Origins of the State and Federal Public

Welfare Programs (1932 – 1935)

in: Programs, Public Relief/Public Welfare

Origins of the State and Federal Public Welfare Programs

By John E. Hansan, Ph.D.

Introduction

The history of public welfare in the United States has been one of continuing
change and growth. Prior to the 1900’s local governments shared with private
charitable organizations major responsibility for public assistance or as it was
often termed, “public relief.” As the nation’s economy became more industrial
and the population more concentrated in urban areas, the need for public
relief often grew beyond the means, and sometimes the willingness, of local
public and private authorities to provide needed assistance. During the
Progressive Era, some state governments began to assume more
responsibility for helping the worthy poor. By 1926, forty states had
established some type of public relief program for mothers with dependent
children. A few states also provided cash assistance to needy elderly
residents through old-age pensions. The programs and the size of the
benefits varied widely among the states.

State financed public assistance programs were often inadequate to meet the
challenges of large-scale unemployment and urban poverty that often afflicted
states and urban areas. But it was the Great Depression of the 1930’s that led
to the collapse of state financed public relief programs. State systems of
public relief were simply unprepared to cope with the volume of requests for
help from individuals and families without work or income. On top of that, the
economic depression reduced state and local revenues. Conditions were so
grave it became necessary for the federal government to step in and help with
the costs of public relief.

The Federal Government Begins To Help States With the Burden of

Public Relief

The national government’s first significant initiative to help bail out state
governments was the enactment of the Emergency Relief and Construction
Act of 1932. On signing this legislation, President Herbert Hoover said:

“Its three major features are–

 “First–through provision of $300 million of temporary loans by the Reconstruction

Corporation to such States as are absolutely unable to finance the relief of distress, we have
a solid backlog of assurance that there need be no hunger and cold in the United States.
These loans are to be based upon absolute need and evidence of financial exhaustion. I do
not expect any State to resort to it except as a last extremity.
 “Second–through the provision for $1,500 million of loans by the Reconstruction
Corporation for reproductive construction work of public character on terms which will be
repaid, we should ultimately be able to find employment for hundreds of thousands of people
without drain on the taxpayer.
 “Third–through the broadening of the powers of the Corporation in the character of
loans it can make to assist agriculture, we should materially improve the position of the
farmer…”

Immediately after assuming office in 1933, President Franklin D. Roosevelt

proposed and then signed the Federal Emergency Relief Act (FERA), which,
in its first year enabled the national government to distribute more than $1
billion to the states to shore up their existing public relief programs. The
language of the enabling legislation included these sections:

Sec. 4. (a) Out of the funds of the Reconstruction Finance Corporation made
available by this Act, the Administrator is authorized to make grants to the
several States to aid in meeting the costs of furnishing relief and work relief
and in relieving the hardship and suffering caused by unemployment in the
form of money, service, materials, and/or commodities to provide the
necessities of life to persons in need as a result of the present emergency,
and/or to their dependents, whether resident, transient, or homeless.
(b) Of the amounts made available by this Act not to exceed $250,000,000
shall be granted to the several States applying therefore, in the following
manner: Each State shall be entitled to receive grants equal to one third of
the amount expended by such State, including the civil subdivisions thereof,
out of public moneys from all sources for the purposes set forth in subsection
(a) of this section; and such grants shall be made quarterly, beginning with
the second quarter in the calendar year 1933, and shall be made during any
quarter upon the basis of such expenditures certified by the States to have
been made during the preceding quarter.
Sec. 5. Any State desiring to obtain funds under this Act shall through its
Governor make application therefore from time to time to the Administrator.
Each application so made shall present in the manner requested by the
Administrator information showing (1) the amounts necessary to meet relief
needs in the State during the period covered by such application and the
amounts available from public or private sources within the State, its political
subdivisions, and private agencies, to meet the relief needs of the State, (2)
the provision made to assure adequate administrative supervision, (3) the
provision made for suitable standards of relief, and (4) the purposes for which
the funds requested will be used.
Sec. 7. As used in the foregoing provisions of this Act, the term State shall
include the District of Columbia, Alaska, Hawaii, the Virgin Islands, and
Puerto Rico; and the term Governor shall include the Commissioners of the
District of Columbia.

The Social Security Act of 1935

FERA was only a temporary measure. The Roosevelt administration

understood more fundamental reforms were needed to prevent a recurrence
of what had happened when the nation’s economy failed to provide the jobs
and public relief necessary to meet the financial needs of unemployed
 workers and their families. President Roosevelt sent a message to Congress
on June 8, 1934 in which he outlined what he believed was necessary.

