In the summer 1932, more than 17,000 American veterans marched on Washington, D.C., along with 26,000 family members and supporters, demanding payment of the bonuses promised in the World War Adjusted Compensation Act, or Bonus Act, of 1924.
The bonus, which was intended to make up the difference between what they were paid as soldiers and what they would have earned as civilians, entitled every veteran to $1 for each day of domestic service (up to $500) or $1.25 for each day of overseas service (up to $625). Veterans were issued certificates for these bonuses that totaled $3 billion in all, but there was a catch: The certificates couldn’t be redeemed until 1945.
Then the Great Depression hit. With the support of veterans’ groups, Congress, over the president’s veto, allowed veterans to borrow up to half the face value of their bonus certificates. But by 1932, veterans felt an urgent need for immediate full payment. So they marched on Washington to pressure Congress for an early disbursement.
The so-called Bonus Army crowded around the Capitol, camped out on public grounds, and built shantytowns on the banks of the Potomac River. In June, they presented their case to the House of Representatives, which soon voted for an early complete payment of the bonuses.
When the resolution moved to the Senate, though, it was defeated on June 17.
At this point, many veterans simply headed home. Other veterans stayed put, having very little reason to leave, and hoped President Hoover would help them.
On July 28, the Attorney General ordered the Washington police to remove the veterans from the capital. The veterans resisted; two were shot and killed by police. President Hoover, far from helping the remainder of the Bonus Army, ordered the current Army to complete the job. Commander Douglas MacArthur, disobeying orders, launched a full assault on the veterans. Cavalry and tanks backed up foot soldiers who drove the Bonus Army from their shanties, which were then burned.
Writing in the Post two months later, Al Smith, former governor of New York, blamed the summer’s calamity on the American Legion and the House of Representatives for encouraging the marchers in spite of the economic infeasibility of paying the bonuses early. But he names the overall politics that led to the Bonus Act and its various amendments and expansions as the larger perpetrator:
[blockquote]If left to the veterans themselves and to the officials of the Government who have to deal with it, there is no doubt that a just and equitable system of compensation and reward could be arrived at, but the unfortunate thing about it all is that it is bedeviled by politics. [/blockquote]
Smith believed it was irresponsible to offer benefits that the budget couldn’t afford. The politicians had used the veterans for their own purposes, and it would happen again.
Smith worried about the snowballing expense of veterans’ benefits. He estimated that, by 1945, the federal government will have spent $23.5 billion on veterans’ benefits. He couldn’t have known that amount would be dwarfed by the cost of caring for the next generation of veterans, from an even larger war.
Smith’s concerns remain a problem today. Between 2000 and 2011, aid to disabled veterans rose 166 percent, from $14.8 billion to $39.4 billion. The president’s 2017 budget includes more than $180 billion for the Department of Veterans Affairs, most of it dedicated to disability compensation and pensions.
In the 1930s, an economist predicted that the cost of armaments and lost production would soon make war too expensive to wage. That didn’t prove to be true. Perhaps the cost of caring for disabled veterans will eventually make war too expensive to be considered as a solution for international conflicts.
Veterans and Taxpayers
By Alfred E. Smith
Originally published on September 17, 1932
No questions in government are so difficult as those that give rise to emotions in the hearts of the people. Nobody will take the negative side of the question that the man who offers himself to the country in time of trouble should be rewarded. Nobody who remembers the returning American heroes who went to France to decide the war would be willing to subscribe to any theory that these soldiers should not receive from the hands of the American people the recognition for that service to which they are entitled. If left to the veterans themselves and to the officials of the Government who have to deal with it, there is no doubt that a just and equitable system of compensation and reward could be arrived at, but the unfortunate thing about it all is that it is bedeviled by politics.
It cannot be disputed that the recent gathering in Washington of veterans demanding the immediate payment of the bonus was certainly encouraged by the attitude of members of Congress. These men received the bulk of their encouragement from the fact that the House of Representatives, the popular branch of the National Legislature, that one which is closest to the people, actually did pass a bill for immediate payment of the bonus. Who can deny that politics entered there into an economic question? Public opinion throughout the country is absolutely right when it lays some part of the blame for what occurred in Washington upon the statesmen hi the Lower House who, by their votes, their speeches and their actions, lent encouragement to that gathering of the veterans. Though I dislike to say it, I feel it is true, also, that they did this in the face of the fact that they could not have believed that their action on the bill was to meet with final success.
