During the Great Depression, President Franklin Delano Roosevelt conceived of Social Security as a program for senior citizens, the disabled, the unemployed, widows and orphans who lacked financial protection. However, when Roosevelt signed the Social Security Act into law in August, 1935, the document did not say how the details would play out.
The task of creating and managing more than 26 million individual accounts had yet to be determined. The sheer scale of this early “Big Data” project was daunting enough; press reports labeled it as the largest bookkeeping job of all time. In addition, the seemingly unrealistic timeframes – the law dictated that the program be in place by January 1, 1937 – were equally frightening. Some experts felt the task was impossible, and recommended that Roosevelt abandon it.
But the Social Security Administration stayed the course. In the summer of 1936, the agency collected proposals from various accounting equipment vendors, each suggesting their own approach to record-keeping.
IBM was ready to handle the challenge because it had a proven track record in large scale government accounting projects dating back to the 1920s. The company had the systems and process knowledge necessary to ensure that the Social Security program’s policies and procedures could be quickly developed and rapidly deployed. The depth of IBM’s proposal, as well as the government’s familiarity with IBM’s skills and equipment, convinced the Agency that the company had the most viable solution, and in September 1936, IBM was awarded the contract.
There was another factor. IBM’s CEO, Thomas Watson, Sr., continued to invest in research & development throughout the Depression. So when the Agency awarded IBM the contract and asked the company to invent a machine that would automatically and rapidly integrate payroll contributions into millions of individual accounts – something that was essential to the success of the program – IBM engineers were ready for the task. They developed the IBM 077 Collator, the machine that made Social Security a reality.
The invention of a new machine wasn’t the only challenge facing Social Security; the logistics of the program were equally daunting. The paper records alone took up 24,000 square feet of floor space. In fact, the weight of the paper records and IBM machines was so great that no building in Washington had floors sturdy enough to hold them, so operations were set up in an old Coca-Cola bottling plant on Baltimore’s waterfront.
The building was far from people friendly. It was cold in the winter, and hot in the summer. Plus, the summer heat brought with it the overpowering smells of rotting fish from the docks and spices from a local spice factory. The Social Security employees in the building also were plagued by sand fleas that lived in the sound-deadening sand barriers between floors.
When the IBM collators were put into action in June 1937, there was still much work to be done before the first Social Security check would be mailed to Miss Ida May Fuller in 1940. However, there were no longer doubts that the program was possible.
It was the close partnership between IBM and the Social Security Administration that created the record keeping system that made Roosevelt’s vision a reality. The partnership improved the quality of life for generations of Americans. It also catapulted IBM from a mid-sized company to the world’s leading information management provider.
But beyond the monumental size and scope of the project, the real significance of Social Security was that it proved that public-private partnerships could roll out enormous solutions to meet grand challenges, promote economic growth and help society.
Public-private partnerships aren’t easy. You need to balance different concerns and learn to work together. But when you do, these partnerships work, and they are essential for driving business and societal growth for the long term. From Social Security to IBM’s work with smarter cities around the world, public-private partnerships demonstrate that collaboration is the key to innovation.
Jonathan Fanton, Ph.D., is the Franklin Delano Roosevelt Visiting Fellow at the Roosevelt House Public Policy Institute at Hunter College in New York City. Dr. Fanton previously served as President of the John D. and Catherine T. MacArthur Foundation, and as President of the New School for Social Research.