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What did the Townsend Plan lead to?
Known as the "Townsend Plan" this proposal would pay every person over age 60 $200 per month, with the requirement it all be spent quickly. It was never enacted but the popularity of the Plan influenced Congress to start the Social Security system, which involved much smaller amounts.
When was the Townsend Plan?
The Townsend Plan was an American scheme in 1933-36, during the Great Depression to give every person over age 60 a monthly cash payment of $200. It was devised by Francis Townsend, an elderly California physician. The Plan was promoted by real estate salesman Robert Clements, who made Townsend only a figurehead.
When did the Great Depression end?
1929 – 1939The Great Depression / Time period
Which was a result of the Great Depression?
1 Unemployment rose to 25%, and homelessness increased. 2 Housing prices plummeted, international trade collapsed, and deflation soared. 3 It took 25 years for the stock market to recover.
What was the purpose of the Social Security Act passed in 1935?
The Social Security Act was signed into law by President Roosevelt on August 14, 1935. In addition to several provisions for general welfare, the new Act created a social insurance program designed to pay retired workers age 65 or older a continuing income after retirement.
What were 5 programs of the New Deal?
Major federal programs agencies included the Civilian Conservation Corps (CCC), the Civil Works Administration (CWA), the Farm Security Administration (FSA), the National Industrial Recovery Act of 1933 (NIRA) and the Social Security Administration (SSA).
What was the purpose of the Social Security Act of 1935?
An act to provide for the general welfare by establishing a system of Federal old-age benefits, and by enabling the several States to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment ...
What did Herbert do to help Americans survive the Depression?
In July 1932, Hoover signed into law the Emergency Relief Construction Act, which allowed the RFC to lend $300 million to the states for relief programs and $1.5 billion for public works projects. Hoover also persuaded Congress to establish Federal Home Loan Banks to help protect people from losing their homes.
What was the Townsend Plan?
The Townsend Plan. The Townsend Plan proposed that every person over 60 be paid $200 per month. The Old-Age Revolving Pension fund was to be supported by a 2% national sales tax. There were three requirements for beneficiaries under the Plan: they had to be retired; they had to be "free from habitual criminality;".
When did the Townsend Plan close?
The movement continued after the Roosevelt administration adopted Social Security in 1935 and beyond Townsend's death in 1960. In 1978, The Associated Press reported that the National Townsend Plan would be shut down by the end of February that year, with only state chapters surviving, and that by then it had a "dwindling and aging membership."
Where was Francis Townsend born?
Life and career. Francis Everett Townsend was born the second of six children on January 13, 1867, in Fairbury, Illinois. After Townsend contracted swamp malaria as an infant, the Townsend family moved to Nebraska where Townsend had two years of high school education. In 1898, Townsend borrowed $1,000 from his father and moved to Southern ...
Who was Townsend talking to?
Townsend talks with Senator Sheridan Downey. In September 1933, Townsend wrote a letter to the editor of the local newspaper (the Long Beach Press-Telegram ), and launched his career as an old-age activist.
Who said we have to have Social Security?
Frances Perkins , President Roosevelt' s Secretary of Labor, in her memoir, The Roosevelt I Knew (p. 294) says that Roosevelt told her, "We have to have it [Social Security]. Congress can't stand the pressure of the Townsend Plan unless we have a real old-age insurance system.".
What was the key dynamic of Townsend's Plan?
So the key dynamic of Townsend’s Plan was to rely on this multiplier effect to produce a large increase in economic activity. This is the “revolving” part in the Plan’s official name, “The Old-Age Revolving Pension Plan.” The idea then was that the forced spending under the Plan would trigger the multiplier effect, increasing economic activity, and at every economic transaction, a 2% tax would be levied. In this fashion, Townsend believed, the necessary funds could be raised to pay for the Plan’s benefits, and everybody would be richer than before the Plan took effect.
What are the problems with Townsend Plan?
THE PROBLEMS WITH THE TOWNSEND PLAN. 1. Tax Rate – According to the Townsend Plan, a 2% “transactions tax” would be sufficient to fund the pension scheme. This surprisingly low tax rate was one of the main appeals of the Plan, since it appeared to offer very generous benefits for a very low cost.
How much was the Townsend pension?
The basic idea of the Townsend Plan was that the government would provide a pension of $200 per month to every citizen age 60 and older. The pensions would be funded by a 2% national sales tax (more precisely, a “transactions tax”). The Plan provided that a 2% tax would be levied “on the gross value of each business, commercial, and/or financial transaction,” to be paid by the seller.
What were the most important economic schemes during the Great Depression?
There were many non-standard economic theories and schemes abroad in the land during the Great Depression. Many of these schemes involved old-age pensions, since this was a area of acute need and a population for which there was a good deal of sympathy. By far the most influential of these alternative pension schemes was the Old Age Revolving Pension Plan, or Townsend Plan, for short.
How much tax would be required to fund the Townsend Plan?
So, the Townsend Plan would require the raising of about $29 billion per year in new taxes.
How many Townsend Clubs were there?
Within two years of the publication of the Plan as a Letter to the Editor in a Long Beach, California newspaper, there were over 7,000 “Townsend Clubs” with over 2.2 million members actively working to make the Townsend Plan the nation’s old-age pension system. At one point in 1936 Townsend was able to deliver petitions to Congress containing 10 million signatures in support of the Townsend Plan. Public opinion surveys in 1935 found that 56% of Americans favored adoption of the Townsend Plan.
What was Townsend grilled about?
At the hearings, Townsend was grilled relentlessly over the revenue assumptions in the Plan. Plan sponsors eventually admitted they had no real idea what the value of transactions were in the economy and that the $1,200 billion figure was made-up.
Overview
The Townsend Plan was an American scheme in 1933-36, during the Great Depression to give every person over age 60 a monthly cash payment of $200. It was devised by Francis Townsend, an elderly California physician. The Plan was promoted by real estate salesman Robert Clements, who made Townsend only a figurehead. It expanded to thousands of clubs in many states and demonstrated a nationwide demand for old-age pensions. The New Deal of President Franklin D. …
Organization
Clements set up a for profit organization Old Age Revolving Pensions, Ltd. It that published pamphlets and newsletters, and hired organizers to set up local clubs. By January 1935 there were 3000 clubs nationwide with 500,000 members. The y circulated petitions to Congress with 20 million names. Washington rejected the Plan as impractical. Nevertheless the company generated revenues from sales of pamphlets and merchandise, and from advertising, making a …
Plan details
The Townsend Plan proposed that every person over 60 be paid $200 per month. The Old-Age Revolving Pension fund was to be supported by a 2% national sales tax.
There were three requirements for beneficiaries under the Plan:
• they had to be retired;
See also
• New Deal coalition
• Social Security (United States)
• Ham and Eggs Movement
• End Poverty in California
Further reading
• Amenta, Edwin. “Political Contexts, Challenger Strategies, and Mobilization: Explaining the Impact of the Townsend Plan.” in Routing the Opposition: Social Movements, Public Policy and Democracy, edited by David S. Meyer et al. (University of Minnesota Press, 2005). online
• Amenta, Edwin, Bruce Carruthers, and Yvonne Zylan. “A Hero for the Aged? The Townsend Movement, the Political Mediation Model, and U.S. Old‐Age Policy, 1934-1950.” American Journal of Sociology (…
External links
• US Social Security Administration, "The Townsend Plan Movement," Social Security History.