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Chapter 1

First Objective of Reform

Direct Job Creation in the Committee of Economic Security and the Designing of the New Deal

To take a seat in the telegraph office of the White House in mid-1934 was to occupy the front row in the central exchange of the American economy, a million messages of crisis vibrating up from across the nation. Good news and bad news chased each other across the wires: cotton up 4 cents, wheat up 42 cents, corn up 49 cents (a twofold increase over the previous year), and the national index of industrial production up 20 percent over the previous year; ten million workers still on the unemployment lines and eighteen million Americans on relief (up four million from the previous year, thanks to the Federal Emergency Relief Administration [FERA]).¹ Scanning this information as it came in, Roosevelt administration officials tried to piece together the state of the union—there was a crisis, certainly, but were things getting better or worse? Was recovery on the way? How could one tell?

While the data trickled in, the New Deal’s flagship programs—the National Recovery Administration (NRA), which was tasked with lifting industry out of crippling inactivity, and the Agricultural Adjustment Administration (AAA), which was charged with saving American farmers from accepting below-starvation prices—were drifting and falling to infighting, both reactive and slow. Congress, so acquiescent to the president’s agenda merely a year before, was beginning to push forward on its own in ways that conflicted with the White House’s preferences on an issue near and dear to the administration.

Senator Robert Wagner (D-NY), who had so bedeviled the previous president with his ambitious relief bills, pushed forward with a bill to create a national Unemployment Insurance (UI) system. It was to be backed by payroll taxes that would cover all workers but which vested the entire management of the system by the states and allowed firms with private pension plans to opt out entirely.² Congressman Ernest Lundeen (DFL-MN) proposed his own bill that went further than Wagner’s efforts, providing for universal and noncontributory insurance programs for unemployment, old age, and disability, all to be provided through general federal taxation.³

Pressed to do something to regain presidential leadership on the major issue of the day, Franklin Delano Roosevelt announced the formation of the Committee on Economic Security (CES) on June 29, 1934.⁴ Reporting directly to the president, the CES was to develop a comprehensive program to deal with the impact of the Depression. In the face of congressional pressure, and the growing popularity of Francis Townsend’s proposal for a guaranteed $200-a-month pension for each elderly citizen, the CES initially seemed like a presidential fig leaf.⁵

As much as it might have appeared that the New Deal itself was in crisis due to the travails of the NRA and AAA in the courts, the political situation rapidly shifted in the months following this announcement. Recovering from summertime doldrums, the public’s desire for more reform—not less—grew throughout the fall of 1934 and triumphed on Election Day. Turning out in record numbers, the voters broke with all historical precedent to back the party in power, delivering the Democrats fourteen more seats in the House of Representatives, and ten more seats in the Senate—a filibuster-proof two-thirds majority.⁶ Suddenly, what might have appeared as a stopgap, throwaway committee seemed instead to be an opportunity for new and sweeping legislation that might reinvigorate the entire New Deal.

Roosevelt’s policy team responded to the midterm elections with a new sense of urgency. The FERA chief, Harry Hopkins, who earlier that year had seen the Roosevelt administration scuttle his Civil Works Administration (CWA) program, pondered the new political landscape. As was his habit, Hopkins leaned up against the rail at a Washington, DC, racetrack, watching the horses hurtle down the track, smoking up a storm with his closest assistants.⁷ “Boys,” Hopkins said, “this is our hour. We’ve got to get everything we want … now or never. Get your minds to work on developing a complete ticket to provide security for all the folks of this country, up and down and across the board.”⁸ Their answer was built on the model of the CWA, which only two years earlier had created 4.26 million government jobs for the unemployed within the space of three months. For Hopkins and his staff, following up with an even more ambitious program of direct government job creation was the best path to ending the Great Depression altogether.

Hopkins and his team were not the only Roosevelt policy wonks looking over the political racetrack. Over in the Labor Department, Secretary Frances Perkins and her advisors, Professors Edwin Witte and Arthur Altmeyer of the University of Wisconsin, had also seen the potential in the congressional majorities for a new burst of reform. She was thinking through a plan for a state-level system of UI and Old Age Insurance, based on what Witte and Altmeyer developed during their time in Wisconsin two years earlier.⁹ Perkins had made FDR’s support for a social insurance system her price for joining his administration, and now that the pressure of the Wagner and Lundeen bills gave their plan a new urgency, Perkins, Witte, and Altmeyer believed that their approach could become the centerpiece of FDR’s counterproposal to Townsend (and Huey Long) on social security.

These were but two of the policy beehives at work in Washington. There were many more. Children’s Bureau advocates drew up plans for a national mothers’ pension system. National Resources Planning Board officials in the Interior Department envisioned a twenty-year plan for public works. Public health advocates at the Julius Rosenwald Foundation drew up their own scheme for a national health insurance system.¹⁰ And during the day, all of these policymakers left their offices in their respective agencies, departments, and foundations to walk to the Washington, DC, headquarters of FERA (and also a temporary home of the CES) to fight for their vision of American social policy.¹¹ They divided into two opposing camps: one relied on direct job creation; the other staked its vision on social insurance.

A full analysis of the CES’s deliberations reveals the origins of direct job creation as the New Deal project closest to the heart of the state “theory” under development in 1934–1935.¹² An eclectic group of expert administrators assembled the foundations of direct job creation both in competition with and cooperation with other New Deal projects within the CES, an effort that would later stand them in good stead when they would move to make direct job creation the dominant economic policy of the New Deal.

Rethinking the Origins of Social Security

The historiography of the Social Security program, and its origins within the CES, is voluminous. Historians have often looked to this foundational program as a vehicle for examining the New Deal itself and the development of the American welfare state more generally. However, most of this literature dwells on how the CES shaped our ideas about social insurance and welfare. Direct job creation has tended to be written out of this historical moment or seen as a separate development within the New Deal.

As one of the earliest theoretical frameworks applied by historians to the study of the New Deal, Arthur Schlesinger Jr.’s model of the First and Second New Deals understandably influenced many later historical investigations of the Roosevelt administration. This is certainly true for the history of the CES. Social Security was Schlesinger’s ür-case study in the transition between a New Deal oriented around cooperation with capitalist interests, and a New Deal that moved to challenge them.¹³ For Schlesinger, Social Security showed FDR acting to create a new relationship between the national state and individual citizens, a new federal responsibility for social welfare, and a new attitude to laissez-faire capitalism that saw it as a fatally flawed system that must be replaced by a mixed economy guided by an activist government.

Schlesinger argued that Social Security was a durable “reform” measure meant to shield Americans from any future recession and hence was a permanent contract between the working citizen and the state. Works Progress Administration (WPA) job programs were, on his account, a “relief” measure, a temporary effort meant to lessen the effects of the Great Depression rather than to become a permanent part of the New Deal order. Other periodization models have followed in the same vein: John Jeffries, Otis Graham, and Barry Karl built on Schlesinger’s model by hypothesizing a Third New Deal oriented around economic planning and the expansion of state capacity; they tended to place direct job creation efforts as part of both the Second and Third New Deals, while still seeing them as separate from the First, and as separate from efforts to construct and expand social insurance programs in the late 1930s.¹⁴ Alan Brinkley’s End of Reform reconceived the New Deal as either reconstructing or ameliorating capitalism and flipped the order of events, but he retained the two-period radical/reformist framework pioneered by Schlesinger. In Brinkley’s model, the WPA was part of the earlier radical phase that ended with the rise of the conservative alliance and the turn to a more moderate liberalism that no longer directly challenged the prerogatives of capitalism.¹⁵

Direct job creation does not fit particularly well with these periodization efforts. FERA work programs and the CWA chronologically fall within the First New Deal period but are virtually identical to the WPA of the Second New Deal, which calls into question the sharp discontinuities between periods described by Schlesinger, Graham, Karl, and Jeffries. Likewise, as we will see in Chapter 3, the WPA’s direct job creation efforts far outlasted the annus horribilis of 1937 that provides Brinkley with his demarcation point. Most important, in my view, is that these models portray different policy projects—especially social insurance and direct job creation—as having little to do with each other. I argue, by contrast, that they were intimately connected from the beginning.

Following Schlesinger’s triumphal narrative of the expansion of the American welfare state, a new body of literature has challenged this optimism, pointing to ways in which the construction of social and economic citizenship within the CES had long-term consequences that entrenched and intensified pervasive gender and racial inequality.

