The Political Origins of Social Security Unemployment Insurance Policy

In a Quite Practical Way: The Political Origins of Social Security Unemployment Insurance Policy

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In a Quite Practical Way: The Political Origins of Social Security Unemployment

Insurance Policy

Andrew Celis

A Thesis in the Field of History

for the Degree of Master of Liberal Arts

Harvard University

May 2018

Abstract

In the winter of 1930, Franklin Roosevelt requested that six of his fellow governors join him in Albany to discuss the relief and prevention of unemployment across the region. Governor Roosevelt stressed in his invitation, delivered from Warm

Springs, that this ―Interstate Conference on Unemployment‖ would necessarily involve discussion of ―large social and business problems as well as matters of definite legislation.‖ The presentations, conversations, and debate that occurred over these few short days in January 1931 were a major milestone in the formulation of a national unemployment insurance policy in the United States. While it has been largely overlooked in New Deal historiography, the Albany conference would both reflect the shifting political landscape of the early 1930s and in some significant ways shape the perceptions of this collection of future New Deal policy makers.

I conclude that the interstate conference itself reflected a shift in the political debate surrounding unemployment insurance in three district ways. First, the conference represented a willingness on the part of the elected leadership of seven major eastern, industrialized states to study the historical and theoretical underpinning of a robust unemployment insurance apparatus. Secondly, it provided the opportunity for Roosevelt himself, along with a broad set of future policy architects of the New Deal, to begin coalition building around the issue of unemployment insurance. Finally, the conference marked a pivot in Roosevelt‘s own attitude—from viewing unemployment insurance as an undesirable ―dole‖ project, toward a broad acceptance of permanent governmental intervention.

iii

In Albany, some of the most progressive political minds of the era would gather to present the historical background and discuss the feasibility of a public unemployment insurance program to a broad collection of state executives. The governors had come from Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, and Ohio. The subjects discussed ranged from domestic and foreign experiences in managing unemployment reserve funds to the very constitutionality of an unemployment insurance system.

Frances Perkins, future Secretary of Labor, had led the organization of the conference in addition to securing the presence of many of its more policy-minded attendees. Paul Douglas, the University of Chicago economist and future United States senator, had led the development of the content with which the attendees would be presented. A collection of lesser-known yet pivotal figures in the future New Deal

Administration had also been key to the Albany Conference. These included the future chair of the National Recovery Administration Labor Advisory Board Leo Wolman, future Public Works Administration executive advisor Aaron Rabinowitz and future SSA unemployment insurance advisor Henry Bruère. With the input of these thought leaders, the end result of these few short days of conversations was both a progressive policy statement on the need for regional cooperation in developing an unemployment insurance program and bolster the political platform from which it might be achieved.

In order to construct the historical narrative surrounding the Albany Conference, this piece will make use of the available transcripts of the conference itself, written records of the attendees, and coverage by both the local and national media.

Acknowledgments

I would like to acknowledge the guidance provided by the research staff of both the

Franklin Delano Roosevelt Presidential Library & Museum as well as the Columbia

University Special Collections Library. I would also like to acknowledge the support and direction provided by Professor Alexander Keyssar. Without this generous assistance, the project would have been exponentially more difficult and significantly less enjoyable.

Table of Contents

Acknowledgments…………………………………………………………………………v

Chapter I. Historical Roots of Unemployment Insurance…………………………………1

Historical Roots …………………………………………………………………..2

American Developments 1830-1930 ……………………………………………..3

Unemployment Insurance Development at the State Level ………………………7

European Influences ………………………………………………………………9

Looking Forward ………………………………………………………………..12

Chapter II. Preparing for Albany………………………………………………………...14

Political Conditions………………………………………………………………14

Economic Conditions …………………………………………………………... 20

Chapter III. The Conference……………………………………………………………..23

Opening ………………………………………………………………………… 25

The Discussion: Utilization of Public Works for the Relief and Prevention of

Unemployment ………………..………………………………... 26

Public Employment Exchanges—Voluntary Interstate Cooperation ………….. 29

Public Unemployment Relief ………………………………………………….. 30

Unemployment Reserves as a Preventive Measure ……………………………. 34

Designing a System …………………………………………………………….. 44

Coming to an Agreement ………………………………………………………. 50

Chapter IV. After Albany……………………………..…………………………………52

Beyond the Conference …………………………………………..………….…. 55

Candidate Roosevelt …………………………………………………………… 58

Conclusion ……………………………………………………………………... 62

Bibliography…………………………………………………………………………… 65

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Chapter I

Historical Roots of Unemployment Insurance

Standing with the aid of only the lectern and his leg braces, Governor Franklin

Delano Roosevelt opened the three-day Albany conference on January 23, 1931, with a set of brief yet instructive remarks. ―I want to say to my fellow governors how happy I am they consented to come here to discuss in this informal way one of our greatest modern problems.‖1 The economy of the northeastern United States was about to enter its second calendar year of significant depression. While the depth and severity of that depression was not yet fully understood, it was clear that governmental action in some form would be essential to recovery. However, to avoid any pre-conference controversy, the governor was careful not to wed himself or his colleagues to any immediate relief measures. Rather, Roosevelt called on his colleagues to consider the conference as an opportunity to ―interchange views in regard to the problem of unemployment with the hope that we can contribute something in our several states toward the elimination of any conditions in the future similar to what we have been going though.‖2

By opening the conference in this fashion, Roosevelt had displayed a very particular political calculation. By withholding any call for immediate policy action, he could both avoid a good deal of political controversy and simultaneously attempt to draw

1 Proceedings of the Conference on Unemployment and other Interstate Industrial Problems by the Governors of Massachusetts, Rhode Island, Connecticut, New Jersey, Pennsylvania, Ohio and New York. Albany, NY, January 23-25, 1931, Box 71, Page 9, Frances Perkins Papers, Columbia University Special Collections, Columbia University Libraries.

2 Ibid., 9.

out serious discussion of long-term policy remedies to what he termed ―one of our greatest modern problems.‖ In suggesting to this collection of governors that immediate socio-political constraints be set aside, Roosevelt had opened the door to a more robust consideration of what could be done to institutionally remedy recurring unemployment crises. Mirroring much of the rhetorical strategy in which he would engage in the formulation of the New Deal, Roosevelt had publicly recognized unemployment as a recurrent problem, across generations, and encouraged his colleagues to treat it as such.

Roosevelt intended to use the Albany conference to construct a sturdy consensus among his gubernatorial colleagues. But first, he set out to convince them that, whatever their individual understanding of the current crisis, future unemployment crises would inevitability arise. Given this central fact, policy responses sufficient to the task should be considered. This forward-looking rhetoric carried with it a quiet recognition that the institutional capacity, both private and public, to deal with massive unemployment had been, to date, largely inadequate. In order to ward off future crises, some remedy to past failures would need to be made. Coming to a shared understanding of the ultimate form and function of that remedy would be the task of the attendees at Albany.

Historical Roots

While the Albany Conference would be a significant turning point, the political and institutional platform of a national unemployment policy had been constructed well before the deliberations of the early 1930s. Over the course of nearly a century, the

United States had witnessed the development of many types of unemployment relief.

These included union-based temporary unemployment benefit plans, federal pensions for

unemployed veterans, and company-based unemployment programs, as well as attempts at state-based unemployment insurance. Each of these developments had occurred years prior to the Social Security Act of 1935, which served to establish a national unemployment insurance policy in the United States. Each had influence, direct or indirect, on the deliberations at Roosevelt‘s Albany conference and ultimately in the shaping of the SSA. In this sense, in order to adequately understand the context of the conference, a brief exploration of these developments is essential.

American Developments 1830-1930

The earliest known formulations of trade-union sponsored unemployment insurance plans took shape in the early 1830s. Evidence of organization on the part of international unions can be found throughout the mid-to-late nineteenth century.3 One such example is that of the Amalgamated Society of Engineers, a North American Branch of a British Union, which adopted its first unemployment benefit plan in 1860.4 With only two American branches at its founding, by the early 1880s it would consist of over forty branches throughout the United States.5 It was during these decades of social and institutional development that the term ―unemployment‖ itself was developed. Along

3 William Haber and Merrill Murray, Unemployment Insurance in the American Economy (Homewood, IL: Irwin, 1966), 61.

4 Bryce Stewart, Unemployment Benefits in the United States (New York: Industrial Relations Counselors, 1930), 85.

5 Ibid., 229.

with it came the realization and acceptance that unemployment would likely continue as a permanent feature of the free labor system.6

Most trade-union initiatives provided members with some level of monetary support for a designated period of time following their loss of work. The permanence of this type of relief was not a central goal and, generally, these programs were structured on a highly temporary basis, as a response to adverse employment conditions. However, despite their temporary nature, throughout the latter half of the nineteenth and early twentieth century nearly all trade unions provided this type of limited support for their unemployed members.7 In subsequent decades, other international unions would follow suit to form similar relief programs throughout the northeastern United States.

In response to the severity of the great depression, by the early nineteen-thirties trade unions had once again hastened to provide relief to their unemployed membership.

Local unions from bookbinders to bakery workers had begun to provide monetary assistance to their affected members. Benefits varied widely in both type and level of assistance. However, two central characteristics were nearly always adhered to: first, contributions to funds were paid exclusively by union members and, secondly, the benefit period was restricted to between 8 and 32 weeks.8 This type of structure would be maintained through a number of subsequent unemployment insurance relief efforts.

Joint-agreement plans, as they have come to be known, were another example of non-governmental unemployment assistance. Involving the cooperation of both unions

6 Alexander Keyssar, Out of Work: The First Century of Unemployment in Massachusetts (Cambridge: Cambridge University Press, 1986), Intro., 5.

7 Haber and Merrill, Unemployment Insurance, 61.

8 Ibid., 62.

and employers, joint-agreement plans were first developed in the early 1920s throughout the garment industry.9 This vintage of unemployment relief had been structured almost entirely to address seasonal unemployment. Plans involved contributions by both union members and employers, allowing for a restricted benefit period at a compensation level based on annual salary. Workers were typically allowed to access benefits twice annually.10 Joint-agreement plans represented an attempt by employers to build on the progress of trade-union plans and promote some level of employment stability in their industry. However, these programs would not represent the only or final attempt by employers to alleviate persistent unemployment and the socio-political issues that came along with it.

