Francis Townsend
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Dr. Francis Everett Townsend (January 13, 1867–September 1, 1960) was an American physician who was best known for his revolving old-age pension proposal during the Great Depression. Known as the "Townsend Plan," this proposal influenced the establishment of the Roosevelt administration's Social Security system.
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Background
Townsend first made his proposal in a letter to the editor of a Long Beach, California newspaper in 1933. The letter proposed a way of alleviating poverty among the elderly, and resulted in a massive response, with the impromptu formation of Townsend Clubs to promote his plan.
In January, 1934, Townsend officially founded Revolving Old Age Pensions, Inc. to promote his plan. At their peak, the Townsend Clubs had around 2.2 million members with about 7,000 active Townsend Clubs.
Features of the Townsend Plan
The Townsend Plan called for a guaranteed monthly pension of $200 (a quite-considerable sum in 1930s dollars, which would have enabled its recipients to have lived a relatively middle class lifestyle) to every retired citizen age 60 or older, to be paid for by a form of a national sales tax of 2% on all business transactions (in reality a concept somewhat akin to a value added tax), with the stipulation that each pensioner would be required to spend the money within 30 days. The tax was to extend to all business transactions, both goods and services. Economists generally disdained this form of taxation as being unfairly advantageous to large, vertically-integrated enterprises which produced goods from the raw material all the way to the finished, saleable product over intermediary operations which were involved in only one or two steps of this process. Townsend saw this criticism as being groundless and felt that the centerpiece of his plan was the requirement that all of the money be spent rather than saved. This, Townsend reasoned, would end poverty among the elderly and simultaneously pull the nation out of the Great Depression with the additional money that would circulate in the economy. To give the idea broader appeal beyond just the elderly, Townsend and his followers came to calling his plan the "Townsend Recovery Plan". Enforcement of the spend-all provision would have certainly been problematic had Townsend's idea ever come to fruition.
Promoting the Plan
Townsend attempted to promote his plan by pursuing political alliances with various politicians, first with President Franklin D. Roosevelt, who rejected the Townsend Plan as unworkable. Next, Townsend allied his movement with the 1934 campaign of novelist Upton Sinclair for governor of California. Sinclair was a former Socialist who was running for governor as a Democrat on a platform known as EPIC, or End Poverty In California.
In 1936, Townsend brought his movement into a short-lived alliance with radio priest Father Charles Coughlin and with Gerald L. K. Smith, in support of the Union Party candidacy of William Lemke for President.
Influence on the Social Security System
Finally, in response to the continued growth of the Townsend movement, the delivery of a petition to the U.S. Congress with 10 million signatures in support of the Townsend Plan, and the increasing likelihood that the United States Congress was going to pass some variation of the Townsend Plan, President Franklin D. Roosevelt proposed his own old-age pension plan, known as Social Security, which was a less radical pension plan than the Townsend Plan.
After Social Security took effect in January 1937, support for the Townsend Plan quickly eroded, although Francis Townsend continued to promote his plan well into the 1950s. The Townsend movement continued to exist in some form until as recently as the early 1980s, but was by then quite obscure, although its heyday was well remembered by some older citizens.