FEDERAL TRANSFER PAYMENTS IN AMERICA: VETERANS‘ PENSIONS AND THE RISE OF SOCIAL SECURITY

This paper examines the determinants of the adoption of the veterans' pension program and how it served as a prototype for the creation and administration of the federal welfare system in the United States. We provide statistical evidence in the form of an analysis of votes in the House of Representatives that state‐based special interests which had supported the ongoing liberalization of the veterans' pension program provided significant support for the adoption of the Social Security Act of 1935. There is clear evidence the social security system was not adopted as a simple extension of state old‐age pension programs.