The early twentieth century also brought on the development of company- sponsored unemployment plans. By the early 1930s, companies such as Procter &

Gamble, S.C. Johnson, and General Electric had begun to make unemployment relief plans widely available to their skilled employees. Generally, plans would be structured in two formats: the ‗guaranteed employment plan‘ and the ‗employee benefit plan‘. Proctor

& Gamble‘s guaranteed employment plan guaranteed 48 weeks of work annually to employees who earned less than $2000, participated in the company profit-sharing plan, and had at least six months of service.11 However, a significant wrinkle in the structure of

9 Ibid., 62.

10 Ibid., 63.

11 Ibid, 64.

the plan had been intentionally designed. To maintain solvency, workers most likely to be laid off were virtually excluded from participation.12

The ‗employee benefit plan‘ was often, although not always, maintained alongside a guaranteed employment plan.13 Under this arrangement, employees contributed a percentage of their annual salary, usually between 5 and 7 percent, into a savings account. Employers in turn matched employee contribution amounts. During periods of unemployment, the laid-off employee could opt to withdraw funds from this account monthly, up to a pre-defined maximum.14

Company-sponsored plans such as these were developed and implemented throughout the early to mid-1920s. Yet, with the onset of the depression, most companies were left incapable of providing unemployment assistance to their employees.15

Meanwhile, labor leaders increasingly looked to the state as a vital source of relief. With the ongoing participation of the labor movement, a new political economy of unemployment had begun to emerge in the 1920s.16 Recent experience with the establishment of unemployment relief programs coupled with ongoing economic distress would drive an era in which state action would be at the center of unemployment relief.

12 Daniel Nelson, Unemployment Insurance: The American Experience: 1915-1935 (Madison, WI: University of Wisconsin Press 1969), 54.

13 Haber and Merrill, Unemployment Insurance, 64.

14 Ibid., 64.

15 Nelson, Unemployment Insurance, 60.

16 Keyssar, Out of Work, 221.

Unemployment Insurance Development at the State Level

In the early decades of the twentieth century, American state legislatures, specifically those of Massachusetts and Wisconsin, took the lead in shaping unemployment insurance policy. Both would attempt to develop and legislate unemployment relief programs into existence. While ultimately unsuccessful, each process would hold significant lessons for the policy makers gathered by Governor

Roosevelt in 1931 and subsequently by FDR as President.

In culmination of years of public debate, the first bill that explicitly created an unemployment insurance system was introduced in the Massachusetts State Legislature in

1916.17 The legislation would establish a commonwealth-wide program covering workers across manufacturing industries.18 Workers who had been laid off for at least one week would receive benefits for a period of ten subsequent weeks. The level of benefit would be based on a worker‘s regular weekly earnings, while funding for the system would rest on a mix of contributions from the worker, the employer, and the state.19

The legislation was met almost immediately by a request for further study. Over the course of six months the ‗Special Commission on Social Insurance‘ aimed to study the feasibility of a comprehensive program. The results of the study were mixed. While the commission acknowledged the seriousness of the need for a permanent bulwark against unemployment crises, it would only provide a full-throated endorsement of the expansion of ―Free Employment Offices‖ and the establishment of an ―unemployment

17 Edwin Witte, ―An Historical Account of Unemployment Insurance in the Social Security Act,” Law and Contemporary Problems 3 (1936): 157

18 Keyssar, Out of Work, 276.

19 Ibid., 276.

reserve fund‖ that would gather infrastructure funds for use during periods of suppressed employment.20 It had been decided that despite the sound principle on which a permanent unemployment insurance fund was based, the time was not ―ripe‖ for such a remedy.21

With only the Commission‘s half-hearted endorsement of an unemployment insurance program, support for the legislation faded quickly. The bill that had been enthusiastically introduced less than a year earlier was never presented on the floor for a vote.22 However, the effort in Massachusetts would not represent the final attempt at building a state-level unemployment insurance infrastructure.

The attempt to secure an employment insurance system by legislation in

Wisconsin took place several years later. In 1921, a bill drafted largely by University of

Wisconsin economist and labor historian John R. Commons was considered by the state‘s legislature.23 Socialist-led labor movements in Wisconsin had for decades advocated for the creation of a public unemployment insurance system, and a collapse of the post-war boom had made it increasingly feasible politically.24 Uniquely, the bill established a system, funded entirely by employer contributions, providing thirteen weeks of benefits at $1.50 per day.25 Commons, his students, and union leaders immediately began a rigorous campaign to promote the bill throughout the state. The bill, Commons claimed, represented an opportunity for business to quell ‗socialistic agitation‘ and alleviate the

20 Ibid. 277.

21 Ibid., 277.

22 Witte, ―An Historical Account,‖ 157.

23 Ibid., 157.

24 Nelson, Unemployment Insurance, 108.

25 Ibid., 109.

resulting instability.26 While it came within one vote of passage, it ultimately failed on the floor. While modified versions of the bill were reintroduced in each subsequent

Wisconsin Legislature through 1931, none would come as close to passage as the original bill had on its first consideration.27

In the years following the attempts in Massachusetts and Wisconsin, interest in state-level unemployment insurance spread widely. By 1931, unemployment insurance bills had been introduced in 17 state legislatures, with six others establishing committees to examine the issue.28 It would be during this thrust of excitement and interest in institutional unemployment relief that Governor Roosevelt would call on his fellow governors to gather in Albany.

European Influences

While the roots of a national unemployment insurance system in the United States had been growing for decades, Europeans had already begun to implement unemployment relief at scale. In late-nineteenth-century Belgium, a system of voluntary unemployment insurance emerged in which trade unions providing unemployment benefits to their membership were granted a state subsidy.29 The Ghent System, as it became known, had been a critical step in the evolution of unemployment insurance.

However, beyond the Ghent method, the two European systems with the most direct

26 Ibid., 110.

27 Witte, ―An Historical Account,‖ 157.

28 Ibid., 158.

29 Guy Vanthemsche, ―Unemployment Insurance in Interwar Belgium,‖ International Review of Social History 35 (1990): 349.

influence on the deliberations over state and federal action in America had been those of the United Kingdom and Germany.30

The development of union-based plans in Britain had occurred at a significantly broader scale than in the United States and had provided an international platform for political debate on institutional relief. The British parliament passed its first national unemployment insurance act in 1911.31 The product of an exhaustive four-year Royal

Commission study, the act covered over 2.5 million British workers. Benefits were initially limited to a maximum of 15 weeks per calendar year, with employers, workers, and the national government each contributing to the fund.32 The Act would eventually cover a wide range of industries, from shipbuilding and construction to machining and sawmilling. By 1920, the British parliament had extended unemployment insurance to cover nearly all wage earners.33

Despite the ongoing expansion of the program, the severity of the post-war economic downturn was to be more severe than any of its framers had anticipated.34

Unemployment had affected over 2.5 million Britons by 1921 and never dipped below one million a year for a full decade.35 Throughout the subsequent two decades, the British system would undergo significant revision. This trend would continually challenge the financial solvency of the system and ultimately culminated in its reformulation with the

30 Haber and Merrill, Unemployment Insurance, 47.

31 Ibid., 50.

32 Ibid., 50.

33 Ibid., 51.

34 Nelson, Unemployment Insurance, 22.

35 Ibid., 22.

Unemployment Act of 1934, which brought the program under the control of an appointed board, stabilized benefits, and implemented a debt-management schedule. This continual expansion of benefits in the context of a debt-financed system fueled a perception throughout the 1920s, both domestically and internationally, of the British system as a perpetually insolvent ―dole‖.36 Despite this stubborn perception, the British development of a national unemployment insurance system would inspire debate and political action on the issue of permanent unemployment relief throughout the Western world.

While generally recognized as the first Western nation to adopt general social insurance, the German national unemployment insurance system was developed only after in-depth study of the British system. Core components of the system, such as a 26- week benefit period, were maintained; yet, the lifecycle of the German Unemployment

Insurance Act of 1927 differed significantly from its British counterpart. While coverage began as nearly universal, policy makers in Berlin were quickly forced to repeatedly restrict benefits through the late 1920s and early 1930s in response to heavy unemployment across the German labor market.37 With these restrictions came a significant decline in the proportion of the unemployed accessing benefits. In January

1929, 81.1 percent of unemployed German workers accessed benefits, but by January

1932 the number had dropped to 31.2 percent.38 Despite its own experience with the development of a nationwide social safety net and the benefit of observing British efforts,

36 Haber and Merrill, Unemployment Insurance, 54.

37 Ibid., 56.

38 Ibid., 58.

Germans ultimately struggled to develop a sustainable unemployment insurance framework. This struggle would not be lost on American observers in Albany and elsewhere. While the British system, with its almost constant reorganization, had introduced significant concerns in the minds of American policy makers, German struggles to maintain their own compulsory system of insurance seemed to solidify the fear that such a system would invariably devolve into a ―dole‖.39

On the whole, European experience in the development, implementation, and maintenance of a national unemployment insurance program would ultimately hold significant sway over the debate in the United States. Issues of solvency, benefit type, and the socio-economic effect of establishing a permanent system of unemployment insurance would permeate policy discussions, including those at Governor Roosevelt‘s

Albany Conference. As has already been discussed, the seeds of an American system of unemployment had been sown through a long institutional history. Nevertheless, it is hard to imagine that the national system of unemployment insurance would have been developed in quite the same way without the European experience serving as a precursor and point of reference.

Looking Forward

The principal subject of the Albany Conference would be to remedy the inevitability of future unemployment crises. While immediately definitive and actionable answers would not be the goal or result of the conference, the gathering itself would represent a significant development in the history of a national unemployment insurance

39 Nelson, Unemployment Insurance, 23.

policy. As the remaining chapters will illustrate, the Albany conference represented a willingness on the part of the elected leadership of seven major eastern, industrialized states to study the historical and theoretical underpinning of a robust unemployment insurance apparatus. It would also provide an opportunity for FDR himself, along with an array of future policy architects of the New Deal in attendance, to begin coalition building around the issue of unemployment insurance. Finally, and possibly most importantly, Albany marked a pivot in Roosevelt‘s own attitude toward unemployment insurance. While he would continue to remain somewhat guarded in the years to follow,

FDR would no longer view institutional unemployment insurance solely as an undesirable ―dole‖ project. Rather, Roosevelt and his advisors would come to recognize the need to build on past experience in order to implement a more effective and permanent bulwark against the unemployment crises yet to come.

Chapter II

Preparing for Albany

In the fall of 1928, Franklin D. Roosevelt had rather tentatively accepted his party‘s nomination for Governor of New York. Having been in recovery from polio, he cited his own ongoing rehabilitation as well as a responsibility to his fellow patients at the physiotherapy facility he had founded in Warm Springs, Georgia.40 Although health may have played a significant role in Roosevelt‘s reluctance, the rather dim prospects of election on the coattails of long-time New York Governor and 1928 Democratic presidential candidate Al Smith had also been a major factor. After much cajoling by his own advisors, leaders in the state Democratic organization and the personal plea of

Governor Smith himself, Roosevelt agreed to accept the nomination.41

Political Conditions

The electoral prospects for Democrats across the nation were challenging in 1928 and the race for governor in New York was no exception. Professional bookkeepers, who had recently come to take bets on political races, held the odds of victory for Roosevelt‘s

Republican opponent, New York Attorney General Albert Ottinger, at two to one.42

Largely under Republican political leadership, the 1920s had brought a general rise in

40 Bernard Bellush, Franklin D. Roosevelt as Governor of New York (New York: Columbia University Press, 1955), 8.

41 Ibid., 9.

42 Kenneth Davis, FDR: The New York Years, 1928–1933 (New York: Random House 1985), 31.

profits, productivity, and wages throughout the American economy.43 In the election of

1928, it would be an economic wave Republicans would be glad to ride.