The economist T. H. Marshall’s definition of “social citizenship,” as “the right to a modicum of economic security and security … the right to share to the full in the social heritage and to live the life of a civilized being according to the standards prevailing in the society,” has been a tremendously useful model for American historians interested in political economy, poverty, and inequality.¹⁶ It is fundamental to both many discussions of American exceptionalism (since America’s journey through Marshall’s three stages of citizenship was quite different from Europe’s) and the distinctive features of the U.S. welfare state. However, Marshall’s concept has also been usefully challenged or extended by Alice Kessler-Harris, who coined the term “economic citizenship” as a fourth category or stage of citizenship. In her book In Pursuit of Equity, Kessler-Harris argued that the distinctiveness of America’s welfare state, and much of its gendered nature, stems from the fact that in America social rights have been made dependent on economic citizenship. Defined as “the independent status that provides the possibility of full participation in the polity” (and buttressed by access to superior forms of social insurance, mortgage and tax rates, and other benefits), Kessler-Harris argues that economic citizenship has been used as a barrier against women through their exclusion from the world of male work.¹⁷

Even those who disagree with Kessler-Harris’s ultimate emphasis on opening up economic citizenship have found her “economic citizenship” term useful. Several feminist historians like Linda Gordon, Eileen Boris, and Dorothy Sue Cobble take exception to Kessler-Harris’s emphasis on expanding the right of women to work in professions that guarantee access to economic citizenship. They noted that this objective would do little for nonworking poor women and mothers. Moreover, working-class women, despite having long been engaged in the same kind of industrial employment as working-class men, were still not included within economic citizenship. Finally, economic citizenship still leaves the issue of the “double shift” and women’s unwaged labor in the home to deal with.¹⁸ Even as they argue instead for expanding universal human rights to health care, childcare, and social supports, Gordon and others accept Kessler-Harris’s terminology of economic citizenship as a useful foil for their preferred categories of social citizenship and universal human rights. Similarly, historians who focus on race, such as Suzanne Mettler and Ira Katznelson, have picked up the “economic citizenship” term and have studied how economic citizenship was made white-only by defining heavily black industries as outside the field of recognized “work.”¹⁹

The historiographical division over social and economic citizenship also plays into debates about the two-track nature of the American welfare state, because economic citizenship is roughly equivalent to access to the “first” track. Gordon, Mettler, Kessler-Harris, Robert Lieberman, Katznelson, and others have convincingly demonstrated that one of the major shortcomings of American social policy, especially policies enacted during the “big bang” creation of the CES, was the division of social welfare policy into social insurance programs and welfare programs. The systematic exclusion of agricultural and domestic workers from all of the major social insurance programs, from Old Age Insurance, to Old Age Assistance, and Aid to Families with Dependent Children, ensured that skilled workers who were predominantly white men gained disproportionate access to benefits that were national, categorical, and well funded through payroll taxes.

By contrast, women, African Americans, and marginal workers were trapped in state and locally run programs. This left them vulnerable to discrimination at the hands of local officials. Benefits varied dramatically because they were shaped by state variation in the rules of eligibility and were subject to demeaning forms of social control through investigations, paupers’ oaths, and home visits. These programs were generally funded through grant-in-aid programs with limited federal matching, creating an incentive to keep benefit levels at a low level. Among scholars who have studied these programs, the major disagreements over the nature of the two-track welfare state revolve around which factors were responsible for the persistence of that two-track welfare state: did they include Dixiecrat insistence on maintaining the Southern labor market, traditional beliefs about the deserving versus undeserving poor, the impact of federalism, patronage systems, or a weak bureaucracy?

Expanding the scope of welfare policies considered under the rubric of the two-track welfare state to include direct job creation complicates this framework. Edwin Amenta’s work on the relative benefits of social insurance payments and welfare payments during the 1930s, for example, argues that “most Roosevelt Administration policymakers did not see themselves as designing a two track welfare state; rather, the WPA was a means-tested program that gave relatively high benefits. Nor did American policymakers view economic security strictly as a matter of social insurance coverage; means-tested programs dominated social policy.”²⁰

In a similar vein, Jason Scott Smith, in Building New Deal Liberalism, deliberately sets out to prove that “public works programs were the New Deal’s central enterprise” and that they played an enormous role in accelerating America’s economic development from the 1930s through the 1960s.²¹ In this view, the Roosevelt administration can be seen as pursuing something like a “jobs and assistance” state, in which the state would use public works programs to spur private-sector economic development, thus steering as many people as possible into the protections of the employment-based welfare state. Similarly, Chad Allen Goldberg’s work on radical WPA unions suggests that WPA workers, while relief clients who theoretically should have been driven into the second tier of the welfare state, were able to use the concept of work to contest their status and demand the right to a job as an entitlement “earned” through their labor.²²

Direct job creation appears to have existed halfway between the two tracks of welfare, with interesting consequences for considerations of social and economic citizenship. On the one hand, this type of program very much traded on the rhetoric of earned rights, based in gendered conceptions of work, deployed by advocates for social insurance, and meant to serve a clientele (predominantly white men, blue-collar workers, frequently older heads of households) normally protected by social insurance. Indeed, the fact that the Great Depression plunged many millions of these normally economically secure workers into the same straits normally occupied by the marginalized might explain why policymakers were willing to countenance such a radical expansion of national provision for the unemployed. On the other hand, direct job creation was not a contributory program as traditionally defined. Its relatively privileged recipients were still those whose paupers’ oaths had ejected them from the ranks of the “worthy” poor in the eyes of many in society. Moreover, the origins of this job program in poor relief drew a straight line between these work programs and the welfare track of American social policy.

Restoring direct job creation to the history of the origin of Social Security and the CES thus offers a new perspective on questions of social and economic citizenship and the two tracks of the welfare state. To begin with, much of this literature has focused on the role of private-sector employment and specific forms of private-sector work as the restrictive and discriminatory dividing line between the worthy and unworthy poor. Yet direct job creation programs like the WPA traded on the idea of work as a badge of worthiness. The state distributed work to those without, bringing them into the circle of worthiness, instead of penalizing the unemployed. Unemployment was defined as a failure of the labor market rather than a sign of individual failure, absolving the unemployed of economic sin.

Direct job creation turned work into a benefit that was open to anyone who applied for it. If this was not precisely identical to the idea of welfare as a right of social citizenship, it certainly was moving in that direction. Moreover, the actual functioning of such programs tended to undermine the racialized and gendered divisions of the two tracks of the welfare state: at any given time during its existence, four hundred thousand African Americans and another four hundred thousand women who would otherwise have been excluded from UI and Old Age Insurance gained eligibility through their WPA paychecks and the payroll contributions deducted from them.²³

Direct job creation called upon work as a cultural, social, and political symbol, used to empower as well as to oppress. Social investigations of the kind studied by Mary Furner, Barry Supple, Alice O’Connor, and other students of social scientific knowledge and progressivism make this clear.²⁴ They turned to research conducted in the 1930s by E. White Bakke, the eminent British social scientist and expert William Beveridge,²⁵ the WPA’s Research Division, the U.S. Labor Department, as well as an array of public and private researchers to show that work had an important symbolic meaning for the poor and the working class. In industrial societies, work provided (and still provides) a huge source of social and psychological meaning. It defined the neighborhood one lived in; it circumscribed the friends and workmates who would occupy much of the day; it offered a sense of contributing to society, of being needed.

Given the influence of immigration in industrial labor forces in the United States especially (but to a lesser extent in Europe as well), where a person worked could also be a signifier of nationality, language, and religion, and vice versa, as professions and sectors were ethnically divided. As a consequence, unemployed workers and their families, even those on public relief, believed in the idea that work entitled one to a superior set of earned rights and they wanted access to it. As one wife of a WPA worker put it, “We’re not on relief any more—my husband works for the government!”²⁶

Early public opinion surveys, conducted by Witte and the nascent Gallup organization, of the unemployed and of relief clients discovered that the most downtrodden were much more adamant about finding a job than they were about welfare for all. While scholars favoring social citizenship or universal human rights (or a guaranteed minimum income) might argue that this reflects the hegemony of American individualism, there is no escaping the evidence of millions of unemployed workers themselves who proclaimed, “[W]e don’t want relief, give us work.” The sentiment reflects the conviction shared by many (including Marx) that the creative potential of employment is missing from social citizenship. As Beveridge argued in 1944, “A person who cannot sell his labour is in effect told that he is of no use … a personal catastrophe. The difference remains even if an adequate income is provided, by insurance or otherwise, during unemployment … the feeling of not being wanted demoralizes.”²⁷

In the context of full employment and the right to a job, work requirements lose something of their punitive or exclusionary force. Instead they become a constitutive element in a horizontal social contract between the employed, who agree to pay the taxes required to employ the jobless, who in turn agree to produce public goods and services to enlarge the commonwealth and beautify the public square. On this reading, economic citizenship becomes less a characteristic of laissez-faire systems, and more a characteristic of solidaristic systems—hence the reason job policy is a vibrant characteristic of social democracies.

Viewed through the lens of job policy, the distinction between social and economic citizenship breaks down. This in turn carries significant implications for the broader debate about American exceptionalism and the welfare state. Go/sta Esping-Anderson’s model of Anglo-American, Continental, and Social Democratic welfare state regimes relies on these distinctions.²⁸ Yet if both the United States and Sweden were developing job policy simultaneously in the 1930s at a time when other nations within the Anglo sphere of influence (the United Kingdom, Australia and New Zealand, Canada, and so forth) and Continental nations such as France and Germany were not, we have a dilemma on our hands. How explanatory is the Anglo-American model of welfare states? How exceptional and separate was the United States? The model does not hold. Likewise, if at times Britain, France, and Germany balked at mass direct job creation (even in the midst of an economic crisis like the Great Depression) then the United States’ frustrated attempts to institutionalize job policy mean that the American social policy is not as far as some would have it from European models.

