How Social Security Really Began: Echoes

History is filled with examples of people who achieved fame not because of a major accomplishment, but simply because they were the first to do something. Such is the case of Ida May Fuller, a resident of rural Vermont who became the first beneficiary of a recurring Social Security payment on Jan. 31, 1940.

Fuller was born on Sept. 6, 1874, and attended school in Rutland, Vermont, as a classmate of future President Calvin Coolidge. Known to her family and friends as “Aunt Ida,” she never married or had children, and she lived alone most of her adult life. After working for decades as a teacher and legal secretary, and contributing to Social Security for almost three years, she filed her retirement claim in November 1939.

The check she received two months later for $22.54 (roughly $350 in today's dollars) bears the historic number 00-000-001.

Fuller lived to be 100 and died on the 35th anniversary of receiving her first check, on Jan. 31, 1975. In her three years of contributing to the program, the accumulated taxes on her salary were $24.75. She collected $22,888.92 in benefits.

Although Fuller’s check and all the Social Security payments to follow were the direct result of the legislation known as the "crown jewel" of President Franklin D. Roosevelt’s New Deal program, it was actually his distant cousin, Theodore Roosevelt, who introduced the U.S. to the notion of social insurance.

In Theodore Roosevelt’s 1912 address to the convention of the Progressive Party, he stated, "We pledge ourselves to work unceasingly in state and nation for… the protection of home life against the hazards of sickness, irregular employment, and old age through the adoption of a system of social insurance."

The idea of social insurance wasn't an American invention, however. First adopted in Germany in 1889, it was already operating in 34 countries by the time the U.S. enacted Social Security.

In the years between Roosevelt's speech in 1912 and the signing of the Social Security Act in 1935, many disparate ideas were proposed for ensuring Americans' economic security as the Great Depression took hold. Some of the more famous proponents of these plans were California doctor Francis E. Townsend (who advocated for federal government pensions), Senator Huey Long (who wanted the government to confiscate and redistribute money from the wealthy), and novelist Upton Sinclair (whose 12-point plan for California included the issuance of scrip currency, a barter system and a state pension plan).

One of the major problems FDR saw in these and other radical calls to action was the undermining of the American capitalist system. Thus, when he introduced Social Security at the depths of the Depression, he was careful to cast it as a fundamentally conservative system in which workers would contribute to their future security in the form of taxes paid while they were employed.

"We can never insure 100 percent of the population against 100 percent of the hazards and vicissitudes of life," Roosevelt said on signing the act, "but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age."

Americans generally reacted favorably to the new system. But the act did receive opposition, particularly within the business community. Many business owners opposed the employer contribution mandated by the new law, and argued that increasing taxes would slow growth and exacerbate the country's unemployment problem. Another major concern, then as now, was the program’s mounting financial burden. And many believed it to be unconstitutional, although the Supreme Court upheld the program in 1937.

The Social Security Act may not have fully achieved Theodore Roosevelt’s grand vision, but it did establish several lasting programs. In addition to what we refer to today as Social Security, the law also included features such as the first national unemployment compensation program, grants to states for medical and welfare programs, and aid to dependent children. (Many of the other benefits we now associate with Social Security, including disability coverage and medical benefits, weren't established until later decades.)

The merits and shortcomings of Social Security have been hotly debated since its inception, prompting several revisions and restructurings over the years. For better or worse, the program has had an enormous impact on three generations of Americans, including people like Ida May Fuller and the more than 50 million Americans who collect benefits today.

(Kristin Aguilera is the deputy director of the Museum of American Finance and the editor of Financial History magazine. The opinions expressed are her own.)

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