SOCIAL SECURITY DEVELOPMENTS
PRIOR TO THE PASSAGE OF THE
U.S. SOCIAL SECURITY ACT OF 1935
SSA Historian's Office
Social insurance was not an American invention. For the most part,
it was a Continental innovation, appearing first in Europe in the
late 19th century. By the time the United States adopted its first
compulsory, contributory social insurance applicable to a large segment
of the working population in the form of Federal old-age benefits
(known today as Social Security) in 1935, some 20 nations around the
world already had such a program in place, and another 30 or more
had introduced at least one other social insurance program (for example,
workers' compensation see Tables 1 and 2 below).
This paper documents the knowledge base of the policymakers responsible
for introducing Social Security to this country and reviews the extent
to which foreign experience in social insurance had an impact on their
In 1934, the Committee on Economic Security (CES) established by President
Franklin D. Roosevelt naturally looked to this foreign experience
in income security programs as background for their proposals. Their
knowledge of the foreign developments and how they informed the Committee's
design of its comprehensive economic security proposal for the country
were referred to in the Committee's January 1935 "Report to the
President."  The CES initially envisioned
a wide-range of programs to provide Federally subsidized, regulated,
or administered programs for workers, the elderly, for children, and
for those facing unemployment, and the related economic and/or health
Two studies provide us a window to the Committee's knowledge base
of foreign income security developments. A 1932 study by Barbara N.
Armstrong includes exhaustive legislative histories and experiences
of various income security programs abroad up to January 1931 (Armstrong
1932). Armstrong was a law professor at the University of California,
and she was subsequently recruited by the CES as its director of old
age security studies. Armstrong's book was well-known to the staff
of the CES and was an influential source for the staff's own research.
In 1937, following the passage of the Social
Security Act in the summer of 1935, the CES staff summarized, in
a single volume, "some of the most important information in
the staff studies" prepared for the Committee, but limited
to that specifically relevant to the Social Security Act (Social
Security Board 1937b). The "factual background" of foreign
systems presented therein, updated the Armstrong study through 1935
in some cases, but was focused primarily on unemployment and old
This review combines both the comprehensive histories of foreign
economic security programs reported in the earlier Armstrong study
and the CES staff's updated report on unemployment and old age.
 Section I presents two tables tallying a wide-range
of income security programs in their latest configurations as known
to the CES at the time–by program type and by country, respectively.
The second and final section (II) highlights overall trends of foreign
income security programs reported in both the Armstrong study and
the CES staff report. It also reviews the extent to which their
knowledge of programs abroad had an impact on policymakers of the
I. Overview of Foreign Income Security Programs, Circa 1935
Scope of Income Security Programs
Two tables below take stock of the comprehensive income security
programs abroad as of early 1930s under varying legislative formulations.
The scope of income security programs abroad extended beyond what
is known as Social Security in this country–namely income security
provisions for old-age, survivors, and disability (OASDI)–to include
four other programs. All five together–OASDI, plus health/medical
insurance (cash benefits for sickness and maternity, and medical
care), unemployment insurance, workers' compensation, and family
allowances–represent the five branches of "social security"
as defined by the International Labor Organization (ILO).
Those five programs appear in two groupings in both tables. The
first group, under the heading of "Social Security Programs,"
refers to counterparts of present-day U.S. Federal Government administered
programs: old age, survivors, disability, and health/medical insurance.
The second group, "Other Income Security Programs," includes
unemployment insurance, workers' compensation, and family (or children)
allowances (or subsidies to families for childbirths and/or care
of dependent children). Both unemployment insurance and workers'
compensation have, to this day, remained federally regulated and
state administered programs in the United States. Family allowances
were relatively rare in the early 1930s–included here to capture
the very beginning of such programs anywhere.
Compulsory, Contributory Social Insurance vs."Non-Contributory,"
Means-Tested Assistance–The Two Main Types of Income Security
Almost all foreign income security programs in the early 1930s were
in the form of either compulsory, contributory social insurance
or "non-contributory," means-tested assistance. 
Terms for those two types of income security programs are replicated
here from the two studies cited (Armstrong 1932 and Social Security
Board 1937b). Both Armstrong and the CES staff made clear distinctions
between these two formulae a program that was in the form of compulsory,
contributory insurance or of a non-contributory and means-tested
variety. Their categorization of those two types of programs is
widely adopted to the present day.
