Arthur J. Altmeyer
Speech at SSA Awards Ceremony
By Arthur J. Altmeyer
Presented at the SSA Awards Ceremony
May 21, 1963
Mr. Robert M. Ball:
It's my privilege today to present to you, really, the man who more than any other person started everything off, as far as social security is concerned. Mr. Altmeyer was the chief of the technical group, advisory to the committee on economic security, which developed the original Social Security Act. Then, as most of you know, he became a member of the Social Security Board; and, in a very short time, when Mr. Winant left the board, became the Chairman of the Social Security Board followed by, in a reorganization, becoming the first Commissioner for Social Security. So that, really without any fear at all of contradiction, it may be said that from the time that social security was just the gleam in the eye of some planners to its firm acceptance throughout the United States, its establishment and its successful operations, our
Mr. Altmeyer was the leading and guiding force in both the legislative work, the development of the program in the formation of policy, and in the establishment of the broad principles of administration that still guide the program.
This is a great legacy that he has left to those of us who are now the trustees of this program. If I could just comment on one aspect of his contribution, because perhaps it's the least thought of part of his contribution. I think it's always clear to people to see legislative advances, extension of coverage, new program, changes in benefits; this is the kind of advance that is clear and visible to the public. It's the same even in fundamental policy; but the longer I have been associated with a big organization and a growing organization like this, and the more I have become acquainted with other social security systems and their administration throughout the world, the more I'm impressed with the tremendous importance to the successful carrying out of a program of sound fundamental administrative arrangement. The fact that in the United States, from the very beginning, we had in the social insurance area a unified national program operated through the civil service is a tremendous asset all through the years ahead. Throughout most of Europe and South America, perhaps most of the world, social security is under a great handicap in operation because of its inheritance of very complicated and involved administrative setups growing out of historical situations that for one reason or another seem to make it necessary for them to administer their program through literally dozens and, in some cases, scores of independent institutions, elected officials, highly complicated and expensive arrangements; and it makes it a very difficult and inefficient type of operation.
Well, Mr. Altmeyer's contribution to getting us started off right rests, therefore, not only in his contribution in program and in policy, which all the world knows, but also in his firm insistence from the beginning that this should be a career-oriented administration with a unified direction. The great credit that we now have of a 2 percent administrative cost system grows out of the sound arrangements that were set up at the beginning.
I'm not going to spend the time to give you anything like an adequate introduction of Mr. Altmeyer. I assume that the great majority of people here know already a tremendous amount about his career; and most important is that I feel it's unnecessary to go into detail, because I would say that this functioning institution is the logical development and further expression of what Arthur Altmeyer has meant to social security and in the formation of social security in the early years. So I give you, at this point, the man who throughout this country is known as the father of American social security. Mr. Altmeyer.
Well, I don't know whether I'm really the father of social security or not. At one time nobody would claim its paternity; now I think there are a great many who claim to have had a hand in its procreation.
At any rate, I want to thank the Commissioner for his kind remarks, and the Director, and all my dear friends on the platform, in the audience here in this room, and throughout this beautiful building, for having invited me here today to view the wonders that have occurred during the last 30 years. I really feel like Rip Van Winkle, on coming back to a scene which was quite different from the one he left. In 1935, there were a handful of devoted people, about 2 dozen, who sat around rather disconsolately wondering what they could do what they should do, to put into effect this great new program known as the social security. They were on relief; I will tell you that, right off the bat. We had presented a budget (now hold your breath; we held our breath) of $1 million at the end of the Congress of 1935. Your budget today, I guess is probably $300 million (I'm speaking of administration alone, not of benefits). It's hard for me to visualize the great increase from a million to 300 million.
I well remember when I went down to call on Buck Bucannon, who was Chairman of the House Appropriations Committee at that time, and he consented to hear my plea for a million dollars. He cocked his head to one side (he had his feet up on the table in front of him); and after I finished explaining why I needed a million dollars, he said, "You know, I don't believe you know a damn thing about it. I don't think you know just what you are going to do with this million dollars, but I'll give it to you nevertheless."