The Growing Costs of War
Students of American history knew that when a large Army was being mobilized to strengthen the position of the United States in the World War, the American people for generations to come were incurring liabilities. That lesson was forcefully impressed upon the American people at the close of the Civil War, and the gradual increase every decade in appropriations for pensions revealed the activity of a group organized to exact as much as possible from the Government. Appropriations for Civil War pensioners, between 1880 and 1920, jumped from $55,000,000 to $203,000,000, and in 1930, after the passage of 65 years, the total cost of Civil War pensioners remained at the figure of $125,000,000. All this was brought about by a series of enactments extending veterans’ pensions and benefits, engineered through Congress by a powerful pension lobby.
There are times when newspaper cartoons more clearly depict the situation than do columns of reading matter, and while viewing the present situation with respect to veterans, my mind is carried back to a cartoon by Keppler in Puck.
The picture displays the pension agent auctioning off the soldier vote. The pension agent, with his arm around the veteran soldier, is offering him to the two political parties. The Democratic Party is represented on one side and the Republican Party on the other, and the pension agent exclaims: “What am I bid?”
At the time that cartoon was published, everybody knew exactly what that meant. It meant that the pension agent, who received a liberal commission for pensions which he was able to secure, was offering the soldier vote to the highest bidder of the two great political parties. There is within my own recollection a pension agent whose office was in my neighborhood. I remember people who sought him out and the thoroughly satisfactory income, which he appeared to be making from pressing their pension claims.
The United States was able to survive all the abuses that crept into the law as the result of the activity of organized pension agents, because of the phenomenal growth of the country and her industries and her population in the period that immediately followed the Civil War.
During the World War, President Wilson, a careful student of history, sought to protect the United States from the abuses that followed the Civil War by laying down a wise and farsighted plan for payments to soldiers. He began by obtaining a scale of payment for men in the service higher than anything ever paid before in this or in any other country. He established, as a further part of this program, the principle of full and complete care of those wounded or disabled during the war and those whose disabilities are traceable to the war, ‘full care and protection for widows and orphans of soldiers who lost their lives in the war, and a system of insurance for all veterans on a sound actuarial basis, with contributions by the Government and the veterans, so that, in 1917, Congress, desiring to avoid the abuses of our 100 years’ history of pensions, passed the war-risk insurance, disability and compensation act. This, as I have outlined, was planned to take care of veterans killed or injured in the line of duty, or their dependents, and to offer to all veterans term insurance upon an actuarial basis.
At the time that this program was put forth, it was accepted by the entire country, and the great army of American veterans subscribed to it 100 percent. In other countries it was regarded as the most generous plan of government cooperation in the pensioning and care of soldiers and their dependents ever offered in this or, for that matter, in any other Country. Within six years of the close of the World War, however, the bonus bill had been passed and hospitalization had been thrown open to veterans not disabled in line of duty.
When the Minority Rules
After the war, the organization of a formidable lobby not only brought about provision for Federal and state bonuses in addition to the other benefits, but the whole Wilson theory was scrapped by the large number of amendments to the veterans’ laws, all of which had for their purpose the payment of hundreds of millions of dollars to hundreds of thousands of veterans and their dependents, whose disabilities and other problems were not remotely connected with the war. It is a matter of fact, and can be proved — and let us hope that it will be — by the congressional committee charged with its investigation, that much of the huge sum now being paid is, in fact, given to men who never saw active service and to dependents of men who never had and never could have any legitimate claim on the Government.
Gradual changes in these laws have put the United States in the position of paying large sums every year to more than 400,000 veterans whose disabilities resulted from causes other than military or naval service. These figures have been issued by a group of veterans themselves, and have never been refuted. Undoubtedly they will form the basis for the congressional investigation, to take place in the fall, of all the statutes passed since the original Wilson plan was adopted by the country.
Now, it goes without saying that unless the rank and file of the American people, who must bear this burden through taxation, pay some attention to these statutes, organized groups will, from time to time, fasten new obligations upon the people, which will result in mounting costs, additional taxation and all the hardship growing from these. The return of prosperity by the encouragement of business and individuals to invest their money in commercial enterprises will thereby be the longer delayed.