Of the first group–"Social Security Programs"–presented
in the two tables in this overview, the pre-1935 programs generally
took the form of either compulsory, contributory insurance or non-contributory
and means-tested assistance. The second group, "Other Income
Security Programs," consisted mostly of contributory insurance
plans, though not always applied compulsorily or nationally. Table
1 below summarizes income security programs by either type.
Generally, contributory, social insurance imposes payroll taxes
upon the covered working population in order to fund benefit payments
to eligible contributors or insured persons. The so-called "non-contributory,"
means-tested programs typically provide benefits out of general
tax revenues. Their sources of funding come from compulsory collections
of taxes contributed by all taxpayers to the central government–albeit
not earmarked for specified social programs. This unambiguous element
of compulsion by the central government requiring citizens, residents,
and/or insured working population to contribute to funding either
form of social security programs reflects that both types of social
security programs share a common set of principles grounded in the
efficacy of collective responsibility, resource pooling, and risk
There are major differences between these two types of programs
in terms of their respective impact on individuals. The most obvious
distinction between the two forms of income security programs is
whether such programs are limited to public assistance for the indigent.
The tax-financed, "non-contributory," program is generally
dedicated to only the needy and requires the potential recipient
to undergo a means-test (namely, an income and/or asset test). The
government presumably can better control the costs by setting the
threshold of the means-test and the benefit amount at specified
levels. There are several disadvantages to this type of benefit.
First, due to the stigma for recipients of being on public assistance
and the requirement of undergoing means-tests, such programs often
have a low "take-up" rate and are not fully effective
in reaching all the deserving poor. Means-tested programs have also
been associated with what is generally known as "moral hazard"–namely,
they may discourage savings and/or productive work for some individuals.
Finally, funding can be a problem because many taxpayers are unwilling
to support programs from which they do not expect to receive benefits.
Contributory social insurance is believed to remedy the disadvantages
of tax-financed means-tested programs. There is no stigma for participants
under social insurance because beneficiaries are themselves previously
(or simultaneously) contributors to the program, they have therefore
earned their "entitled right" to the fruits of their own
contributions upon reaching old age, or becoming disabled, unemployed
or injured. Making such programs available to the working population
would therefore encourage productive work and not induce "moral
hazard." The CES staff observed, in reference to old-age income
security program, that there was a noticeable shift abroad from
tax-financed old-age "assistance" to contributory insurance,
because of "the widespread objection to the ‘means-test' basis
of noncontributory old-age assistance and the desire to make grants
available as of right (emphasis added) on arrival at old age."
 Further, the CES staff found the government's
presumed power to keep down the costs of means-tested programs to
be limited. They reported that both domestic and foreign experience
showed that there seemed to be an ever-growing proportion of aged
becoming in need of relief at home and abroad. 
The CES staff concluded (while espousing the introduction of old-age
insurance in the United States): "a system of contributory
old-age insurance should be established at the earliest possible
time to control the upward trend in expenditures for old-age assistance.
Only through the method of preventing dependency through some form
of cooperative thrift can the cost of relief be kept down. Old-age
insurance financed in large measure from the contributions of workers
and their employers would serve to protect an increasing proportion
of our citizens from the hazard of old-age dependency and at the
same time retard the mounting trend of assistance expenditures....
Since insurance benefits would be received as a matter of right,
based on contributions related to wages, workers would be encouraged
to maintain the best possible record of employment and wages in
order to earn the right to a high rate of benefits. Savings or other
assets would in no way reduce the amount of benefits received but
would provide a means of augmenting income in the later years of
Indeed the contributory social insurance programs would serve to
stabilize the economy, so the CES staff believed, because "The
certainty and regularity of benefit payments under an old-age insurance
program would serve to stabilize in some degree the flow of consumption
expenditures on the part of our superannuated population."
