John J. Corson III
John Corson was the Director of the Social Security Administration's Bureau of Old-Age and Survivors Insurance in 1938-41, and again in 1943-44. Previously, he was the Assistant Executive I Director of the Social I Security Board in 1936-38.
"Social Security - A Recollection"
The years, 1936-44, when I was associated with the administration of Social Security, were the "make it work years." The suffering of the 1930-35 depression years had highlighted the tragedy of the aged. Franklin D. Roosevelt had nurtured and sold the idea of self-respecting aid for the aged. The Congress had overwhelmingly approved the law creating Social Security in 1935. What remained was to make it work.
Despite widespread approval of this new law, the times were rough. The Republican candidate for president in 1936 promised, if elected, to repeal the law. At his suggestion many employers inserted materials in their employees' pay envelopes warning them that the payroll taxes to be deducted from their wages would be lost. And when it was proposed that Social Security numbers would be issued, this candidate branded them as "dog tags to be hung around the neck of every American worker."
The press branded the organization being created to administer this new law as "the biggest bookkeeping organization in the world." The keeping of individual accounts of the earnings of each of more than 80 million workers and the calculation of benefits due those who retired or died on the basis of their earnings was an unprecedented task for government--or for any private enterprise. Moreover, it created for employers a new and unpopular reporting obligation.
Sir Roland Davidson, who had administered the British unemployment insurance, was brought over to assist with the planning of the organization and its processes. Harry Hopp, the preeminent management consultant to American corporations in those days, was retained to review the way in which we planned to go about the job. The advice of each was substantially similar: "You can't do it; go back to the Congress and have them revise the law; abandon the idea of relating each individual's benefits to his or her earnings on which each had paid contributions."
The years 1936-39 were fraught with problems. Social Security numbers were assigned to more than 30 million individuals. With the aid of these numbers, ledger accounts were established for each of these individuals. Local offices were established in 300 communities to accept the claims of those who retired or died. And the big test was met: the payments that became due for the first time in January 1937 were paid on time.
So well was the system functioning by 1939 that a national advisory council, appointed to review its operations, proposed the payment of monthly benefits (only one-time lump-sum payments were payable during 1937 and 1938) 2 years earlier than the original law called for. And the Congress amended the law to provide for the payment of benefits to widows and orphans of workers who died as well as the benefits for those who retired. Again the administration met the test--benefits were paid on time.
Moreover, the House Appropriations Committee, concerned with the cost of administering this vast new enterprise, investigated and found that the system was operating at a cost of less than two cents of each dollar contributed as payroll taxes. That ratio of administrative cost was significantly less than had been achieved by any private insurance company!
We who were responsible for "making the law work" in those early years had our problems; we made mistakes. But within 5 years, leaders in private industry--M. Albert Linton, President of the Provident Mutual Insurance Company; Reinhard A. Hohaus, Chief Actuary of the Metropolitan Life Insurance Company; and Marion Folsom, Treasurer of the Eastman Kodak Company among others--publicly applauded the Bureau as a model of efficient operation. That fact need be illuminated for those prone to criticize the operation of this vast enterprise today.
How did we do it? We had a team of workers who believed deeply that we were doing something desperately important. We didn't know that we couldn't do it (even though Davidson and Hopp had advised us that we couldn't!). We believed in ourselves, and above all in the essentiality of Social Security.
Years later, when I served in private enterprise, I never was able to induce, with the aid of higher pay, bonuses, stock options et al. as great devotion to duty or more imaginative enterprise from the workers I managed, than from those I worked with in Social Security in the years 1936-44. It was a great and rewarding experience. I have often wondered why I ever left.