The Great Depression in the 1930s, caused largely by the debt and destruction incurred from World War I and by the stock market crash of 1929, created poverty the likes of which the United States had never before endured. Millions of citizens suffered from hunger and poverty, causing turmoil, unrest, and a considerable amount of crime. Simply put, people had to feed their families, but banks were closing, people lost all of their savings and means of income, and many resorted to looting and violence to feed and clothe themselves and their children.
By 1935, the financial crisis peaked, but Welfare there was no end in sight to the economic malaise. The government had little choice but to step in and create a welfare system to protect its citizens from dying and the country from breaking down. That system still exists to this day, though it has evolved over the years. This article covers the history and the evolution of the American welfare system over the past 7 plus decades. In part 1 of this 2 part series, we will discuss the beginnings of this welfare system up and through the Second World War. Part 2 will continue examining that history into the present-day.
By 1931, 2 years after the Great Crash, the Depression came. So many citizens were flat broke, even in exceptional cities like New York City, that many lived as though they existed in a third-world country. Grocery stores were looted en masse. The New York Times reported such an incident on February 26th, 1931: “Several hundred men and women in an unemployed demonstration today stormed a grocery store and meat market in the Gateway district, smashed plate-glass windows and helped themselves to bacon and ham, fruit and canned goods.”
The crisis was awful, though far from over. The Depression itself lasted twelve years. By 1933, more than 31 million single mothers, disabled citizens, and elderly citizens lived an extremely meager existence, barely surviving with the help of charities, state and local governments. The ranks of the homeless filled rapidly until the state and local governments were downright broke, and unable to accommodate all those in need. For most Americans, the ability to support the family and to establish a life was lost, and the American Dream seemed dead. Schools shut down. Children roamed the streets looking for handouts or unskilled labor jobs to help support their families. All classes were affected by the crisis, and even many highly skilled professionals could not find work.
President Franklin D. Roosevelt did his best to stimulate growth and jobs, but it wasn’t enough. He instituted a policy called the New Deal to try to address the widespread causes and symptoms of the dilemma, focusing on the “3 R’s: relief, recovery, and reform. That is, “Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression.”
As a part of these new, necessary policies, by 1935, a national, federal welfare system was established to help pull America and Americans up by their bootstraps. Though a national welfare system was a foreign concept to most Americans, a nation founded on the principles of individualism, capitalism and freedom, the federal government assumed these responsibilities that were previously administered to by state and local governments.
The federal government began addressing the problem by providing jobs for many out of work citizens, creating community employment by paying for various public works projects, but this was not a large enough fix to support the many single mothers, paupers, elderly and disabled that suffered from the disaster who could not fend for themselves. In 1935, Roosevelt proposed a federal unemployment policy and retirement age benefit system before Congress during his State of the Union Address, and this was the true birth of the American welfare system.
By August 18th of 1935 the Social Security Act was passed, and the American Social Security System was implemented to assist those people aged 65 and older, no longer capable of working to support themselves. The system was paid for by payroll taxes to be shared by workers and employers alike. Employers were also responsible for paying for unemployment insurance as part of this Act. Once the federal taxes and policies were enacted, the government assumed a nationalist welfare role that forever changed this country. The federal government helped pay for assistance for disadvantaged children under the age of 16 and disabled citizens. Though Roosevelt and the Congress thought the need for assistance would disappear after the economic crisis subsided, it never did, and welfare assistance and taxes have grown ever since.