Table 1 highlights the income security programs abroad by either
type–contributory or "non-contributory"–under the broad
grouping of "Social Security Programs" and "Other
Income Security Programs." Under both groupings–"Social
Security Programs" and "Other Income Security Programs"–those
in the form of "non-contributory" are separated from contributory
systems for easy comparison. The tally in Table 1 shows that by
1935, the contributory social insurance form of income security
programs had predominated every major program category. Workers'
compensation was the most prevalent of social insurance programs,
adopted by all 54 countries that had introduced income security
to protect workers from accidents and occupational diseases. The
second most popular program was old-age security totaling 36 countries–with
27 countries already offering contributory, social insurance plans
to at least certain segments of the working population. Twenty eight
countries offered disability programs including four that opted
for the "non-contributory" and means-tested format. Out
of 23 countries offering survivor benefits only three chose the
"non-contributory" type. As for health/medical insurance,
unemployment and workers' compensation, all were in the form of
contributory social insurance, albeit in some countries the participation
was voluntary, not compulsory. Of the 17 countries that had introduced
"family allowances" programs, a great majority of them
(14) had only localized application for their contributory social
insurance format; two had introduced voluntary coverage, and New
Zealand was the only country that had national application but opted
for the "non-contributory" and means-tested assistance
(see also Table 2 below to identify countries under each program).
SEE Table 1: Summary of Major Program
Categories--Number of Nations Having Programs of Each Type Prior
of Program Profiles by Country
Table 2 identifies the countries that had adopted
the many programs by 1935, under the same two groupings-"Social
Security Programs" and "Other Income Security Programs."
It shows how many programs each country had legislated in what format
(contributory or "non-contributory") by 1935 and for how
long. To the extent possible, the date of the first legislative
act of a program in each country (in its latest configuration) and
subsequent amendments are included here to show that at best each
case was a "work in progress." For example, in France
and the Great Britain, Armstrong documented the legislative act
in 1910 as it first introduced contributory social insurance, followed
by amendments to augment the program through 1930. 
A review of Table 2 follows.
Social Security Programs
The heading "Social Security Programs" refers
to nationally applicable legislation of income security programs
in the form of either compulsory and contributory social insurance
or "non-contributory" and means-tested assistance. Where
the legislation was yet to take effect, [N/E] is assigned to the
specific program for the country involved.
In the early 1930s, old age income security was the most prevalent
in this group of programs, provided by 36 countries. Twenty seven
of those countries had introduced nationally- legislated compulsory,
contributory insurance; nine countries rely solely on "non-contributory,"
means-tested programs for old-age income security; and Uruguay had
a "non-contributory" and means-tested program as its primary
source for public relief for seniors, and also begun to introduce
contributory social insurance to specified sectors of the working
population. (It is entered in both contributory and "non-contributory"
columns in both tables).
Among the 27 countries (across Europe and extending to Latin America)
that required contributory insurance for old-age benefits, a great
majority (20) had a national program offering "general"
coverage, namely, applicable to employees in industry and commerce
or beyond. Six of the 27 are marked as [L] in the table, to indicate
limited coverage of such programs to specified occupational groups,
for example, railroad, bank, or public utilities, or government
employees-reflecting the early stages of contributory insurance
in those countries. (The United States, for example, had similarly
"limited" coverage prior to the 1935 Social Security Act
in the contributory insurance coverage for railroad workers.) One
of the six was Uruguay, it is entered in the contributory column
with [L] for limited coverage, and also in the "non-contributory"
column for its general application. Of the 27 countries, Iceland
had adopted a hybrid program that required contributions from all
citizens aged 18 to 60 (therefore included in the "contributory"
column in both tables), but benefits were provided to only the needy.
Nineteen of the 20 countries that had national, general coverage
for old age insurance legislated a contributory program for disability
as well-the lone exception being Spain. Again, of the same 20 countries
that required contributory social insurance, 14 had introduced contributory
insurance for surviving spouse and/or dependent children-Chile,
Italy, Portugal, Romania, Spain, and Sweden excepted. Of the six
countries with "limited" contributory insurance, four
offered benefits of survivors and disability as well (including
Uruguay). Only Ecuador and Switzerland extended their program to
both the aged and survivors, but not the disabled.
Health insurance abroad generally provided cash benefits for sickness
and/or maternity as well as medical care for the working population.
Twenty seven countries had adopted such a program by January 1931.
