Bonus Army - Background

Background

In 1781, most of the Continental Army was demobilized without pay. Two years later, hundreds of Pennsylvania war veterans marched on Philadelphia, then the capital, surrounded the State House where the U.S. Congress was in session, and demanded their pay. Congress fled to Princeton, New Jersey, and several weeks later, the U.S. Army expelled the war veterans from the national capital. In response to that experience, the federal district directly governed by the U.S. Congress, Washington, D.C., was excluded from the restrictions of the Posse Comitatus Act which forbade the use of the U.S. military for domestic police activity.

The practice of war-time military bonuses began in 1776, as payment for the difference between what a soldier earned and what he could have earned had he not enlisted. Breaking with tradition, the veterans of the Spanish-American War did not receive a bonus and, after World War I, their not receiving a military service bonus became a political matter when WWI veterans received only a $60 bonus. The American Legion, created in 1919, led a political movement for an additional bonus.

On May 15, 1924, President Calvin Coolidge vetoed a bill granting bonuses to veterans of World War I, saying: "patriotism... bought and paid for is not patriotism." Congress overrode his veto a few days later, enacting the World War Adjusted Compensation Act. Each veteran was to receive a dollar for each day of domestic service, up to a maximum of $500, and $1.25 for each day of overseas service, up to a maximum of $625 (2010: $7,899). Amounts of $50 or less were immediately paid. All other amounts were issued as Certificates of Service maturing in 20 years.

Some 3,662,374 military service certificates were issued, with a face value of $3.638 billion (2010: $43.7 billion). Congress established a trust fund to receive 20 annual payments of $112 million that, with interest, would finance the 1945 disbursement of the $3.638 billion due the veterans. Meanwhile, veterans could borrow up to 22.5% of the certificate's face value from the fund; but in 1931, because of the Great Depression, Congress increased the maximum value of such loans to 50% of the certificate's face value. Although there was Congressional support for the immediate redemption of the military service certificates, President Hoover and Republican congressmen opposed such action; they reasoned that the government would have to increase taxes to cover the costs of the payout, and thus any potential recovery would be slowed.

The Veterans of Foreign Wars continued to press the federal government to allow the early redemption of military service certificates.

In January 1932, a march of 25,000 unemployed Pennsylvanians, dubbed "Cox's Army", had marched on Washington, D.C, the largest demonstration to date in the nation's capital, setting a precedent for future marches by the unemployed.