LaborHistory, Vol. 42, No. 3, 2001

Townsendand Roosevelt: Lessons fromthe Strugglefor Elderly Income Support

DANIELJ. B.MITCHELL

Senator,let meask youwhat createsincome? Nothing in theworld but demand.Now, let ushave demand,an abundant demand and we shall vastly increasethe national income. 1 (Dr. Francis E.Townsendat aSenatehearing)

Alternative schemesfor “saving”Social Security are muchin theair, asCongress and thePresident confront the forthcoming retirement ofthe baby boom generation.Social Security wasan integral part oftheNew Deal program. Itsnow-distant Depression-era origins are oftencited as proof ofanoverdue need for reform by thosecalling for radical changes.In contrast,to those traditional liberals resisting drastic changes,Social Security’s NewDeal origins putthe program onhallowed ground. Historiesof Social Security’s passage focuson theviews of the various “progressive” reform movementsand currents of thought that eventually came together toframe the Social Security Actin 1935. The respectablereformers, government ofŽcials, and businessleaders who played apart in theAct’ s creation left behinda paper trail of documents,articles, andarchives. For academicsreviewing this history, thereis a natural tendencyto concentrate on this mainstream documentation. There is atroubling element,however, in thebias towardrespectability. It isoften thecase that thoseproposing radical economicand social remedieshave anin uence onthe political process,even if their schemesare notadopted. And the proponents of respectableproposals sometimesundertake less than honorable tacticsto discredit their radical critics.Such tactics are notnecessarily given prominent attentionwhen the winnerswrite thehistory oftheir success. Atthetime Social Security wasbefore Congress, the alternative TownsendPlan— a radical pensionscheme that attracted millions ofdevoted followers— was also under consideration.Under the Townsend Plan, eachperson over 60 wouldhave been granted amonthly pensionof $200 per month—ahuge sumat thetime— on condition he/shenot work and spend all themoney within themonth. The Townsendstipend was unrelatedto past workhistory or wages.It containedno pre-funding of beneŽ ts. The TownsendPlan wasdecidedly not a mainstream proposal. Unlikethe Social Security program that emerged,the Townsend Plan didnot have behindit along history of academic andpolitical debate.The TownsendPlan wouldhave involved avast income transferand entailed a major price increase,among other drawbacks.Moreover, the “archives”left behindby theTownsendites consist largely ofpropaganda pamphlets, newslettersto the faithful, andan autobiography ofits founder.The TownsendPlan, in short,was not respectable— then or now. Yet,although histories ofSocial Security give Townsendlittle attention,there is

1U.S. Congress,Senate, Economic Security Act: Hearings beforethe Committee on Finance ,Seventy-Fourth Congress,First Session (Washington, DC, 1935),1025.

ISSN0023-656Xprint/ ISSN1469-9702online/ 01/030255–22 Ó 2001Taylor & Francis Ltd onbehalfof The Tamiment Institute DOI: 10.1080/00236560120068137 256 D.J. B.Mitchell grudging acknowledgmentthat agitation for theTownsend Plan “wasa potentpolitical forcein thepassage ofSocial Security.”2 Onerecent historian has suggestedthat the post-1935 move towarda pay-as-you-go modelof Social Security—often detested by contemporary critics ofthe system— had its rootsin continuingTownsend agitation in theperiod after theinitial Actwas passed. 3 This limited recognition ofTownsendite inuence is reasonenough to re-examine theTownsend episode. Andthere is another reasonas well. The currentdebate over Social Security (and Medicare)is being conductedin what has becomethe traditional modeof public policy making. Learnedposition papers are prepared by respectableacademics, policy ana- lysts,think tanks,commissions, and government agencies.It isassumed implicitly that theseefforts— as Ž lteredthrough thepolitical process—will eventually producean acceptable “solution”to the problems posedby thebaby boomers’retirement. The questionis “acceptable towhom?” Is it really clear that theelderly boomersof, say,2020 or 2030 will contentthemselves with what is viewedtoday asa respectable solution?The history ofthe Townsendites suggests a needto reconsider the idea that theboomers will go quietly intothe sunset along apath chosenby present-day mainstream experts.A more likely scenariois that therewill arise off-centerpolitical entrepreneursto harness any discontentfelt by theelderly ofthe future. The issueof thefuture of Social Security is notjust a matter tobe resolved through economicand actuarial analysis. History has lessonsto teach, although thoseresearchers and policy makers prominently involved in thecontemporary Social Security debateare largely ignorant ofthose lessons.

PresidentialFears Certainly, theamount of effortaimed at discrediting theTownsend Plan in the1930s isnot consistent with aview ofthe Townsendites as a marginal movementof little importance. In 1936, aCongressionalinvestigation waslaunched into “ Old-Age PensionPlans andOrganizations.” Despite its plural title (i.e.“ Plans”), theinvestiga- tionwas focused mainly onone plan, theTownsend Plan, andon onegroup, Old-Age Revolving PensionsLtd. (OARP), theofŽ cial Townsendorganization. Aspecial “SelectCommittee” of Congresswas established to conduct this investiga- tion.Its chair, CongressmanC. Jasper Bell ofMissouri, was chosen because he had a safeseat controlled by theKansas City Pendergastmachine. Bell wouldnot have tofear electoral reprisal from angry Townsendites,or sothe reasoning wentwithin the Rooseveltadministration that wasvery muchbehind the investigation. 4 The elderly votedin large numbersand had time toengage in political action.That wastrue then, now,and will likely betrue when the boomers retire. Why didthe Roosevelt administration feelsuch stealth wasrequired todo battle with Dr. Francis Townsend,an elderly LongBeach, California, physician, andhis loyal

2IrvingBernstein, ACaringSociety: The New Deal, the Worker,and the Great Depression (Boston, MA, 1985),66; Paul H.Douglas, Social Security in the United States: An Analysis andAppraisal of the Federal Social Security Act (NewYork, 1936),307; John DuffyGaydowski, “Dr. Townsendand his Plan 1867–1934” . (unpublished MAessay, Dept. ofHistory, UCLA, 1970),197– 198. 3StevenA. Sass, The Promiseof Private Pensions: The First HundredYears (Cambridge, MA,1997),98. 4David H.Bennett, Demagogues in the Depression: American Radicalsand the Union Party,1932– 1936 (NewBrunswick, NJ, 1969),178– 179. See also Alan Brinkley, Voices ofProtest: Huey Long, FatherCoughlin, andthe GreatDepression (NewYork, 1982). Townsend and Roosevelt 257 followers?By 1936, theadministration already had wonenactment of Social Security, which had beenpassed by Congressin 1935. Accordingto one historian, theanswer is simple: “The Bell Committee’s purposewas almost wholly political in nature;its objectivewas the discrediting ofthe [Townsend] movement and the humiliation ofits leader.It aimed todestroy the Townsend organization’ s effectivenessas a political force in the1936 elections.”5 Surely,if theTownsendites were viewed as a minor fringe element,they wouldnot have required suchattention from theadministration andCongress. The only “empirical”test of Townsendite potential had beenin theearlier debateover Social Security.In that debate,the Townsendites had lost—in thesense that Social Security andnot the Townsend Plan had beenadopted. But the Townsendites had played enoughof a role in that debateto suggest that they couldbe a political forcein the upcoming election.Moreover, Townsendism showed no sign ofdisappearing; indeed, it wasabout tospawn a rash ofstate-level copycat movementsall pushing schemesto raise elderly incomes. Although it may seemstrange in retrospect,in 1936 Rooseveltwas not at all sureof thepolitical outlookfor his re-electioncampaign. The blank checkgiven him by Congressin 1933 todeal with theDepression was no longer available. Rooseveltfaced strongopposition from conservativeswithin his party aswell asfrom Republicans. LouisianaSenator Huey Long— anominal Democrat with his ownpopulist, anti-Roo- sevelt“ share ourwealth” movement— hinted at becoming acandidatefor Presidenton athird-party ticket.And Long had incorporated pensioniteelements into his ownvague scheme.Some observers saw a fascistdanger in theblind enthusiasmof the Townsendites—who might team upwith Long. 6 Noone thought that Long—even backed by Townsend—could actually winin 1936. The fear wasthat athird-party Longcandidacy could take enoughvotes from the Democratsto give theelection to the Republicans. Indeed, Long had that very intent. 7 HeŽ guredthat hecould hand the 1936 electionsto theRepublicans by runningon a third-party ticket.The Republicanswould exacerbate theDepression and, in 1940, with theelectorate fed up with both major parties, Longwould take thepresidency as anational savior. Roosevelt’s economicpolicy wasunder attack. Particularly controversial washis decisionto go offthe gold standardin 1933 andthen return with adevalueddollar in 1934. The currencydecision entailed invalidating various “gold clauses”in private and ofŽcial contracts—amatter which ultimately wentto the Supreme Court and was narrowly decidedin Roosevelt’s favor. However,the New Deal gold policy was denouncedin aspeechby former PresidentHerbert Hoover,who remained aŽgure of signiŽcance in Republican politics. Respondingto a letter from asupporter,Roosevelt said:“ [Hoover’s view] may bea factor in 1936 butI am inclinedto think at presentthat more seriousopposition may comefrom theDr. Townsends,the Huey Longs, etc.” 8 Plainly, theTownsend Plan, andits originator, wason the President’ s mind.