Direct Job Creation and the Welfare State

Social Security occupies a prominent place in policy history. Sociologists and political scientists have been interested in why the United States is a welfare laggard and why the country adopted certain structures of eligibility and their underlying “theories” of worthiness and not others. The American political development (APD) school has made particularly important theoretical contributions to our understanding of the ways institutional changes and structural features shape policy outcomes historically. In this model, initial policy decisions create a political dynamic that acts to reinforce them over time. This “policy feedback effect” entrenches one approach and excludes others, creating a “path dependency” in institutional development.

Theda Skocpol, Margaret Weir, Ann Orloff, Jill Quadagno, Jacob Hacker, and others in this tradition point to Social Security as a classic case of path dependency. Once a policy so controversial that after enactment it was targeted for repeal by the opposition party, it became a third rail of American politics, so strong that it was easily able to weather antistatist periods in American politics. APD studies have tended to focus almost exclusively on social insurance and welfare programs. They tend to treat other policy initiatives considered by the CES as examples of policy options that were ruled out as a consequence of path dependency.

Direct job creation throws a wrench into this model of the origins of Social Security. To begin with, path-dependent studies rarely involve what we might call “dual origins” of public policies. To the extent that direct job creation has been studied by the APD school, it has been through the work of Edwin Amenta, Drew Halfmann, and others, who portrayed this type of job program as part of a policy agenda that was separate from the Social Security Act:

When people think of the origins of American social policy, they usually think of the 1935 Social Security Act…. [T]hese programs were somewhat marginal to New Deal social policy because they dealt with special categories of “unemployable” citizens…. Scholars miss the fact that most Roosevelt Administration policymakers did not see themselves as designing a two-track welfare state; rather, the WPA was a means-tested program that gave relatively high benefits…. These programs constituted an incipient “work and relief” state favoring the unemployed.²⁹

I take issue with this perspective. As I will explain in greater detail, Social Security did in fact include “a commitment to work programs” as well as programs aimed at “unemployable” citizens. This raises the question of whether direct job creation was part of a “work and relief” state or rather a “work-insurance” state; the latter is what I believe the CES intended. Path dependency would seem to have limited utility as an overall approach to the development of the welfare state if we take the CES as the starting point. Social insurance and direct job creation shared very similar origins: they came out of the same committee, served much of the same clientele, used much of the same rhetoric of justification and similar economic theories, and yet, in the long run, met very different fates. This may well point to a more contested and contingent process by which different public policies win political support. Social insurance was, after all, not the most popular element of the Social Security Act—there was a long lag before benefits were paid out, payroll taxes were not popular (especially at the higher levels required for a prefunded Old Age Insurance program), and the program was challenged all the way up to the Supreme Court. And yet, unlike the WPA, which had a much stronger institutional base in many respects from an APD perspective, social insurance lasted much longer.

Shaping Historical Memory

One of the reasons why direct job creation has not generally been celebrated as an achievement of the CES is that a conscious attempt was made to write that type of program out of the historical record. The CES is seen today as the organ that created social insurance and social insurance alone.

In 1936, Witte wrote an account of the development of the Social Security Act that was used for many years as the official in-house history of the Social Security Board.³⁰ While the memoir’s purpose was to serve as an eyewitness account of the CES, the effect was to serve as an official narrative of what FDR and his staff intended the New Deal to be.

Witte makes it clear that, from his perspective, the CES intended that social insurance would be the cornerstone of the New Deal. He was a partisan of this approach and did much to promote its importance for the long haul. From the beginning, he argued, the CES had hit on “unemployment insurance and old age security” as the “two major fields to which the staff would have to devote a great deal of attention.”³¹ “It was agreed that the committee would have to make careful actuarial studies” their first priority, given its foundational importance to Old Age Insurance.³² Witte went farther, claiming that direct job creation research was not a major undertaking of the CES. “No final report was ever made by [Emerson Ross] or his staff.… [T]he reports of Dr. Givens and his staff were able research reports, but did not figure very much in the final report of the CES.”³³

Archival sources contradict this: Ross’s report was in fact presented to the committee; material from it was included in the first Executive Staff report and adapted in the final CES report. Witte had downplayed contributions of the pro–direct job creation members of the staff with whom he was not entirely in sympathy. The larger goal here was to argue that “the immediate relief problem came to be regarded as outside the committee’s jurisdiction,” that direct job creation was not a part of the committee’s deliberations, but social insurance was.³⁴

Did all the committee members agree on this point? Did they see the remit of CES in the same way? In Development of the Social Security Act, Witte wrote that the committee had issued “a unanimous report,” that its members were “of one mind,” and that they “were able at all times to present a united front.”³⁵ Those who disagreed are either subtracted from the story or described as foolish: “the advisory council … violated all requests of the committee,” he noted. The advisory council to the CES, a major institutional source of opposition to many of the characteristics of social insurance (it argued with the main committee over everything, from contribution levels and the exclusion of agricultural and domestic workers to firmwide versus industrywide pooling of financial reserves to pay benefits), was not included in Witte’s account of the committee’s deliberations. Witte wrote that “it remains doubtful whether it would not have been better to have no organization at this time.”³⁶ Witte’s narrative relegated comprehensive alternative models for economic security to historical footnotes (in this case, exactly two).³⁷

Fortunately, there are historical accounts that contradict Witte and they deserve pride of place in the historiography of the CES. Josephine Brown, a FERA alumna of the committee, chronicled the rise of direct job creation in her book, Public Relief. As Brown described it, far from the placid consensus between committee members that Witte had described, the adherents of a “democratic philosophy” of provision for the poor pushed hard for direct job creation, challenged the principles of UI as inadequate, and came within a hairbreadth of total success.³⁸ Social insurance advocates such as Witte sought to tamp down the more universal aspects of the economic security system, while FERA officials fought to maintain them.³⁹ In a larger sense, Brown argued, Witte’s social insurance advocates were not the true inheritors of the New Deal’s spirit.

Similarly, in The WPA and Federal Relief Policy, Donald Howard, a researcher for the Russell Sage Foundation, emphasized the links between the WPA and the CES. In his opinion, the language of security—the idea that the employee-clients of the WPA should be sure that their jobs would be safe, the conviction that workers needed wages even when logistical issues or environmental considerations shut down projects, the requirement that monthly wages have a solid floor, all of these issues that the WPA would take as a common ideological foundation—was the handiwork of FERA staffers serving on the CES.⁴⁰ In the course of developing plans for the committee, debates erupted within the WPA on whether the program should adopt prevailing wages or a security wage, whether it should accept any unemployed workers or demand a means test, and ultimately how far WPA wages should diverge from relief.⁴¹ Founded between the fall of the CWA and the rise of the WPA, the CES had “given a new lease of [sic] life” to the principle of federal provision for the unemployed. The CES’s arguments about the proper roles of federal and state action had the effect of more firmly establishing direct job creation as a federal responsibility, Howard noted.⁴²

The Structure of the CES

When the CES first met in late June of 1934, it was a divided institution. Different groups of political actors assembled, each sensing limited space for policy action, each intent on winning that contest for their favorite vision of the new welfare state. The committee’s structure fostered the tension. While the Labor Department had the most representatives, Hopkins (as the administrative head of FERA) and Secretary of Agriculture Henry Wallace also claimed membership, as a testament to the dominance of the “liberal bloc” on antipoverty issues.⁴³ Although these parties shared common goals in extending the reach of the state to combat economic insecurity, they had their own distinct ideas about how to do so. Above all, they wanted to commandeer the results for their own agency or department.