Positive economic conditions, and the perception that Republican policy had guided it, were not FDR‘s only electoral obstacle. Almost immediately following his nomination, Roosevelt‘s physical disability had become a campaign issue. However,

Governor Smith seemed to quell any question of fitness by declaring that ―the governor does not have to be an acrobat…. the work of Governor is brainwork, ninety-five percent of it is accomplished sitting at a desk.‖44 The retort, widely published throughout the New

York political press, along with Roosevelt‘s own commitment to a vigorous campaign schedule across the state, would draw him within striking distance of Ottinger.45

Al Smith‘s own emerging opponent, Secretary of Commerce Herbert Hoover, had decades of managerial experience at the federal level. He himself had emerged into national political life somewhat reluctantly, having forged a career focused largely on food distribution in both wartime Europe and the United States.46 Hoover had considerable experience in both relief planning and execution. In fact, in response to a recession in 1921, Secretary Hoover had become directly involved in unemployment issues and even came to chair a presidential conference on the subject.47 Addressing that conference, Hoover reminded the attendees that they were ―dealing with the problems of

43 Richard Jensen, ―The Causes and Cures of Unemployment in the Great Depression,‖ Journal of Interdisciplinary History 19 (1989): 560.

44 Davis, FDR: The New York Years, 30.

45 Ibid., 43.

46 Martin Fausold, The Presidency of Herbert C. Hoover (Lawrence: University Press of Kansas, 1985), 12.

47 Ibid., 16.

men women and children.‖48 However, Hoover was also careful to stress that a central goal of any policy action would be to find ―if we can get through the crisis without calling on the funds in the public purse for the support and subsistence of our unemployed.‖49

Throughout the 1920s, Hoover had advocated a new ―American individualism‖ in which ―equality of opportunity‖ would protect against ―frozen strata of classes.‖50

Careful coordination of capital, government, and labor would be at the heart of his political philosophy.51 However, Hoover had always held to the standard that excessive governmental involvement in industry would ―extinguish the enterprise and initiative which has been the glory of America.‖52 This sentiment would guide Hoover in the months and years to come. In the campaign of 1928, riding the tide of several economic boom years, it was a principle that many business interests, farmers, and even workers could easily come to support.53

By his own admission, Roosevelt had not spent much time directly involved in politics between his polio diagnosis and nomination for governor. ―You know, I have been somewhat out of the game during the past eight years,‖ Roosevelt quipped during an

48 Report on the President‘s Conference on Unemployment October1921, Box 71, 34, Frances Perkins Papers, Columbia University Special Collections, Columbia University Libraries.

49 Ibid., 34.

50 Fausold, Presidency of Herbert C. Hoover, 18.

51 Ibid., 18

52 Ibid., 27.

53 Ibid., 28.

October 1928 campaign speech, ―except when I have been nominating Al.‖54 At the time of the 1928 gubernatorial election, Roosevelt‘s political ideology was understood as only mildly progressive. Having begun his political career as a supporter of women‘s suffrage and the direct election of U.S. senators, Roosevelt‘s rise to national politics in the Wilson

Administration had never indicated any radical agenda of economic reform.55 His campaign for governor would not break this trend. Roosevelt entered the 1928 campaign ready to take up a combative platform, not a clearly progressive one.

Along with support for the eight-hour day and the restoration of direct primaries for state elective offices, the campaign‘s central plank rested on legislation that would perpetually guarantee public ownership of state water resources.56 This put FDR in direct confrontation with his Republican opponent, who sat on the State Commission that had for years purportedly been attempting to privatize New York waterways.57 The gamble paid off on election night. Despite a landslide loss for Al Smith, Roosevelt had carried the governor‘s chair by the thinnest of margins. Aided by significant upstate support, the official result would have Roosevelt taking the Governor‘s Mansion by only 25,564 votes, out of over 4.2 million cast.58

It was clear early in Roosevelt‘s administration that he had not come to Albany to implement any significant redistributionist agenda. His first months in office would be

54 Organized Labor Luncheon Speech, October 30, 1928, New York City, NY, File No. 291, 1928; Franklin D. Roosevelt, Master Speech Files, 1898, 1910-1945, Series 1: Franklin D. Roosevelt's Political Ascension. http://www.fdrlibrary.marist.edu/_resources/images/msf/msf00295.

55 Bellush, Franklin D. Roosevelt as Governor, 4.

56 Bellush, Franklin D. Roosevelt as Governor, 11.

57 Ibid., 10.

58 Davis, FDR: The New York Years, 47.

dominated by a protracted political conflict with the State Assembly over the governor‘s role in controlling the executive budget.59 If Roosevelt‘s personal thoughts on economic policy were ever any shade of radical, they certainly never expressed themselves very clearly through his early politics. For the bulk of his political progressivism, he would come to rely on his friends and advisors. A social worker turned policy maker named

Frances Perkins would be among the most influential of them.

Perkins had built a career that stretched from service at Hull House in Chicago to an appointment by Governor Smith to the Industrial Commission of the State of New

York.60 Newly elected Governor Roosevelt, seeing an opportunity to project a forward- thinking position on the role of women in government, appointed Perkins to be

Commissioner of the New York State Department of Labor.61 From this position, she would rise to become the most prominent labor policy maker in the nation.62 Perkins would be among the first to counsel Roosevelt as to the need for progressive policy actions such as permanent unemployment insurance, while simultaneously emerging as one of FDR‘s most loyal political allies.

While she had initially thought of him only as a man with a ―slightly supercilious appearance,‖ in time Perkins began to develop a warm personal relationship with him.63

This came along with a realization that he could be ideologically flexible if adequately

59 Bellush, Franklin D. Roosevelt as Governor, 41.

60 Lillian Mohr, Frances Perkins: That Woman in FDR’s Cabinet! (New York: North River Press, 1979), 64.

61 Kirstin Downey, The Women Behind the New Deal: The Life and Legacy of Frances Perkins- Social Security, Unemployment and the Minimum Wage (New York: Random House, 2009), 98.

62 George Martin, Madam Secretary: Frances Perkins (Boston: Houghton Mifflin, 1976), 205.

63 Frances Perkins, The Roosevelt I Knew, rev. ed. (New York: Penguin, 2011), 11.

convinced. However, even as their political relationship grew tighter, she had found it difficult to turn his opinion on the political and practical viability of a permanent unemployment insurance system. For this effort, she would seek support from outside the political circles of New York.

Frances Perkins came to know the man she later credited with converting FDR to unemployment insurance, Professor Paul H. Douglas of Illinois, through a mutual friend only months before the Albany Conference.64 For the cause of permanent unemployment insurance, theirs would be among the most consequential of political relationships.

Douglas, who had been in the process of penning a book on the subject of unemployment insurance, The Problem of Unemployment, would eventually become a leading progressive voice in the U.S. Senate.65 For now, he would lend his expertise to the gathering in Albany.

Without any record of their having met, Douglas and Perkins had both forged their early careers in the American Midwest. As it had for many emerging progressives, the backdrop of early twentieth century Chicago served as a sort of proving ground for each of them. During his early career, as an aspiring economist and academic, Douglas had come to develop a friendship with Perkins‘ mentor, Jane Addams.66 At one time he had even delivered brief lecture courses at Hull House to union study groups, including the leadership of the Amalgamated Clothing Workers.67 Balancing his practical social

64 Paul Douglas, In the Fullness of Time (New York: Harcourt, 1971), 71.

65 Paul Douglas and Aaron Director, The Problem of Unemployment (New York: Macmillan, 1931).

66 Edward Schapsmeier and Frederick Schapsmeier, ―Paul H. Douglas: From Pacifist to Solider- Statesman,‖ Journal of the Illinois State Historical Society 67 (1974): 310.

67 Douglas, In the Fullness, 45-46.

welfare experience with an increasingly successful academic career, Douglas had emerged from his years in Chicago to become among the most respected and well-known liberal intellectuals of his time. Perkins and Douglas had much in common, both politically and personally. It was with this in mind that she would invite him to play an integral role in the development of a policy response to the growing threat of unemployment.68

Economic Conditions

The economic conditions of early 1931 were starkly different from those of 1928.

Since Roosevelt‘s election as governor, millions had lost work throughout the country, particularity in the northeast. At the time, it was difficult to estimate exact numbers of unemployed, let alone formulate an effective public response. In 1931, the chairman of

President Hoover‘s Organization for Unemployment Relief testified to congress that he simply could not accurately cite the number of unemployed.69 It would later come to light that hundreds of thousands were losing work on a monthly basis. In the manufacturing sector alone, from 1930 to 1931, the employment rate saw a drop of over 12 percent.70

This could be considered catastrophic as a one-time event; yet even more dramatic days lay ahead for the American economy.

68 Ibid., 71.

69 John Wallis, ―Employment in the Great Depression: New Data and Hypothesis,‖ Explorations in Economic History 26 (1989): 45.

70 Wallis, ―Employment in the Great Depression,‖ 53.

For millions in the American workforce, fairly normal cyclical unemployment had begun to shift into to permanent structural unemployment.71 Whereas workers could have previously anticipated and responded rather effectively to short-term unemployment events of weeks or months, this ‗hard-core‘ unemployment of the early 1930s regularly drove workers out of work for six months or more.72 These dire economic circumstances would likely require a new institutional response.

Roosevelt had become the first governor in the country to publicly declare the severity and increasing threat of unemployment.73 In announcing the establishment of a state Commission on the Stabilization of Industry, Roosevelt had charged a board of industry and labor leaders with the development of a ―long-time program for industrial mobilization and prevention of unemployment.‖74 The committee had largely been the creation of Frances Perkins and represented a first step toward state-level unemployment relief.75 For Roosevelt, it also represented a clear break from the Hoover Administration‘s focus on asserting ―confidence‖ in order to quell public concerns over the ongoing economic crisis.76 However, for the governor himself, the focus of relief would continue to be ―local.‖ The state and federal governments did not yet have a clear role to play in unemployment relief. The continual flood of unemployed as well as the exposure to

71 Jensen, ―Causes and Cures,‖ 556.

72 Ibid., 564.

73 Davis, FDR: The New York Years, 158.

74 Ibid., 159.

75 Martin, Madam Secretary, 215.

76 Davis, FDR: The New York Years, 159.

unemployment insurance policy design that was to occur at the Albany conference would significantly shift his mindset on the topic.