5SeeBennett, 179. 6LutherWhiteman and Samuel L.Lewis, Glory Roads:The Psychological State ofCalifornia (New York, 1936),265– 267. 7Robert Mann, Legacy to Power:Senator Russell Long ofLouisiana (NewYork, 1992),30– 31. 8Letterfrom Roosevelt to Frank E.Gannett(president of the Gannettnewspaper chain), March1, 1935. Gannetthad defendedRoosevelt’ s goldpolicy againstHoover’ s attack in anewspapercolumn. The Supreme Court decisionupholding Roosevelton goldhad beenissued in mid-February 1935(OfŽ cial File 229(Gold), Box5, Franklin D.RooseveltPresidential Library, HydePark, NY) 258 D.J. B.Mitchell

West Sacramento Calif.May 25 th–36

President Roosevelt

Wethe membersof Townsend ClubNo 11West Sacramento, dorespectfully askthat you use the power invested in you asPresident ofour United States, to stop this disgraceful andun-American “Bell Investigation”so-called, and stop the persecution ofour belovedleader, Dr. F. E.Townsend. andby the exercise ofyour highauthority to thus exalt yourself in the esteem ofyour citizens whose rights you have sworn to protect. Werepresent two hundred(200) voters in our smallclub.

Respectively Submitted.

President Dr.D. B.Boyd Secy. Mrs.C. Simpson

FIG.1. Sample letterfrom Townsendites to PresidentRoosevelt protesting the Bellhearings.

In short,the Roosevelt landslide that actually occurredin the1936 electionwas not foreseenand the political climate seemedvery unstable.The constantpolling that characterizes thecontemporary political scenedid not exist in the1930s. Indeed,1936 wasthe year ofthe famed LiteraryDigest poll that forecasta victory for Republican presidential candidateAlf Landon.What wasavailable togauge public opinion was anecdotalinformation owing intothe White House. Includedin this inow was a letter from amajor trade unionofŽ cial worried that workersmight beattracted tothe Townsend Plan. Andthere were postal reports onthe large volume ofmail going tothe Townsend organization. The special electionof a TownsenditeRepublican congressmanfrom Michigan, warnings that Republicanswere “irting”with Townsend,and that California Townsenditeswould try toinŽ ltrate the Democratic conventionwere also troubling. 9 It wascertainly not foreseenthat 71% of votersfavoring theTownsend Plan wouldnonetheless vote for Roosevelt. 10 Of course,Townsendite voters were not aware ofthe degree to whichthe Roosevelt administration had instigated theBell hearings; they wroteletters to the President asking him tointervene against thecommittee (seeFig. 1). Surely they didnot know ofthe enlistment of thepostal authorities by theadministration toget Townsend. 11 To many elderly Townsendites,the Townsend Plan wassimply anextension of the New Deal. Indeed,Dr. Townsendseemed to have that view.The TownsendPlan, after all, involved economicactivism bygovernment,social welfare spending,and an attempt to stimulate theeconomy. At asuperŽcial level, wasnot that what theNew Deal wasall about? Whatever thethinking ofthe Townsendites, the attempt ofhigh NewDeal ofŽcials toŽ ndsome dirt onthe Townsend operation wentback to1934 at least.To besure, therewere ofŽ cial effortsto expose the “ economicand social absurdities”of the TownsendPlan, asthe young Wilbur Cohentermed them. 12 Butmoving beyonda

9Letterfrom Victor E. Wilson, Sept. 3,1935,summary ofletter from Dan Tobin (Teamsters), Jan. 17, 1935,letter from Edwin E. Witte,Dec. 11, 1935, OfŽ cial File 1542 (Townsend), Franklin D.Roosevelt PresidentialLibrary. 10HadleyCantril, The Psychology ofSocial Movements (NewYork, 1941),209. 11Letterfrom the PostmasterGeneral, April 16,1935 (OfŽ cial File 1542(Townsend), Franklin D. RooseveltPresidential Library). 12EdwardD. Berkowitz, Mr.Social Security: The Lifeof Wilbur J. Cohen (Lawrence,KS, 1995),30. Townsend and Roosevelt 259

April22, 1938 820 Brook Dallas,Tex.

Honourable President Franklin D.Roosevelt

Dear Friend Idothank you that Godpardoned Dr. Townsend through you it was aloveable thing to do.Of course you know Godhas inspired Dr Townsend to bring“ hisGod’ s” supply to hispeople. Didn’t you see that perseverence that DrTownsend has,that is the power ofGod. Of course, Idonot need to tell you, for you know it already.This plan will bethe law ofour land.Our God will put it in operation some day, Godwill put the desirein our present President’s heartif it is aour place to use the plan but ifit is not your place to put it in operation, the desirewill befelt in the heartof some future President. Forall power belongs to Godwe arehis ideas doing hiswill. Idothank you again foryour kinddeeds and wish Godsguidance foryou andyours.

Your Friend andwell wisher

MrsAnnie Self

FIG.2. Sample letterthanking the Presidentfor pardoning Dr. Townsendafter his convictionfor contempt ofCongress.

purely informational campaign, EdwinE. Witte,Executive Director ofthe administra- tion’s Committeeon Economic Security, tried toenlist the Federal Bureauof Investi- gation (FBI) in theanti-Townsend endeavor. Witte’s committee,the planning task forcefor theadministration’ s Social Security proposals,wrote requesting an FBI investigation in November. Among Witte’s com- plaints werethat Townsendpublications madeit appear that Rooseveltsupported their plan.13 The FBI closedthe case after concludingthat nothing Townsendhad done warranted federal prosecution.However, Congressman Bell requestedthe FBI supply him with any criminal recordsit had onselected Townsend ofŽ cials, including Dr. Townsendhimself. 14 FBI director J.Edgar Hooverfurnished Ž lesfor certain individu- als.But he indicated uncertainty as to whether the individuals for whichŽ leswere foundwere the same people in whomBell had aninterest. 15 Alater effortby Bell to

13FBI Žleson Townsendwere made available to the author undera Freedomof Information Actrequest. TheFBI had receivedcomplaints fromprivate citizensabout the Townsendoperation earlier,but had found no causeto becomeinvolved. DirectorJ. EdgarHoover forwarded the Žlesto postal authorities for investigationof mail fraud. Relevantmaterials concerningthe Witterequest include: Holtzoff to Hoover, Oct. 4,1934;Witte to Holtzoff,Oct. 5, 1934;FBI interviewwith Witte,Nov. 8, 1934.The last document indicatesthat the LosAngeles Bureau ofŽ ce had beeninstructed to make a“discreet”investigation of the Townsendorganization. AformerTownsend organization employee wrote to Wittealleging mail fraud and failureto pay femaleemployees the California minimum wage;this letterwas passed on to the FBI (Shuster to Witte, Nov. 19,27, 1934). The FBI did not seemespecially desirous of pursuing Townsend but did compile information. Itclosed the LosAngeles investigation at the endof 1935 with anote indicatingthat the localU.S. attorneydid not believesuccessful prosecution could be made (Hanson Report, Dec.30, 1935). 14Tamm to Hoover,Feb. 25,1936 (FBI Žles). 15Includedwas aŽleon an F.E. Townsendwho may ormay not have beenDr. Townsend(Hoover to Bell, Feb. 26,1936, FBI Žles). Subsequently, duringthe hearings,the FBI did turnover a criminal Žle ofone individual to the Bellcommittee (Tamm to Hoover,June 3, 1936,FBI Žles). 260 D.J. B.Mitchell obtain information directly from local FBI agents(rather than going through Hoover) wasrebuffed. 16

Townsend’s Contempt AfterTownsend’ s initial testimonyto the Bell committee,he walked out of the hearings in ahuff,escorted by Gerald L.K.Smith, aviciousanti-Semite whohad beenpart of theLong organization. The walkout prompted acontemptof Congress citation, convictionafter atrial, anda jail sentence.Requests to Roosevelt for apardon for Townsendpoured in from Townsenditesand some members ofCongress. (Fig. 2) By that time, theadministration— now past the1936 election—would have been happy tooblige, hoping toput the Townsend issue to rest. But Dr. Townsendwould notask for apardon (thenormal procedure);he was content to be a martyr. Thus, whenTownsend was about toreport tojail, an unsolicited pardon from Roosevelt miraculously appeared. Accordingto a pressrelease, the President was persuaded by a telegram from now-benevolentCongressman Bell. RepresentativeBell argued that the Townsendwalkout had beenplanned by “menof stronger will andintelligence” than thebefuddled old doctor. 17 AsTownsend gleefully reportedin his autobiography, thepresidential pardon had beenissued so quickly that theWhite Househad failed tomake acarbon copy andlater requestedhe send the original back toduplicate. 18 Still, his walkoutsfrom investigations werenot always sosuccessful. Townsend also marched outof a courtproceeding investigating fundingof his Clevelandbranch. After a car chase,however, he was hauledback tocourt by alaw enforcementofŽ cer. 19

