North America’s Divide - The Political Geography of Inequality - page 127

Despite this outcome, the proposal to adopt a national system of unem-
ployment did not lack either support (the trade unions among others) or an
articulate defense (Douglas 1934 : 215-216). On the grounds of administrative
efficiency, distributive equity, and cost effectiveness, Bryce Stewart and his sup-
porters advocated treating a “national problem” with a “national solution,”
following a route similar to the one the Canadian provinces would take in 1940
(Stewart 1930 ). Indeed, a recommendation for a national system was officially
made on October 1, 1934 as part of the first report presented by the Unit of
Study on Unemployment to the CES board:
if constitutional, a nationally administered system of unemployment insurance is to be
preferred to a state system, but the Committee should be satisfied that the nationally
administered system is constitutional before commitments in favor of such a system are
made to the public.
The paragraph also reflects how supporters of the tax offset system along the
lines of the Wagener-Lewis Bill centered their strategy around the issue of the
unemployment insurance system's constitutionality. By that I refer to the need
to respect state rights while developing policy on matters, like social security,
in which the constitution does not guarantee the federal government an exclu-
sive political capacity. Indeed, the Wagner-Lewis Bill was itself inspired by the
Federal Inheritance Tax Act. That legislation was the response of President
Coolidge's administration to the attempt by Florida to expand its tax base
through the elimination of inheritance taxes. The federal government intro-
duced an inheritance tax with the provision that “80 % of the sums thus col-
lected would be returned to those states which had state inheritance tax laws.
If a state did not have such a law, however, the federal government retained all
the amounts paid in from the states residents” (Douglas 1936 : 22). Florida pre-
sented a case for state autonomy before the Supreme Court and lost it. Aware
of this precedent, supporters of the tax offset system were closer to Roosevelt's
views. In the same Declaration of Policy (June 8, 1934) where he announced
the appointment of the CES, he indicated that “he favored a plan providing
for a maximum of cooperation between the states and the federal government,
leaving to the states a portion of the cost of management and to the federal
government the responsibility of investing, maintaining and safeguarding the
funds constituting the necessary insurance reserves.”
While Roosevelt's administration was concerned with social insurance
potentially being turned down by the Supreme Court (Douglas 1936 : 33),
this fear did not stop him in the case of old-age insurance. Thus, I would
argue, what really resonates behind his words are the strictly political concerns
about potential opposition from the Southern states to anything disrupting
their specific system of labor relations. Roosevelt effectively encouraged the
CES to factor in any issue that could jeopardize the passing of the Social Secu-
rity Act (Berkowitz 1991 ; Noble 1997 ). Francis Perkins, labor secretary, and
Witte took this encouragement as a mandate, and made every effort to prevent