Bonus Bill (1924)

David G. Delaney

The World War Adjusted Compensation Act (43 Stat. 121), known as the Bonus Bill, created a benefit plan for World War I veterans as additional compensation for their military service. It credited servicemembers with "adjusted service certificates" equal to $1.00 per day served in the United States and $1.25 per day served overseas, up to specified limits. The certificates, popularly known as "bonuses" because they supplemented the pay and benefits that servicemembers had received during the war, earned interest and became payable to the veteran in 1945 or to a veteran's family if he died before then. Although many saw the Bonus Bill as a worthwhile program, its $4 billion cost led fiscal conservatives to question the wisdom and necessity of paying servicemembers additional benefits for past military service.

Prior to the Bonus Bill, veterans' benefits, like the Civil War Pensions, consisted almost exclusively of pensions to surviving veterans. The only exception was a 1917 law under which the government paid enlisted personnel and their families monthly allotments during the war and maintained life insurance policies for officers and enlisted servicemembers even after the war ended. The allotment program ended with World War I in 1921, leaving numerous groups anxious to continue some form of additional benefits to returning servicemembers.

Veterans, with strong support from the newly formed American Legion, led that movement, but Democratic and Republican political progressives also supported it. What became the Bonus Bill originated in the 1920 Fordney Bill (named for Representative Joseph W. Fordney), a broader benefits program that would have let veterans choose between a cash bonus, education grants, or payments toward buying a home or farm. Many supported the plan to increase employment, promote spending, and develop rural areas of the United States. Yet the $5 billion cost proved politically unpalatable, and the Senate rejected the Fordney Bill. In 1922, however, Congress shed the education and home purchase options and passed a bonus-only bill of approximately $4 billion. Still too expensive, President Warren G. Harding promptly vetoed it for being fiscally irresponsible.

By 1924 most Americans, including some well-known business leaders like William Randolph Hearst, favored some form of additional benefits. Most fiscal conservatives, however, thought additional benefits too costly and the specific proposals unlikely to strengthen the economy. Secretary of the Treasury Andrew W. Mellon typified this group, preferring instead to lower taxes rather than burden the government with additional spending. Nevertheless, Congress reconsidered a version similar to the failed 1922 bill and passed it over President Calvin Coolidge's veto.

In 1932 most veterans were still thirteen years away from receiving their bonuses. Suffering the economic effects of the Great Depression, they marched on Washington and were dubbed the "Bonus Expeditionary Force" as they lobbied Congress, unsuccessfully, to receive their payments early. Forced to leave Washington by the military, the marchers would have to wait another four years for Congress to authorize the early payments, again over a presidential veto, this time from Franklin D. Roosevelt.

Although the Bonus Bill provided only one modest benefit, the political debate that preceded it introduced others that would become the mainstays of future veterans legislation. The education benefits that failed in 1920 and 1922 became the hallmark of the G.I. Bill after World War II, and the payments toward home or farm purchases became low-interest loans available to most servicemembers even without serving during a time of war. In the Bonus Bill, Congress laid a foundation for these and other successes by balancing a servicemember benefits plan desired by Americans with the economic constraints that the country required.

See also: CIVIL WAR PENSIONS; VETERAN'S PREFERENCE ACT OF 1944.

BIBLIOGRAPHY

Daniels, Roger. The Bonus March: An Episode of the Great Depression. Westport, CT: Greenwood Publishing, 1971.

The G.I. Bill of Rights

American veterans of military service have been given grants or benefits as far back as the Revolutionary War, when veterans of the Continental Army were awarded $80 bonuses and grants of land totaling two mil lion acres. In 1944, Congress enacted the Servicemen's Readjustment Act, also known as the G.I. Bill of Rights, to help sixteen million veterans make the transition to the civilian economy after the war. The act provided unem ployment compensation, education and job training, and guaranteed housing and business loans. Nine million veterans received nearly $4 billion in "readjustment allowances," 10 million veterans took advantage of the educational benefits, and five million veterans received loans total ing more than $50 billion. Historians agree that the G.I. Bill was one of the most important pieces of economic and social legislation in American history, helping World War II veterans to become one of the most educated and prosperous generations of Amer icans. The benefits provided in the G.I. Bill were later extended to veter ans of the Korean and Vietnam wars.