Origins ofthe Townsend Plan Howdid the Townsend Plan originate? Somecritics saidthe plan had itsorigins in a humorousmagazine article by advertising executive—and later Congressman—Bruce Barton. Writing in Vanity Fair in 1931 asthe Depression intensiŽ ed, Barton proposed asa jokethat “every man andwoman in theUnited States be retired from workat the age offorty-Ž ve ona pensionamounting toone-half of his or her average earnings in thepreceding Ž ve years.”Barton explained that theproblem with themodern economy wasunderconsumption. “ Myremedy,” he wrote, “ …issimple andFundamental. Createa special automatic classof Consumers.” Barton wenton, “ Letyoung mendo thework, and old men loaf,” a statementeerily similar tothe ofŽ cial slogan later adoptedby Townsend’s OARP: “Age for leisure;youth for work.” Townsendnever acknowledged any relationship betweenBarton’ s jokeand his own later plan.20 And,in any event,there were other suchplans aroundto copy. For example, asthe Bell committee pointedout, a similar pensionprogram wascopyrighted in 1931 by adentistsaid to be inspired by theTechnocracy movement. 21 But the fact 16Bellto Jones, Mar.16,1936; Jones to Bell, Mar.21, 1936; Listerman to Hoover,May 1,1936;Hoover to Listerman,May 13,1936 (FBI Žles). 17White Housepress release dated April 18,1938 (President’ s PersonalFile 3385,Franklin D.Roosevelt PresidentialLibrary). 18FrancisE. Townsend, New Horizons (An Autobiography) (Chicago, IL,1943),212. 19SeeWhiteman and Lewis,144– 145. 20SeeBennett, 152. 21Technocracycalled for a planned economy runby scientistsand engineerswith values and incomes calculatedin ergs.U.S. Congress,House of Representatives, Hearings beforethe Select Committee Investigating Old-AgePension Organizations ,Seventy-Fourth Congress,Second Session (Washington, DC, 1936),757– 764; Cantril, The Psychology ofSocial Movements ,171;Whiteman and Lewis,66. Townsend and Roosevelt 261 wasthat well beforethe Great Depression, removing theelderly from competition with younger workerswas seen by somereformers asa way ofraising wages. 22 Moreover,pension plans for theelderly had beenproposed in Congresswell before theGreat Depression. Perhaps theearliest in theline ofCongressional efforts to set up ageneral pensionsystem was a bill of1909, endorsedby theAmerican Federation of Labor.At thetime, therewere doubts whether a national pensionwould be consti- tutional. Butveterans’ pensions clearly werelegal; Civil War veteranswere receiving them.So thebill proposedcreating an“ Old Age HomeGuard” for those65 years and over.Members of this Guardwould be paid $120 per year for unspeciŽed “ military” duties.23 Evenif federal authority toestablish apensionplan wasquestioned, there was little doubtthat statescould do so. By 1933, some17 stateshad somekind of pension system,plans oftenpushed by theFraternal Order ofEagles onbehalf ofthe elderly. Theseplans typically required long residencein thestate and that someor all ofthe costbe funded at thecounty level. California—Townsend’ s homebase— had adopted theŽ rst“ mandatory”plan in 1929, underwhich the state required thecounties to set up“ outdoorrelief” systems for theindigent elderly. 24 Anothereight statesprovided that countiescould optionally createsuch plans. 25 In short,Townsend had plenty ofsourcesfrom whichto compile aplan. Butrather than acknowledgeany inspiration from apre-existing source,Townsend had amore poignant story ofhow his particular proposal wasconceived. Townsend’ s versionwas that hehad lookedout his windowand had seenold women foraging in his garbage for food.His fury at theevident injustice inspired him tocome up with his ownplan for theelderly.

Townsend’s Remedy Seeingthe garbage ladies ledTownsend to decide, he later reported,that all citizens60 years oldand over shouldreceive $200 per monthfrom thefederal government.The $200 Žgure wasdeliberately setincredibly high by thewage andincome standards of theperiod, Townsend later explained. The idea wasthat with sucha high number,no onewould likely comeup with aplan with astill larger pension.Despite this retroactive claim, Townsend’s earliest versionof theplan actually setthe Ž gure at $150; apparently $200 wastoo big initially evenfor Dr. Townsendto contemplate. 26 In reproducing this versionin his autobiography, Townsendrewrote history andchanged the Ž gure to $200.27 In fact,there was always afuzzyelement in Townsend’s pensionŽ gure.For

22Jill Quadagno, The Transformation ofOld Age Security: Classand Politics in the American WelfareState (Chicago, IL,1988),100. 23LeeWelling Squier, OldAge Dependency in the United States: AComplete Survey ofthe Pension Movement (NewYork, 1912),339– 347; Abraham Epstein, The Challenge ofthe Aged (NewYork, 1928),259– 262; Abraham Epstein, Insecurity: AChallenge to America (NewYork, 1968[1933]), 532– 533; Theda Skocpol, Protecting Soldiersand Mothers: The Political Origins ofSocial Policy andthe United States (Cambridge, MA, 1992),212– 217. 24“Outdoor relief”referred to cash payments recipientscould receive at home ratherthan in-kind support in poor houses. 25Epstein, Insecurity, 534–535. 26Townsend’s lettersto the Long Beach PressTelegram ,in which the earliestversions of the plan appeared, arereproduced in Gaydowski, Dr.Townsend andhis Plan ,and in John DuffyGaydowski, “EightLetters to the Editor:Genesis of the TownsendNational RecoveryPlan, Introducedby J.D.Gaydowski,” Southern CaliforniaQuarterly ,52(Dec., 1970),382. 27Townsend, New Horizons , 138. 262 D.J. B.Mitchell example, in a1941 pamphlet, Townsendclaimed theplan wasnever $200— only up to $200, with athen-currentestimate ofonly $50. 28 Whatever thenumber— and $200 waswhat rank-and-Žle Townsenditesgenerally believed it tobe— the only conditionfor receipt wasto refrain from employment and topromise toconsume the full pensionin 1month.The plan combinedthe notion of spreading workwith relieving underconsumption,ideas popular during theDepression. For example, thecodes of the National Industrial Recovery Act—and later theFair Labor StandardsAct— sought to spread work by limiting weeklyhours and discourag- ing child labor. Andthe ofŽ cial rationale ofthe Wagner Act—as found in its pream- ble—was that collective bargaining wouldstimulate consumptionby raising wages. Townsend’s pensionwas to be Ž nancedby a2% turnover or “transactions”tax. But it wouldactually becostless, according toTownsend, since the plan wouldstimulate theeconomy by far more than thepension expenditure, a multiplier called the“ velocity effect.”29 In oneearly version,the plan had thegovernment create$2 billion in new currencyto jump-start the“ revolving”feature of the plan. 30 The revolving terminology suggestedthat oncestarted, the plan wouldpay for itself with thetax amply reŽlling the coffersdue to the multiplier. If that notionseems far-fetched, it wasin keeping with various “pump-priming”notions popular in the1930s, i.e.that aninitial demandshock wouldpush the economy to a higher, permanentequilibrium. With a$2 billion jump-startvia newcurrency, this versionof the Townsend Plan had amoneycreation component(also popular during theDepression), although that elementwas lost as the transactions tax becamethe central elementof Ž nanceand controversy.But language ofthe ofŽ cial Townsendliterature spokeof the velocity of money(a phrase that may have beencribbed from Irving Fisher’s quantity theory of money).It pointedto excess bank reservesas potential fuelfor economicrecovery. Thus,prevailing monetary doctrineswere part ofthe package, along with proto-Keyne- sianism.

