from a 1996 John Hopkins magazine:
In dismantling the orphanage system, Progressive reformers laid the groundwork for modern welfare--the same welfare system that some reformers today want to fix (you guessed it!) by bringing back the orphanage.
Last year, when Speaker of the House Newt Gingrich suggested solving some of the country's welfare problems by taking dependent children from their parents and putting them in orphanages, political science professor Matthew Crenson found himself thinking, Do these people know what they're talking about?
Crenson knew what they were talking about. He had spent the last eight years researching orphanages. He estimates that in 1900 there were close to 1,000 of these institutions throughout the country, housing perhaps 100,000 kids. There were county orphanages, Catholic, Protestant and Jewish orphanages, non-sectarian children's homes run by private charities. With the movie Boys Town, orphanages--or at least a Hollywood image of them--became part of American mythology.
What startled Crenson was the idea of orphanages as a remedy for welfare. After traveling to four states to examine thousands of records, transcripts, articles, books, letters, and government documents to research a book, he had reached this conclusion: that public and political reaction to the orphanages of the 19th century had spawned the modern welfare state. Here was Gingrich, who sees welfare as a problem, proposing as an alternative the very institution that had inspired welfare's creation.
http://www.jhu.edu/jhumag/496web/orphange.html?du