(FORTUNE Magazine) – -- Have we learned anything in the quarter century since the last great war on poverty was conceived? After all, that war was lost, and poverty in the U.S. is just as ugly and sprawling now as it was then.

The answer is critical to the new war about to begin. The House and Senate are completing action on legislation that will replace welfare with workfare, linking assistance to a requirement that recipients take state-provided jobs or enroll in educational training programs. Like the noble experiment passed as a monument to John Kennedy in 1964, the new legislation has the goal of getting the down-and-out off welfare and back into productive lives. But unless Congress pays close attention to the lessons of the 1960s, the new effort will end like the old one. What's essential is to: -- Set up the program so that it won't be subverted by the federal, state, and local bureaucracy. That means defining the rules clearly and establishing strict principles of accountability. -- Loosen the purse strings slowly, and only for pilot programs at first, even though such experimentation will delay full implementation of the plan. -- Each new program reflects the times in which it's put together. The philosophy behind the 1964 legislation was very different from that of the New Dealers. Poverty in the 1930s was pandemic, and the Roosevelt Administration held that society owed support to the unemployed, be they laborers or lawyers. The New Dealers also believed that the unemployed would become self-supporting as soon as opportunities revived. By the 1960s, however, poverty had become endemic. There was work for the lawyer, but not for the laborer who could neither read nor write. Worse, many welfare recipients had no desire to learn, stripped as so many of them were of any sense of family structure, from which the work ethic arises. The centerpiece of the legislation drafted by President Lyndon Johnson's Task Force on the War Against Poverty was Title II, the Urban and Rural Community Action Programs. Communities would strike at the roots of poverty by developing programs to provide everything from adult education and day care to make-work projects. The dole alone was ruled out because it institutionalized dependency. Communities would have to show evidence that all their leaders -- in business, labor, politics, social agencies, and the police -- were united behind their Title II programs. The states would put up 10% of the cost the first two years and 50% in the third year, and the federal government the rest. That formula was adapted from the Eisenhower highway program in an effort to attract conservatives. It was solid thinking in theory, but in practice it went nowhere. The ink was barely dry on the legislation when Mayor Ralph S. Locher of Cleveland sent in his plan together with the tithe. In my opinion, the plan was poorly conceived at best -- a few pages of generalizations with no homework in evidence -- and the task force staff rejected it. Mayor Locher called upon Lyndon Johnson, whose response was, ''My friend Ralph S. Locher needs that money, and I mean to see that he gets it . . .'' To some task force staffers, that was the beginning of the end of the poverty war. Cynics suggested the President was obsessed with achieving a landslide victory at the polls that fall, and they joked about how fast the ward heelers would spread the Title II monies around Cuyahoga County. Their discouragement led to talk of making welfare recipients earn their checks, at least by going to school. Staffers even discussed forcing recipients to work. Such requirements are in vogue now, but they were not then. Some conservatives were intrigued with the idea, but other advisers still around from New Deal days protested. I was told that one economist remarked in a policy session, ''Why, you can't do that to those people. The society has harmed them; therefore the society is responsible for them.'' So a bureaucracy grew up under the new Office of Economic Opportunity, administering a plan that didn't spell out what the money was to be spent on or who was accountable for the spending. About all that was clear was that much of the money went into the coffers of state and local agencies, and some into the pockets of people supposedly running so-called community-based organizations. It's a Washington adage that barely 10 cents of every dollar spent early in World War II went for the men and weapons on the front lines. Similarly, historians may well wonder whether as much as a nickel of each dollar spent in the poverty war got through to the people needing help. The poverty war was a strange conglomeration of youthful do-good enthusiasm and bureaucratic stubbornness. There was precious little management know-how. A union official on loan from the AFL-CIO, Jack Conway, joked as he left, ''This is the first organization I have ever worked for in which the basic management chart was drawn in the form of a circle.'' Who, finally, was in charge -- the bureaucrats or the welfare recipients and the organizations that represented them? In 1965 William Haddad, a Kennedy aide who became the chief inspector in the poverty war, found that funds in a Midwestern town near an Army base were being used to pay the children of uniformed personnel, even officers, to mow public lawns. It was not a deliberate misappropriation of poverty money. The local officials running the program honestly thought those funds were earmarked for the most deserving youngsters, a kind of scholarship. Some of what Haddad uncovered wasn't so innocent. One Southern governor was caught using poverty funds for his political benefit, and in a way that clearly favored whites. Mayor Richard Daley of Chicago financed part of his political machine with the money, and when funds were cut off, as they were nine times, merely made cosmetic changes and went back for more. Now we are preparing to try again. In June the Senate voted 93 to 3 for workfare. The House had passed a similar workfare bill in December by 230 to 194. In its final form, the legislation mandates that the states provide jobs and training for able-bodied welfare recipients. Those recipients would be required to participate if they want to receive benefits. Jobs and pay will vary by state, and the states will still set many of their own standards for welfare; single parents with very small children would be exempt. AT PRESENT the direction of the federal poverty effort is largely in the hands of the Department of Health and Human Services, which is required to consult on some matters with the Department of Labor. Federal bureaucrats in those departments write specific rules governing whether a local plan meets the standards of the national program. State and local officials continue to be responsible for operating the plans in their areas. Under the new legislation, the same federal bureaucracy that now oversees welfare will oversee workfare. Considering how poorly the welfare system has worked under that management, Congress should take upon itself the task of writing rules. It should make heavy use of the General Accounting Office, the investigative arm of Congress, to check that those rules and guidelines are being followed. Isabel Sawhill, a senior fellow at the Urban Institute in Washington, D.C., argues that welfare recipients too often have to go one place for education and training, another for day care, yet another for health care. ''There is a need for a unified whole. That means the states need to develop computer-based management information systems to track caseloads in the counties to determine which recipients need what kind of help and when. It is all but impossible to do that with the manual methods that most states employ today.'' Any workfare program, no matter how sound philosophically, must be thoroughly tested before another full-scale assault on poverty is launched. Charles DeCarlo, once director of applied science at IBM and a former president of Sarah Lawrence College, calls for interconnecting networks that would permit states to monitor the success of programs elsewhere in the country. WHEN THE SENATE passed workfare, the New York Times reported, ''The measure is not expected to increase the costs of the ((welfare)) program, as it is designed to get people off welfare.'' The same thing was said about the 1964 poverty program, which like most good works was expected to more than pay for itself. But when the New Deal economists advising the task force were informed that its cost in the first two years would be only a few billion dollars -- it was deemed wise to keep the effort modest until proved successful -- at least one of them rose up and insisted that the economy could afford $15 billion. Plainly we have to do something. The costs of welfare in our economy are becoming intolerable. A study by the New York State Department of Social Services, for example, reveals that benefits would have to rise 29% to accommodate the minimum needs of the 1.3 million welfare recipients in the state. Workfare properly run could bring a tremendous advantage over welfare in the struggle against poverty. But to make it work, standards of program administration hitherto apparent nowhere in the annals of American bureaucracy have to be applied. Only Congress, with its power to hold oversight hearings and pass revised legislation, can put those standards in place.