In early January of 1931, again on the advice and direction of Perkins, Roosevelt called for a meeting of his peer governors to gather in Albany.77 Political expediency, along with a certain level of personal interest in the matter, had driven the decision to go forward with the meeting. In the end, the experience of these three days, the exposure to policy design that they afforded, would do much to change the opinion of the future president on the feasibility and necessity of a permanent unemployment insurance system.

77 Ibid., 223.

Chapter III

The Conference

In the early winter of 1931, Frances Perkins submitted to the office of the governor a draft memorandum modestly titled ―Proposed Agenda for the Conference on

January 23-24, 1931.‖78 In just two pages, Perkins proposed to cover an impressively wide range of unemployment insurance–related issues. In her view ―matters of relief or prevention of unemployment are of such over shadowing importance at this moment‖ that a robust, action-oriented discussion would be necessary.79 In order to carry out this discussion, she proposed to invite some of the most accomplished academics and thought leaders of the era. Over the course of the weekend, the attending governors would have the opportunity to learn and discuss the historical background and the theoretical design and administration of a robust unemployment insurance system. For many of them,

Governor Roosevelt included, it would be the first in-depth exposure to unemployment insurance policy formulation. Perkins had designed an agenda to make the most of that opportunity and, with no request for significant changes from Governor Roosevelt‘s office, the conference would proceed largely as she had proposed.

Having run a second successful gubernatorial campaign, this time for a full term,

Roosevelt himself had spent much of the preceding two months in rest and rehabilitation

78 Proposed Agenda for the Conference on January 23-24, 1931, Box 71, Page 1, Frances Perkins Papers, Columbia University Special Collections, Columbia University Libraries.

79 Ibid., 1.

at his Warm Springs retreat.80 Since the reelection campaign, Roosevelt had been attempting to keep his response to the ongoing economic crisis at the forefront. On the same day that the New York Times reported that ―Roosevelt Will Invite Six Governors to

Confer on the Jobless Problem,‖ it also reported that the governor would be opening the state armories to the homeless unemployed throughout New York.81-82 In the wake of his reelection to a full term as governor, the public‘s perception of their state executive as an active force against economic distress was of paramount importance to FDR. His hosting of an interstate conference on unemployment insurance was a significant part of that effort.

Each invitee hailed from a state with significant political and economic ties with

New York, and all had responded to the invitation almost immediately. The governors of

Massachusetts, Rhode Island, Connecticut, New Jersey, and Ohio and a senior representative of Pennsylvania would all be attending.83 A majority of the governors en route to Albany had recently been inaugurated or re-inaugurated. In the first week of

January alone, Roosevelt had turned down inaugural ceremony invitations from three of the governors who were to appear in Albany for the conference.84 FDR had himself made headlines with an announcement of the most austere ceremony in a generation, ―meeting

80 ―Governor Home after 3-Weeks Rest in Georgia,‖ New York Herald Tribune, December 12,1930, ProQuest Historical Newspapers.

81 ―Roosevelt Offers Armories for the Homeless; Asks Mayors to Report on Needs of Unemployed,‖ New York Times, November 18, 1930, ProQuest Historical Newspapers.

82 ―Roosevelt Will Invite Six Governors to Confer on the Jobless Problem,‖ New York Times, November 18, 1920, ProQuest Historical Newspapers.

83 Notes on the Albany Conference, January 23-24, 1931, Box 71, Page 1, Frances Perkins Papers, Columbia University Special Collections, Columbia University Libraries.

84Letters Dated Jan.2nd, Jan.6th & Jan.7th, Series 2, Dec. 1, 1930–February 7, 1931, FDR Governorship Papers, FDR Presidential Library & Museum, Hyde Park, NY.

his wish for saving at the inauguration.‖85 Roosevelt hoped that all this signaling would ensure the public of his commitment and concern in the face of the ongoing crisis.

However, this public relations effort did not come without complication. In the days leading up to the conference, FDR had also been dealing with Eleanor Roosevelt‘s public effort to have the wives of the governors included in the weekend conference.86 She had made it public that, in her view, ―just as it requires two persons to run a home, so both men and women should participate in the solution of political and social problems.‖87

Although they ―took no part in the discussions,‖ Mrs. Roosevelt would be granted her request88. Seated near the rear of the chamber, alongside Commissioner Perkins, were the wives of each attending governor.89

Opening

In his opening remarks, Governor Roosevelt made sure to point out to his colleagues that the conference was to be focused on future prevention and not immediate relief. ―What we are seeking,‖ he explained, ―is information and free discussion of some of the phases of the unemployment problem as a whole.‖90 He was also careful to call attention to the significant interests that they as a collective represented. Roosevelt

85 ―Simple Ceremony is Adopted for Roosevelt,‖ New York Times, December 22, 1930, ProQuest Historical Newspapers.

86 ―Mrs. Roosevelt Asks Women to Confer on Idle,‖ New York Herald Tribune, January 20, 1931, ProQuest Historical Newspapers.

87 Ibid.

88 ―Governors Advised to Fight Idleness with Job Insurance,‖ New York Times, January 24, 1931, ProQuest Historical Newspapers.

89 Ibid.

90 Proceedings, 9.

reminded his fellow governors that ―the population of these seven states is thirty-two percent of the population of the Union.‖91 He went on to explain that ―the personal income taxes paid in these seven states—I am not sure this is a figure to boast of—are nearly two-thirds of all the personal income tax paid in the United States.‖92 His wariness about the fiscal implications of an unemployment insurance system could not be fully cloaked behind this excitement at leading the political charge for it. The forging of cooperation between states was imperative in Roosevelt‘s mind. He made clear that the political and fiscal support of his fellow governors would be critical to the long-term effectiveness of any legislation.93 However, FDR never intended to push his colleagues to overcommit at the conference. In closing, he assured the governors that, after the formal program, ―in private conference we, as the responsible executives of our several states, can discuss these questions and others in a quite practical way.‖94

The Discussion: Utilization of Public Works for the Relief and Prevention of

Unemployment

The first presentation began immediately following Roosevelt‘s opening remarks.

Professor Leo Wolman, a prominent Columbia University economist and social scientist, discussed the Utilization of Public Works for the Relief and Prevention of Unemployment.

Wolman had been thinking, writing, and speaking on the subject of unemployment relief for over a decade. He had even attended the 1921 conference on unemployment chaired

91 Ibid., 9.

92 Ibid., 9.

93 Ibid., 7.

94 Ibid., 10.

by Hoover.95 More recently, Wolman had been tapped by Hoover to serve on the

President‘s Committee on Recent Economic Changes and had also begun a term of service as Research Director for the Amalgamated Clothing Workers of America.96

Stepping to the podium in the stately hall, Wolman began by explaining that

―public construction has come to be regarded as serving two distinct purposes … on one hand to be a potential factor of considerable importance in the stabilization of business and, on the other, as a source of additional work, and consequently relief, during periods of great unemployment.‖97 Comparing the value of public construction with the private automobile industry, Wolman explained that economic activity provided by investment in the public infrastructure industry served as ―one of the several major basic industries of the country and as such is in a position to affect profoundly both the course of business and of employment.‖98

Wolman stressed to the governors that public spending on infrastructure development could serve as a kind of ―balance-wheel.‖99 Yet, to serve as an effective remedy for private unemployment, he explained that it ―must be available in an extraordinary amount … when business is least able to provide employment.‖100 While he was careful to recognize the fiscal obstacles to increased public infrastructure

95 Robert Zieger, ―Herbert Hoover, the Wage-earner, and the New Economic System, 1919–1929,‖ Business History Review 51 (1977): 175.

96 Proceedings, 13.

97 Ibid., 13.

98 Ibid., 14.

99 Ibid., 14.

100 Ibid., 14.

spending, he stressed to his audience of governors that ―the need and desire to increase public works spending had likely never been so great.‖101

In closing, Wolman outlined the parameters of a sound public works program.

First, he explained, it would be imperative to create ―machinery for the forward planning of public construction.‖102 The second critical feature would involve ―the effective tracking of public infrastructure work across the country.‖103 Finally, the ―emergency of this winter‖ would require that ―all possible government funds be continued without interruption.‖104

As an extension of Wolman‘s focus on public infrastructure investment, New

York State Board of Housing Representative Aaron Rabinowitz briefly presented on the application of public spending for the construction of affordable housing. In a presentation titled ―Quasi-Public Works-Housing,‖ Rabinowitz‘s discussion focused on a set of housing developments in lower Manhattan, Brooklyn, and the Bronx. 105 The developments had been the product of a partnership between the Amalgamated Clothing

Workers of America and the state housing authority.106 Stressing the efficiency of construction along with the elimination of tenement districts, he emphasized that the project had also provided ―good housing for the so-called working people, who are just as

101 Notes, 2.

102 Proceedings, 15.

103 Ibid., 15.

104 Ibid., 15.

105 Ibid., 16.

106 Ibid., 16.

worthy and self-respecting as the rest of our population.‖107 Rabinowitz made an impassioned argument to the governors on the long-term benefit of this type of public investment, explaining that ―this type of project for making good housing available to working people will render an invaluable service to community betterment and give desirable employment to both capital and labor for many years to come.‖108

Public Employment Exchanges—Voluntary Interstate Cooperation

The second session of the weekend conference focused on interstate cooperation in the creation of public employment exchanges. Bryce Stewart, a principal of the independent research firm Industrial Relations Counselors, stood at the front of the hall to discuss these exchanges as a mechanism of recovery. Public employment exchanges themselves were not a recent innovation. Stewart spent much of his time at the podium highlighting a rather troubled history involving competing interests between exchanges and workers.109 Perhaps even more importantly, Stewart presented a unique perspective on the historical arc of unemployment relief. ―The history of unemployment and methods for combating it, in every industrial country, shows a development from the conception of a purely local problem, subject to local treatment, largely philanthropic in character … to the view that unemployment is a problem of industry, that its principal causes lie beyond the locality or even the state or nation, and that the line of attack must be national or international.‖110 It was a formulation that likely rang true for many for the governors

107 Ibid., 16.

108 Ibid., 16.

109 Notes, 2.

110 Proceedings, 23.

seated in the hall, Roosevelt included. The business of the conference would be to understand how an American model might take shape.

In the first instance of documented questions, Governor Roosevelt was the first to speak up. He asked Stewart if ―as a general proposition there should be supervision over private employment agencies?‖111 Stewart answered with an emphatic yes, stating that many agencies were ―certainly guilty of abuses.‖ He then went on to explain to the governor that there was a ―very great temptation, as I have indicated, to promote labor turnover because their profits are in direct ratio with the mobility they stimulate.‖112

Roosevelt followed up by asking Stewart how he might promote the ―exchange of

[employment] information or statistics?‖113 Stewart explained that he could ―see no reason why a central clearance arrangement could not be effective.‖114 A brief set of follow-up questions was followed by a break in the proceedings. Institutional unemployment relief was the next topic on the agenda and, while the morning sessions had been informative, the governors were eager to next delve more directly into the subject for which they had gathered.