Establishment Views Townsend’s prescription for theelderly andthe Depression did not sit well with conventionaleconomic opinion. Thus, his ofŽcial pamphlet literature warnedthe faithful tobeware of criticisms from “stock-marketoperators” as well as“ college professors,economists, and newspaper writers.” 31 Andcritics ofTownsend were not in shortsupply. The Tax Policy Leaguedeclared that theTownsend Plan would“ crush business[and] bankrupt thecountry.” Among theLeague’ s supporterswas Professor Paul H.Douglas ofthe University ofChicago, later Presidentof the American EconomicAssociation and Senator from Illinois. Leagueliterature frettedabout thepoor grandma who,instead of spending all ofher pensionin amonth,as required, innocently gave her grandsona $5 bill for his savings. Wouldshe be targeted by agovernment “army ofsnoopers and ferrets” ? 32 President

28FrancisE. Townsend, The Townsend National Recovery Plan:New Reference Book (Chicago, IL,1941). 29SeeBennett, 151– 152. 30Richard L.Neubergerand KelleyLoe, An Armyof the Aged:A History andAnalysis ofthe Townsend OldAge Pension Plan (NewYork, 1973[originally published in 1936]),58. 31J.W.Brinton, The Townsend National Recovery Plan:The Solution ofYour Problem ,3rdedition, revised (Chicago, IL,1936)(pamphlet). 32MabelL. Walker, The Townsend Plan Analyzed (NewYork, 1936)(pamphlet). Townsend and Roosevelt 263

Roosevelthimself keptofŽ cially quietabout theTownsend Plan. Butin aletter toa young nephew,he declared it wouldbe an economicdisaster. 33 Presumably, these presidential viewswere shared with othersmore inuential aswell.

Left, Right, or Neither? Townsend’s viewson government andpensions were hard toclassify ona traditional left–right spectrum.In 1934, California statepolitics werein turmoil dueto the takeover ofthe Democratic Party by one-timeSocialist muckraker UptonSinclair and his EPICcampaign for Governor(EPIC stood for EndPoverty in California). Sinclair called for turning idle farms andfactories into worker cooperatives Žnancedby anew statecurrency. And initially hecalled for apensionplan for theelderly. Despitethe pension element, Townsend refused to endorse the EPIC program becauseit “opposesthe proŽ t system.”34 Butas a young physician in Belle Fourche, SouthDakota, heconceived himself aSocialist andwrote a Socialist newspaper column.Townsend involved himself in politics early on,winning a seaton the Belle FourcheCity Council.At thepeak ofhis movement,Townsend made the mistake of inviting Socialist Party leader Norman Thomas tospeak to his followers.To abooing audience,Thomas pronouncedthe Townsend Plan tobe a “quackremedy,” a particu- larly unkinddescription of a plan createdby aphysician. 35 Muchlater in life, Townsendendorsed the left-wing candidacy of HenryWallace for Presidenton a third-party ticket in 1948. 36 In aletter tothe Independent Progressive Party (Wallace’s electoral vehicle in California), Townsendexpressed his disenchant- mentwith Republicansand Democrats alike. Buthe also notedthat “many ofour staunchTownsendites are notin accordwith my views,”and thus made theendorse- mentpersonal rather than onbehalf ofhis organization. 37 In spiteof this endorsement,Wallace’ s IndependentProgressive Party refusedto make more than ageneral referenceto Townsend’ s role in highlighting theplight ofthe elderly. Only thecandidate of the tiny Vegetarian Party actually advocatedthe TownsendPlan in 1948. 38 Townsendhimself attendedthe convention of the left-lean- ing CIOin this era, ostensiblyas a reporter for his ownmovement’ s newspaper. 39 Yet despitehis sometimeleftist leanings,Townsend often seemed more at homewith Republicans,perhaps becauseof the hostility his program drewfrom theRoosevelt administration. Butit wasnot just Townsend who was politically mercurial. Hiselderly followers werealso hard toclassify ona left–right Europeanscale. They might favor Democrats or Republicans,depending on who was making pensionitepromises. And they might

33Letterto James Davis fromRoosevelt, Mar.6, 1935(President’ s PersonalFile 6678(Townsend Clubs), Franklin D.RooseveltPresidential Library). Young Davis wantedto know the President’s views fora speechat school. Theletter cautions him, however,to keepthe communication conŽdential. 34SeeTownsend, New Horizons , 170. 35SeeBennett, 9. 36Ibid. 290. 37Letterof April 27,1948 from Townsend addressed to “Membersof Progressive Citizens of America, Friendsof the IndependentProgressive Party, and the TownsendNational RecoveryPlan” on Žleat Southern California Libraryfor Social Scienceand Research. 38Abraham Holtzman, The Townsend Movement: APolitical Study (NewYork, 1975),184. 39Papersof Gardner Jackson, Container72 (Townsend), Franklin D.RooseveltPresidential Library. 264 D.J. B.Mitchell voteand support rival pensioniteschemes which Townsendopposed. Such  uidity has long characterized populist movementsin theU.S.

Sellingthe Plan Whatever his beliefsas a youth,after somemid-life personal misfortunes,Townsend foundhimself asan AssistantHealth OfŽcer for theLong Beach, California, Health Department.When he was laid offin 1933 at age 66, his interestin pensions(and his ownlack ofone!) clearly focusedhis mind onthe problems ofretirees. As noted, exactly howhe formulated his plan isunclear. The sight ofold ladies rummaging through garbage doesnot automatically lead toa speciŽc remedy.So Townsend’ s personal creation story is incomplete. The inspiration couldhave beenthe humorous Barton article or someother. It could also have beenderived from theSocial Creditmovement, with its notionof a govern- mentdividend to provide sufŽcient consumption power. Social Credithad been imported from Britain toCanada and was soon to take over Alberta province. Townsendwas attracted toSocial Creditand other movementsat various times.He reportedly had tobe steered from suchproposals by his handlersand kept focused on the TownsendPlan ashis ownmovement evolved. 40 Townsendinitially outlinedhis pensionideas in lettersto the LongBeach Press Telegram.Apart from his ownresidence in thecity, LongBeach wasat thetime what California historian KevinStarr has dubbed“ thegeriatric capital ofUnited States.” 41 Butit wasnot just the City ofLong Beach; California asa wholehad becomean elderly state,beginning in the1890s— aplace toretire in thesunshine— and would remain so until thein ux ofyoung jobseekers during andafter World War II.

That thestate already had themost progressive, pre-DepressionOld Age Assistance law—the Hornblower Act— when the Townsend Plan came along wasno coincidence.

40Neubergerand Loe, AnArmyof the Aged , 93. 41KevinStarr, The DreamEndures: CaliforniaEnters the 1940s (NewYork, 1997),11– 12. Townsend and Roosevelt 265

Demographics werethe root ofCalifornia’ s pensionitepreoccupation before, during, andafter theDepression. About a third ofthe California electoratewas over age 50 during thepeak ofthe Townsend movement. And roughly fourin 10 Californians, including theelderly, wereto be found in LosAngeles County. This concentrationof elderly fosteredpensionite communication in anera long pre-dating theInternet. Having aplan andselling it are notthe same thing, however.But Townsend soon involved alocal real estatesalesman, Robert Earl Clements,in working outthe entrepreneurial details.The twoin effectbecame partners in theTownsend enterprise (with ClementsofŽ cially listedas “ co-founder”). This partnership lasteduntil alater falling outshortly beforeClements’ s testimonyto the Bell committee.Clements had more businessacumen than Townsendand could foresee the revenues from elderly supportersthat theplan might produce.But he had theunfortunate custom of referring tothe Townsend movement as a “racket.”42 Suchsloppy verbal habits wereto haunt Townsendduring theBell investigation. 43 Basically, however,the Townsend organiza- tion—as developed by Clements—generated revenues by requiring Townsendclubs to buy only ofŽcial literature from Townsend’s publishing venture.

Movingthe Politicians AsTownsend clubs formed, the movement began towield political inuence. A San Diego assemblyman wasrecalled in 1934 for criticizing Townsend. 44 San Diego merchantscomplained that Townsenditeswere demanding credit in advanceof their soon-to-be-enactedpensions. This pressurewas intensiŽ ed by the1934 electionof Democratic Congressman,John Steven McGroarty, on a Townsendplatform. 45 Mc- Groarty wasa former LosAngeles Times writer. Hehad leda campaign by thepaper in the1920s torevive LosAngeles’ s Olvera Street,the old Mexican plaza whichbecame amajor touristattraction. 46 In 1933, hewas named the state’ s “poetlaureate” for his California-oriented plays andpoems. Once elected, McGroarty focusedhis literary talentson drafting Townsendbills in Congress. ButRepublicans could also beneŽt from theTownsendite vote. As was earlier noted, aRepublican Congressmanfrom Michigan waselected on a Townsenditeplatform. 47 Closerto its California home,Townsendites provided aboostto the Republicans’ anti-EPICcampaign for Governor.Needing support against Democrat UptonSinclair andhis EPICcampaign, incumbentRepublican GovernorFrank Merriam endorsed theTownsend Plan while Sinclair refusedto do so. The Merriam–Townsend alliance in 1934 may well have provided themargin todefeat EPIC. Merriam’ s winand Sinclair’s lossalso taught California politicians—Republicans and Democrats— in sub- sequentcampaigns tobe careful about what wassaid on the pension issue. Anendorsement of Townsend was actually painlessfor theotherwise conservative GovernorMerriam. Townsend’s plan wasa national—not a state—program. Afterthe election,Merriam fulŽlled his political obligations merely by pushing amemorial to Congressthrough theCalifornia legislature favoring Townsend.At thesame time