As usual, the lion’s share of the committee’s work would be done by the Executive Staff, and hence Perkins’s choice of Witte to lead it was consequential. Witte, in turn, set about filling the slots with his colleagues from the University of Wisconsin and the Department of Labor—Joseph Harris, Thomas Elliot, and Wilbur J. Cohen, to name a few.⁴⁴ These experts were mostly, although not entirely, students of John R. Commons, the American institutionalist economist. Prior experience in drafting the state of Wisconsin’s UI system just a few years earlier had led them to a common understanding that emphasized how UI, narrowly tailored to cover industrial workers, could counteract the natural cycle of unemployment in American industry by creating incentives for firms to regularize their employment. This perspective inclined Department of Labor staffers to emphasize UI over other forms of social insurance, contributory systems over noncontributory systems, and firm-level funds rather than industrywide funds.⁴⁵

However, FERA was also well represented on the Executive Staff by six individuals (the second-largest contingent) in no small part due both to Hopkins’s position on the formal committee and to the fact that FERA had paid for and housed the CES.⁴⁶ Other voices found no quarter. Social insurance promoters tied to the Ohio plan for UI (such as Abraham Epstein and Isaac Rubinow), advocates for national systems, and voices for public works were not included on the staff.⁴⁷

Further complicating the debate was the Technical Board, a supposedly unbiased group of experts who would conduct research to inform the staff’s work. In practice, the board’s division into different topical working groups (on social insurance, direct job creation, relief, health insurance, and so forth) ensured instead that each camp on the Executive Staff could draw upon its own group of experts on the Technical Board to do the legwork on preferred policies. For example, the Department of Labor was represented by Altmeyer, Elliot (both University of Wisconsin economists, brought in by Witte), and Isador Lublin, all of whom would focus on UI research, while Aubrey Williams and Corrington Gill headed up the FERA contingent and conducted research on job programs.⁴⁸

Although competition persisted throughout, conflicts intensified at specific and representative moments. Tension first surfaced in August 1934, when the CES set forth its initial plan for what topics it would research, what topics it would not, and who would be assigned to these studies. The second contentious period lasted from late September through early November of that year and book-ended the first round of presentations by the various research teams and Technical Board and Executive Staff preparation for their first report to the full committee. The CES’s final report to the president in January 1935 generated a third stage of conflict. Last, but not least, conflict occurred over the drafting of what would become the Social Security Act of 1935 and the Emergency Relief Appropriation Act of 1935, or what Roosevelt referred to as his “big bills.”⁴⁹

Hopkins’s Team

In selecting staff to back up his political arguments, Harry Hopkins drew on an eclectic group of experts and bureaucrats drawn from among the first and second tiers of FERA administrators. Jacob Baker, an industrial engineer who had worked for left-wing publishing firms on the West Coast before the Depression and an advocate of “cooperative enterprise,” wrote most of the policy proposals for direct job creation programs. Emerson Ross, a Dartmouth-educated statistician who had formerly worked for the Metropolitan Life Insurance Corporation, was both Hopkins’s chief numbers man and a key architect of direct job creation proposals. Corrington Gill, a University of Wisconsin–trained economist of the John R. Commons school who had been studying unemployment in New York State before being hired on by FERA, provided the economic theory and empirical analysis to undergird their arguments. A French-trained social worker and white racial liberal from Alabama, Aubrey Williams contributed his training in social work and his on-the-ground experience as the chief administrator of the Alabama Relief Administration.⁵⁰

Aubrey Williams, Emerson Ross, and Josephine Brown had all entered into the relief business in the early days of the Great Depression; Brown was a social worker who had been hired as Hopkins’s assistant, and Ross was a staff statistician for FERA. These FERA staffers additionally leaned on Meredith Givens, another University of Wisconsin–trained scholar, and Eveline Burns, one of the few women economists working at Columbia University, for additional firepower. While Jacob Baker and Givens and Burns had no formal training in social work, they were passionate amateurs and picked up much of the social work culture from their peers. Harry Hopkins himself was a professional social worker trained at Grinnell College, and he acted as a synthesizer and popular advocate for the ideas developed by these specialists; he was assisted by Brown, who would later write a history of FERA and its successor agencies.⁵¹

As Brown described in Public Relief, many FERA staffers came out of the new generation of social workers (both professional and amateur) in the late 1920s who imbued their work with a new “democratic philosophy of relief” that emphasized the systemic nature of unemployment, the importance of treating individuals on relief with dignity and respect, and the obligations of all citizens to help people in need.⁵² This view, she argued, diverged sharply from earlier philosophies of social work that had emphasized personal responsibility and individual failings. The massive failure of private industry produced a concurrent need for public provision for the poor.

Beyond this binding philosophy, three factors crafted a cohesive intellectual community out of these disparate individuals. First, they shared similar backgrounds. They were all well educated, either in the Ivy League, the Midwest, or Europe.⁵³ Most had been trained in the social sciences or were amateur social scientists with backgrounds in engineering or statistics. Most important, they had all come of political age in the 1920s and were hence somewhat disinterested in Progressive Era debates about the state and economy.

Second, they shared the common experience of administering poverty programs during the Great Depression. As both Brown and William Bremer point out, the 1930s had a transformative effect on those in the relief fight, overthrowing existing orthodoxies in economics and social work, leaving intellectuals scrambling for new explanations and prescriptions for ending the crisis.⁵⁴ Simultaneously, the unprecedented scope of economic collapse and human suffering created a deep sense of urgency and impatience with inadequate local institutions and traditional methods of relief administration.

Third, they shared a common institutional home—all of them had come to work for the federal government during the early days of the New Deal. Some of them had either worked in state relief agencies or had been hired by Hopkins to work in New York’s Temporary Emergency Relief Administration (TERA) prior to the New Deal. Most of them signed on to the federal government in the First Hundred Days through the FERA. These activist-intellectuals were charged with coordinating national relief policy across the country, and they had to come to grips with the inadequacies of local methods and the sheer scope of the poverty crisis. And, most important for our purposes, they were steeped in job creation experiments. Indeed, for five months immediately prior to the establishment of the CES, they had run the CWA, the first and most ambitious effort to put the unemployed back to work across the country.

As social scientists and experts, these individuals were expected not only to produce plans for action, administer programs, and evaluate outcomes—the raw stuff of “policy learning”—but also to explain to the government and themselves what they were doing or propose how it would work or how it was working, and why it should be done. The CES relied on research programs, iterative proposals, and a final report to the president, all of which provided FERA staffers the means and the opportunity to convert their explanations into an economic theory of the Great Depression and the wisdom of government intervention, and into a series of formal policy proposals that translated ideas into agencies, budgets, and boots on the ground.

Direct Job Creation Emerges

The idea of direct job creation as developed by FERA experts in 1934 was this: that in order to respond to a crippling unemployment rate of 20 percent, the federal government had to create jobs for the unemployed on a mass scale. This action would reduce unemployment rates by “force account” (i.e., by the government’s directly employing and managing formerly unemployed workers). Once the target for federal job creation was met, these workers would be assigned to various useful projects: “light” construction (chiefly of roads and public buildings), social services (especially in the realm of public health and education), arts projects, and social science surveys. FERA jobs were to include administrators for these programs as well.

The notion that the government should provide jobs first and worry about what the jobs produced afterward was a major departure from traditional ideas about public works. A long-standing tradition in American political economy since the eighteenth century, public works were usually created by local governments in times of economic decline in the hopes of absorbing some of the excess unemployed.⁵⁵

Direct job creation had a different intellectual root. It emerged not among public works experts, but rather from within the brain trust of poor-relief agencies and the social workers who staffed them. From the beginning, FERA administrators had experimented with providing relief in the form of wages for work instead of handing out food baskets or grocery orders (“in-kind relief”) to the destitute unemployed. In October 1933, FERA administrators had pushed their experiment further by establishing the CWA, which offered jobs to 4.26 million unemployed without requiring workers to take the humiliating step of registering as paupers under relief regulations.⁵⁶ Thus, by the time FERA officials walked into the first meeting of the CES, they already had the kernel of a program as well as a year and a half of experience.

The Economic Theory Behind the Policy

Advocates of direct job creation saw their program as grounded in a particular school of economic thought. In an internal FERA memo titled “A National Program for Economic Security,” Jacob Baker, the FERA assistant administrator for policy and one of the chief intellectual architects of FERA’s direct job creation program, laid out the essentials of their approach. It began by analyzing the causes of the Great Depression. He argued that the economic collapse was ignited by mass unemployment and evaporating demand as opposed to various other theories that ranged from monetary deflation or economic imbalance between agriculture and manufacturing to tariffs restricting trade or a lack of “business confidence.” Baker’s report opened with a comprehensive survey of employment, unemployment, and relief statistics collected by FERA bureaucrats and then focused on the ten million unemployed as the chief economic problem. In Baker’s view, “There can never be recovery as long as there are economic strata without money to buy and security to spend…. [T]hey cannot contribute to recovery, their support constitutes a constant deflationary drain.”⁵⁷

Baker justified his arguments by appealing to “the purchasing power theory of development and maintenance of prosperity” that was percolating within the New Deal.⁵⁸ The economy had collapsed due to a lack of purchasing power. There would be no escape from the downdraft of the Depression until the government enabled the public to get back to its normal spending patterns. As he put the matter, “Government money shall be spent when private money stops.”⁵⁹ This economic theory particularly emphasized that pump priming had to be directed toward specific programs rather than spread across the normal areas of government activity: increased spending would only work by redistributing wealth to “the lowest economic strata because it is there that occurs automatically the greatest number of respendings.”⁶⁰ Direct job creation advocates argued that the New Deal had been overly cautious to date, not giving enough money to working-class consumers to produce a sizable-enough multiplier effect, and they called for a dramatic increase in effort; as Baker put it, “The flow should be free as long as the pressure of government spending is needed.”⁶¹

FERA officials focused on more than levels of aggregate spending. They emphasized the form as well as the quantity of spending. As Baker and his colleagues saw it, countercyclical spending would be wasted if it were to be spent solely on direct relief (which they understood would be the most efficient means of income transfer). These relief administrators believed that direct relief “destroys morale, it returns nothing to the community [and] contributes little to recovery except that it keeps people alive.”⁶² FERA officials did not dislike relief solely because of traditional American beliefs about dependency and charity, or because of liberal objections to the stingy, temporary, and degrading administration of local relief, but also because of its economic effects. With poor relief, “none of the money is paid back and not nearly enough is produced by its use.”⁶³ Pump priming through direct relief produced little in the way of multiplier effects due to the low levels of consumption it generates (especially when it is “in kind” rather than “in cash”). Baker called outright for the abolition of direct relief as an integral part of any program for economic security, a call echoed by his peers in FERA.