Well, that was one hurdle overcome, and it then went through the House and got over in the Senate. Huey Long was in his prime at that time and he was filibustering in the dying days, dying hours, dying minute of the Congress of 1935. He was discoursing on the virtues of pot liquor, and I sat in the balcony watching that clock hand go around, just racing around towards 12 o'clock midnight, and he was still speaking when the hour struck. Congress adjourned, and we did not have a nickel with which to operate.
So as I say, we were on relief, because we had to prepare a research project for the consideration of the Work Progress Administration. The research project consisted of research as to how to administer the Social Security Act. Harry L. Hopkins, the Director of the Federal Emergency Relief Administration, who had been a member of the Cabinet Committee that drafted the act, thought that was a very good project. He gave us the $150,000 so we could at least pay salaries until Congress convened the next January. So that's how we got started administering the Social Security Act back in 1935.
I must say that if I don't watch myself the clock will race around just about as fast as it did that night that I was watching it as Huey Long spoke. I thought today I would just reminisce a bit on the events of days gone by, and then say something rather general about what I see coming for the future in social security. The advent of social security in this country some people have said was inevitable. We certainly would have had something called--something. Whether it was called social security, it would have been a social program of some sort to provide the protection that we envisaged should be provided under social security. Because 125 other countries have that sort of program, we certainly wouldn't have been the only industrial nation without feeling the need.
In that sense it was inevitable; but just exactly what sort of a social security (as it is now called) we would have was quite dependent upon the key figures on the theme at the time the law was being developed, and the law enacted.
Of course, the great key figure was Franklin Roosevelt. He came to his consideration of social security not at all unprepared. He had been a State Senator and had participated in the passage of the first workmen's compensation law in this country, in New York, which is the earliest form of what we call social security today. As Governor he had advocated unemployment insurance, and he'd advocated old-age pensions. His Secretary of Labor, Miss Frances Perkins, likewise had had experience in the administration of workmen's compensation and was familiar with social insurance in other countries. Harry L. Hopkins, a man of great imagination, energy, and compassion, was also familiar with the field of social welfare and the contribution that social insurance could make toward social welfare. I was lucky enough to be Assistant Secretary of Labor at that time, and so, as Mr. Ball has said, I was made the chairman of the Technical Board that developed the recommendations for the consideration of a Cabinet Committee which the President set up.
I might say that when Congress adjourned in 1934, it had gotten very hot. It had been a long session and tempers were frayed, and the President suggested that Congress really needed a vacation and, if they would go home--this was in June 1934--he would present to them a complete program of economic security, as it was called at that time, for their consideration when they reconvened in January of 1935. That gave us 6 months to develop a program for the consideration of the Congress. As the chairman of the Technical Board and as a good bureaucrat--good executive, let's say--I immediately turned to a man from Wisconsin whom I knew to be the executive director of a full-time staff who whipped together the relevant data and the alternatives for the consideration of the Technical Board of which I was chairman, which in turn presented them to the Cabinet Committee.
The President gave us only two general admonitions. The rest of it was left to us to develop. The two admonitions were these: he wanted a program that was sound from an economic standpoint, and he wanted a program that was administered in a simple and direct fashion, as he called it, so that Mose Smith, his farm manager, could go to the local office and find out all he needed to know as regards his rights and duties and not have to write to a faceless bureaucrat in Washington and get a form letter in reply. We took those two admonitions very seriously, and I think as you folks have lived through the years with this program and have made it a living reality for the American people that you have carried out this admonition very well.
The program when it got to Congress had fairly easy sailing. Congress actually added several features that were not included in the program submitted by the Cabinet Committee, and changed the label from economic security to social security. That was really a splendid thing because social security better expressed the ideals incorporated in this program. As you know, this magic phrase has spread throughout the entire world. Social security is a magic formula; a great goal for all of the nations of the world today.
