Nevada and Montana Introduce Old-Age Pensions Summary

  • Last updated on November 10, 2022

Before Nevada and Montana approved old-age pensions in 1923, the United States trailed far behind the rest of the industrialized world in providing relief for older citizens.

Summary of Event

At the same hour and on the same day, March 5, 1923, Montana governor Joseph M. Dixon and Nevada governor James G. Scrugham signed the first old-age pension legislation in the United States. The issue of providing pensions for older Americans had become prominent in the years after World War I. Proponents of old-age pensions, propelled to a great extent by the politics of Progressivism, pointed to the fact that the United States stood alone among industrialized nations in failing to provide assistance to those considered too old to hold regular jobs. The United States continued to apply the nineteenth century doctrine of laissez-faire at a time when circumstances cried out for assistance to retired wage earners. It was no longer realistic to expect that lifelong wage earners could set aside enough money to live comfortably in their retirement years. Old-age pensions[Old age pensions] Pensions [kw]Nevada and Montana Introduce Old-Age Pensions (Mar. 5, 1923) [kw]Montana Introduce Old-Age Pensions, Nevada and (Mar. 5, 1923) [kw]Old-Age Pensions, Nevada and Montana Introduce (Mar. 5, 1923)[Old Age Pensions, Nevada and Montana Introduce (Mar. 5, 1923)] [kw]Pensions, Nevada and Montana Introduce Old-Age (Mar. 5, 1923) Old-age pensions[Old age pensions] Pensions [g]United States;Mar. 5, 1923: Nevada and Montana Introduce Old-Age Pensions[05790] [c]Laws, acts, and legal history;Mar. 5, 1923: Nevada and Montana Introduce Old-Age Pensions[05790] [c]Business and labor;Mar. 5, 1923: Nevada and Montana Introduce Old-Age Pensions[05790] Dixon, Joseph M. Scrugham, James G. Epstein, Abraham

Supporters of old-age pensions had statistics on their side, and they used them effectively. In 1880, 3 percent of the U.S. population was age sixty-five or older, but by 1920 the proportion in this age group had risen to 5 percent. In addition, more people than ever before worked for wages, the average life span was increasing rapidly, businesses were tending to retire workers forcibly, and industrialization had brought about greater dispersal of family members. Given these facts, there could be little doubt that the need for old-age pensions was going to increase in the future. This led Abraham Epstein, a prominent advocate of old-age relief, to ask in the 1920’s, “If the sunset of life is to continue unproductive, wretched and humiliating, is it worth prolonging?”

Much of the information that pension advocates used to expose the problems of retired American workers came from a study conducted by a legislative commission created in Pennsylvania in 1917. It was not in Pennsylvania, however, or in any other highly industrialized northeastern state, that an old-age pension bill was first enacted. Instead, the underpopulated and far less industrialized states of Montana and Nevada led the way. The circumstances under which these two states first provided old-age assistance included staggering local economies, progressive politics, and inadequate care facilities for the destitute elderly.

Like many other states, Montana and Nevada had a certain number of county homes that housed the old and poor. These were modeled roughly on the poorhouses prescribed by the 1834 New Poor Law in England. Although some of the more onerous aspects of the poorhouses had been eliminated, the county homes were scarcely desirable residences. Moreover, with physician fees and food costs, they were expensive to maintain, and the numbers of persons seeking refuge continued to increase. It was evident that these homes would soon be incapable of handling the demands placed on them. Those who supported the creation of old-age allowances made compelling economic and humanitarian arguments against housing the destitute elderly in county homes. They pointed out that the homes were becoming too expensive to maintain and that, because of the notorious conditions in many of the homes, people feared living in them more than they feared starving.

Early in 1923, the state legislatures in Montana and Nevada began to consider another kind of relief for the retired and poor. In each state, the presence of a governor who favored social reform contributed to the momentum for new measures. In Montana, Governor Dixon, a longtime Republican progressive who had served in the U.S. House of Representatives (1903-1907) and the U.S. Senate (1907-1913) and managed Theodore Roosevelt’s 1912 presidential campaign, gave his support to a pension plan that would allow individual counties to provide relief for persons seventy years of age and older who had incomes of less than three hundred dollars per year. Each person given a pension had to have been a citizen of the United States and a resident of Montana for at least fifteen years. The maximum that any person could receive was twenty-five dollars each month. The Montana law placed the burden of administering and financing the pension in the hands of county officials. County commissioners were to decide who qualified for the old-age pension and how much each pensioner would receive. There was no state authority to oversee the pension plan, and the state would not reimburse counties for the pensions they paid.