42Arthur M.Schlesinger,Jr., The Age ofRoosevelt: The Politics ofUpheaval (Boston, MA, 1960),39. 43SeeU.S. Congress,House, Hearings beforethe Select Committee Investigating Old-AgePension Organizations ,1936,585, 593. 44SeeBennett, 173. 45SeeNeuberger and Loe,69– 70. 46Robert Gottlieband IreneWolt, Thinking Big:The Story ofthe LosAngeles Times,its Publishers,and TheirIn uence on Southern California (NewYork, 1977),155. 47SeeWhiteman and Lewis,108. 266 D.J. B.Mitchell

Merriam recommendedthere be no change in California’s stateOld Age Assistance. 48 Merriam couldhave theTownsendite vote without providing Townsenditepensions. Runningwith Sinclair against Merriam asthe Democratic/ EPICcandidate for LieutenantGovernor was Sheridan Downey.Downey later announcedhis supportfor Townsendand eventually becamea TownsenditeU.S. Senatorfrom California. 49 Downeyproposed repealing thenascent Social Security systemand replacing it with the TownsendPlan. Helinked theproposal tosupport for anationalized central bank,a demandof popular radio priest Father Charles Coughlin.Downey argued that Cough- lin’s bank would“ safeguard”the Townsend Plan. 50 Downey’s variant ofthe Townsend Plan wouldhave had thecentral bank Žnancethe pensions.He wanteda plan supportedby moneycreation rather than Townsend’s 2% tax. Downey’s proposal foreshadowedthe more amboyant Ham andEggs pension plan that wassoon to be unveiled in California andwhich Downeyalso supported.

TheEconomics of the Townsend Plan Despitethe political supportthe plan engendered,the economics of theTownsend Plan weresoft. In 1935, for example, whenthe Townsend Plan competedas a proposal in Congresswith Social Security,nominal grossdomestic product (GDP) per capita was about $570. Hadthere been no Depression, of course, the Ž gure wouldhave been higher, perhaps $785 in 1935 prices. 51 Hence,a pensionincome of $200 per month ($2400 per year and$4800 per couple)was a great deal ofmoney.To putthe amount in someperspective, years later famedbaby doctorand best-selling author Benjamin Spockrecalled his attempts toestablish apediatrics practice during theDepression. “ It tookme threeyears beforeI earnedas much as $100 amonth gross,”Spockreported (italics added). 52 In fact,the amount of the proposed pension was so large that theTownsendites publishedbudgets to prove that themonthly spendingobligation couldbe met. 53 Even thesebudgets included refrigerators, washing machines,and radios bought onan 18-month installment plan. Presumably, theelderly wouldbe turning over their durable appliances every year anda half unlessthey couldcome up with other formsof expenditure. The potential elderly recipientsof the Townsend pension amounted to just under a tenthof the population in 1935. Thusthere would have tobe a transferfrom theother nine-tenthsof a sumof something justshort of 30% ofnon-DepressionGDP toŽ nance

48Frank F.Merriam, OldAge Pensions andthe Budget ,addressdelivered over NBC in astatewideradio program, Mar.4, 1935(UCLA pamphlet collection). 49Hisviews on the TownsendPlan canbe found in Sheridan Downey, Pensions orPenury ? (New York, 1939);and Sheridan Downey, Highways to Prosperity (Chicago, IL,1940). 50Also includedin Downey’s 1936book on the subject is areprintof a radio addressby Downey’s brother, urgingin generalterms a Žght againstunemployment without any speciŽc plan forhow this Žght might be undertaken.Sheridan Downey, WhyI Believe in the Townsend Plan (Sacramento, CA, 1936), 20–21, 44. 51To estimatethe non-Depressionlevel of GDP per capita in 1935,a mid-point interpolation ofreal GDPwas taken between1929 and 1941.The non-Depression nominal GDPin 1935was then estimated as the ratio ofactual nominal GDPto realGDP timesthe interpolatedŽ gure.The resulting estimate is about $100billion. CurrentCensus estimates suggest an elderlypopulation levelin 1935somewhat higher than the Žguresused in discussionsof the TownsendPlan. Itappears that somewhat over12,000,000 people wereaged 60 and overin that year,a littleunder a tenth ofthe population. 52LosAngeles Times ,“Baby Doctorfor the Millions Dies,”Mar. 17, 1998, A19. 53SeeBrinton, 24;Neuberger and Loe,72– 73. Townsend and Roosevelt 267 theTownsend Plan, if everyone60 andover receivedit. That is,even if theplan were assumedto restore prosperity, it wouldstill involve avery large transfer.Naturally, the transferas a percentageof GDP at thedepressed economic levels of1935 wouldhave beenmuch higher, about 40% ofGDP. 54 Of course,had it beenoffered, high-income people earning more than $200 wouldhave turneddown the pension, lessening the costssomewhat. Givenits large proposedexpenditure, the exact Žnancingof the plan becomes important. Townsend’s turnover or transactionstax wasset at 2%,a seemingly small numberif thewords “ turnover”and “ transactions”are interpretedto mean a salestax. In fact,the words were intended to mean a tax oneach market transaction,including intermediate transactions.That is,the tax wouldbe levied onthe coal soldto the steel mill andagain onthe steel sold to the automobile plant andagain onthe sale ofthe automobile tothe consumer. Basically, thetax wouldbe imposed whenever cash changedhands. Ascritics soonpointed out, such a pyramid tax wouldcreate incentives for vertical consolidationto avoid cashtransactions. 55 That is,the tax systemwould create an incentivefor theautomobile company toownits ownsteel mills andits owncoal mines. Suchconsolidation would erode the Townsend tax base,aside from its distorting impact onindustrial organization. In any event,the tax wouldraise pricesby ordersof magnitude more than thesmall 2% Žgure suggested.An economist apparently sup- portedby theTownsend organization testiŽed before Congress that therecould be a 24% price increaseas a resultof a 2% tax onall grosstransactions and “ transfers.”56 Andlike asalestax, thetransactions tax wouldbe regressive. There wasalso theissue of whether an income transfer from thenon-elderly to the elderly wouldhave astimulative effect.The Townsendreasoning wasthat thetransfer wouldmove incomefrom saversto non-savers (since the pension had tobe spent each month).While estimatesof the marginal propensity tosave in the1930s are not available, average personal saving propensitieswere quite low and sometimes negative during theGreat Depression. Given “ Hard Times,”people were spending what income they had.Thus, taxing nine-tenthsof the population andtransferring theincome to the remaining non-savingtenth would have beenunlikely tohave had muchof amultiplier effect.Consumption loss of one group wouldhave beenreplaced by consumptiongain of another.

Attracting theElderly The TownsendPlan may nothave had muchpotential for aneconomic multiplier, but theplan didhave amultiplier effectin attracting elderly acolytes.A poll takenin 1939, summarized in Table 1, revealed theobvious. Those who most favored theTownsend

54InCongressionaltestimony Townsendsaid he assumed that 7,500,000would takethe pension out ofthe 10,400,000who werethen assumed tobe eligible.(As notedabove, currentCensus estimates suggest alargerfraction of the population fellinto the 60years and overcategory than the data usedin 1935.) Itwas unclearexactly how Townsendscaled down from10,400,000 to 7,500,000.He said that 1,000,000 people would not apply and some elderlywould not be citizens.Even with his 7,500,000,however, the non-Depressionproportion ofGDP in 1935would be 18%and the actual proportion would be 25%(U.S. Congress,House, 1935, 698). 55National IndustrialConference Board, The Townsend Scheme (NewYork, 1936),25. 56Seethe statementof Robert R.Doane in U.S. Congress,Senate, 1244.Doane assumed the economy was functioningat the 1929level. His tax collection estimate was $18billion, an amount consistentwith Townsend’s estimateof 7,500,000 beneŽ ciaries. 268 D.J. B.Mitchell

TABLE 1. Public attitudestoward the Townsend Plan, 1939 (%)

Group Favor plan Oppose plan No opinion

Age (years) Under 30 31 53 16 30–50 34 53 13 50–60 37 54 9 Over 60 46 46 8 Economic status Above average 17 76 7 Average 28 59 13 Poor 49 42 9 On reliefor Old Age Assistance 69 26 5

Source:American Institute of Public Opinion, reproducedin HadleyCantril, The Psychology ofSocial Movements (NewYork, 1941),192.

