during these post-war years, increasing attention is being given to this problem of social security.

That attention is being directed along three main channels: in the first place, security against destitution by the lack of work; in the second place, against sickness, especially as regards the families, the women and children of the working population; and thirdly, security against the loss of earning power which invalidity and old age inevitably bring.

As regards unemployment, there are a number of possible schemes, and we in Geneva, in drawing up an International Convention, which was adopted this year, have left a great deal of latitude as to the precise nature of the scheme to be adopted. There is no hard and fast rule or rules which should be or could be applied to every country.

One finds that in some countries there is voluntary insurance, with aid from the state, in countries like France, Holland, Switzerland, and Norway. Then again there is state insurance, full state insurance, such as exists in Great Britain, Germany, Italy and Poland.

But in that connection, whatever the scheme, there is one point about which I would venture to say a word. It is often alleged that this expenditure from public funds is uneconomic. Look at the expenditure of $535,000,000 on unemployment insurance and emergency benefits. Of that sum, $190,000,000 was paid by the employers and workers' contributions. In Germany, in 1932, the sum of $750,000,000 was spent for the same purpose, and one way ask oneself, "Was all of that money wasted?" Well, I venture to think it was not, and I think when one sees the situation as it has been in those countries, one realizes that that expenditure has made some contribution toward maintaining the economic situation.

In Great Britain, the total earnings of industry naturally dropped by some $855,000,000 between 1929 and 1931. During that period, the expenditure on unemployment arose by $375,000,000 and I don't feel any doubt in my own mind, that that money was one of the factors which kept retail trade on a comparatively high level, and I think if you will look at the situation you will see some evidence of that. While unemployment may have kept production moving on a lower level, much lower level, of course, the unemployment benefits still did keep some flow of money circulating in industry.

Furthermore, they prevented a great accumulation of unemployed in the urban centers. For the fact that a man could get his relief in a small town, or his village, as well as he could in a great city, kept him on the spot, kept his purchasing power, however reduced, on the spot, and prevented a great accumulation in the urban centers, I think that that undoubtedly has been the result of the wide-spread payment of unemployment relief in whatever form in Europe.

I needn't emphasize the moral aspect of the thing, but there is one other point, which is still the point, I think, which requires the most elucidation. Obviously, it is much better to give cash benefit than nothing, but it is not so good to give cash benefit as it is to give work, if it can be made, and my own feeling is that sufficient exploration has not been done along that line. It is true, a good deal has been done in some countries. In Sweden and in Germany, particularly, a great deal of money has been spent, and I believe usefully and wisely spent on public works, but as far as our inquiries have gone, we are rather led to think that a further investigation of that particular phase of the unemployment problem can still be made.

Well, as I said at the beginning, I do not feel competent or called upon to make any suggestions as regards the particular solution of the unemployment problem that may be adopted in this country. The only thing I feel certain of is this: that the American problem must find an American solution. The experience of each country is individual, and each country has to work out its own solution in the light of its own experience, and its own conditions. Foreign experiences are useful up to a point, as showing the shoals to be avoided, and perhaps pointing to some channels which are probably safe for navigation, but beyond that I should not be disposed to go. I think that our experience has shown that each nation has got to be its own pilot and chart its own course, taking advantage, of course, of such indications as may safely be derived from the previous experience of others. I also feel certain of one thing, that a solution and a satisfactory solution will be worked out in America.
This pamphlet is based on speeches delivered at the National Conference on Economic Security, Washington, D.C., November 14, 1934.
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