The Civil War Pension System
Few people realize that, long before the creation of Social Security, America had once had one of the most liberal old-age pension systems in the world. This system paid out more than five billion dollars in pensions between 1866 and the arrival of Social Security. In the last years of the nineteenth century, it consumed more than a quarter of the entire U.S. budget. Experts have claimed it was every bit as generous as the more heralded program of Bismarck's Germany. The origins and disappearance of this gigantic program are important to understanding the development of America's modern social welfare programs.
This first old-age pension system grew out of the Civil War. As in previous wars, Congress was quick to enact a program pensioning soldiers who incurred permanent disability in direct consequence of their military duty. Dependent widows and orphans would also receive pensions in cases of death. The Pension Act of 1862 was only novel in its inclusion of mothers and orphan sisters as potential dependents. Most expected the 1862 act to offer modest support for those most harmed by the war, and then, like the pension systems for the Mexican and 1812 wars, to quietly fade away. They had not reckoned on the numbers of men who would fight, or on the new politics of postwar era.
The numbers of disabled soldiers was far higher than anyone could have imagined when the Civil War began. The huge number of cases swamped the rickety pension process, forcing passage of the Consolidation Act of 1873 to revamp and revise the entire system. The huge number of cases also led to an explosion of pension