Most (22) opted for compulsory insurance, only five countries were
marked [V] for voluntary coverage (depending on employers) with
national government subsidies.  (This pattern
of health insurance for the working population differs from the
Federally-administered Medicare program in this country in two respects:
Medicare insures only seniors aged 65 or over or the disabled at
any age  with cost sharing for out-patient
and in-patient care.) Estonia, Japan, Latvia, and Lithuania offered
contributory social insurance for health and medical care but offered
no program for old age, survivors, or disability.
In short, a total of 13 countries had compulsory coverage for OASDI
and health insurance as well-including Greece and the Netherlands,
where the health insurance legislation was yet to take effect as
of January 1931.
Of the 10 countries that had "non-contributory,"
means-tested programs for old age, Denmark was the only country
that had extended similar coverage to both survivors and the disabled;
it also offered voluntary, contributory health insurance. Ireland
required contributory insurance for disability and health care instead;
Norway chose contributory insurance for health care. Uruguay's "non-contributory,"
means-tested program was applicable to only seniors and the disabled.
Other Income Security Programs
Under this heading are mostly contributory insurance programs with
general application, compulsory or voluntary (labeled as [V]), except
for family allowances.
Twelve countries had established national compulsory unemployment
insurance by the end of 1935, including Canada, where its income
security for old age was in the form of "non-contributory"
and means-tested assistance. Ten other European countries provided
subsidies to voluntary plans, including Denmark and Spain, where
eligibility for receiving benefits were means- or earnings-tested.
In Switzerland, however, about half of its cantons adopted compulsory
insurance for unemployment, and the other half opted for federally-subsidized
voluntary plans. Russia was the only country that had repealed its
unemployment insurance by 1935, only because the government there
declared that unemployment no longer existed upon its adoption of
the Communist model of centrally-planned economy. (Russia was entered
in Table 2 but not counted toward the total in Table 1 for this
Workers' compensation was often the first
national social insurance program to emerge in most countries due
to increasing incidents of injuries and occupational diseases rising
out of industrialization. Fifty four of the 55 countries presented
here had opted such a program; Greenland being the only exception.
By the early 1930s, the program typically offered cash benefits
and medical care for short- and long-term disability caused by work-related
injuries and/or occupational diseases. In many cases the benefits
had already extended from employees in industry and commerce to
agricultural and domestic workers. In a large majority of countries
(34), employers were required to be insured against liabilities
rising out of workers' compensation or to contribute to a Guaranteed
Fund for such purposes. 
Finally, family allowances (or child endowment) plans grew in the
post-WWI era out of the "living wage" movement or of the
government policy to increase birth rates. From a total of 18 countries
that offered such programs, New Zealand was the only nation that
paid these allowances out of general tax funds as a matter of national
policy to help low income families with dependent children and,
indirectly, to subsidize employers paying low wages. In 15 other
countries, this program was available in specified localities (indicated
as [L-L]). In Belgium and France, employers voluntarily offered
allowances, as an incentive for childbirths. In parts of Australia,
for example, in New South Wales, where such a program was adopted
to supplement the basic wage with allowances for each dependent
child, this move enabled the employers to keep the basic wage down.
SEE Table 2: Social Security Program
Abroad by Country, Pre-1935
II. Summary of the Developments and Trends
Abroad Prior to the 1935 Social Security Act
The two overview tables merely tally programs abroad in their latest
form in the early 1930s. The most valuable contributions of the
two studies cited here are their compilation of voluminous factual
information and the authors' detailed analysis of data. The authors
presented thorough reviews of the evolution of income security programs
of all types. Foreign experiences were, in effect, the results of
experiments in social laboratories around the world cultivated in
incubators of varying combinations of social, economic and political
makeup. Results from each experiment at every stage of its development,
spanning over half a century in many cases, were subject to careful
and critical examination. Repeatedly, those results showed that
in most countries, demands for income security under various contingencies
initially generated voluntary programs, organized by guilds, mutual
aid societies, local communities, or trade unions–at first without
With meticulous documentation, the authors showed how those earlier
forms of income security failed to provide intended protections
for workers, the aged, and children for their economic and physical
well being. Through trial and error, income security programs in
nations of varying sizes and political orientations followed a pattern
of voluntary, localized, or limited coverage plans evolving into
nationally applied programs, either means-tested or social insurance.