But now, turning back to putting this great social legislation into actual operation--as a lifelong civil servant and as a student actually under a great economist at the University of Wisconsin before I had even become a civil servant; I was impressed with this fact, as drummed into me by this professor of mine at the University, that administration is legislation in action. That is so true, particularly of social legislation. The law on the statute books is a dead thing. It does not come into effect automatically, untouched by human hands. It only becomes a reality as it is put into operation by trained and dedicated human beings, such as you.
Our first job was to set up a core organization. Many people have said it must have been very very difficult to start from scratch to develop the largest organization that has ever been developed under civil service in the United States. It really wasn't. I don't want you to think that we are entitled to any credit at all. We are entitled to this much credit; we knew enough to pick about a half-dozen dedicated persons with integrity and understanding of the social objectives to be achieved, and we knew enough to let them be free to choose their assistants, who in turn would choose persons of that same character. That's all there was to it.
Charts of organization--I am going to step on somebody's toes, I know, before I get finished with this--charts of organization and procedures are needed. They are guidelines to keep people informed as to what their respective functions are and their relationships to others working toward a common goal. There are no substitutes for human beings that work together to carry out the objectives of the legislation. My goodness! If you really weren't a well-intentioned and dedicated person you could make a shambles of the best laid plans of mice and men, in the form of a chart and work program and procedures.
Here's what we ran up against right off the bat. We set up this training course, you know, of which I am very proud. I think that was one of the secrets of our success, this extensive and intensive personnel training program that started as soon as we had an office in which to put a chair and a desk. Of course, the cardinal principle was that the Social Security Board was a social agency; and it is your responsibility, your affirmative responsibility, to make that social legislation achieve its social objective. You cannot sit back and do nothing but wait for people to come to you, because they do not understand their rights, will not understand their rights and their duties, unless they are informed by you and helped by you to realize those rights and duties. We ran up against this obstacle in the form of the General Accounting Office. After we had trained our people in that cardinal principle and they went out to the local offices to carry out that principle. The General Accounting Office said to us there is an 1837 statute that says that it is a criminal offense for any employee of the Government to encourage or promote a claim against the Government. There we were, we had a statute on the books; it provided for rights to certain benefits, and we were told that we could not assist persons in achieving those rights which a statute had given them. It took us quite a while to explain to the General Accounting Office that this was contributory social insurance, and the whole idea was that certain statutory rights to benefits were incorporated in the statute, that it would be a mockery if we did not help people achieve those rights that Congress intended that they should achieve. This 1837 statute probably is somewhere on the statute books, but at any rate we haven't heard about it in the 25 or 30 years since then. (I hope if there is anybody from GAO in the audience that they're deaf and haven't heard a word of what I've said.)
You know as I walked through this building, with its shining equipment, the electric data processing machinery and all that sort of thing, I couldn't help contrasting it with the Candler Building with which many or most of you here are unhappily too familiar. The early days in the Candler Building when we had the Flex-o-Line central index of which, incidentally, we were very proud of at the time because it was better than anything in existence at that time, by far. But that's a far cry from that day, indeed. As a matter of fact, all of this is quite amazing to me. I never expected things to work out so well as they have. I was a little frightened. At the time we'd hired an expert, the greatest living expert the private life insurance companies could suggest to us, to tell us just what we ought to do to carry out this law. After studying for several months, he called for a full-dress meeting of the Social Security Board. He stood up to address the Board; and we said, "Just sit down; there is a chair over there. You don't have to stand." He said, "I prefer to stand." He was talking about the old-age benefits law. He said, "I've given this very very serious detailed study. It is absolutely impossible to administer. Don't you realize that you will have millions and millions of little white slips of paper floating in on you like a blizzard; and before you have dug yourself out from the first blizzard, the next blizzard of little white slips--(from employers, you know, making their wage reports. The first time the first reports were individual employer wage slips, not payroll reports, as we rapidly discovered was more feasible.) He said, "It is utterly impossible."
Well, we said we have a law, and we can't very well go back to Congress and say that we can't administer it. So, we proceeded to develop the central organization here, over at Baltimore, and he'd frightened us so much that we thought, to be on the safe side, we'd better set up 12 production lines, each one absolutely independent of the other. Then we'd have a flying squadron which would go from one to the other, and as one broke down the flying squadron would go in and get it started again.