 “Our task of reconstruction does not require the creation of new and strange values.
It is rather the finding of the way once more to known, but to some degree forgotten, ideals
and values. If the means and details are in some instances new, the objectives are as
permanent as human nature.
 “Among our objectives I place the security of the men, women, and children of the
Nation first.
 “This security for the individual and for the family concerns itself primarily with three
factors. People want decent homes to live in; they want to locate them where then can
engage in productive work; and they want some safeguard against misfortunes which cannot
be wholly eliminated in this man-made world of ours…”

An Executive Order was issued June 29, 1934 that delegated to five Cabinet
officers the responsibility to study methods of providing “security against the
hazards and vicissitudes of life” with the primary purpose of developing a
workable social insurance system. Named the Committee on Economic
Security it was headed by Secretary of Labor Frances Perkins. She selected
as key staff Arthur J. Altmeyer, the Assistant Secretary of Labor, and Edwin E.
Witte, a professor of economics at the University of Wisconsin. A final 50-
page committee report was filed on January 15, 1935 and sent to the
Congress for hearings two days later, accompanied by draft legislative
language. Following seven months of Congressional hearings and
negotiations, on August 14, 1935 President Roosevelt signed the Social
Security Act into law. The law was a landmark piece of legislation that
created, among other things, the basic framework that guided the nation’s
public welfare system for sixty years.

The Social Security Act consisted of 11 separate “titles” and it established

three distinct types of programs designed to provide economic protections to
different populations in different ways: 1) a system of state
administered Unemployment Insurance programs designed to provide
temporary financial assistance to able-bodied workers who lose their jobs
through no fault of their own; 2) the Old Age and Survivors Insurance
Program?, a universal and contributory social insurance program for eligible
wage-earners who retired or died, leaving a spouse or family; and, 3) a
system of state-federal public assistance programs for aged, blind, and
dependent children deemed unable to earn wages and therefore participate in
the social insurance programs.

The Public Welfare Titles

The Social Security Act of 1935 initially authorized federal financial

participation in three state administered cash assistance programs: Title I:
Grants to States for Old-Age Assistance; Title IV: Grants to States for Aid to
Dependent Children; and Title X: Grants to States for Aid for the Blind. The
framers of the Act also recognized that certain groups of people had needs for
particular services which cash assistance alone could not or should not
provide. To meet these needs small formula grants for the states were
authorized in relation to: Maternal and Child Health, Crippled Children, Child
Welfare, and medical assistance for the aged. A fourth program of public
assistance — Aid to the Disabled — was added in 1950.

The basic shape of the state-federal public welfare system formed by the
Social Security Act of 1935 remained largely intact until 1973 when Congress
combined the cash assistance programs serving needy adults (Aid for the
Aged, Blind, and Disabled) into the Supplementary Income (SSI) program,
making it a federally administered program under the U.S. Social Security
Administration. In 1975, Title XX of the Act was enacted, consolidating most
of the social services provisions of the various cash assistance titles into a
single program of social services for needy citizens. In 1996, the Temporary
Assistance for Needy Families (TANF) program, a federally funded block
grant program, was enacted to replace AFDC.

Under the terms of the Social Security Act of 1935, each state had to first
choose whether or not to participate in one of the new public welfare
programs. After a state chose to participate in the new federal-state public
assistance programs, it was required to submit a “state plan” that
demonstrated to the federal government that its proposed program adhered to
the minimal standards set out in the law, e.g., state-wideness, no residency
requirements for recipients, etc.. States retained major control over setting the
requirements governing client eligibility and the level of cash benefits paid to
recipients. Initially, federal financial participation in the cost of benefits paid to
recipients was determined according to a formula which fixed federal
reimbursement to the level of cash benefits established by a state. In addition,
the federal government agreed to pay fifty percent of the administrative costs
incurred by a state.

These new state-federal welfare programs were “means tested” and

“categorical” in nature. Means testing required the applicant to
prove/demonstrate that their income and assets were below the level to be
deemed eligible for assistance in a particular state. It was also a condition of
eligibility that the individual fit one of the established categories, that is: to be
aged, blind or a child living in a household without a father. For this reason,
the federal-state public welfare programs were often referred to as “means-
tested categorical programs.” The categorical nature of the nation’s public
assistance programs effectively denied any federal financial help to poor men
or women under 65 years of age or poor couples with minor children. For
many years, this limitation of the federal-state public assistance programs
contributed to the phenomenon of fathers voluntarily leaving a family so their
children could receive public assistance.

The framers of the Act also recognized that certain groups of people had
needs for particular services which cash assistance alone could not or should
not provide. To meet these needs, small formula grants were authorized to
the states for Maternal and Child Health, Crippled Children, Child Welfare,
and Medical Assistance for the Aged. Further expansion of medical
assistance for the aged occurred in 1965 with the enactment of Medicaid
(Title XIX) for eligible public welfare recipients.
The basic shape of the state-federal public welfare system formed by the
Social Security Act remained largely intact until 1973 when the Congress
federalized the cash assistance programs serving adults (Aid to the Aged,
Blind, and Disabled) into the Supplemental Security Income (SSI) program. In
1975, Title XX of the Act was enacted, consolidating most of the social service
provisions of the various cash assistance titles into a single program of social
services for needy citizens, with a cap on the amount of money the states
could claim as federal financial participation for the provision of social
services.

For more information, visit the U.S. Social Security Administration’s

website: www.ssa.gov/history/.

How to Cite this Article (APA Format): Hansan, J.E. (2011). Origins of the
state and federal public welfare programs (1932-1935). Social Welfare History
Project. Retrieved [date
accessed] from http://socialwelfare.library.vcu.edu/public-welfare/origins-of-
the-state-federal-public-welfare-programs/