In its place, FERA officials argued that direct job creation would be the most effective means of stimulating countercyclical spending, and thus it would simultaneously provide for the poor and generate demand that would lead to greater economic security. By providing work at wages that ranged from 26 to 70 cents an hour, direct job creation would pull millions out of outright destitution, millions who would promptly add their new wages to existing consumer demand. The return on wages from taxes paid by newly employed workers would reduce the final cost of the program; most important, the publicly employed would, with their labor, “create new national wealth … more important than any saving.”⁶⁴ The goods these workers would produce, from housing and public buildings to highways, streets, and road gradings, and infrastructure for utilities such as electricity, water, and sewage, would themselves stimulate production as well as consumption. FERA enthusiasts of direct job creation could be seen as proto-Keynesians, plain and simple. However, their policy vision went beyond mere countercyclical spending to a broader restructuring of the American economy, in which direct job creation would play a central role.

This vision emanated from work done collaboratively between this brain trust and a private firm of economic analysts from Manhattan’s Financial District.⁶⁵ Lewis Baxter, the executive secretary of Economic Security Associates, devised a chart (see Figure 1) that displayed the American economy as a Mobius strip, with public and private economies as intertwined halves of a whole, linked by flows of taxation, interest, investment, and, above all, purchasing power.⁶⁶ By adjusting a slide that denoted the size of the federal budget, the reader saw that increasing federal outlays on direct job creation reduced unemployment, increased production, and expanded purchasing power, thus repaying the cost of the program by increasing personal and corporate incomes and thus taxation, and increasing overall levels of economic production, as long as “universal useful employment based on assured jobs in public service” could be assured.⁶⁷

Baxter’s model suggested a reconceptualization of the role of government in the American economy that went well beyond emergency measures during a catastrophic downturn: “Government activities constitute, in effect, an auxiliary industry,” he argued, “which might always utilize advantageously the entire labor surplus.”⁶⁸ This auxiliary industry produced goods and services just as private-sector industries did, and it had its own rates of return on investment and labor. In this model, the old idea of government spending as a drain on private economic activity and hence a loss to the overall economy was turned on its head. Instead, unemployment would be abolished by government fiat. In one hypothetical recession, he speculated, “Decreased private activities have released 1,200,000 workers … but under this plan, expanding public activities would promptly take on 1,200,000 extra men.” Government-created jobs would maintain “the required equation between total workers and total available jobs. There would be no labor surplus to start the ‘vicious cycle’ of a depression.”⁶⁹ Direct job creation would be the permanent solution to any cyclical economic crisis, periodically stepping in to counteract recessions and keep the economy growing at a stable rate.

Figure 1. Baxter’s vision of the American economy. From Lewis Baxter, “National Balance Sheet,” undated, Staff Subject Files Miscellaneous, Staff Subject Files, Records of the Committee on Economic Security, Group 69, National Archives II Building, College Park, MD.

Baxter argued that direct job creation offered two further advantages over other antirecession strategies. First, it provided for the prospect of recovery through growth by putting potential labor to use. “The point to be emphasized here,” he wrote, “is that allowing an over-supply of human productive energy to go to waste in idleness, which might be utilized to create general benefits, deflates the entire price and investment structure.”⁷⁰ By putting labor power to work, direct job creation would push the economy to its maximum level of production, reduce the downward push on wages caused by mass unemployment and decreasing demand, and restore an imbalance in the distribution of capital between consumers and investors by shifting tax revenue taken from the rich toward wages for the poor.

In the memo “A National Program for Economic Security,” Baker concurred with Baxter’s emphasis on the effects of inequality on hypercapitalization, speculation, and underconsumption, theorizing that greater redistributive impact could be had by financing direct job creation through a tax on securities. “The more money that is hoarded or thrown into nonproductive uses, the greater become the number of such instruments of debts, and consequently the broader the base for such a tax,” he noted. “The imposition of such a tax … tends to force money into productive use,” complementing the government’s direct efforts.⁷¹

Second, direct job creation would decommodify work. By expanding government’s role into that of an employer and producer, direct job creation blurred the distinction between the private and public sectors. Public industry “differs from the others only with reference to the nature of its products and the methods of marketing them,” Baxter argued.⁷² This emphasis on the similarity of government and business implicitly argued for a gradualist strategy in which the basic economic structures would evolve without seeming to change. “Total income remains constant. The average personal income remains constant. The sole change is that the average producer is buying less individually and more cooperatively.”⁷³

This perspective was not wholly embraced by everyone at FERA. Corrington Gill represented the more orthodox strain of economic theory. He approached direct job creation from much the same angle that John R. Commons would have: empirically, institutionally, and with a slightly conservative tinge to otherwise progressive aims. In his memo entitled “Basic Considerations Affecting a National Public Assistance Program,” Gill laid out his interpretation of the theory underlying direct job creation. In his view, persistent unemployment was driven by a mixture of frictional, structural, and cyclical factors. While frictional unemployment was “inevitable in a dynamic economy,” structural and cyclical factors were not. They reflected instead the force of technology and the shifting availability of natural resources, which could both be shaped by government intervention.⁷⁴

“Since full employment is not in prospect in the predictable future,” Gill noted, “[people] other [than] marginal workers will be in need of public assistance.”⁷⁵ The federal government would have to establish a permanent system of marginal direct job creation to ensure full employment, “play an increasing role in the field of public investment,” and avoid European-style dependence on nonwork-related welfare. Direct job creation, therefore, was an important element in the toolbox of New Deal liberalism, functioning in unison with a Keynesian “flexible public spending program [as] … a permanent aspect of public policy.” Along with wage and price controls it could avoid the kind of rigidity feared by Gardiner Means, a “price balance” policy between agriculture and industry along the lines envisioned by Rexford Tugwell, as well as “compulsory standards for wages and hours, guaranteed annual wage plans, and wide extension of unionization.”⁷⁶ This intellectual work was a key part of coalition building; by explaining how direct job creation could complement other New Deal projects, Gill provided Williams and other FERA staffers with arguments they could use in conversation with the “spending faction,” key advisors to the NRA and AAA, and significant sections of the Labor Department.

Gill worked hard to ensure that direct job creation projects would not undercut private manufacturing and displace workers from the labor market. He looked to the empirical data to argue that “inasmuch as these projects would not have been undertaken in the immediate future through the regular channels,” the decline in private spending meant that “displacement of the labor forces of private contractors is not involved.”⁷⁷ From a more traditional economic theory perspective, Gill noted that conservative complaints were based on the “lump of work doctrine” rejected even by neoclassical economics. Finally, Gill pointed to direct job creation as an engine of economic growth. It was a “failure to utilize the productive services of idle men,” he argued. “[It] … has cost us at least 200 billion dollars in income which we might have produced but didn’t.”⁷⁸

As much as his economic arguments sought to place direct job creation on a sound theoretical platform, Gill was actually one of the more conservative FERA thinkers. He maintained that the old “security wage” derived from poor relief should be maintained in any new program in order to reduce dependency and forestall the movement of private-sector employees to government employment. Wage differentials should not become incentives to seek public employment. Gill maintained that FERA’s program should concentrate on relief clients, thereby maintaining the means test and limitation of jobs to heads of households.⁷⁹ What is more, in contrast to most of his compatriots, he did not believe in the absolute right to a job as he thought such a guarantee was beyond the fiscal means of the federal government.

Nonetheless, even the most conservative of the FERA’s policy experts placed direct job creation at the heart of New Deal economic policy, a keystone of social Keynesianism. Gill argued that since “normal times have ceased to mean full employment … others besides marginal workers will be in need” of publicly provided work.⁸⁰ If the economy continued to lag below full employment, he was prepared to abolish the means test that he had argued for elsewhere: “Mr. Hopkins has said that ‘we should reach a concept in America where the able-bodied unemployed are entitled to a job as a matter of right.’ … Abolition of the needs basis of hiring [and means testing], therefore, may be regarded as a desideratum which it has been impossible to achieve thus far because of … necessity.”⁸¹

The major dividing line over the means tests and the right to a job was, at least as Gill saw it, less an ideological issue than a practical matter. However, for people like Baker, the issue was very much an ideological dividing line. For Baker, fundamental social rights were at stake. The United States needed to promise a new social contract between worker-citizens and the state—one founded on a reciprocal exchange of work for wages. In a memo titled “A Program for Social and Economic Policy,” he wrote, “We, therefore, propose that the government assume the obligation of providing the opportunity for gainful work to all its citizens able and willing to work,” even as he proposed the elimination of federal direct relief.⁸²

A common criticism of New Deal job programs now and in the past is that they failed to employ everyone who needed a job. This was not by design. Gill, Baker, and others envisioned a much more comprehensive program, embracing anywhere from 3.5 million workers (roughly 35 percent of the total unemployed) to eight million workers (roughly 80 percent of the same population).⁸³ Their eyes were far bigger than the budgets that were available to them, but this was not for lack of imagination. Moreover, with the exception of Gill, who thought of direct job reaction as an emergency stopgap, the rest of the FERA brain trust was moving in a more fundamental direction: permanent direct job creation and eventually the fulfillment of a sacred principle that every American has the right to a job.

