A Google search in and of itself does not prove anything! I'm not sure where you are getting your information about literacy. I don't know much about it but searching gave me more questions than answers.
The main one is, how do you define literacy? If you define it as a college reading ability (full literacy), the percentage is about 15% of US citizens today. I don't have the figures, but I can't imagine the figure being higher 100 years ago.
If you define it as the ability to read and write (functionally literate), it's over 99%. Functional illiteracy has dropped from 20% to 0.6% between 1870 and 1970.
reference: https://en.wikipedia.org/wiki/Literacy_in_the_United_States
reference: https://nces.ed.gov/NAAL/lit_history.asp
The Milgram studies are very powerful findings, extremely widely cited, I'm aware of it of course. I have never read a claim by Milgram or associates that schooling laid the foundation for acceptance of authority, if that is what you're implying. In fact I believe he thought it applicable to human psychology in general.
I think your point on the conflicted term "social contract" is true, but it is obviously euphemistic. It's just a way to get people to accept something on face value which they might otherwise, a manipulation technique and a bad one at that.
You might have a point about the police. But it's maybe more the knowledge that they wide license to use force. It's like me telling you "by the way, such and such's father will beat you up for very little, and there's no one to stop you, so watch out". That's how I feel about them anyway, I'm not sure if that's indoctrination but I've learned to avoid confronting the police. It's the threat of what they can do to you.