Plan wereelderly and/or poor.Money  owedinto Townsend’s publishing organiza- tion—which provided theofŽ cial literature andnewspaper— from Townsendclubs aroundthe country. As letters  oodedCongress in 1934–35 in supportof the TownsendPlan (asopposed to the New Deal administration’s Social Security pro- posal),angry senatorsbegan togrill Townsendand Clements about their organization’s Ž nances.57 Thesehearings provided theimpetus for thelater Bell committee investiga- tion. It isapparent that therewere really twoworlds in collision in 1935. Ontheone hand, therewere the planners in theRoosevelt administration, combinedwith reformers of various stripesand respectable academics, who were putting together Social Security with theassistance of Congressional allies. Onthe other hand,there were the Townsenditesand their Congressionalallies with arival proposal. The paradox was that theadministration’ s pioneering proposal for federal assistancefor theaged was being condemnedby theelderly electorate.As one commentary ofthe period putit: Herewas President Roosevelt, ready andeager tolaunch a systemof paying every oldperson thirty dollars amonth.No President in history had done anything exceptgive lip serviceto so advanceda proposal. NowMr. Roosevelt actually wassuggesting that it becomelaw. And millions ofpeople westof the Mississippiwere ridiculing andcondemning his proposal! The Townsendclub members werewell aware that thirty dollars wasexactly onehundred and seventydollars lessthan what Dr. Townsendplanned to give them. 58 In fact,as noted earlier, theTownsend Plan $200 Žgure wasnot as solid as its supportersthought. Congressman McGroarty introduceda secondversion of the plan that speciŽed that thepension could not exceed $200, i.e.it couldbe less, depending on funding.59 The newversion caused splits within theTownsend organization, aswell as asplit betweenTownsend and McGroarty. Ultimately, it wasSocial Security that emergedvictorious from Congress.Yet, as indicated above, observersthen and later sawa link betweenthe eventual passage ofSocial Security andTownsendite pressure.

57SeeU.S. Congress,Senate, Economic Security Act, 1015–70. 58SeeNeuberger and Loe,85. 59Thebill is reproducedin Neubergerand Loe,319– 29. Townsend and Roosevelt 269

Social Security—as proposed by theRoosevelt administration— was a radical depar- turefrom thetraditional role ofthe federal government.And it came along at atime whenopposition to the New Deal wasgrowing in Congressand the Supreme Court was invalidating earlier NewDeal legislation. Apart from itscenterpiece, the deŽ ned-beneŽ t pension,the Social Security Actcreated a federal–state system of Old Age Assistance (for elderly whodid not qualify for thebasic job-relatedpension), unemployment insurance,and welfare aswe (used to) know it. It is hard toimagine amore sweeping (andtherefore controversial) pieceof social legislation. Alsoin theCongressional hopper at thetime werethe “ LundeenBill,” a more generousscheme without much external political support,and the Townsend Plan— backedby its “army ofthe aged.” The LundeenBill wasa comprehensiveunemploy- mentrelief bill that includedold age asa category ofinability towork. Because of its high beneŽts— the unemployment beneŽ t wasessentially 100% ofthe wage— it was estimatedto cost almost asmuch as Townsend’ s proposal. 60 Indeed,critics ofboth Townsendand Lundeen linked theplans together asexamples ofwildly unworkable schemes.61 With theTownsend Plan themost popular “radical alternative”— ashistorian William Graebnertermed it— the somewhat less radical Social Security plan became themoderate option. 62 Voting for Social Security wasthe only viable optionfor many conservativesin Congresswho did not want Townsend. To beagainst Townsend and Social Security wasto be clearly anti-elderly. Yeteven after theSocial Security Actwas passedin 1935, thenewly established Social Security Board felt theneed to combat continuingTownsend agitation. Itsinitial approach wasto encourage the preparation of“ neutral”academic studiesthat wouldexpose  awsin theTownsend Plan. However, the1936 Bell committee investigation soonbecame the primary meansof discrediting Townsendand his organization. 63

TheBell Tolls for Townsend Viewedin historical perspective,the transcript ofthe Bell investigation intothe TownsendPlan is startling. Shouldsuch an investigation have beenconducted in the age oftelevision, Dr. Townsendwould probably have emergedas a hero,despite the unfavorable information revealed.The investigation wasso overtly aimed at destroying Townsendthat his walkout from thehearing wouldhave evokednation-wide cheers, had it beentelevised on the modern-day Six O’ClockNews. But there was no Six O’ClockNews back then. The avor ofthe questioning can be found in committee accusationsthat Dr. Townsendwas a closetatheist or Communist.He was questioned as to whether he belongedto a church(no) and whether he believed in God(yes). The committee’s line ofquestioning in this regard may have beentriggered by thetendency of Townsend clubmeetings to take onareligious aura with thesinging of“ OnwardPension Soldiers” and“ Glory, Glory, Hallelujah; Our Plan isMarching On.”64 Asthe committee certainly

60TheLundeen Bill was pushed by an allianceof Communists, socialworkers, and Farmer-Laborites. Lundeenwas aFarmer-Laborrepresentative from Minnesota; seeDouglas, Social Security in the United States, 74–83. 61SeeQuadagno, 109. 62William Graebner, AHistory ofRetirement: The Meaning andFunction ofan American Institution, 1885–1978 (NewHaven, CT,1980),192– 197. 63Charles McKinleyand Robert W.Frase, Launching Social Security: ACapture andRecord Account, 1935–1937 (Madison, WI, 1970),454. 64Nicholas Roosevelt, The Townsend Plan:Taxing forSixty (GardenCity, NY, 1936),13– 14. 270 D.J. B.Mitchell knew,various ministers had becomeTownsend supporters. Asked by aninterviewer on anewsreelof theday whetherthe Townsend Plan wouldwork, a Townsenditepreacher respondedthat “Webelieve Godis onourside and with Godall things are possible.”65 To suchsupporters, Townsend-as-accused-atheist was surely shocking. The committee pointedout that elderly atheistsand Communists who received the proposedTownsend pension might spendtheir fundsin promoting their evil causes. Thus,the Townsend Plan wasdepicted as a vehicle for furthering atheism and Communism.(Not mentioned was the fact that atheistsand Communists who received Social Security payments—which Congresshad previously enacted—could also spend themoney to further their beliefs.)The Bell committee also heard from aDaughter of theAmerican Revolution,a former Townsendclub ofŽ cial, whotestiŽ ed that shenow realized that theplan wasCommunistic. 66 Disparaging editorial commentsand interjections by thecommittee members were frequent,as in this exchange about Townsenditeradio programs: CommitteeCounsel James B.Sullivan: “The headline of‘ Wolvesin sheep’s clothing’is onthe address made on Sunday, February 2, 1936, ‘Blood money attacks Townsendplan’ by EdwardJ. Margett, whichwas given over stations KFRC,KHJ, KGB,KDB, KMJ, KFBK,KGW, andKERM.” CongressmanJoseph A. Gavagan: “It istoo bad they didnot have astation called KNUT.”67 The damage toTownsend was primarily indirect.There wasClements’ s reported descriptionof the movement as a “racket.”68 There wasa Townsenditereverend who—the Bell committee let it beknown— wrote letters too obscene to be reprinted in thepublished hearings. 69 Andthere was the matter oftheabove-mentioned Edward J. Margett. Margett wasa Townsendmovement ofŽ cial whohad previously beenindicted (but notconvicted) for assortedcrimes suchas pimping andbootlegging. Townsendinsisted onkeeping Margett onthe payroll evenwhen reports ofhis shady background surfaced, onthe grounds that Margett had been“ cleared.”70 ButMargett wassaid to have describedhimself as“ cleaning up”Ž nancially in theTownsend movement. 71 And he wentinto hiding whencalled totestify. 72 Probably thegreatest damage doneto Townsend was the revelation ofthe large sums themovement had producedfor its founderthrough contributions,dues, and sales of literature. Townsendand his partner Clementsowned Prosperity Publishing Company, whichput out the Townsend Weekly ,themovement’ s newspaper.There wasrevenue from salesof the newspaper and other publications aswell asnewspaper advertising incomefrom dubiouspatent medicines such as “ Kuhn’s Famous Remedy”and “Juvenus”for “weakglands.” 73 AsClements’ s testimonywore on, the income he admitted receiving tendedto rise undercommittee grilling. The committee inquired about various items onhis expense

