In The Beginning

Frank Bane

The Social Security Act was enacted on August 14, 1935 in an atmosphere of nationwide suffering, deprivation and discouragement. Ahead was the enormous task of setting up the vast machinery needed to implement its provisions and bring its intended relief and mercy as quickly as possible to the millions of people who required them. Mr. Bane held the first administrative post in the social security program of the United States as executive director of the Social Security Board. Here he describes some of those first steps of implementation.

Someone has said that the three areas of most significant legislation in the period of 1933-36--those that had the greatest and most lasting impact upon our social and economic system--were: the Tennessee Valley Authority and related activities in the field of conservation; the Securities and Exchange Commission and other investment and banking legislation; and the Social Security Act. The greatest of these from either the social or economic point of view was the Social Security Act.

It has cushioned the risks of life and living in our industrial age for millions and millions of our fellow citizens. It has shored up the floor of our economic structure, and it has contributed enormously toward tempering the impact of depressions and converting them into relatively mild recessions.

But most important perhaps, the Social Security Act revolutionized our whole political and social philosophy concerning the responsibility of government--that is, all of us--for the welfare of each of us.

In the late summer of 1935 there was no social security program--just an idea and a hope which had been translated into a Congressional Act and a Social Security Board, consisting of three members who had been given the idea, the hope and the Act, with instructions to "get going." The board appointed an executive director and we went to work on the structure of an organization which we thought would make the social security concept an actuality.

From the standpoint of public administration it was a unique task, a great opportunity to build from the ground up a large social and economic agency which would operate in every part of the country and would affect immediately and directly the lives and living of millions of people.

The first problem, of course, was to develop an operational plan. The Social Security Act gave the board three major assignments.

1. Public Assistance

This was a federal-state program designed to provide assistance on the basis of need for persons over 65 years of age, dependent children and the needy blind. The Act outlined the program and prescribed certain standards which must be met if a state participated in the program. It also provided that the federal government would match state expenditures for these services. Direct administration was to be the responsibility of the states. The major decisions were to be made by the states. Each state would determine whether or not it would participate in the public assistance program and, if it wished to participate, would submit a plan to be approved by the Social Security Board. Within broad federal standards the state would determine who would receive assistance and how much each person would be granted. In the main, this was a typical federal-state cooperative pattern--already familiar in the agricultural, highway and health fields: federal policy, federal standards and federal financial participation; state operation, state administration and state matching of funds.

2. Unemployment Compensation

"Compensation" was the word the Act used because there had been some question of constitutionality in case the word "insurance" was used. Unemployment compensation, unlike public assistance which was paid for out of general revenue, was tied to a tax on employers. But here again, operation and administration within federal standards was in the hands of the states, although the entire cost of administration was to be paid by the federal government through a tax offset device.

3. Old-Age Insurance

Old-age insurance was established as a federal insurance program based on actuarial principles--federally administered and financed entirely by tax on employers and employees.

Getting Into Operation

The overall administrative staff as provided in the Act consisted of a board of three members and an executive director--and to repeat--this group set to work to plan the organization and administration of the Act. We set up eight operating units or bureaus--three line and five staff. The three line bureaus were: Public Assistance, Unemployment Compensation and Old-Age Insurance, while the staff divisions were: General Counsel, Accounts and Audits, Research and Statistics, Business Management and Informational Service. In addition, we planned 12 regional offices through which social security would work with the states--in the public assistance and unemployment compensation fields and with federal district offices for old-age insurance activities.

Immediately we began to learn the facts of administrative life. What would be the operating relationship between the Washington staff and the regional offices? What relationship between the heads of the bureaus in Washington and the regional director, especially with respect to the bureau's representative in the regional office? We developed Administrative Order No. 11 and during my something over three years with the board, we rewrote it four times as new problems developed and new personalities clashed. After 25 years Administrative Order No. 11 is still not the law of the Medes and Persians. And we learned quickly that the easiest thing in the world to do is to establish a regional office and the most difficult thing imaginable is to get rid of one.

With the organizational structure set we began the strenuous, difficult and all important task of staffing the agency. It was an urgent task since the program was scheduled to begin functioning January 1, 1936. The states had to develop legislation for compliance and develop state plans to be submitted to the board. Federal standards had to be "spelled out" and certain operating precedents established, while more than 40 million individual workers under old-age insurance had to be registered. Tabulating machinery had to be leased, space in which to work acquired and people with the necessary "know-how" to do the job had to be employed.

Personnel Administration--Its Import

I have always thought that the Social Security Board in its early days made its greatest contribution toward efficient government in the field of personnel administration. Not only was this true within its own organization, but Social Security personnel policies had a major and far-reaching effect upon public personnel administration in all of the states. Every effort was made in staffing the agency to select well-qualified, competent people and to appoint them solely on the basis of merit. This was not easy. Just before the Social Security Act was passed, the National Recovery Administration and the Agricultural Adjustment Administration had been declared unconstitutional with the result that hundreds, and I used to think thousands, of displaced public employees landed on the doorstep of this new, very large agency. Nine out of ten of them, I am sure, carried a letter from his congressman.

Personnel policy, as is well known, ran into difficulty at times. And at times it cost the Board much criticism in high places; large cuts in appropriations and for a time a material reduction in the salary of the board's top administrative official. In the main, however, the policy "stayed put" and it was followed soon by a board action placing all of its officials and employees from top to bottom under civil service. And then in 1937 and 1939 the Social Security Act was amended to extend successively the personnel policies of the board itself to all state-administered social security programs in which the federal government participated.

After a lapse of more than 20 years I have had occasion--many times in the past two years--to be in and out of the Department of Health, Education, and Welfare, and to work with the social security and other groups on a number of their studies and projects--and there they are--scores of them still there after more than 20 years--professionals in the best sense of the word, professionals in the science, or rather the art of public administration and public service. And, there they are--day in and day out-- operating that great agency of theirs to the benefit not only of the people they serve directly, but to the great credit of the country as a whole. And whenever I work with the staff there in any capacity, I confess to a great degree of satisfaction in the fact that many years ago we fought the fight and stayed the course.

Securely Established

We have in our political spectrum groups and individuals with many different opinions about almost everything. We have conservatives--sometimes called reactionaries; moderates, and liberals --sometimes called radicals.

We are at present in a great political campaign and I venture the flat assertion--not too risky--that not a single serious candidate for any major office will publicly advocate the repeal of the Social Security Act or the abolition of the social security program.

It has become an inseparable part of our way of life--Social Security is here to stay.