 The CES staff's fastidious adherence to and
unrelenting scrutiny of factual information, could justifiably pass
the standards set by Frederick A. Hayek, Nobel Laureate, who held
that "Past experience is the foundation on which our beliefs
about the desirability of different policies and institutions are
mainly based.... Yet we can hardly profit from past experience unless
the facts from which we draw our conclusions are correct."
Given this extensive knowledge base, to what extent did the CES
recommendations follow the world-wide developments of social insurance?
Authors of the CES Report pointed out that their proposals were
deemed as most appropriate "under American conditions"
and did not follow any single pattern or "copy European methods."
They recommended "wide application of the principles of social
insurance, but not without deviation from European models."
A review of the Committee proposals as compared with findings in
the Armstrong study appears to bear this out. The CES' overall preference
for contributory social insurance over "non-contributory,"
means-tested assistance has been discussed earlier in section I
of this paper. Their recognition of the advantages of the social
insurance method, however, did not lead to indiscriminate recommendations
for this form of income security program to be installed for all
types of contingencies. The Armstrong study and the CES staff report
were equally diligent, if not more so, in their research and assessment
of domestic needs and appropriate forms of income security programs
on U.S. soil.
The CES' proposal for a compulsory, contributory "old age annuity"–a
social insurance program–in its January 1935 Report (later renamed
as "Federal old-age benefits" in the 1935 Social Security
Act), was grounded in an analysis of the advantages of the insurance
method and the necessity of a single Federal system, preceded by
lengthy discussions of contemporary needs of the aged in the United
States.  The 1935 Committee proposals did
not follow models in foreign lands to recommend provisions for survivors
or the disabled in addition to old-age insurance, or suggest national
government administered unemployment insurance. Further, it did
not recommend a Federal contributory social insurance program for
workers' compensation, despite the preponderance of this practice
abroad. The CES concluded in the same Report, having examined the
safeguards for workers' accident compensation laws practiced in
all but four states in this country, that "substitution of
continental European form of contributory accident insurance for
our noncontributory accident compensation laws...or any other fundamental
change is unwarranted." 
To CES members and staff, the ultimate test
for the formulation of any income security program for the United
States in 1935 was efficacy, not affinity to any model or ideology.
Armstrong, Barbara Nachtrieb. 1932. Insuring the Essentials: Minimum
Wage Plus Social Insurance–A Living Wage Program. New York: Macmillan
Committee on Economic Security. 1935a. "Report to the President
of the Committee on Economic Security." 74 pp., reproduced in
Reports Book, 1935-69. Volume 1. Baltimore, MD: Social Security
Administration [n.d.]. Available online at: http://www.ssa.gov/history/reports/ces/ces.html
Committee on Economic Security. 1935b. "Supplement
to ‘Report to the President of the Committee on Economic Security.'"
18 pp., reproduced in Reports Book, 1935-69. Volume 1. Baltimore,
MD: Social Security Administration. [n.d.] Available online at:
Social Security Board. 1937a. Principal Provisions of Foreign
Compulsory Contributory Insurance Laws Covering the Risks of Old-Age,
Invalidity, and Death. Washington, D.C.
Social Security Board. 1937b. Social Security in America: The
Factual Background of the social Security Act as Summarized from
Staff Reports to the Committee on Economic Security. Washington,
D.C.: Government Printing Office. Available online at: http://www.ssa.gov/history/reports/ces/cesbook.html
Weaver, Carolyn L. 1982. The Crisis in Social Security: Economic
and Political Origins. Durham, N.C.: Duke Press Policy Studies.
Witte, Edwin. E. 1963. The Development of the Social Security
Act: A Memorandum on the History of the Committee on Economic Security
and Drafting and legislative History of the Social Security Act.
Madison: University of Wisconsin Press.
* The author is indebted to the SSA Historian,
Larry DeWitt, for suggesting the study, introducing her to the sources
cited, and for guiding her throughout the writing of this paper.
His comments and suggestions have substantially improved the quality
of the product.
1. See, Committee on Economic Security 1935a, p.
50; and Committee on Economic Security 1935b, pp. 7-9 and 13-14.
2. Armstrong's broad expertise
in social programs also came to bear on CES' proposals on unemployment
compensation and other issues (Witte 1963, pp. 30, 33n, 55-56, 82n,
83n, 116, and 122). She was also one of the contributors to the
basic data for old age security studies of the CES staff report
cited below (Social Security Board 1937b).