Origins of an Ideology

In the minds of FERA staffers, direct job creation was simultaneously an economic policy and an ideology. As administrators of programs that had to register millions of people on relief, collect data on the programs they were enrolled in, and find a way to provide sustenance for everyone, FERA officials focused primarily on the needs of poor people. They used experiential data, as sociologists might have used statistical or ethnographic data, to elaborate on an ideological conviction that they knew what the poor wanted. In memo after memo, supporters of direct job creation argued that “work is the form of assistance desired by the unemployed themselves…. [T]he unemployed themselves want assistance in the form of work…. [W]hat the workers really want is continued employment.”⁸⁴ FERA officials pointed to their experience in the CWA, when seven million unemployed workers who had refused to take relief lined up to apply for government work in the winter of 1933, as proof of the overwhelming preference of unemployed people for work over relief.⁸⁵ Ordinary people supported a conservative self-help doctrine that “employment is the best cure for employment” and “work is the best antidote for poverty,” converting these cultural precepts into a populist demand for affirmation of the popular will.⁸⁶

Direct job creation advocates pointed to the psychological and social benefits to the unemployed individual to bolster their policy recommendations. Just as they believed that relief had destroyed morale and allowed skills of the trade and habits of self-reliance to wither away, FERA officials believed that direct job creation would restore morale and self-respect and also maintain skills. “Projects must be planned to use the skills of the workers in need … but also the rehabilitation and retraining of persons whose ordinary means of livelihood has permanently disappeared,” FERA officials argued.⁸⁷ Psychological well-being was also necessary for real economic security: “the worker … should feel that, both in terms of security and maintenance of skill, he gets something besides the wages paid…. [E]ach worker should be sure of his job.”⁸⁸ This emotional sense of economic security would help combat the universal fear of destitution and helplessness that characterized the early 1930s.⁸⁹

At the same time, FERA staffers had not yet reached a consensus. Still in the process of formulating their own position, they were evolving from a poor-relief mentality to a destination not yet fully elaborated. Indeed, one of their first priorities at the outset of the CES was still welfare reform.⁹⁰ “It is proposed to abolish direct relief for the unemployed,” argued one memo. “Give no relief for the able-bodied,” urged another.⁹¹ In its place, FERA administrators urged a direct job creation program as a better alternative. At the same time, Eveline Burns, an economist hired by FERA to conduct research on direct job creation, argued that, given public hesitancy regarding federal intrusion into the economy, the administrative difficulties of bringing enough projects online, and the need to preserve the dominance of the private sector in a capitalist society, “work must be regarded as a desirable form of relief which cannot, however, be extended to all the unemployed.”⁹² The same sentiment was shared by Ross and Givens in other reports.⁹³

In contrast, other staffers (including Baker and Alan Johnstone) argued that “work relief” had to be as large as possible in order to have the necessary impact on purchasing power across the entire economy. Even FERA officials who believed that direct job creation could not cover all the unemployed emphasized that it had to be deployed as a countercyclical measure on a large scale. “As a permanent policy, the federal government, without guaranteeing employment, should continuously interest itself in maintaining a high level of employment,” argued direct job creation advocates on the CES’s Executive Staff.⁹⁴ Over on the Technical Board, Williams and others further emphasized that “the first effort of government should be to … encourage maximum … employment.”⁹⁵

Thus within the CES, FERA staffers were doing more than fighting over social insurance—they were developing an entirely new policy program, an economic theory to explain it, and an ideology to justify it. The process was not complete. FERA officials differed between themselves and were not always internally consistent on major issues such as whether jobs should be limited to heads of households, whether workers should be paid a prevailing wage, whether the means test should be abolished, and whether a right to a job should be created.⁹⁶ In mid-1934, they were still negotiating with each other over how distinctive this new program would be from what came before.

FERA officials would use the very mutability of these ideas when debating proponents of other programs. To promoters of social insurance, direct job creation advocates would argue that the UI program would not provide enough of a demand boost to restore the economy, a point familiar to their interlocutors who often relied on the same argument. In dealing with advocates for social assistance and mothers’ pensions, they would use the language of social work to argue that direct job creation offered more income and greater security than social assistance ever could, and that it provided the kind of psychological support that poor relief could not. Locked in battle with economic planners, the FERA administration claimed that their policies could help government planners manage long-term patterns of employment and demand. This rhetorical fluidity would be crucial in the next phase of the CES’s deliberations.⁹⁷

Initial Conflicts

The first skirmish with the CES revolved around the scope of its policy remit and the breadth of empirical knowledge it needed to gather. Social surveys would serve as the basis for the separate reports issued by the Executive Staff, the Technical Board, and their specialized subcommittees. In a series of memos titled “Basic Questions of Policy” and “Possible General Approaches,” Edwin Witte, the executive director, attempted to steer the direction of knowledge gathering toward social insurance. Witte set forth what he considered to be the key questions about the economic security program that would have to be researched first. Unsurprisingly, these questions focused exclusively on social insurance: should it be funded by payroll taxes or from general funds, should the system be federal or combine federal and state administration, and so forth.⁹⁸ He hoped to dominate the discussion of options such that the deliberations would become a debate between his own Wisconsin plan and the Ohio plan.

He went a step further by downplaying the role that alternative options could play in a system of economic security. Witte engaged in a preemptive defense by listing what he perceived to be direct job creation’s flaws. “Even if it [direct job creation] were attained,” he argued, “it would not eliminate the necessity for other methods of protection against the hazards of accident, sickness, old age, and death.”⁹⁹ FERA staff would no doubt have agreed with this, except Witte did not extend the same standard to his own proposals for UI (which fewer than half of the workforce would be eligible for). Likewise, there was more than a little hypocrisy in Witte’s argument that workers’ compensation and health insurance were necessary, given that these were both rival projects that Witte viewed as inferior options to UI.

Above all, he argued that even if direct job creation were part of the solution, it could never be the main chance. Why? Because, the executive director argued, it “would very likely prove quite costly,” and employers would oppose prevailing wages and the production of usable goods.¹⁰⁰ The traces of Witte’s push to have social insurance dominate the thrust of research efforts are visible in the legwork of the CES. Of 116 reports written prior to the passage of the Social Security Act, 65, or slightly more than half, dealt with some form of social insurance, with 36 reports devoted to UI specifically.¹⁰¹

Against this current, direct job creation advocates pushed for a different research agenda. In a memo titled “Outline of Work,” Emerson Ross laid out a strategy that emphasized gathering statistics favorable to including direct job creation, including “estimates of unemployment and/or employment as far back as possible, present unemployment by industries … emergency government employment, PWA [Public Works Administration], CCC [Civilian Conservation Core], CWA, [FERA] Work Program.”¹⁰² By focusing attention on unemployment as the major crisis of the Great Depression, FERA officials believed that their research would point the committee toward the conclusion that more direct job creation was essential. Ross labored over preexisting data sets collected by FERA’s Research Division on relief applications and relief clients, as well as surveys of poverty and unemployment conducted by the CWA’s research projects to set up a comparison between relief and work as rival options.¹⁰³

To underline the contrast between direct job creation and public works, Ross pushed for statistics on the “relative importance of government construction programs … in relation to total volume of construction,” contrasting the slow pace of PWA construction against the CWA’s sterling track record of a large “number of employed” compared to “wages earned [and] … costs of materials.”¹⁰⁴ Finally, Ross argued that studies of “the present operations of each of the following agencies” would be necessary “to arrive at a judgment as to their relationships with the new program” of direct job creation. Ross believed that these studies would lend weight to his proposal to establish a permanent Public Welfare Department that would unify all aspects of direct job creation, including under one roof offshoot programs such as the CCC or placement bureaus such as the United States Employment Service.¹⁰⁵

Naturally, these two research agendas collided. Ross wrote to Witte, arguing, “I think it would be useful to study the methods by which other countries have met the unemployment problem as a whole rather than simply by variations in unemployment insurance.”¹⁰⁶ Ross thus positioned FERA on the side of all those policy advocates whom Witte was attempting to exclude from research funding and policy discussions, thus building valuable goodwill for FERA among the members of the Technical Board and advisory committees from organizations outside of the Labor Department—the raw material for future alliances.¹⁰⁷

Ross increased the pressure by also insisting on more FERA research projects, arguing that “work programs should be incorporated in addition to social insurance measures” in CES research.¹⁰⁸ “Equal time” demands won space for some fifteen reports on direct job creation.¹⁰⁹ This was far and away the largest amount of research done by any noninsurance group. By contrast, Children’s Bureau advocates and health insurance advocates only managed to include three reports on their respective policies in the CES’s research program.¹¹⁰ Insofar as reports can be used as proxies for the overall flow of argument within the CES (as official minutes tended to report only final decisions, with little mention of deliberations), direct job creation advocates succeeded in maintaining a significant place in the conversation despite opposition.