We would hope that the other 11 would keep on going. Well, that is funny in retrospect; but it wasn't funny at the time and it cost us a million dollars to have 12 instead of 1 integrated production processing system in Baltimore. At the end of 1 year, the 12 were consolidated; and since that day you folks have been able, very successfully, to do the impossible.
I could go on and comment on other incidents. We did fairly well, but we did run into some criticism in 1939 and 1940, after we had been going a year or so. We used an expression for unidentified items that we should never use--we called them John Doe's, and we put them in suspense. Some columnist got hold of these John Doe's and they ran into the hundreds of thousands, maybe several million; and while they were only a fraction of 1 percent of the total wage items, a million or two John Doe's struck the imagination pretty forceably. The columnists started speculating on what was going to happen to the rights of these people whose wages had not been recorded properly.
So we ran into that sort of criticism, but on the whole we were able to give a good enough account that we went to the Congress for improvements in the Social Security Act of 1939. As you know, the law before 1939 provided only for small lump-sum payments and monthly payments to begin in 1942. Well, the law was liberalized so that instead of being an individual old-age benefit law it became a family insurance plan with dependents allowances, survivors allowances. Monthly benefits started being paid in 1940 instead of 1942. I thought that was an indication that we had not done too bad a job.
The war came along, and for 10 long years nothing really was done to improve social security. The only thing that was done was wrong, because there was a 1948 amendment that excluded 600,000 so-called "independent contractors," to use a legal expression--persons who were on the borderline, or liked to be on the borderline between being employees and self-employed. But then, in 1950 we had another breakthrough. We liberalized the law greatly, and it needed it. Just think of the anomaly--in 1950 we had more persons receiving old-age assistance than were receiving old-age insurance benefits, and the average monthly amount of old-age assistance was higher than the average monthly insurance benefit. So Instead of social insurance being the first line of defense against destitution, assistance had become the first line of defense, and the social insurance relatively unimportant.
So, when we got the amendments of 1950 that was a rather great landmark in the development of social security. Of course, the inclusion of farm and domestic employees and urban self-employed was a great accomplishment. There were other accomplishments--the long struggle for disability benefits, which I cannot recount to you; in fact, you are more familiar with the details of that than I am probably. But we now have disability benefits in this old-age, survivors insurance law, so it is old-age, survivors, and disability insurance, a long title but nevertheless descriptive.
Another landmark that I felt was very very significant was the inclusion of farm operators; that is, farmers themselves in 1954, as I recall. I'll tell you why it struck me so forceably. From 1940 on, I had been urging the venerable chairman of the Ways and Means Committee to include farmers. I would go to him and have long talks with him. He was a grand old man, had been a farmer himself. He said, "Doctor"--I always wondered whether it was a compliment or a little disparaging title that he applied, but at any rate--"Doctor, I will listen to you as soon as the first farmer with manure on his shoes comes into my office and says he wants to be covered. But up to this time not a single farmer has ever written to me or come to my office saying he wanted to be insured under your social security system. I am, therefore, going to wait a while longer." But by 1954, social insurance had proved itself sufficiently so that the farm groups of this country wanted the protection. As a matter of fact, I was given a citation by a farm group after I had left Government, which I thought was rather ironic because that particular farm group had been the one standout against having farmers covered under social security.
So now, what about the future of social security in America? I am going to disappoint you because I'm not going to give you a blueprint. I don't think any human being can give you a blueprint. I think it will have to be a consensus of the opinions of many people upon the express needs of the constituents, of the voters, the citizens of this country. But let me make a few general observations regarding the considerations that I think will need to be kept in mind in the future development of social security in America. The first observation I should like to make is that our so-called affluent society has by no means reduced the need for our more adequate social security system. On the contrary, it has increased the need in some respects, anomalous as that may seem. Our per capita income has increased; as a matter of fact, it's tripled since the Social Security Act was passed, even taking into account the increased price level.