3. The two books cited here
(Armstrong 1932 and Social Security Board 1937b) form the basis
of this paper for purposes of documenting the knowledge base of
the CES as its members and staff deliberated proposals for and provisions
of the 1935 Social Security Act. (No attempt is made to review the
unpublished individual reports on foreign programs prepared by the
staff.) Those two studies represent perhaps the most exhaustive
and valuable documentation of foreign programs in its day by U.S.
authors. They also inform later-day scholars interested in the early
stages of social security developments. (See, for example, Weaver
1982, pp. 33-35 and, especially, Table 3.3 "Compulsory old-age
insurance and pension programs abroad, 1933" on p. 34).
The widely referenced book Social Security
Programs Throughout the World (SSPTW) published by the Social Security
Administration made its first appearance in 1937 under the auspices
of its predecessor (Social Security Board 1937a). It cited a single
1933 source as reference–namely, the International Labour Office's
Compulsory Pension Insurance (Studies and Reports Series M (Social
Insurance) No. 10). This first issue included only provisions for
old age, survivors, and disability in countries that opted for compulsory,
contributory social insurance. Later editions of the same series
(1999 being the latest available) have since included countries
where "non-contributory," means-tested program is the
preferred format, and also expanded the scope to include other branches
of social security–health/medical insurance, unemployment insurance,
workers' compensation, and family allowances. The biennial revisions
of this publication are designed to update the programs in their
current form and, as such, they typically date the first legislation
of programs in each country, but provide no further details of those
programs in their beginning years. Where inconsistencies exist between
this first edition of foreign social security programs (Social Security
Board 1937a) and the Armstrong (Armstrong 1932) and the CES staff
study (Social Security Board 1937b), the latter two studies are
the sources of information presented here without independent verification
of the information cited, because the primary purpose of this paper
is to document the knowledge base of CES members and staff.
4. There were minor exceptions
to this pattern. For example, all citizens in Iceland aged between
18 and 60 were required to contribute to a poll tax to finance its
means-tested old-age assistance; Denmark's and Spain's contributory
unemployment insurance was established with voluntary participation
but beneficiaries had to meet specified means or earnings tests
for eligibility (see also Table 2 below) In addition, there were
countries where both forms co-existed so that contributory old-age
social insurance would cover the working population and tax-financed
means-tested programs would target those who for one reason or another
were not able to participate in the labor force and became indigent
in their later years.
5. Social Security Board
1937b, p. 184.
6. Social Security Board
1937b, pp. 137-167; 181-188.
7. Social Security Board
1937b, pp. 197-198.
8. Social Security Board
1937b, p. 198.
9. It should be noted that
dates of legislative acts in Table 2 refer to only income security
programs in their respective latest configuration. In other words,
as each country's programs evolved from voluntary, localized, or
‘non-contributory" means-tested" assistance, the legislative
history or dates for the earlier forms are not recorded here. Thus,
France's earlier experiment with "non-contributory" and
means-tested program in 1905 is not reported in Table 2.
10. Compulsory, contributory
health insurance for the working population is a common practice
today among industrialized countries, excluding South Africa and
the United States.
11. Medicare is available
to the disabled at any age under two specified conditions: if the
disabled (1) have been receiving disability benefits for more than
24 months; or (2) are receiving disability benefits for treatment
of chronic renal disease (CRD)
12. Armstrong 1932, pp.
240, 249, and 571-572.
13. Armstrong, 1932, pp.
14. For old age security,
among several principal European nations, France (1905) and Great
Britain (1908) first introduced "non-contributory" means-tested
programs, while Belgium and Spain experimented with voluntary plans
with government subsidies. All abandoned their earlier programs
and opted for contributory, social insurance instead within two
decades (Armstrong 1932, pp. 407-432; Social Security Board 1937b,
pp. 181-188). By the 1930s, several countries had gradually expanded
social insurance coverage from one of limited sectors of the working
population to include most of their labor force, even domestic and
casual workers in some cases.
15. Cited in Weaver 1982,
16. Committee on Economic
Security 1935a, p. 50.
17. Armstrong 1932, pp.
376-438; and Social Security Board 1937b, pp. 139-180; 197-202.
18. Committee on Economic
Security 1935a, p. 46.