Public Unemployment Relief

In a session titled, Administration of Public Unemployment Relief, speaker John

Fahey would express what many at the Albany Conference had likely come to believe.

111 Ibid., 28.

112 Ibid., 28.

113 Ibid., 28.

114 Ibid., 28.

―As you know, in 1921 we had a situation not unlike that of today,‖ Fahey began.115 As a member of the New England Council, Fahey had come to Albany in order to represent both the interests and attitudes of industry. Representing a conservative approach to unemployment relief, his intention had been to remind the conference of past successes in dealing with unemployment crises and discuss the best methods of emergency relief administration.116

Fahey focused on a local approach to recovery in which ―relief committees‖ would be organized by governors who would collaborate with local mayors and town officials to secure pathways to recovery. Fahey explained that ―the first step is the proper registration of the unemployed,‖ which would involve local registration conducted by volunteer social workers, teachers, and other community representatives.117 The next stage of this type of relief would involve ―a thorough study of the registration cards and to get at the facts as to the size and character of the problem.‖118 This study would bring to light those who might be only seasonally unemployed along with ―a certain number of so-called unemployables.‖119 Fahey then explained that ―the organization of an energetic committee always attracts the attention of many who have not had jobs for a long while, who are not disposed to work very persistently but who are willing to apply to such a convenient organization as that of the committee.‖120 His proposed study would

115 Ibid., 33.

116 Notes,4.

117 Proceedings, 33.

118 Ibid., 34.

119 Ibid., 34.

120 Ibid., 34.

ultimately reveal ―how many persons there are in the community who should be at work, who need to be at work, and who are unable to get to work through their own efforts.‖121

For Fahey, large-scale public investment in infrastructure or unemployment insurance would not be the prescription for recovery. ―The local committee should work closely with the public welfare and social agencies of the community,‖ otherwise there was likely to be ―much conflict, waste of money, and lost motion.‖122 The ultimate goal of this coordination would be to secure ―odd jobs for the unemployed—and the extent to which such work can be provided depend[s] very much on the imagination of the chairman.‖123 The key to Fahey‘s proposal would be the local committee‘s effective engagement of industry. For those of this persuasion, the measure of success would not necessarily be any one-labor metric, but rather ―is measured by its ability to arouse the enthusiasm of the community and its power to enlist the full cooperation of business men.‖124 It was a sentiment with which FDR and many of his fellow governors would not disagree.

Henry Bruère, a personal friend of both Frances Perkins and Paul Douglas as well as the President of New York‘s Bowery Saving Bank, continued the discussion on Public

Unemployment Relief.125 With a focus on the personal impact of unemployment on working families, his discussion would stand in contrast to Fahey‘s presentation. From the outset, Bruère was careful to point out to the attendees the financial precariousness of

121 Ibid., 34.

122 Ibid., 34.

123 Ibid., 35.

124 Ibid., 35.

125 Ibid., 37.

many affected by frequent or sustained unemployment. He began by explaining that

―working people employed casually and many other though regularly employed have little to no margins in reserve when they lose their jobs.‖126 This fact, coupled with a deteriorating labor market, meant that slow coordination of local relief efforts would be an inadequate response to the ongoing crisis. Bruère stressed to the governors that, in fact, ―New York State has recently completed a survey of relief activities, covering 51 out of 59 cities … [and] we found that in most of these cities the public relief work was being well handled according to the usual standard of public outdoor relief.‖127

Describing the voluntary contributions of philanthropy, business interests, and the public, Bruère reflected that despite all this, more significant institutional relief would be needed. He explained that ―despite all the good will we still find ourselves having to deal with these periods of depression and the want they entail, without adequate planning or preparation, relying largely on improvised methods.‖128 In order to remedy this fact, ―the

State may well take constructive responsibility.‖129 His final declaration would be an appeal to the collection of governors to use their influence ―to give adequate relief to those who are driven to seek relief because unemployment to them is not merely a word of unpleasant connotation, but a pressing, bitter, inescapable fact.‖130

126 Ibid., 37.

127 Ibid., 37.

128 Ibid., 38.

129 Ibid., 39.

130 Ibid., 39.

Unemployment Reserves as a Preventive Measure

The conference would now turn to the subject of ―unemployment reserve funds.‖

The presentation described a system, sometimes mandated by state action and in other cases voluntary, in which employers and workers both contribute to fund benefits. For the first time at the Albany Conference, Paul Douglas, the man Perkins would ultimately credit with turning Roosevelt to unemployment insurance, took the podium.

He began with a kind of warning that ―it is probable that a very considerable amount of unemployment will continue in the future … economists seem to be not much further along in their knowledge of the causes, and governments seems to be no more powerful to reduce business depressions than they were two or three decades ago.‖131 For

Douglas, the need for action was clear, given that ―the present depression seems to give evidence of being as prolonged and severe as other depressions which have gone before it.‖132 He went on to cite three primary causes for his assertion and attempted to convince the governors of the same. First, a historical comparison of global price indexes seemed to indicate an extended deterioration in economic conditions. Second, despite ongoing relief efforts of industry and philanthropy ―the major portion of seasonal unemployment will still remain.‖133 Finally, it seemed to Douglas that there appeared to be ―no evidence that there will be any smaller amount of temporary unemployment from technical, managerial and market changes than in the past decade.‖134

131 Ibid., 43.

132 Ibid., 43.

133 Ibid., 44.

134 Ibid., 44.

With all these factors in mind, Douglas was convinced that state action would inevitably be required. He explained to the governors that ―the only two methods which we have at present to protect the unemployed and their families are (1) the workers‘ own savings, and (2) public and private charity.‖135 He went on to detail for the attendees how even the most frugal of workers, if paid an elevated wage, would not be able to save at a rate that would allow for extended protection against unemployment. ―Therefore the only protection which we have for those people whose earnings are insufficient to provide adequate reserves for themselves will be from public and private charity.‖136 Despite this criticism, Douglas was careful to recognize the generosity of the public, as well as the significant contributions made by charitable organizations. In the end, however, Douglas was adamant that ―such aid does not meet the situation for three very simple reasons: it is inadequate, it is uncertain, and it is humiliating.‖137 Douglas asserted to the governors

―that a country that wishes to develop self-respect on the part of the workers should provide a better means of accumulating reserves.‖138

To highlight and further strengthen his point, Professor Douglas analogized the careful efficiency with which many businesses dealt with stockholder dividends. ―If business has shown such excellent sense in accumulating reserves to stabilize business dividends and interest,‖ Douglas explained, ―society and business together should show equal sense in accumulating reserves to stabilize the income of wage earners.‖139 This

135 Ibid., 44.

136 Ibid., 45.

137 Ibid., 45.

138 Ibid., 45.

139 Ibid., 46.

new approach would serve the dual purpose of alleviating the pressure on charitable organizations and stabilizing industry. Mandated unemployment reserves would ―swell the net income of the wage earning classes‖ and set off a chain of spending that would ultimately reduce total unemployment.140

Douglas stressed that were the state to take up an unemployment insurance reserve system, industry would benefit greatly. ―The result would be that businesses would be able to reduce their expenses if they successfully stabilized their working force, and a monetary premium would be placed upon the stabilization which would help seasonal unemployment.‖141 In return for this benefit, industry would be expected to contribute in kind. Douglas put it to the audience that ―if this is a good thing for any business to do, why cannot we depend on business to assume the burden.‖142

Douglas would go on to acknowledge the recent expansion of voluntary unemployment reserve plans, which had not been compelled by legislation. Nevertheless, in his estimation, the expansion would be inadequate for the level of relief now needed.

While both employers and trade unions had made progress, ―somewhere around one-half of one percent are now protected … a very slow rate of progress indeed.‖143 Furthermore, a large-scale voluntary adoption of unemployment reserves on the part of industry could not be counted on because ―individual businesses, however excellent their intentions, will be very loath to incur additional expenses in adopting plans which their competitors do

140 Ibid., 46.

141 Ibid., 47.

142 Ibid., 47.

143 Ibid., 47.

not adopt.‖144 For Douglas, the answer was clear: ―if adequate relief if to be provided, if business is to be stimulated and stabilized, it must then be by some form of mandatory state plan.‖145

To supplement his comments, Douglas had developed the first of six memoranda for distribution to the attendees. It contained a summary of both the why and the how of the proposed unemployment reserve system. For easy consumption, he had condensed his presentation into five core points:

―1. A considerable amount of unemployment can be expected to continue in the future….

―2. The only protection which the workers now have against such unemployment is that provided by their own savings and by charity. Both of these tend to be inadequate and uncertain while the latter is in addition humiliating….

―3. It would seem logical for industry and society to lay aside reserves to help stabilize the income of workers during periods of unemployment as reserves are now laid aside to help stabilize the income from capital….

―4. Such a program of accumulating reserves would not only be the most effective form of relief but it would exert a stabilizing influence upon business….

―5. If the benefits of the unemployment reserve funds are to be extended to any considerable proportion of the wage-earners it must be by legislative action.‖146

Douglas had presented a strong and frank case to the governors. His appeal had been to practicality, common sense, and compassion. Now, he would temporarily hand the reins over for a discussion of how past experience might inform future policy design.

144 Ibid., 47.

145 Ibid., 47.

146 Memorandum No.1, Box 71, Frances Perkins Papers, Columbia University Special Collections, Columbia University Libraries.

Leo Wolman returned to the podium in order to discuss the American Experience with Voluntary Unemployment Funds. Wolman first laid out the essential features of any proposed legislation in four principles. First, ―there should be segregation of unemployment funds as between industries and firms.‖ Second, it would be ―desirable in an American plan of unemployment insurance to offer incentives to individual industries and to individual employers within the industry to regularize their business as far as is practicable.‖ The third critical step would be to ―sharply differentiate this proposal from those in operation in other countries‖ and ensure that ―liability of the unemployment funds be strictly limited to the amount of cash in it.‖ Finally, the ―burden of the administration of the unemployment insurance…should be imposed on industry itself,‖ with the ongoing supervision of a relevant state agency.147

Wolman would go on to describe the voluntary system established by the

Amalgamated Clothing Workers of Chicago as a potential model. It was a plan ―based substantially on the principles of the American plan.‖148 Wolman was careful to point out its flexibility: the joint agreement plan originally held an even 1½ percent contribution by both the employer and the worker, and it was modified five years into operation to increase employer contributions to 3 percent.149 Careful design as well as flexibility had allowed the fund to relieve seasonal unemployment, provide some protection during the recent downturn, and even serve as a source of dismissal wages for workers affected by advances in technology.150 Along with this success, Wolman explained, ―in a highly

147 Proceedings, 50.

148 Ibid., 50.

149 Ibid., 51.

150 Ibid., 52.

irregular industry, in which there is not a large amount of industrial responsibility, it has been possible during the years since 1923, in which there have been two depressions, to build up unemployment insurance funds to meet these various problems.‖151

The next phase of the conference, conducted by Bryce Stewart and his colleague

Mary Gilson, would provide a historical survey of foreign unemployment reserve and insurance systems. Beginning with an explanation of the development and evolution of the Ghent System, Stewart traced the European experience with voluntary unemployment insurance through the 1920 expansion of the British system.152 He explained to the governors ―the general evolution of unemployment benefits from voluntary forms established by trade unions, government or industry on a local basis to compulsory governmental systems on a national basis.‖153 Stewart described the United States as

―still in the stage of voluntary plans conducted by trade unions, employers, and unions and employers jointly.‖154 The inadequacy of the U.S. position was clear when one considered that ―even if all the unions in the United States adopted unemployment benefits, or negotiated joint schemes with their employers, only about seventeen percent of the industrial wage earners of the country would be covered.‖155 The need for state action would be critical and industry could simply not be counted on to lead the relief effort. Stewart explained that ―a few progressive employers will take the initiative

151 Ibid., 52.

152 Ibid., 54-56.

153 Ibid., 56.

154 Ibid., 56.

155 Ibid., 57.

without legislation, but the mass will lag, and sooner or later the progressive group must ask for legislation to protect themselves against the competition of the others.‖156

Gilson rose to describe the reformulation of the British unemployment insurance system from its inception through late 1930. American policy makers, including FDR, had perennially used the British example as a counterpoint to any proposed unemployment insurance system. In her remarks Gilson addressed these issues head on.