65NewLine Home Entertainment, Marchof Time: The Great Depression ,vol. 3(VHS videotape), 1995. 66SeeU.S. Congress,House, Hearings beforethe Select Committee Investigating Old-AgePension Organizations ,1936,580, 681, 752, 765– 767, 895. 67Ibid., 116–117. 68Ibid., 585, 593. 69SeeWhiteman and Lewis,124– 125. 70SeeU.S. Congress,House, Hearings beforethe Select Committee Investigating Old-AgePension Organizations ,1936,102– 115, 695, 911– 967. 71Ibid., 909. 72SeeWhiteman and Lewis,129– 130. 73SeeU.S. Congress,House, Hearings beforethe Select Committee Investigating Old-AgePension Organizations ,1936,183– 184. Townsend and Roosevelt 271 accountdown to whether it wasproper for him tohave charged certain laundry bills. 74 Butit wasthe revelations about raw incomereceived that weremost damaging. Townsendeventually bought outClements’ s share in thepublishing ventureafter the twohad their falling out.Clements received $25,000 for his shareson top ofadividend from thoseshares of another $25,000. In addition,he had receiveda regular salary for his work,bringing thetotal receivedduring his afŽliation with theTownsend movement tosomething like $75,000. 75 For thevast majority ofTownsend supporters such sums (in 1936 prices)would have seemedincomprehensibly vast. Townsendwas also embarrassed by thetestimony of Robert R.Doane,an economist themovement had apparently supportedduring theearlier hearings onSocial Security. Questionshad beenraised at thetime concerningwho was paying Doaneand whether hewas a doubleagent. University ofWisconsin economist and Social Security expert EdwinE. Witte believed that Doanein factworked for “big business”interests desirous ofembarrassing Rooseveltand undermining supportfor Social Security by linking it to Townsend’s scheme. 76 In any event,when brought beforethe Bell committee,Doane nowfell over himself toplease its members andbe hostile tothe Townsend Plan. HetestiŽed that theTownsend Plan couldnot possibly workdue to an insufŽ ciency ofrevenues that thetransactions tax couldprovide. Moreover,he testiŽ ed that both Clementsand Townsend knew the plan had adeŽcient revenue base and were hiding that fact.77 Finally, DoanetestiŽ ed that theTownsend Plan wouldlead torationing, although howwas not made clear: Chairman C.Jasper Bell: “Whenyou say wewould have tohave arationed economy,you mean a forcedeconomy; do you not?” Dr. Doane:“ Oh, yes.” Chairman Bell: “Forcedat thepoint ofa bayonet;is notthat right?” … CongressmanJ. William Ditter: “Well, it wouldbe thecollective systemof the Communists;would it not?” Dr. Doane:“ There wouldhave tobe some central authority directing all this.” CongressmanDitter: “There wouldhave tobe commissars, similar tocom- missars in theSoviet Union?” Dr. Doane:“ Wecould not do it underour present constitutional form of government.” Sometestimony produced by thecommittee revolved aroundwhether the Townsend movementhad brokenany lawsby engaging in political activity, suchas endorsing candidates.Such evidence, however, could not have beenvery hurtful toTownsend. Hissupporters were obviously engaging in political activity. Politics waswhat they wantedto do. But there was also testimonythat Townsendhad referredto his supportersas “ oldfossils [who] don’t knowwhat it isall about.”78 Townsendwas never given thechance speciŽ cally todenythe remark, butits appearance in thepublic record couldnot have helpedhim with his constituencyof “ fossils.”

74Ibid., 89. 75Ibid., 316–317. 76Letterfrom Edwin E. Witteto MerrilG. Murrayof the Social SecurityBoard datedDec. 11, 1935 (OfŽcial File 1542(Townsend), Franklin D.RooseveltPresidential Library). 77SeeU.S. Congress,House, Hearings beforethe Select Committee Investigating Old-AgePension Organizations ,1936,229– 308, 409. 78Ibid., 586, 593. 272 D.J. B.Mitchell

Townsendand Roosevelt: Hell Hath NoFury The “relationship”of Townsend with PresidentRoosevelt— if it canbe called that, given its one-waynature— was a peculiar one.Townsend desperately wanted his pensionplan tobe a central part ofthe New Deal. From theplan’ s earliest days, Townsendand his supportersconstantly wrote to Roosevelt. Initially, thegoal wasto obtain aninterview with thePresident so that Townsendcould “ explain”his plan. Thenit wasto stop the Bell hearings. Later it wasto grant Townsenda Presidential pardonfor his contempt-of-Congressconviction. In 1936, Roosevelt—having scornedhis erstwhilesuitor— saw his nightmare ofa third-party candidacyinvolving Townsenddevelop. Long was assassinated, but one of his followers—Gerald L.K.Smith—took over parts ofLong’ s “Share Our Wealth” movement.Smith joinedforces with radio priest (andfellow anti-Semite) Father Charles Coughlin andCoughlin’ s Social Justicemovement to form theUnion Party. They in turnenticed Townsend to link upwith their newparty. The party then nominatedan obscure North Dakota Congressman—William Lemke—as its Presiden- tial candidate. Lemkewas a quasi-Republican whononetheless supported Roosevelt initially. He began his political career in theNon-Partisan League,a group with populist and agrarian elementsŽ ghting against railroads, Žnanciers,and grain elevator operators. Lemkebacked bills for freesilver andother currencyexpansion while in Congress.And hesupported a moratorium onfarmers’ debt. But he was never quite in controlof his ownPresidential campaign; Coughlin andSmith tendedto dominate. Smith’s contributionto this effortwas a UnionParty conventionspeech condemning “Franklin D.Jews-Evelt.”79 The UnionParty’ s ofŽcial platform had overt Coughlinite elementsechoing Coughlin’s monetary conspiracy beliefs.It called for anewcentral bank toreplace theFederal Reserveand new currency to buy back thenational debt. The platform combinedthis monetarism with Long-ishdemands for limits onannual incomesand inheritances. Economic security for theaged waspromised, re ecting the Townsendcomponent. But the ofŽ cial TownsendPlan itself wasnot actually in the platform andLemke was personally slowin endorsingthe pension plan. This omissionof theTownsend Plan may have beenCoughlin’ s inuence. Before the UnionParty alliance ofconvenience, Coughlin had oncecalled theTownsend Plan “economicinsanity.” At one point, Coughlin supportedthe Lundeen Bill, theabove- mentionedalternative toSocial Security that wouldhave taxed therich toprovide pensionsand unemployment beneŽ ts. 80 Townsend’s connectionwith Long’s (andnow Smith’ s) Share Our Wealth move- mentwas as tenuous as its link toCoughlin. The “co-founder”of the Townsend movement,Robert Earl Clements,had had an amiable chat with Longbefore the latter’s death.But no meeting ofminds resulted. 81 Asa resultof theUnion Party’ s weak supportfor theTownsend Plan, Townsend’s supporterswere not called outto obtain thepetitions necessary to put Lemke on the ballot in California andsome other states. ThusLemke was not available asa choiceto California’ s Townsenditevoters except as awrite-in.In theend, Townsend— as a Californian—said that eventhough hesup-

79Smith’s pro-Nazi sentimentsgot him into legaltrouble during World War II. Afterthe warhe campaigned againstEisenhower as “Ikethe Kike”and calledfor deportation ofblacks and Zionists. 80SeeWhiteman and Lewis,137. 81SeeU.S. Congress,House, Hearings beforethe Select Committee Investigating Old-AgePension Organizations , 1936, 330. Townsend and Roosevelt 273 portedLemke, he would vote for Republican Alf Landonso asnot to waste his voteon awrite-incandidate. Moreover, the California Democratic Party, underthe leadership ofthen-Chairman (andlater Governor)Culbert Olson, had plantedinŽ ltrators in the Townsendclubs. Their task wasto hold Townsenditevotes for Roosevelt. 82 Lemkewas no HueyLong when it came tocampaigning. Hisonly “major”endorse- mentwas by “General”Jacob S.Coxey,who had ledan “ army”of the out-of-work to Washington in 1893 demandingunemployment relief andmoney creation for public works.83 Aswerethe later leadersof the1932 BonusMarch onWashington by World War Iveterans,Coxey was arrested and became a folk hero.But such an endorsement, combinedwith thelukewarm supportof Townsend, could not dent Roosevelt’ s popularity. Lemkereceived fewer than 900,000 votes,2% ofthetotal. Townsendwrote toRoosevelt in 1937 congratulating him onhis re-electionand again requestingan interview.84 Ofcourse,no suchinterview wasever granted.Frustrated, Townsend tried tostart his ownpolitical party in California in thelate 1930s, butit neveramounted to much.85 In 1940, Townsendtried anewtactic towin Roosevelt’ s attention.He sent a letter tothe President inviting him tospeak to the annual Townsendconvention about the growing national defenseeffort. 86 Townsendmay have thought that aninvitation to speakon a non-pensionissue would entice the President, particularly in anelection year. The letter sparkeddiscussion within theadministration about howto respond; public supportfor military affairs prior toPearl Harbor wasweak. But Roosevelt was notabout tolend credence to Townsend; he would not even send a representative to theconvention. In theend, the President simply answeredTownsend’ s invitation with his ownletter describing thedefense effort. But the Townsend/ defenseissue did not die. Again in 1941, butbefore Pearl Harbor, theadministration receiveda recommendationfrom an ofŽcial charged with theWest Coast defense effort that Roosevelt—or at least theVice President—should meet with Townsend.Such a meeting,it wassuggested, would increasepopular supportfor defensepreparations. 87 Butas before, no such meeting was arranged. Townsend’s futile effortsto achieve Presidential recognition suggesthe never under- stoodthe degree to which Roosevelt regarded him asa dangerouscrackpot. Nor didhe comprehendthe extent of the efforts by theadministration todiscredit him through the Bell hearings. Hemay also nothave understoodthe indirect impact his movementhad in pushing Congressto enact the Social Security plan hehad scornedas inadequate. Yeteven after theinitial enactmentof Social Security,Townsendite pressures had an impact ontheprogram. In particular, theCongressional decision in 1939 tomove the program towardpay-as-you-go andaway from Roosevelt’s original preferredfully

