Dr. Francis E. Townsend
The Townsend Plan was the brainchild of Long Beach, California physician Dr. Francis E. Townsend. Born in 1867 in Illinois, Townsend held various occupations during his early adult life before receiving a medical degree at age 40. After practicing briefly in South Dakota and following military service in World War I, Townsend relocated to Long Beach in 1919 where he became involved in real estate promotion.
When the Depression descended, he lost his entire savings and was forced to accept a position as assistant director for the City Health Office of Long Beach. It was during this period Townsend became acutely aware of the economic hardships afflicting America‘s elderly.
Townsend Plan
Townsend first proposed his concept in late 1933, which would establish a federal pension system that would disburse $200 monthly to every American citizen over age 60. The funding would be derived from revenues generated by a “transaction tax” levied upon all business transactions, generating 20 to 24 billion dollars annually, according to Townsend. The recipients would be required to spend the entire amount each month on consumer goods and services, stimulating the nation‘s faltering economy by creating millions of new jobs.
“Townsendites”
A federally funded pension found enormous appeal among older Americans languishing under the privation resulting from the Great Depression. To millions of aged citizens, Townsend was viewed as a savior sent to deliver them from poverty and return America to the affluence of the 1920’s.
By 1935, petitions circulated to support passage of the proposed legislation produced 20 million signatures nationwide. Townsend’s organization, the Old Age Revolving Pensions (OARP), Ltd., claimed a membership of over 2 million Americans in 1936.
Political Resistance
Townsend’s bold plan was met with a cold reception in Washington, D.C. Despite its enormous national support, a bill to implement the old age pension was soundly defeated by a four to one margin when it came to a vote before the House of Representatives in 1935.
The plan’s detractors argued that it was simply not economically feasible, coming with a price tag that was as likely to destroy America financially as it was to rescue it. The current American industrial capacity would be incapable of supplying the required good and services that were to be consumed by the pensioners. Additionally, there was no practical method to guarantee that the newly enriched elderly population would spend the entire amount each month, choosing instead to save a portion of the benefits as a hedge against its possible discontinuation.
Townsend’s Reaction
An embittered Dr. Townsend blamed Washington's rebuff of his widely popular proposal on a "conspiracy" of New Deal politicians. He became increasingly critical of the Roosevelt Administration, describing the New Deal as "a misdeal...where political appointees experiment in human misery." Townsend's outspoken contempt drew retaliation in the form of a congressional subcommittee, headed by Representative C. Jasper Bell, created to investigate fraud within old age pension plans. A thinly veiled attempt to weaken the OARP's influence on the 1936 elections, the Bell committee exposed accounting irregularities within the OARP and eventually charged Townsend with contempt of Congress when he walked out of the hearings in the midst of intense questioning.
Townsend's Legacy
Although his radical solution to the ills of the Great Depression was never seriously considered by the Roosevelt Administration, it did accelerate the adoption of the Social Security Act of 1935.
Reference
The Year Of The Old Folks' Revolt, David H. Bennett, American Heritage Magazine December 1964, Volume XVI, Number 1