Describing in some detail the nearly twenty alterations during the 1920s, she stressed issues of contribution levels, benefit terms, and solvency.157 Gilson provided an assurance to the governors that ―in spite of all the patchwork legislation and the experimentation with unemployment insurance by trial-and-error methods there is no desire on the part of thoughtful economists, employers or other citizens of Great Britain to do away with the principle of unemployment insurance.‖158 Once policy had been tested, reformulation led to an increasingly sustainable system. She assured the audience that ―the old, haphazard, stupid methods have been abandoned for all time.‖159 Douglas‘ Memorandum No. 4 reinforced this point by stating that ―these laws have fewer faults than is commonly supposed…but America can profit from the mistakes of Europe and can create a very much better system.‖160

156 Ibid., 57.

157 Ibid., 58-65.

158 Ibid., 65-66.

159 Ibid., 66.

160 Memorandum No. 4, Box 71, Frances Perkins Papers, Columbia University Special Collections, Columbia University Libraries.

To set the table for the theoretical construction of an American System of

Unemployment Reserves, Professor of Economics William Leiserson of Antioch College was invited to address the governors. In his remarks, Professor Leiserson warned against three central faults of system design: first, ―the British experiment of combining relief with unemployment insurance‖161; second, ―no unemployment insurance fund is workable without a place for registering the unemployed‖162; and, finally, and most importantly in his view, ―to guard against the tendency to check the mobility of labor.‖163

This would involve the establishment of a ―dismissal wage,‖ in which workers would be granted a limited set of payments after a dismissal in order to assist in the transition from one industry to another.

Leiserson presented powerful comparisons in order to convince the governors of the merit of an unemployment insurance system. Describing corporations that ―continue to distribute dividends to the stock holders in bad years and in good … no one has said that this is the dole, but that is what it is.‖164 In his view, this seemed clear, given that investors had not earned the dividends that were to be paid. ―Nobody has said that this undermines the initiative and responsibility of the investor,‖ Leiserson explained, concluding, ―I think it shows what sound, intelligent management and accounting can do when we decide a thing is important enough for our attention.‖165

161 Proceedings, 69.

162 Ibid., 69.

163 Ibid., 69.

164 Notes, 7.

165 Ibid., 7.

In another rare instance of an on-the-record question, FDR spoke up, posing the following question: ―[W]e have in this state a law for the security of the aged … in your mind how does employment insurance tie in with the old age pension allowance?‖166

Leiserson responded by stating that ―if the old age pension bills which have already been introduced in a number of states and which began primarily as doles and as substitutes for the old poor house were to stop there,‖ he would be fundamentally opposed to the idea. In his view, it was clear that ―industry must pay for the depreciation of its human machines exactly the same as for the horses and the non-human machines, and I think presently we will come, if we have an unemployment insurance scheme, to attach this depreciation feature to unemployment insurance.‖167

In the late summer of 1930, Governor Roosevelt had requested that the

Metropolitan Life Insurance Company attempt to prepare a survey on regional unemployment.168 A representative actuary, James Craig, prepared comments for the governors on their findings. Craig explained that, while private insurers had been pushed by industry to provide unemployment insurance products, his company ―had no legal power to write such insurance.‖169 Despite this, Craig was also confident that ―if such power should now be granted, the Company would probably experiment along these lines.‖170

166 Proceedings, 75.

167 Ibid., 75.

168 Ibid., 80.

169 Ibid., 81.

170 Ibid., 81.

Having spent time as an insurance executive himself, Roosevelt prepared a brief set of questions for the actuary.171 FDR began by asking if it would be ―premature on my part to ask if the Metropolitan Life Insurance Company in view of its present studies believes it should continue these studies with the idea of extending its coverage in the field of social insurance?‖172 Craig explained to the governor that, defined as group life and group health, ―to a large extent I think we are now definitely in the field of social insurance.‖173 Revealing at least some thread of his thinking on system design, FDR next asked the actuary, ―[D]o you think that on the start of unemployment insurance it might, in part at least, be put on an actuarial basis?‖174 Craig answered that, in his opinion, ―with qualifications, yes.‖175 Roosevelt would close his questioning with a critical inquiry:

―[H]as there been any attempt to determine the course of unemployment during a period of depression from the data of previous depressions?‖176 Craig clarified that there had not been, ―because there are too many possibilities of variation.‖177

Immediately following the Craig presentation, the governors discussed and approved a motion that Governor Cross of Connecticut request that the Yale Institute of

Human Relations begin a statistical study focused on regional employment and working

171 Geoffrey Ward, A First-Class Temperament: The Emergence of Franklin Roosevelt, 1905– 1928 (New York: Vintage, 2014), 650.

172 Proceedings, 81.

173 Ibid., 81.

174 Ibid., 81.

175 Ibid., 82.

176 Ibid., 82.

177 Ibid., 82.

conditions.178 It was also decided that a series of conferences would be held in the coming months, the first to be hosted by Governor Roosevelt in New York City, to discuss and act upon the results of that study.179 These would be the first concrete steps decided upon at the Albany Conference. Displaying his knack for political strategy, FDR ensured that it had occurred just before a presentation on the theoretical parameters of unemployment insurance legislation.

Designing a System

For the second time in as many days, Paul Douglas stood before the conference, this time to deliver remarks titled Suggestions for an Unemployment Bill. He explained to the governors gathered in the hall that ―the first problem in the drafting of any bill is the question of the sources of contributions,‖ and in his estimation three available sources existed: ―the employers, the employees, and the State and you may have all kinds of combinations of these three.‖180 Douglas began by describing the benefits and drawbacks of a system in which the burden of funding fell almost exclusively on the employers.

Douglas would explain that ―by throwing the entire initial burden upon employers, they will be stimulated still more to reduce unemployment‖; however, he also clarified that

―with the conditions of interstate competition as they are, if the employer is saddled with the exclusive cost, the benefits are likely to be inadequate.‖181 Douglas was suspicious of a benefits system managed by industry. He went on to declare that ―if the employers

178 Notes, 9.

179 Ibid., 9.

180 Proceedings, 83.

181 Ibid., 83.

make the exclusive contribution, the administration of the insurance funds is likely to be confined to them.‖182

For Douglas, if the goal would be to establish a sustainable unemployment insurance system, employers could not be exclusively relied upon. The use of worker contributions would serve an important role in the sustainability of the system. ―If the workers contribute they will take a greater interest in the plan and they will not be so ready to push for unreasonable extension of its benefits.‖183 Importantly for FDR and those who shared his mind on the topic, Douglas pointed out that ―if the workers contribute there will not be so great a danger that the plan will result in the dole.‖184 He would go on to suggest that ―although it could be argued that states which have income and inheritance taxes should transfer a part of the burden to the shoulders of those most able to bear it…I doubt whether that is politically expedient in this country.‖185

The second question Douglas explored for the panel of governors would be whether benefits should be structured as a universal amount or according to individual earnings. In his view, ―from an administrative standpoint there is no doubt that the flat rate system is much the easiest‖; however, it was also important to recognize that it would ―not adequately protect the standard of life of the better paid workers.‖186 As an alternative, Douglas proposed a hybrid system in which workers would be divided into

182 Ibid., 83.

183 Ibid.,83.

184 Ibid., 83.

185 Ibid., 84.

186 Ibid., 84.

roughly ten groups, benefits increasing commensurate with wages and separate flat amounts allotted for each class.187

Douglas‘ third question addressed the vehicle by which insurance benefits would be carried. His first assertion was that there might be ―a great deal of difficulty if we were to set up too many different sources of unemployment insurance.‖188 Douglas‘ own opinion on the matter—which he admitted retained some bias—would be ―to have the ultimate administration of this fund in the hands of industry, including both employers and employees, rather than in the hand[s] of the State.‖189 Douglas directly refuted the previous speaker—and, to a degree, FDR—in stating that he ―would not favor permitting the private insurance companies to write such policies since their natural tendency would be to fight claims in order to reduce costs.‖190 To prove his argument, Douglas pointed to the ―unfortunate experience in the field of workmen‘s compensation with the efforts of many private companies to scale down the benefits to which workers are entitled.‖191

The fourth question to be addressed involved the ―type of people out of work who shall be regarded as unemployed.‖192 On this front, Douglas introduced five core parameters: first, that benefits should be confined to ―those who are laid off by their employers for lack of work and should not apply to people who are discharged for

187 Ibid., 84.

188 Ibid., 84.

189 Ibid., 85.

190 Ibid., 85.

191 Ibid., 85.

192 Ibid., 85.

adequate cause or who leave without just cause‖193; second, that benefits should ―be designed only for those who customarily are employed…an average of 26 weeks in the preceding year‖194; third, that benefits should ―not be paid to those who have left on account of a strike or lockout.‖195 This point was not without exception, as Douglas explained: ―[T]he plan should carry with it the provision that the workman cannot be denied the benefits if he refuses to take work in a factory where there is a strike or lockout.‖196 Fourth, Douglas argued, a worker‘s benefits should be restricted ―if he refuses to work in his occupation at the prevailing rate of wages.‖197 A final and critical restriction would require that ―after a reasonable space of time he may be required to take work in other localities or industries if he is not able to find work in his former occupation.‖198

The fifth question Douglas put to the governors involved the clarification of any other limitations on benefits beyond eligibility. These included a one- to two-week waiting period, an assurance that the benefit amount be significantly less than earnings, and, finally, that the benefit period not extend beyond a calendar year.199 A final suggestion, which would stretch into debates yet to come, would be ―to include in any such bill a provision giving the State the power in its discretion to require that the worker

193 Ibid., 85.

194 Ibid., 85.

195 Ibid., 85.

196 Ibid., 85.

197 Ibid., 85.

198 Ibid., 85.

199 Ibid., 85-86.

receiving benefits should receive general or vocational training.‖ In that way, Douglas explained, ―the period of unemployment would be prevented from being a period of degeneration…. it could be made actually into a period of development.‖200

The sixth and final question to consider would be to decide what industries and employers should be included within the system. Douglas suggested to the governors that

―the act might include establishment where there are more than three or five employees; it probably should exclude agricultural and private domestic workers‖201—an interesting assertion, which would foreshadow future decision making in social security policy development. Yet, for now, the conference would move from Douglas‘ discussion of system design to the legality of unemployment insurance.