82SeeBennett, 221. 83With his monetarist leanings,Coxey named his son “LegalTender.” 84Letterfrom Townsend to Roosevelt, Mar.2, 1937(OfŽ cial File 1542 (Townsend), Franklin D. RooseveltPresidential Library). 85LeonardLeader, LosAngeles andthe GreatDepression (unpublished PhD diss., Dept. ofHistory, UCLA, 1972),150. 86Letterfrom Townsend to Roosevelt, May 26,1940 (OfŽ cial File 1542(Townsend), Franklin D. RooseveltPresidential Library). 87Seematerials relatedto Paul McNutt’s recommendationin the Townsendfolder for years 1941– 45 (OfŽcial File 1542(Townsend), Franklin D.RooseveltPresidential Library). 274 D.J. B.Mitchell fundedmodel must be seen against abackground ofcontinued agitation by the Townsenditesand related groups. 88

Townsendin the States Townsendismlived onat thestate level for another decadeand a half after the enactmentof Social Security.As had California underGovernor Merriam, several statespassed memorials toCongress endorsing the Townsend Plan. 89 Onevariant of Townsendismin California wasthe outlandish Ham andEggs plan, aschemeto pay everyonein thestate over 50 “Thirty Dollars Every Thursday”to be Ž nancedout of a newstate currency. This schemereceived 45% ofthe vote in a1938 referendumand probably wouldhave passedhad it notbeen for theshenanigans of thecon artists who promotedit. 90 The Ham andEggs movementbegan tosplinter thereafter butwas able tokeep California politics roiling for several years.A Townsend-likescheme in Ohio, theBigelow Plan, also wentdown to electoral defeatin thelate 1930s. 91 Moresuccessful were those political entrepreneurswho adopted more moderate approaches,accepting theexisting statesystems of Old Age Assistance,but demanding higher payments.In Colorado,a rump Townsendgroup movedin this directionand amendedthe state constitution, ultimately pushing upbeneŽ t amountsafter much litigation andpolitical Sturmund Drang .92 In 1942, Earl Warren successfullywon the California Governorshipby courting Townsendites,Ham andEggers, and other pensionadvocates by promising todo something (unspeciŽed) about the pension issue. Onceelected, he created an advisory commissionof pensionite representatives and raised stateOld Age Assistance. Unfortunatelyfor Warren, thepensionites were not easily molliŽed. During his secondgubernatorial term, Warren returnedfrom campaigning for Vice President in 1948 toŽ ndthat aone-timeHam andEgger, GeorgeMcLain, had succeedingin passing areferendum.Under its provisions,the state’ s Old Age AssistancebeneŽ t was substantially raised andcontrol of the program wasshifted to the California Department ofSocial Welfare. That departmentwas placed by aclausein therefer- endumunder the directorship ofa womanassociated with McLain’s pensiongroup. It tooka secondreferendum a year later torepeal theseadministrative provisions (al- though thehigher beneŽt amountremained in place).Thanks tothese state-level pressures,Colorado and California had thehighest stateOld Age Assistancein theearly 1950s.93

88Underthe changes,pensions beganto be paid in 1940rather than as originallyscheduled, in 1942. 89SeeHoltzman, 192. 90Acontemporarydescription of the Ham and Eggsmovement and its anticscan be found in Winston Mooreand MarianMoore, Out ofthe Frying Pan (Los Angeles,1939). A moderninterpretation can be found in Daniel J.B.Mitchell, Pensions, Politics, andthe Elderly (Armonk, NY, 2000),23– 81. 91On the BigelowPlan and its proponent, seeDaniel R.Beaver, ABuckeye Crusader ,unpublished manuscript available fromthe Universityof Cincinnati library, 1957. 92TheColorado movement is describedin O.Otto Moore, Mile HighHarbor (Denver,CO, 1947);and Stephen J.Leonard, Trialsand Triumphs: A ColoradoPortrait of the Great Depression with FSA Photographs (Niwot, CO, 1993). 93Floyd A. Bond et al., Our Needy Aged:A CaliforniaStudy ofa National Problem (NewYork, 1954), 241. Townsend and Roosevelt 275

Lessonsfor thePast andFuture The ingredientsof the Townsend Plan weretaken from various ideas,doctrines, and social currentsprevalent at thetime. Certainly, ideasabout stimulating theeconomy through government spendingand providing oldage securitywere not exclusively those ofthe Townsendites. Such notions were part ofthe New Deal aswell asother social movementsof the period. The enemiesof New Deal legislation sought—as Roosevelt feared—to make justsuch connections between the New Deal andTownsend. For example, ananti-Townsend analysis ofthe time by theNational Industrial Conference Board stated: Thosewho regard theTownsend scheme as dangerous and delusive should remember that it isonly alogical extensionof the same assumptions upon whichalmost all public policies in theUnited States are basedat thepresent time. Itswidespread acceptance is anatural andinevitable consequenceof the forcesof mass emotion which have beenset in motion andstimulated into political activity by thesystematic propagation ofthese same assumptions in securingsupport of similar schemesthrough theexploitation ofpopular ignorance,envy, and prejudice during thepast threeyears. 94 The differencebetween Townsend (and other off-centermovements of the period) and theNew Deal wasthat Rooseveltwas more cautiousand had “respectable”analysts to workon his proposals.He tried toavoid proposals that seemedradical and,where his proposals werein factradical (asSocial Security certainly was!),to put them in non-threateningformats. Thus, the Social Security systemwas set up to look like one ofthe (relatively rare) private pensionplans thenin existence,with atrustfund and deŽned beneŽ ts based on past wage earnings.Indeed, in theinitial stagesof the developmentof the Social Security plan, Rooseveltwrote that “The systemought tobe operatedthrough thepost ofŽ ces. Just simple andnatural— nothing elaborate or alarming about it.”95 And,indeed, the initial distribution ofSocial Security numbers wascarried outthrough thePost OfŽ ce until Social Security ofŽces could be estab- lished. In theend, the basic designof Social Security washeavily inuenced by the(few) liberal-minded businessmenwho worked with theRoosevelt administration’ s plan- ners.96 What eventually passedwas decidedly not the Townsend Plan. Butpressure from theTownsendites inadvertently helpedto pass it. WhenSocial Security was modiŽed andpushed toward an earlier 1940 payout—shifting towardpay-as-you-go— thecontinuing Townsend agitation again played arole in Congressionalpolicy. 97 It was notthat Congresswanted to pass some version of the Townsend Plan per se. However, theTownsendites represented a continuingsource of agitation for doing more on pensions. Asfor theTownsend movement itself, its suddenrise andlater dissipation is typical ofpopulist movements—particularly thosecentered on a single individual. Townsend had poor political judgment.He failed toperceive thedepth of oppositionto his plan, failed tounderstand the degree to which theRoosevelt administration sawhim asa

94SeeNational IndustrialConference Board, The Townsend Scheme , vii. 95Quoted in Bernstein, ACaringSociety , 50. 96Sanford M.Jacoby, ModernManors: Welfare Capitalism since the New Deal (Princeton,NJ, 1997), 209–214; Ann Shola Orloff, The Politics ofPensions: AComparativeAnalysis ofBritain, Canadaand the United States, 1880–1940 (Madison, WI,1993),288– 289. 97SeeSass, 98. 276 D.J. B.Mitchell threat, andwas unable to adapt towartime andpost-war prosperity. For all that, heleft aninadvertent mark onthe history ofAmerican social welfare. There isno suggestion here that whenthe baby boomersretire, somemechanical copy ofTownsendism will reappear. Futurepolitical entrepreneurswill derive their proposals from thecircumstances and currents of thought thenprevailing. Butthe elderly will beavailable for organizing aroundthe key issuesof concernto them. They may notwin whatever it is they will want—as the Townsendites did not win. But they couldbe in uential. As the contemporary issuesof gun control and abortion restric- tionsdemonstrate, well-organized, single-issuevoters are hard toignore. Finally, thetactics used against Townsendby theRoosevelt administration andits supportersin Congresswere not nice. The administration played towin,conŽ dent that its Social Security program waswhat thenation needed and that theTownsendites representeda threat totheir proposal. Then,as now, and as in thefuture when the baby boomersretire, politics has tended,tends, and will tendto be a bare-knucklecontest.