In Nevada, the old-age pension bill gained the support of Democrats and progressive Republicans. The Democratic governor, James Scrugham, gave his approval to the measure as it proceeded through the state legislature. The Nevada law provided for a form of administration much different from that approved in Montana. In Nevada, the governor, lieutenant governor, and attorney general were established as the State Old Age Pension Commission. The governor then appointed three residents from each county to serve on county pension boards. These boards received applications for relief from eligible persons and then made recommendations to the state commission. Pensions could be granted to individuals sixty years of age or older who had been U.S. citizens for at least fifteen years and residents of Nevada for at least ten years. No one could be given an old-age allowance in excess of one dollar per day. Applicants who owned property valued at three thousand dollars or more were automatically disqualified. The money to support the Nevada system came from a special tax on property within each county.

Significance

Although it remained to be seen whether the centralized Nevada system or the decentralized Montana system would work more efficiently, supporters of old-age pensions from around the nation were buoyed by the legislation. Beginning with Pennsylvania in May, 1923, many other states took similar action.

In the specific cases of Montana and Nevada, however, the impacts of the 1923 old-age pension measures appear to have been slight. A survey of Montana counties undertaken by Abraham Epstein in 1926 is quite revealing in this regard. Epstein received information from fifty-one of the state’s fifty-six counties. Fourteen counties did not participate in the system because they had either no applications or no money to provide pensions. The largest county, which included the city of Butte, fell into the latter category. Epstein further found that, in the counties responding, only 2.6 out of every 1,000 eligible inhabitants applied for old-age pensions. At the end of 1926, there were only 448 pensioners in the thirty-two counties reporting that they had granted any pensions. Statistics gathered from the Associated Industries of Montana and the U.S. Department of Labor showed that each citizen of the participating counties paid about twenty-eight cents per year to support the pension plan and that money spent on old-age relief was less than a quarter of that spent to maintain the county homes.

The Nevada old-age pension law was so ineffective that the state legislature repealed it early in 1925. In March of that year, a new bill was passed that adopted the Montana system of putting all decisions in the hands of county officials; the state no longer supervised the granting of old-age allowances. The 1925 Nevada legislation also raised the eligible age for assistance to sixty-five. A survey undertaken in 1926 found only one person in the entire state who had been granted an old-age pension. In both Montana and Nevada, as well as in other states, private insurance interests tried to discourage implementation of the pension laws.

The Montana and Nevada laws did not have much impact within the respective populations of those states, but on a national level the legislation gave momentum to the old-age pension cause. Legislators in highly populated industrial states were embarrassed that sparsely populated Montana and Nevada had taken the first steps to provide relief for the aged poor. Ultimately, it took the Great Depression, when many well-to-do elderly lost their savings, to force the U.S. government to devise a federally funded program to ensure income for the elderly. The result was the national Social Security Act, passed during the Franklin D. Roosevelt administration. This legislation did not abandon the notion that individuals should provide as much as possible for their own retirement through personal savings, but it added a safety net to ensure that the elderly would have a degree of financial security in retirement. Old-age pensions[Old age pensions] Pensions

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Axinn, June, and Mark J. Stern. Social Welfare: A History of the American Response to Need. 6th ed. Newton, Mass.: Allyn & Bacon, 2004. History of welfare programs and legislation in America from the colonial period to the present includes discussion of the introduction of old-age pensions in the 1920’s.
  • citation-type="booksimple"

    xlink:type="simple">Douglas, Paul H. Social Security in the United States. 1936. Reprint. New York: Beard Books, 2000. A comprehensive, if somewhat thin, look at efforts to provide relief for the nonworking aged. Explains why employers in every state opposed pension legislation on the basis of cost. Includes index.
  • citation-type="booksimple"

    xlink:type="simple">Elliott, Russell R. History of Nevada. 2d ed. Lincoln: University of Nebraska Press, 1987. Splendid general history of Nevada includes thorough annotated bibliography and index.
  • citation-type="booksimple"

    xlink:type="simple">Epstein, Abraham. The Challenge of the Aged. 1928. Reprint. New York: Ayer, 1976. One of the most useful and significant works on the plight of the aged in the United States through 1927 by a leader in the campaign for old-age relief. Provides substantial, well-organized information and statistics that illuminate the subject. Includes notes, appendix, and index.
  • citation-type="booksimple"

    xlink:type="simple">Karlin, Jules A. Joseph M. Dixon of Montana. 2 vols. Missoula: University of Montana Press, 1974. Well-researched and inclusive biography of one of Montana’s most important politicians. Does not discuss old-age pension laws, but describes convincingly the circumstances in Montana from which such laws emerged. Includes excellent bibliography and index.
  • citation-type="booksimple"

    xlink:type="simple">Katz, Michael B. In the Shadow of the Poorhouse: A Social History of Welfare in America. Rev. ed. New York: Basic Books, 1996. History of the development of social programs aimed at relieving the plight of the poor in the United States. Chapter 8 discusses the period in which the Nevada and Montana legislation was passed. Includes notes and indexes.
  • citation-type="booksimple"

    xlink:type="simple">Spense, Clark C. Montana: A History. New York: W. W. Norton, 1978. Limited state history provides a very good introduction to Montana’s politics and society. Includes suggestions for further reading and index.

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