In the final presentation of the Albany conference, the issue of constitutionality was discussed by the Director of Columbia University‘s Legislative Drafting Research

Fund, J. P. Chamberlin.202 Chamberlin had been recognized as one of the foremost authorities on the drafting of labor legislation.203 In Chamberlin‘s view, any legal controversy would ―depend to a very large degree upon whether or not the particular act before the court seems to the court reasonably apt to remedy the situation which the legislature had in view, and not impose an unreasonably heavy burden upon the persons or interests affected.‖204 Despite this, Chamberlin assured the conference that ―there is

200 Ibid., 86.

201 Ibid., 86.

202 Ibid., 89.

203 Notes,5.

204 Proceedings, 89.

nothing novel in regulating employment by statue.‖205 Even the revenue structure of the system could be understood to be on solid legal ground. He explained to the governors that ―the constitutional prohibition against taking property without due process of law does not stand in the way of legislation placing on business a reasonable share of the burden caused by unemployment and inevitably associated with its operations.‖206 In the end, Chamberlin‘s assessment rested on the legal notion that ―the social principle of requiring contributions from a group of persons with a common interest in order to pay losses caused through that interest has been applied in many other cases.‖207

Chamberlin‘s presentation had clarified, at least in a general sense, the constitutionally of an unemployment insurance system. The governors could put some faith in the fact that any eventual unemployment insurance system would have sound legal footing.

Douglas‘ sixth and final memorandum for the attendees would serve a critical purpose. It was titled Some Objections to Unemployment Reserves Considered and, in doing so, Douglas was terse yet, effective. Douglas deconstructed the two most common and direct challenges to the proposed unemployment insurance system. First, ―it is feared that the payment of benefit will in reality constitute ‗doles‘ and will undermine the independence of the wage-workers.‖ Douglas made clear that ―such benefits would not partake as much of the nature of doles as does the present method of granting relief from public and private charity.‖208

205 Ibid., 90.

206 Ibid., 92.

207 Ibid., 92.

208 Memorandum No. 6, Box 71, Frances Perkins Papers, Columbia University Special Collections, Columbia University Libraries.

The second challenge that Douglas would refute had been the fear ―that the benefits to the unemployed will cause them not to seek employment but instead to remain idle.‖209 This anxiety could be mitigated through the inclusion of a set of basic benefit restrictions. These would include: restricting access to benefits only to those laid off due to a lack of work; a waiting period of one to two weeks; a requirement for the unemployed worker to register at the nearest public employment office; benefits amounting to significantly less than wages; and, finally, a clearly limited benefit period.210

Coming to an Agreement

Retiring to the Governor‘s Mansion, the attendee governors prepared for an evening of off-the-record discussion. Given the parameters that Roosevelt had outlined in his opening remarks, there was not any serious pressure to overcommit to any immediate establishment of an unemployment insurance system. With that, it would not take long for the governors to come to a unanimous agreement on an immediate course of action.

The press release summarizing this course of action was released on the Monday morning following the weekend conference. The release affirmed that the ―three major divisions of the unemployment problem from the point of view of government, were covered at the Governors‘ Conference.‖211 Each division would require some level of action. The first would involve ―a comparative study of labor and corporation taxes laws

209 Memorandum No. 6, 1.

210 Ibid.

211 Proceedings, 101.

in the seven states represented.‖212 Second would be a centralized mechanism for

―collecting and interchanging information and statistics regarding employment and unemployment.‖213 The final and most critical topic would be the eventual establishment of an ―American plan or plans for the creation of unemployment reserves, sometime referred to as unemployment insurance.‖214 As the release made clear, the impact of the

Albany conference would not be immediate. However, its legacy would be felt for years to come.

212 Ibid., 101.

213 Ibid., 101.

214 Ibid., 101.

Chapter IV

After Albany

In the days following the Albany Conference, Roosevelt and Perkins were keenly aware that its perceived success or failure would rely on newspaper coverage of the proceedings. With this in mind, direct access to the Executive Chamber had been granted to a range of beat reporters. It was a decision for which, by and large, they would be rewarded.

In the wake of the conference, the New York Times declared to its readers that the meeting had ―brought immediately to the front‖ issues of unemployment relief and unemployment insurance.215 Reporting that the opinions of both the presenters and attendees appeared ―to be in favor of mandatory insurance, with the States contributing to the funds,‖ the conference was broadly framed as a success.216 The Herald Tribune ran a headline proclaiming ―Governors Lay Foundation for Work Insurance.‖217 Quoting

Massachusetts Governor Ely, the Herald reported that the attendees were ―convinced that this conference will prove helpful not only to the people of the states represented but to the people of the whole United States.‖218 Governor Roosevelt himself was described as feeling that ―as much progress as could have been expected was made at the

215 ―Governors Advised to Fight Idleness with Job Insurance,‖ New York Times, January 24, 1931, ProQuest Historical Newspapers.

216 Ibid.

217 ―Governors Lay Foundation for Work Insurance,‖ New York Herald Tribune, January 25, 1931, ProQuest Historical Newspapers.

218 Ibid.

conference.‖219 ―He believes,‖ the reporter went on, ―that the widespread publicity given the conference will arouse countrywide interest in unemployment insurance.‖220 FDR‘s public messaging on the potential for unemployment insurance to become a permanent bulwark against unemployment crises of the future had begun to shift significantly.

Beyond direct coverage of the event, the Times Editorial Board would go on to praise Roosevelt for ―a fine thing in inviting Governors of the leading Eastern States to discuss means of dealing with economic crisis.‖221 The statement went on to explain that, while ―no one in his sense would want America to copy the British system,‖ flexibility to experiment would be required, given that ―the present emergency has had a highly sobering effect on our mood…we are not so cocksure as we used to be, not so confident that all is well with our American industrial system.‖222 These seemed to be Governor

Roosevelt‘s sentiments exactly.

Even the Harvard Crimson praised the efforts of its former Editor and his gubernatorial colleagues. ―A note of optimism is to be seen in the proposed program of the conference of governors at Albany,‖ one Crimson reporter exclaimed. The report went on to assert that ―it is to be hoped that the Governors' conference will bolster the ineffectual efforts of the national administration in coping with this problem.‖223 For

219 Ibid.

220 W. A. Warn, ―Governors to Press for Study of Insurance for Unemployment,‖ Special to the New York Times, New York Times (1923–Current file), January 26, 1931, ProQuest Historical Newspapers: New York Times, pg. 1

221 ―The Governors‘ Conference,‖ New York Times, January 26, 1931, ProQuest Historical Newspapers.

222 Ibid.

223 Harvard Crimson, ―Fact Finding,‖ January 30, 1931. http://www.thecrimson.com/article/1931/1/30/fact-finding-pa-note-of-optimism-is/.

FDR, this particular hope was becoming increasingly true. If the conference could be understood as a response to Hoover Administration inaction, it would directly serve his own political interests.

Despite widespread coverage of its success, some press attention had not gone entirely as the Roosevelt Administration had planned. FDR himself had heard whispers of a potential demonstration in the days leading up to the conference; yet, all the major proceedings had been held quietly, without interruption. By Sunday afternoon of the conference weekend, with the attendee governors preparing for the trip home, that quiet would be briefly disrupted; as the Times reported, ―a group of idle men appeared at the

State Capitol and asked for a hearing.‖224 The demonstration of several dozen members of the ―Albany Unemployed Council of the Trade Union Unity League‖ had begun at the

Capitol building and moved to the Governor‘s Mansion, once word had spread that the governors had already retired for the day.225 The placards and banners carried by the demonstrators read, ―We Want Work‖ and ―We Won‘t Starve‖ and ―Governors, less talk, more action.‖226 Unless a resolution was quickly produced, there would be significant potential for the coverage of the conference to be watered down by that of the demonstration. The governor was swift to action. ―After a parley, two members of the unemployed were allowed to present their arguments,‖ the representatives were walked into the governors‘ quarters, where ―they requested cash relief, free shelter in State

224 ―Unemployed Make Pleas to Governors,‖ New York Times, January 25, 1931, ProQuest Historical Newspapers.

225 Ibid.

226 Ibid.

armories and the end of evictions for non-payment of rent.‖227 Roosevelt spoke to these issues directly, explaining that ―under the terms of the State Constitution the money of the State could not be spent or its credit pledged for individual relief.‖228 He went on to explain to the representatives that he had recently issued an order opening state armories as shelters and that, for reasons possibly related to inadequate publicity, demand for the shelters had not yet been widespread.229 Satisfied with having earned an audience with the governor himself, the demonstrators left the Governor‘s Mansion without significant fanfare. FDR, through direct engagement, had turned a potential stumble into a public relations success.

Beyond the Conference

In the weeks following the conference, FDR continued to speak across the state on issues of recovery and relief. His commitment to decentralized government and his pre-Albany insistence on ―local‖ unemployment relief seemed to be dissipating rather quickly.230 However, it was in a speech on March 6, 1931, only a few short weeks removed from the Albany Conference, delivered at the Life Insurance Underwriters

Association Dinner at the Hotel Astor, that Roosevelt made his strongest commitment to permanent unemployment insurance.

―As many of you know I was for years active in the surety branch of the great field of insurance,‖ FDR imparted to the smoky ballroom of insurance executives and

227 Ibid.

228 Ibid.

229 Ibid.

230 Davis, FDR: The New York Years, 223.

their families.231 Pointing to history, Roosevelt shared with the dinner attendees that he had recently learned that ―suretyship is one of the oldest of all forms of business, for on an ancient tile found in the ruins of Babylon is a record of the pledging of property.‖232

With this framing he would go on to declare that ―insurance as a whole is indeed historic, reaching back through hundreds of centuries to meet a very natural human need for protection against all kinds of unforeseen or unknown contingencies.‖233 These natural human needs, of course, extended to the modern day and Roosevelt explained that

―insurance as a whole is a constantly changing and a constantly growing force in our individual lives and in our business lives.‖234 The next two lines of the address are among the most striking and reveal Roosevelt‘s evolving thoughts on the subject of unemployment insurance: ―As the world becomes more and more civilized and stabilized we are able to give protection against more and more forms of potential dangers or losses.

