ssa.gov/History is a terrific portal to a tremendous and deep resource on Social Security's history through both primary and secondary sources. What follows here is mostly quotations from and commentary on sections of the essay Historical Background and Development of Social Security. The essay is quite long and comprehensive with the relevant parts for this post starting about half way down. And serious students shouldn't skip the bibliography at the end. This essay and even more so this humble post are just the entry points.
The Social Security Act of 1935 had eleven Titles, with Title 3 establishing national unemployment benefits, Title 4 and 5 Aid for Dependent Children and Maternal and Infant Care, and Title 11 Aid for the Blind, in all cases structured as grants to the states. That is we already have the Great Society in embryo. Title 2 on the other hand was the Old Age Insurance program we know as Social Security today. But for the purposes of this post I want to pull together the limited available material for Title 1 GRANTS TO STATES FOR OLD-AGE ASSISTANCE which established a state administered retirement pension plan independent of and parallel to the new Title 2 Insurance Plan.
The rest in Extended.
SECTION 1. For the purpose of enabling each State to furnish financial assistance, as far as practicable under the conditions in such State, to aged needy individuals, there is hereby authorized to be appropriated for the fiscal year ended June 30, 1936, the sum of $49,750,000, and there is hereby authorized to be appropriated for each fiscal year thereafter a sum sufficient to carry out the purposes of this title. The sums made available under this section shall be used for making payments to States which have submitted, and had approved by the Social Security Board established by Title VII (hereinafter referred to as the Board ), State plans for old-age assistance.
First thing of note is that unlike Title 2, Title 1 kicked in right away with a first year appropriation of $50 million, not much in todays terms but a reasonable amount of money then. Second thing of note is that, also unlike Title 2, Title 1 provided universal coverage, that is not excluding categories of workers like domestics and agricultural workers originally not covered under Title 2. Which makes some of the claims that the Social Security Act was inherently racist and the product of a dirty deal with the southern State Democrats shaky at best.
Section 2
(b) The Board shall approve any plan which fulfills the conditions specified in subsection (a), except that it shall not approve any plan which imposes, as a condition of eligibility for old-age assistance under the plan-
(1) An age requirement of more than sixty-five years, except that the plan may impose, effective until January 1, 1940, an age requirement of as much as seventy years; or
(2) Any residence requirement which excludes any resident of the State who has resided therein five years during the nine years immediately preceding the application for old-age assistance and has resided therein continuously for one year immediately preceding the application; or (3) Any citizenship requirement which excludes any citizen of the United States.
One year of continuous residence and five of the preceding nine not being particularly onerous, even in a time of itinerant labor, and the provisions of (3) effectively evoking the protections of the 14th Amendment in regards to African-Americans. With that in mind back to the Historical Essay with a key sentence bolded:
The two major provisions relating to the elderly were Title I- Grants to States for Old-Age Assistance, which supported state welfare programs for the aged, and Title II-Federal Old-Age Benefits. It was Title II that was the new social insurance program we now think of as Social Security. In the original Act benefits were to be paid only to the primary worker when he/she retired at age 65. Benefits were to be based on payroll tax contributions that the worker made during his/her working life. Taxes would first be collected in 1937 and monthly benefits would begin in 1942. (Under amendments passed in 1939, payments were advanced to 1940.)
The significance of the new social insurance program was that it sought to address the long-range problem of economic security for the aged through a contributory system in which the workers themselves contributed to their own future retirement benefit by making regular payments into a joint fund. It was thus distinct from the welfare benefits provided under Title I of the Act and from the various state "old-age pensions." As President Roosevelt conceived of the Act, Title I was to be a temporary "relief" program that would eventually disappear as more people were able to obtain retirement income through the contributory system. The new social insurance system was also a very moderate alternative to the radical calls to action that were so common in the America of the 1930s.
Bingo, the source of the myth that Social Security was only intended to be temporary. Au contraire mon frere, Title 2 was built to last and did last right up to its 76th birthday two weeks ago and if Social Security Defenders has anything to say about it will last for lots of birthdays to come.
Okay fast forward fourteen years, once again with key sentences bolded:
1950 Amendments
From 1940 until 1950 virtually no changes were made in the Social Security program. Payment amounts were fixed, and no major legislation was enacted. There was a significant administrative change in 1946, however, when the three-person Social Security Board was abolished and replaced by the Social Security Administration, headed by a single Commissioner.
Because the program was still in its infancy, and because it was financed by low levels of payroll taxation, the absolute value of Social Security's retirement benefits were very low. In fact, until 1951, the average value of the welfare benefits received under the old-age assistance provisions of the Act {ed. Title 1} were higher than the retirement benefits received under Social Security {ed. Title 2}. And there were more elderly Americans receiving old-age assistance than were receiving Social Security.
Because of these shortcomings in the program, in 1950 major amendments were enacted. These amendments increased benefits for existing beneficiaries for the first time (see The Story of COLAs), and they dramatically increased the value of the program to future beneficiaries. By February 1951 there were more Social Security retirees than welfare pensioners, and by August of that year, the average Social Security retirement benefit exceeded the average old-age assistance grant for the first time.
Which means you can throw just about everything you 'know' about the first generation of taxpayers and beneficiaries out the window, and especially nonsense about 16 workers for every beneficiary. Well yes. For the intially limited number of people receiving the significantly constricted benefits payable under Title 2 starting in 1940. To get a real picture of who was paying what for whom you would have to adjust all those figures for ROI (Return on Investment) and Dependency Ratios that allegedly show the Greatest Generation as pigs at the trough feeding off of generations yet unborn to take into account the tax monies they paid to support beneficiaries under Title 1.
The above is the last we hear of Title 1 in this essay but clearly it wasn't abolished in 1950, just overtaken in numbers and dollars by Title 2. When the last Title 1 check went out is a good question and one I don't have a definitive answer to, but a good guess would be with the introduction of the Great Society programs that superceded the State Grants for children and mothers established under Titles 4 & 5 of the original Act. In any event I would advise people to be pretty careful in citing any numbers before say 1960 without adding in a Title 1 caveat.
And for those wanting to put in the time there are PDFs for all Reports from 1942 to 1994 at this link. Presumedly you could dig out comparative numbers for Title 1 vs Title 2, I just never have found the time. Maybe someday, unless some industrious Kossack beats me to it.