But still there is an appalling amount of poverty in the United States. I remember 1936, Franklin Roosevelt standing on the steps of the Capitol and saying, "I see a third of the Nation ill fed, ill clad, ill housed." If he were alive today, he would tell us there are at least one-sixth still ill fed, ill clad and ill housed; and that doesn't tell the whole story, because the poverty is concentrated in certain areas, certain groups of our population, which makes it all the worse. Furthermore, our entire population whether they are in the low income group today or the middle income group, or even higher, are exposed to increasing hazards to their economic security, strange as that may seem, because these great changes--industrialization, urbanization, technological changes, and changes in consumer demand--have resulted in a less self-sufficient family group. It has resulted really in a greater reliance upon the continuity of income, of the paycheck coming in every week, or every 2 weeks, because installment buying has increased far more than has savings or than have any of the other means of private provisions against economic insecurity.
The net result is that with this great general increase in prosperity we still have a great deal of economic insecurity against which we must provide effective protection, in my opinion, through a contributory social insurance system to the maximum extent possible. At least, we must provide a minimum basic security against all of the major economic hazards, such as old age, disability, sickness, death, and unemployment. I stress basic, because I do think it is possible for people to build upon this general underpinning of security--build more effectively than if it did not exist. I think, of course, we have to go a long way further in providing for social institutions, social services of one kind or another, to prevent many of these hazards occurring.
In deciding what form of social insurance we shall develop to meet these hazards that I have touched on briefly, I think we must decide which level of Government is going to do the job. That level of Government should do the job which can do it most effectively, whether it's Federal, State, or local. That's a difficult decision many times to make. I think we have to take into account the non-governmental arrangements that are in existence, that have grown--the so-called fringe benefits--in determining just what form of basic security we provide through governmental measures.
I can't go further in giving you specifics at this time, but let me say that I think our ultimate goal should be a social security system which literally extends from the cradle to the grave. I use that expression deliberately, because I know it is considered sort of a double expression by many people, who use it sneeringly to deprecate any governmental plan to provide economic security. But these hazards do affect us throughout our entire life span, and I think that's a good expression. As a matter of fact, it's usually attributed to Lord Beveridge, who developed the famous Beveridge plan in Great Britain. He incidentally developed it at the insistence of that arch-conservative Sir Winston Churchill, and he presented it to his country when the bombs were still falling. I can testify from personal experience that it was Franklin Roosevelt who first used that expression, because he used it; and in looking through my files the other day I verified it. He used that expression in 1940 and 1941, and the Beveridge report did not come out until 1942. So I think it's a good expression and will continue to use it, even though to some it may be a little bit shocking and smack of socialism, and welfare state, and a lot of other things that are going to take away our initiative and our freedom if we don't watch out.
It seems to me that the people who are fearful that social insurance will affect the initiative and the freedom of human beings don't really comprehend the meaning of those terms, and the motivations that are involved. It seems to me that it isn't fear that presses people on to high endeavor, to do better and better, but hope; and I think social insurance replaces fear with hope. Furthermore, when we talk about freedom we should think of it in composite terms. Freedom means equality of opportunity, not just to be let alone. Someone said many years ago that everybody should be let alone so that he could carry out--achieve his own rugged individualism and have the right to work out his own "destitution," but that's not the kind of freedom that is worthy of Americans.
We should trust our Government, because the Government is us, really. It's a democratic government. After all, ourselves, organized to provide for ourselves those things that we want provided and which can be done better through government than through individual uncoordinated action. I think that conservatives, as well as liberals, should favor social security because in my judgment it favors, it strengthens our system of free enterprise by enabling it to encourage invention, improvement, elimination of waste, variety and continuing adaptation to changing ideas and circumstances without causing, at the same time, great individual hardship and serious social problems to which I have already referred. Indeed I think social security does even more. It helps our democratic form of government to achieve its primary obligation as expressed in the very first sentence of the United States Constitution, which is to promote the general welfare. Some people seem to have forgotten that.
In conclusion, may I say that I am absolutely certain that all of you will continue to do your utmost to assure that social security does, in fact, fulfill this high purpose.