Witte’s hostility may well have been exacerbated by efforts of direct job creation advocates to borrow ideas and rhetoric from other groups on the committee. In a proposal titled “A Public Work Program as a Means of Economic Security,” submitted as part of the first round of reports, Ross presented a system of direct job creation that focused on UI’s shortcomings. “Any work program that may be devised must of necessity be more comprehensive than a program of unemployment insurance,” he recommended, at least in part because “the work program would provide for those not covered by the unemployment insurance plan” in light of its stringent eligibility standards.¹¹¹ Ross joined this emphasis on universality (which appealed to advocates for more universal social insurance programs like the Ohio plan) with arguments that would appeal to the more conservative members of the committee: work projects like roads, schools, and bridges would ensure that the New Deal’s program for the unemployed would return some value to the taxpayer.¹¹²

Ross appealed to the members of the “spending caucus” by relying on purchasing power theory. Demand stimulation was important to their analysis of the Depression and he found a way to incorporate it into the direct job creation agenda. His comments about eligibility pressed on the biggest weakness of the UI approach: its failure to provide economic security to blacks, women, the long-term unemployed, and all other workers not covered due to industry or firm size. Job creation was open and hence it appealed to critics of the Wisconsin plan, to social workers, and to labor unionists.¹¹³ Most trenchant, Ross pointed to the resonance of jobs in shaping public opinion: UI offered a dole in a political culture dismissive of “handouts,” whereas direct job creation offered work, which would be viewed more favorably by citizens. Social science surveys and FERA interviews provided ample support for the notion that the poor themselves were mainstream believers in the value of work over relief. As part of this rhetorical shift, Ross also sought to distance direct job creation from poor relief by gradually changing terminology, from “relief” to “work relief” to “public employment program” to “work program.” Each step emphasized work more and public relief less.

What were the methods proposed for developing a system of government job creation? The ones under consideration borrowed from social insurance proposals developed by Witte and his fellow Wisconsinites, but they sharply constrained the importance of UI in the CES’s program. The first plan “involves the use of contributions for protections against unemployment for a work program—employment not restricted to those making the payments. This conception regards the funds collected as an additional source of revenue collected and is based on the belief that employees will willingly make payments in return for the protection offered them by a large work program when unemployed.”¹¹⁴ This language borrows directly from social insurance rhetoric. Establishing a contributory basis for direct job creation but not limiting funding or eligibility to those contributing, maximized direct job creation’s fiscal flexibility (and rendered it more open to disadvantaged groups) by giving it a source of funds free from congressional interference, while also keeping the door open to general funds. More important, this option diminished the relevance of UI by establishing an independent system that would be more generous in benefits and duration, in a form preferable to the partial wage replacement characteristic of social insurance, and open to more people than UI (especially agricultural and domestic workers). If such a system were to pass into law, UI experts would find it very difficult to justify an additional payroll tax and an additional bureaucracy designed to provide a less popular benefit. At best, UI would find itself a small, complementary program, if it passed Congress at all.

The second plan put forward by Ross was equally bold. It contemplated “wages on a work program as a means of paying all unemployment benefits.”¹¹⁵ (In other words, while a UI system would still exist for the purposes of collecting taxes and tracking benefits, the actual payoff of those benefits would be done through a work program.) As in the first option, work would become the dominant form of public provision against destitution, guaranteed as “a matter of contractual right to … wages paid for work performed.”¹¹⁶ Once again, one sees the combination of social insurance terminology with a focus on work as the primary mechanism—showing a willingness to appropriate the intellectual clothing of FERA’s rivals. The threat in this option was that, in addition to undermining the cash benefit basis of insurance, direct job creation officials would oust social insurance officials as the primary contact for beneficiaries. Direct job creation administrators would establish their own personnel as the primary contact with almost the entire workforce, ready to link up with clients and congressmen to protect the system politically. To hammer the final nail in the coffin, FERA agencies would maintain budgetary authority over the reserves. “The cost of the work program [for the individual worker] would first be supported by payroll contributions [made by all workers] and at the expiration of the benefit would be supported by public [general taxation] funds,” thus maintaining funding flexibility.¹¹⁷

The third option was something of an olive branch to UI advocates like Witte, especially compared to the previous two. Here UI and direct job creation would remain separate programs: one funded by payroll taxes, the other by “public funds,” thus eliminating any fiscal or programmatic overlap. However, the two programs would cooperate to provide longer and more generous provision of unemployment benefits by “delaying the employee’s eligibility for the work program until after the right to cash benefits under an unemployment insurance scheme becomes exhausted.”¹¹⁸ This setup offered certain advantages from Witte’s perspective. It moderated the UI system’s relatively stingy provision of benefits, while letting the system off the hook for long-term payouts. It counteracted the perception of social insurance as a dole by tying cash benefits to work. Finally, it provided for “workers not covered under unemployment insurance,” a priority for liberals within both the CES and Congress, without having to directly challenge the Southern congressional caucus on the issue of agricultural and domestic workers.

Taken together, these three options—wherein work programs could either replace UI entirely or work alongside it—thus served as ammunition for the battle surrounding the first round of reports by the Technical Board and the Executive Staff. Over at the Technical Board, Williams fought for a report to the CES that stressed the importance of direct job creation as a first step to securing its position within the economic security program and largely succeeded. The result was a document resoundingly in favor of direct job creation: “The first requisite of security is a useful job,” the board wrote. “[It] is recognized that extensive public employment will … be necessary.” Moreover, the board argued, in the event of political pressure regarding the cost of the economic security program, “employment … should receive first consideration. To the extent of the maximum funds which can be made available, public employment should be provided until the bulk of the people … are absorbed.”¹¹⁹

Indeed, the Technical Board essentially recommended in its first report the major provisions of the proposals advanced by Ross and Baker. “All unemployed who are at the same time employable and also in need … [or] not covered by unemployment insurance and also recipients … [whose] benefits have lapsed,” should be eligible for direct job creation, the report’s authors urged.¹²⁰ A large direct job creation system funded by general taxation would complement a contributory social insurance system. The crowning glory was a recommendation for a yearly appropriation of $3–4 billion, which would go into effect immediately. Although social insurance and direct job creation would be separated into independent programs, both sides saw potential for collaboration and cooperation.

But moving up the policy chain was not a simple process, and Witte was not done with the debate. As the Technical Board passed on their work to the Executive Staff for refinement, he blocked the efforts of FERA advocates to place direct job creation at the center of the CES’s framework for reform. In their report, the Executive Staff largely sided with the UI crowd. Witte argued that “it would be equally unsound to ignore the 80% of all workers now employed in the concern for the 20% who are unemployed. The 80% are in need of protection as well as the 20%.”¹²¹ By phrasing the debate in terms of majority and minority, the Labor Department was able to elide the fact that UI would not cover half of the 80 percent because they were not eligible. The Executive Staff followed Witte in arguing that direct job creation for all would not help the aged, children, or the sick, and in any case it would be too expensive. The staff insisted that the committee recommend a broad system of UI and Old Age Insurance as the “first line of defense,” and that these programs should be put into place “on a nationwide basis at the earliest time possible.”¹²² Both direct job creation and UI advocates seemed to have understood that those acting first, claiming budgetary and conceptual space, would be much better positioned to move from plan to law. Witte had grabbed the largest share for himself.

Ross, Givens, Burns, and other FERA members of the Executive Staff fought hard to keep direct job creation on the agenda and had succeeded to a degree. Thus, the report stressed that “the only effective cure for unemployment is employment.”¹²³ Although FERA members were unable to win jobs for all, they did make progress. Thus the CES report notes that, “as a permanent policy, the federal government, without guaranteeing full employment, should continuously interest itself in maintaining a high level of employment.”¹²⁴ Building off agreement on purchasing power theory among the Executive Staff, the report recommended that “the government should undertake an extensive public employment program by next summer at the latest … financed from general federal funds” to boost the economy.¹²⁵ (That would happen in 1935.) Thus, the basis of Williams’s draft from the Technical Board managed to pass through the process of revision by the Executive Staff without being eliminated outright.

Indeed, this first report suggests that the CES was coalescing around Ross’s third option of separate and complementary systems of direct job creation and UI. “[A] program for economic security may well be built around the concept that work is the greatest need of the wage earner,” the staff report argued, “but this does not preclude unemployment insurance.”¹²⁶ Similarly, UI advocates conceded that “a program for personal economic security cannot be confined to social insurance alone, as this will not meet the problem of the unemployed and the people on relief.”¹²⁷ By the end of the first round of reports, direct job creation advocates had succeeded in establishing their program as a major component of the economic security program.

