Townsend Plan

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The Townsend Plan was a proposal by Dr. Francis Townsend, a retired medical doctor, during the Great Depression for an old-age pension in the United States. For a few years it spawned a popular movement, but with the passage of Social Security the Townsend movement lost most of its steam.

The plan was mathematically suspect. The proposed pension was $200 a month, to be funded by a 2% national sales tax, which wouldn't come close to covering the proposed pension for every senior citizen. To get around this, it relied on a requirement that the entire $200 be spent immediately, where it would be taxed at 2%, and claimed the plan would pump so much money into the U.S. economy it would automagically generate all the tax revenue needed to fund it, and get the U.S. out of the Depression all at the same time. (This is called something-d-o-o economics). It was opposed by Franklin D. Roosevelt for this reason, but its popularity may have propelled the passage of Social Security as a more workable, mathematically sound[1] plan in its stead.

Francis Townsend sought out some strange alliances trying to get the plan passed by Congress. He first appealed to the Roosevelt administration and was rebuffed. He then allied his movement with the 1934 campaign of former socialist Upton Sinclair for governor of California, then a couple of years later in an alliance with the right-wing Roman Catholic "radio priest", Father Coughlin, in support of a short-lived third party called the Union Party, which only ran candidates in the 1936 election and disbanded shortly thereafter. Despite Social Security filling the need for an old-age pension, the Townsend movement continued well after Francis Townsend's death into the 1950s and beyond, albeit with minuscule support by then.

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  1. This is disputable, but at least Social Security has survived this long. The Townsend Plan had all the soundness of a pyramid scheme and would have collapsed within a few years if enacted.
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