Published by EH.NET (December 2003)

Susan M. Sterett, Public Pensions: Gender and Civic Service in the States, 1850-1937. Ithaca, NY: Cornell University Press, 2003. x + 222 pp. $39.95 (cloth), ISBN: 0-8014-3984-1.

Reviewed for EH.NET by Joanna Short, Department of Economics, Augustana College

In Public Pensions, Susan M. Sterett examines the development of state and local pensions in the United States. As early as the 1850s a few large cities made payments to disabled police and firefighters. By 1910, many cities provided pensions for teachers and other civil servants. By 1925, three states had developed state old-age pension plans for all elderly residents. Clearly, views on the appropriate use of public funds for pensions expanded. Initially, only those who performed a dangerous public service were eligible for a pension. Pensionable service gradually expanded to include any public employment, and finally included everyone regardless of service or employment.

Certainly, pension advocates influenced the transformation of public opinion on pensionable service, and thereby influenced the opinions of state court judges. More directly, though, courts responded to the inevitable challenges to new pension programs. In the process, judges carefully constructed their reasoning and placed pensions in the broader context of other payments to individuals, like poor relief and aid to farmers. In this book Sterett, Professor of Political Science at the University of Denver, provides a much-needed analysis of state court decisions on pension programs. She finds that the courts insisted on distinctions between “service,” which was pensionable, and “work,” which generally was not. Gradually, these distinctions were blurred, and the courts became tolerant of social insurance programs.

Courts regulated state taxing and spending using the public purpose doctrine. States could spend money on individuals or firms if the payments served a public purpose. Spending without a public purpose was considered class legislation, an unconstitutional preference of one group over another. Under this doctrine, Sterett claims that courts maintained a distinction between those who are inherently dependent and those who are independent. State payments to the dependent (poor relief, pensions for disabled veterans) served the public interest. Hence, “mother’s pensions,” for widows with children, were a legitimate use of state funds, but only when limited to the indigent. State payments to the independent, though, were considered class legislation. For example, in Griffith v. Osawkee Township (Supreme Court, 1875), the court found that a Kansas township could not sell bonds in order to buy grain for farmers who had suffered a total crop loss as a result of a grasshopper plague. At that time, aid to farmers did not satisfy a public purpose. Thus, the gradual expansion of public pensions hinged on a change in what constituted a public purpose.

The strength of Public Pensions is Sterett’s treatment of some of the early, and relatively obscure, court battles over payments to firemen and soldiers. In the 1850s, for example, insurance companies challenged laws in New York and Illinois requiring them to pay a tax to go to firemen’s charities. The courts upheld the tax, in part because those who paid the tax benefited directly from the services provided by firefighters. In addition, the firemen’s charities provided for the dependent, that is, for disabled firefighters.

Similarly, in response to the Conscription Act of 1863, several towns subject to a draft quota issued bonds or raised taxes in order to raise commutation fees collectively. Taxpayers, and occasionally bondholders who did not receive timely interest payments, sued the towns. For example, Charles Booth, apparently a cranky taxpayer, sued Woodbury, Connecticut. Woodbury planned to raise $200 per man for each man on the town’s 32-man draft quota. Booth argued that the town was transferring the personal liability of the draftees to everyone in town. Woodbury argued that military service was the collective obligation of the town. The court agreed that the draft quota was a collective obligation, therefore, raising money for commutation fees served a public purpose.

Although federal military pensions posed few legal problems since they clearly served a national purpose, states repeatedly disallowed state pensions for all but the disabled and poor. State courts argued that military pensions were a reward for past service, thus they could not serve a public purpose by, say, encouraging more recruits. How, then, did public purpose grow from applying only to those who served in a dangerous service to those who work as teachers and in other civil service jobs? Here, Sterett is not as clear. Courts apparently began to recognize the potential benefits that pensions could bring in recruiting, retaining, and providing an orderly retirement for civil servants. In particular, contemporary advocates of federal civil service pensions emphasized that pensions with a mandatory retirement age would make the civil service more efficient, by retiring elderly workers who had “retired on the job.” Thus, the expansion of pensions to civil servants may have originated with the aging of the civil service ranks once these jobs were transformed from temporary patronage to permanent civil service jobs. Sterett disagrees with this view, since pensions originated at the local level, and patronage (for example in the naming of police captains) continued with pensions as it did without them. Instead, Sterett argues that civil service pensions were part of a more general (and vague) transformation of the courts’ view from one of public, collective service to more direct ties between the individual and the state.

Much more could be said on why states paid pensions to expanding groups of civil servants, and why courts gradually accepted them. Sterett does a great service, though, by directly examining the reasoning that courts used in response to challenges, and how this reasoning changed over time.

Joanna Short is assistant professor of economics at Augustana College. She is the author of an article, currently under review, on Confederate veteran pensions and retirement in the South. At present, she is investigating the origins of saving for retirement in nineteenth-century America.