That is why I have at all times been so ready to go along with new forms of insurance to meet new needs.‖235 Roosevelt had handwritten the phase ―more civilized‖ on his podium copy of the speech. The man who had once openly equated the idea of unemployment insurance with a ―dole‖ was now publicly proclaiming a significant change in persuasion.

Roosevelt would go on to explain that, despite his past doubts, he had always opposed the idea that ―only because a new form of risk has never been written before it

231 Franklin D. Roosevelt, Life Insurance Underwriters Dinner Speech, March 6, 1931, New York, NY, No. 420, 1, Franklin D. Roosevelt, Master Speech Files, 1898, 1910-1945, Series 1: Franklin D. Roosevelt's Political Ascension. http://www.fdrlibrary.marist.edu/_resources/images/msf/msf00295.

232 Ibid.

233 Ibid.

234 Ibid.

235 Ibid.

should not be undertaken in the future.‖236 For FDR, the ongoing economic collapse would require a major reassessment of long-term unemployment relief strategy. In his view, unemployment insurance was emerging as a significant feature of that new strategy. Its emergence corresponded with what he described as the fundamental principle that ―insurance must, if it is to survive, be based on human experience.‖237

The governor was eager to move his audience to understand what that future might look like. He explained that ―today we are giving serious thought to still another form of insurance risk—that of providing some form of reserves for individual men and women to be used by them for their maintenance and support in time of involuntary unemployment.‖238 While sensible design would remain critical in order to ―prevent a mere dole,‖ these issues were now, in Roosevelt‘s mind, very navigable.239 As he explained policy design obstacles were, ―more methods of administration than matters of fundamentals.‖240 The central concept of unemployment insurance was sound. As for the challenges of feasibility, he offered his confidence that ―all of these can, I am very certain, be worked out in the days to come.‖241 As he closed, smiling and waving in response to applause, Roosevelt was keenly aware that the political future of unemployment insurance was now tied to his own.

236 Ibid.

237 Ibid.

238 Ibid.

239 Ibid.

240Ibid.

241 Ibid.

Candidate Roosevelt

In the months and years to come, Roosevelt as Governor of New York would greatly expand the role of the State in unemployment relief efforts. Throughout early

1931, Commissioner Perkins had been delivering increasingly devastating economic news to the Governor‘s Office. A New York Department of Labor Statistics report in the summer of 1931 judged that, even by the most conservative estimate, a million New

Yorkers were involuntarily unemployed, a number well beyond the means for existing relief organizations to handle.242 Calling a special session of the legislature in the fall of

1931, Roosevelt presided over the creation of what may be considered the crowning policy achievement of his time as governor, New York‘s Temporary Emergency Relief

Administration (TERA), which provided substantial state funding for work and home relief.243 His reputation as one of the most active and engaged governors in the country was building on the already general public impression that FDR held national political ambitions.

TERA had not been achieved without serious opposition. Republicans in the State

Assembly vigorously challenged the economic logic on which it was based as well as the income tax proposed to fund it.244 FDR used the governor‘s pulpit to mount his defense.

In a move unique among politicians of serious presidential aspirations, Roosevelt stood in front of the State Assembly in August 1931 to assert that government‘s obligations went beyond simple governance.245 Governmental responsibility extended not only to those

242 Davis, FDR: The New York Years, 239.

243 Bellush, Franklin D. Roosevelt as Governor, 149.

244 Ibid.,141.

245 Davis, FDR: The New York Years, 240.

held from employment by illness or old age, but also for ―men and women incapable of supporting either themselves or their families because of circumstances which make it impossible for them to find remunerative labor.‖246 His message had been a powerful and ultimately effective one. After a muted threat of delay, Republicans ultimately capitulated and TERA passed into law.247

Hoping to build on the successful passage of TERA, the Roosevelt administration began plans for mandatory unemployment insurance legislation. Conservative

Republican leadership in the State Assembly aligned with the National Association of

Manufacturers stifled these efforts.248 Legislative delay had been coupled with a coordinated effort in the press to label mandatory unemployment insurance as the ―first step in [a] program of paternalism.‖249 The conservative opposition focused on themes of cost, governmental overreach and constitutionality. It was a set of concerns that would define the debate over unemployment insurance for years to come.250 Republicans in the

State Legislature continually delayed the proposed legislation in committee. With the

Administration focused on TERA, they had ultimately succeeded in preventing it from reaching the floor.251

246 Ibid., 240.

247 Bellush, Franklin D. Roosevelt as Governor, 142.

248 Ibid.,189.

249 ―Producers against Insurance for Idle,‖ New York Times, August 30, 1931, ProQuest Historical Newspapers.

250 Edwin Witte, The Development of the Social Security Act (Madison: University of Wisconsin Press, 1962), 130.

251 Bellush, Franklin D. Roosevelt as Governor, 189.

Despite this temporary setback, Roosevelt‘s interest in mandatory unemployment insurance would not fade. FDR had always maintained, at the Albany Conference and elsewhere, that unemployment insurance would be a long-term preventive measure. It was meant to prevent the next crisis, not necessarily relieve the current one. With a vocal opposition to contend with, Roosevelt knew it would take time to effectively combat it. In turn, FDR opted to spend the remainder of 1932 pressing for an expansion of TERA and voicing his support for Federal unemployment relief legislation.252 Unemployment insurance had been delayed but only temporarily.

With over 160,000 people receiving direct relief through TERA, it could be argued that no other governor in the country had taken such aggressive action against the growing unemployment crisis.253 It was a sentiment that Roosevelt would attempt to convert into a political advantage. The beginnings of a national presidential campaign had emerged.

The economic devastation of the early 1930s had accelerated the transition from welfare capitalism to a more broadly organized set of worker demands bolstered by state action.254 Unemployment insurance represented a significant part of that transition.

Workers in urban centers throughout the Northeast and the Midwest sought political representation that could more directly reflect their interests.255 In the election of 1932,

Roosevelt hoped to open the door to their support and take advantage of this budding

252 Bellush, Franklin D. Roosevelt as Governor, 149.

253 Davis, FDR: The New York Years, 242.

254 Lizbeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1919-1939 (New York: Cambridge University Press, 1990), 3.

255 Ibid., 3.

political realignment. His vocal support of unemployment insurance significantly contributed to that effort.

Once the presidential campaign began in earnest, Roosevelt continually highlighted the relief work being done in New York alongside his support for unemployment insurance. At one Massachusetts campaign stop, he declared that

President Hoover‘s Administration had, ―utterly and entirely failed—failed to meet the great emergency.‖256 Yet, in Roosevelt‘s view, the failure had not been caused by a lack of reliable information. Highlighting the fact that Hoover himself had chaired an

Unemployment Conference in the early 1920s, Roosevelt declared that despite the central recommendations of the conference, including public works, long-term infrastructure projects, safeguards against inflation, and the establishment of unemployment offices,

Hoover ―did nothing to put into effect the provisions advocated in 1923 against the possibility of a future depression.‖257 Roosevelt was especially careful to highlight a critical measure of relief discussed at Hoover‘s conference: unemployment insurance.

―No one in the Administration in Washington has assumed any leadership in order to bring about positive action by the States to make this unemployment insurance a reality,‖ he explained.258 In FDR‘s view, if it had been in place the current crisis may have been

256 Campaign Address on a Program for Unemployment and Long-Range Planning, October 31, 1932, Boston, Massachusetts, Franklin D. Roosevelt, Master Speech Files, 1898, 1910-1945, Series 1: Franklin D. Roosevelt's Political Ascension. http://www.fdrlibrary.marist.edu/_resources/images/msf/ msf00295.

257 Ibid.

258 Ibid.

significantly blunted. Leaving the text of the speech for a brief moment, Roosevelt exclaimed to the audience that ―someday, in our leadership we are going to get it.‖259

Conclusion

As she approached the lectern at eighty-three years of age, a still dynamic Frances

Perkins couldn‘t help but be filled with pride. As she looked over the small audience gathered at the Social Security Administration‘s Baltimore Headquarters on this early summer morning in 1962, the former Secretary of Labor and master political operator felt a distinct sense of nostalgia. ―I must say I feel very much at home,‖ she quipped, ―I feel at home because the Social Security Administration has, ever since it was established, been a sort of special concern of mine.‖260 It certainly had been. While on stage, she spoke with a steady and humble tone indicative of her ability to navigate a political world largely unaccustomed to someone of her gender in a position of leadership. That political ability had been on clear display for decades prior to the Social Security Act of 1935 and especially so in her work organizing the Albany Conference of early 1931.

In a speech focused on the history of the Social Security Act, the Secretary reminisced on a range of the Roosevelt social policy accomplishments, including unemployment insurance. She explained that ―while Roosevelt was Governor and we were in the midst of this depression in the early twenties I did get him sort of worked up about it.‖261 She explained that ―at that point education was the whole thing, you see. We

259 Ibid.

260 Frances Perkins, Address Delivered at Social Security Administration Headquarters, Baltimore, Maryland, October 23, 1962. https://www.ssa.gov/history/perkins5.html.

261 Ibid.

had to get people used to the idea.‖ This, of course, included the governor and future

President.262 This had been her own central goal in organizing the Albany Conference, exposing FDR to thought leaders like Paul Douglas, and ultimately providing a platform from which the governor could take up leadership on the issue of unemployment insurance.

Perkins described Roosevelt‘s newfound attention to the issue as ―an important victory. Once you get the ear of a politician, you get something real.‖263 Perkins was revealing a critical component of her own political philosophy in explaining that ―the highbrows can talk forever and nothing happens. People smile benignly at them and let it go. But once the politician gets an idea, he deals in getting things done.‖264 She warned the collection of young administrators, ―don't ever scorn the politicians.‖265 For Perkins, it was critical to recognize that ―they are really the key to these situations in which we now deal.‖266 It was a practical reality that she held a remarkable ability to act upon. The

Interstate Conference on Unemployment of 1931 had been one of many examples of this.

January 1931 marked a significant milestone in the political debate surrounding unemployment insurance. The Albany Conference, largely under the direction of Frances

Perkins, reflected three major shifts in the political debate surrounding unemployment insurance. First, it represented a willingness on the part of the elected leadership of seven major eastern states to study the historical and theoretical underpinning of a robust

262 Ibid.

263 Ibid.

264 Ibid.

265 Ibid.

266 Ibid.

unemployment insurance system. Secondly, it provided the opportunity for FDR, along with a broad set of future New Deal–era policy architects, to begin coalition building around the issue of unemployment insurance. Finally, the conference marked a pivot in

Roosevelt‘s understanding of unemployment insurance—from an undesirable ―dole‖ project to a central policy goal. These three days in January 1931 deserve an increased recognition of their significance as well as further study.

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