DURING the depression the Nation sought a compromise between capitalistic and socialistic principles, between ability to pay and need, as the basis of its system of relief and social security. It was assumed that public expenditures should not be so large that they would destroy capitalism and that they should be no larger than was required to meet the critical situation faced by the American economic system. On the other hand, some compromise was made with the principles of capitalism, since the ostensible basis of the distribution of relief was need.
The battle between the need and the ability principles began with relief. Since the history of this struggle forms the basis of the subsequent compromise over insurance, it deserves careful examination. Were the choices made between capitalistic and socialistic principles in our relief program socially justifiable? Was the burden of the cost placed upon the individuals who receive the bulk of the relief expenditures, or were relief funds exacted from the wealthier classes and paid to those who needed them? Did the Federal Government require each state to bear its burden of relief on the principle of "ability to pay" even though it might be very poor, or did it establish a system of equalization between the different states? To what extent did it emphasize local responsibility and local ability to pay, and to what extent did it stress equalization?