In these back-and-forth exchanges, FERA administrators and Labor Department advocates for social insurance had marshaled votes, appointments, experts, and ideas, to try to sway the CES in their preferred direction. And while the process did not end in a conclusive victory for either side, the fact that the CES had been pushed from its initial stance of studying social insurance programs alone, through a period of either-or conflicts between social insurance and direct job creation, to an ultimate compromise where the two networks fused points to a tactical draw and a strategic victory for job creation advocates. They had pushed their way into the process and retained a substantial foothold.

Reporting to the President

The CES made its final report to President Roosevelt in January 1935. It was the longest and most developed argument for a system of economic security produced by the committee. Both an internal memorandum and popular propaganda, it simultaneously proposed a program of action and sought to establish a consensus on Capitol Hill that these options were within the bounds of legitimate state activity. The recommendations went well beyond the limited scope of social insurance. In its public statements and publications, the CES embraced a hybrid mentality that saw overlapping spheres of protection as a pragmatic solution to insecurity that neither challenged outright the structure of American capitalism nor ruled out further challenges.

Philosophically, the report blended approaches from multiple factions into a coherent New Deal perspective. Insecurity was seen to stem from multiple causes: the mass unemployment of ten million workers, the effects of bank failures and illness on workers’ savings, and basic volatility built into the very bones of an economy that evinced high average unemployment, frequent industrial accidents and disease, and a lack of support mechanisms for the elderly and the young.¹²⁸ This comprehensive perspective left space for multiple programs to deal with the crisis, allowing rivals within the CES to accept the presence of their critics. It also had the advantage of pointing toward a common insecurity—a lack of a steady income—and a common cure: “The one almost all-embracing measure of security is an assured income. A program of economic security, as we [en]vision it, must have as its primary aim the assurance of an adequate income to each human being.”¹²⁹

It was the very looseness of “income assurance” that made this system seem so “all-embracing.” Direct job creation partisans and social insurance advocates could agree on the importance of incomes without having to compromise on what form the income should come in. Moreover, the two different sides could agree on the importance of achieving security and recovery by swelling purchasing power even as they disagreed about how it was best stimulated. Compromise bred political advantage. The appearance of “a piecemeal approach” helped to blunt charges that the CES was an institution of radical partisans, rather than an objective agency. Committee members emphasized their pragmatic eclecticism as proof of their program’s place in the liberal mainstream: “the program for economic security we suggest follows no single pattern. It is broader than social insurance and does not attempt merely to copy European methods,” they argued.

Even so, the political significance of direct job creation was not lost on anyone who read the report to the president. The committee made it clear that direct job creation singled out the CES program as distinctively American: “in placing primary emphasis on employment, rather than unemployment compensation, we differ fundamentally from those who see social insurance as … all-sufficient.”¹³⁰ It was symbolically aligned with the tenets of American culture. President Roosevelt was not proposing a new dole in the form of UI; he was emphasizing self-reliance in the form of work. “Since most people must live by work,” the CES report noted, “the first objective of a program must be maximum employment,” which would be provided by a combination of social insurance and “stimulation of private employment” and “provision of public employment.”¹³¹

Ultimately, the CES portrayed “employment assurance” and “unemployment insurance” as complementary protections for the entire workforce, always with a pronounced emphasis on maintaining the quintessentially American work ethic. “Those workers who remained unemployed after benefit rights are exhausted … should be given … a work benefit” (emphasis mine). Likewise, “Workers who cannot be brought under employment compensation … will become eligible for public employment.”¹³² Direct job creation would forestall the possibility that a limited UI system would leave millions destitute or lead to an unlimited dole, as part of a “program for economic security … more comprehensive than unemployment compensation,” which would be “but a complementary part of an adequate program for protection against the hazards of unemployment.”¹³³

Countercyclical planning was used repeatedly as the intellectual cement binding the two halves of the federal program together, with direct job creation playing a leading role. The authors of the final CES report argued, “Provision of public employment in combination with unemployment compensation will … promote private employment … [and] maintain purchasing power,” by pushing billions of federal dollars into the hands of working-class consumers, all according to an overarching process of “advance planning.”¹³⁴ Economic planning would be driven by the “sound principle that public employment should be expanded when private slackens,” to counteract mass unemployment, to add “the social and economic values of completed projects” as “a considerable offset to … economic losses” incurred in the Hoover years, and to provide “an important stabilizing effect on private industry by increasing purchasing power.”¹³⁵

UI reserves could be released in planned countercycles to achieve desired effects: “had $2,000,000,000 been available for distribution to the workers when depression set in in 1929 … it would have a most pronounced stabilizing effect at a crucial time.”¹³⁶ Thus, just as the two programs worked to provide overlapping protections to the individual, they would also work to produce positive outcomes for the national economy. In both cases, the rhetoric of planning was used to give the two policies an aura of scientific exactness, of modern, forward thinking, designed by experts. Overall, it was a textbook approach for linking Roosevelt’s economic security program with the larger Progressive project of rationalization.¹³⁷

In the final report then, FERA’s work program would serve as the linchpin of Social Security—bringing all workers under the umbrella of federal protection while maintaining American ideals of self-reliance. Politically, programmatically, and intellectually, direct job creation was at the very heart of a vision of the New Deal order that went far beyond the “idea of the state” that Brinkley describes.

On January 4, 1935, President Roosevelt sent to Congress a plan for economic security that transcended a single act—indeed, in his message and public pronouncements, FDR described his two “big bills” (the Social Security Act of 1935 and the Emergency Relief Appropriation Act of 1935) as part of a single package. Introduced almost simultaneously on January 17 and 21, the two bills presented a complementary picture: direct job creation would receive $4.88 billion to put the unemployed to work; by taking many of the unemployed off relief rolls and onto payrolls, Social Security would face a lesser burden on its new funds and receive more contributions from payroll taxes, jump-starting the growth of federal reserve funds.¹³⁸ Both bills passed Congress with overwhelming majority votes—although the appropriation act would pass three months earlier than Social Security—and would go into effect in the summer of 1935.

The reason why the CES’s work resulted in two big bills instead of one is hard to divine, as there is little archival mention of the decision-making process. Moreover, given that the report prominently featured “employment assurance” among its recommendations, making it an important part of its public relations efforts, one might expect some measure to be part of the eventual Social Security Act. The report mentioned other programs—the coverage of agricultural and domestic workers under social insurance, the creation of a system of old-age annuities, and so on—that never made it into the Social Security Act, so we could just see job creation as one more idea that did not make the cut. However, when it comes to those issues, we have documentation about why they did not make it in: agricultural and domestic workers were left out of the eventual bill by Southern Democrats in Congress with the cooperation of Secretary of the Treasury Henry Morgenthau; old-age annuities frightened the life insurance companies, who successfully lobbied against their inclusion. Direct job creation was a policy that actually did get enacted at roughly the same time—so the question of why the legislative shift happened remains.

The answer may well be that, just as when Hopkins went directly to FDR in October 1933 to get funding for the CWA when he felt that the PWA was taking too long to get “shovel ready,” Hopkins might have gone to FDR to argue for a separate Emergency Relief Act as a plan B in case the CES got bogged down (this time with Harold Ickes as an ally), and that the plan B was put into effect despite the committee wrapping up its work in a timely fashion.¹³⁹ However, it is equally likely that the reason for the bills being split was an artifact of the congressional process: the powerful Senator Robert Wagner had introduced his Social Security bill as a social insurance and welfare measure so that it would run through his Committee on Banking and Finance, and he may not have wanted to complicate passage of the law by having it run through the Senate Appropriations Committee (as the Emergency Relief Appropriation Act of 1935 was). The latter committee was chaired by the more conservative Senator Carter Glass (D-VA). Politically Wagner may also have considered it easier to get Congress to focus on social insurance and welfare specifically rather than to try to get buy-in on the committee’s vision of comprehensive social protection.

Conclusion

As fraught as its deliberations had been, and as complicated as the ultimate compromise between social insurance and direct job creation was, the CES proved to be the launching pad for job creation’s rapid growth in the New Deal. Within a month of signing the Social Security Act, 220,000 people were drawing paychecks from the WPA. By the time that the first fifty thousand lump-sum Old Age Insurance benefits were paid out in 1937, the WPA had already covered more than two million workers and their families.¹⁴⁰

Direct job creation started out in 1933 as an experimental program, having to borrow personnel and budget from elsewhere. It was on the chopping block by early 1934 when the CWA was abruptly shut down, in no small part due to fears that the system was too radical a departure from traditional welfare practice. Now the policy had the explicit, lengthy endorsement of a presidential committee that represented virtually the whole of the Roosevelt administration. Its legislative authority and budget were enacted as one of the big bills backed by the president’s personal prestige, and job creation formed a major part of his campaign for 1936.¹⁴¹

Just as important for the future development of direct job creation, Jacob Baker, Emerson Ross, Corrington Gill, Aubrey Williams, Meredith Givens, Josephine Brown, Alan Johnstone, and the other Hopkins advisors had worked out a set of theories to justify a new policy model. They built goodwill and alliances for their efforts with many New Dealers whom advocates of a job program would need to appeal to when the WPA came into existence. At that point, everyone would be faced with a major conflict over which employment policy would be the dominant force within the New Deal.