It must be borne in mind that by no means all the veterans subscribe to this form of legislation. It is, in all human probability, the well-organized minority which has been successful in securing the enactment of these measures, which are entirely outside of the original program laid down, accepted by all, and adopted.
The real fact of the matter is that those in a position to know have made an unchallenged statement that 75 percent of the country’s veterans are not members of the American Legion and they may or may not agree with its views. This is in accordance with the history of the activity of the Grand Army of the Republic immediately following the Civil War. It presents another example of what can be accomplished in our country by the organization of a group, even though it may be a minority one. Nor is the American Legion the only active organization of veterans of the World War. There are a number of veterans’ organizations of the World War, to say nothing of those whose membership dates to other wars.
The Legion Falls in Line
Even the Legion as a whole, to do it justice, judging by the records of its conventions, came reluctantly to some of this program. At its first organization meeting in St. Louis, only a small minority favored a bonus payment to every soldier, and the plan was turned down. When a bonus resolution was introduced into the 1919 convention of the Legion, its action was reported as follows:
While the American Legion was not founded to promote legislation in its selfish interest, yet it recognizes that our Government has an obligation to all service men and women to relieve the financial disadvantages incidental to military service . . . but the Legion feels that it cannot ask for legislation in its selfish interest and leaves with confidence to Congress the discharge of this obligation.
It must have been the minority even in its own organization that finally forced it into action after the first bonus bill, entitled The Fourfold Adjusted Compensation Measure, was introduced in Congress. From that time on, through all its vicissitudes from 1920, through its postponement at President Harding’s request, and his veto of the bill when passed in 1922, until it was finally passed over President Coolidge’s veto in May, 1924, each successive Legion convention took a more and more decisive, positive and peremptory attitude.
This Adjusted Compensation Act was a compromise of the bonus idea. It gave extra compensation to every service man at the rate of a dollar for each day of home service and a dollar and a quarter for each day of overseas service. It limited the base amount to $500 for home service and $625 for overseas service. The money was to accumulate as an insurance fund for 20 years, the Government putting aside $112,000,000 a year to meet the total, which would be due in 20 years. The maximum amount due any one man would at that time be in the neighborhood of $1600. It was possible for veterans to borrow up to 22 percent of the full amount.
Agitating for Payment in Full
This compromise lasted for six years. Then came the business depression, and brought with it renewed demands to pay the full amount immediately and in full.
In February 1931, over President Hoover’s veto, a compromise was again made. It permitted veterans to borrow 50 percent of the face value of adjusted-compensation certificates. Nearly $1,500,000,000 has already been advanced in such loans, and the original purpose of using it as insurance has been defeated.
Nor was this enough. Agitation to pay all of it at once continued, and the President himself went to the last convention of the Legion at Detroit and succeeded in averting the demand temporarily. Still the Legion seemed to be ruled by indecision and was not unanimous. I quote an address made to the department commanders of the Legion at the end of 1931:
Now, on the so-called bonus legislation … some departments are for it, some are adamant against it, in some others a very close split. That is so right on throughout the Legion. Others cannot make up their minds as to what should be the proper procedure. … I do not think this Legion can afford to oppose the efforts of any group who are asking for the payment of the bonus, in full or in part.
At a very recent meeting of one of the Eastern departments of the Legion, resolutions were passed, from which I quote partially, which indicate that there is a growing consciousness in that organization of the situation and that they do not wish to be held responsible for all such abuses which they rightly say are often sponsored by other veteran organizations, “by politicians or by individuals, sentimental, thoughtless or self seeking.” In the resolution itself this department of the American Legion, to which I refer, “declares itself in favor of a return to the strict policy of liberal and just compensation to the actual dependents of those who lost their lives as a direct result of their war service, and compensation and care for those who were, in fact, disabled thereby; and declares itself opposed to all legislation giving special privileges, hospitalization and compensation to veterans or their dependents for death and disabilities not so incurred.”
Yet, in 1932, the bonus bill for full payment was passed in the House and defeated in the Senate. That is another evidence of the encouragement received by the bonus army in its advance on Washington. To cap the climax, President Hoover, on July 21, signed the bill, which broadens the power of veterans to borrow on their adjusted-service certificates and reduces the rate of interest charged by the Government on the money advanced. This will cost the Government an additional sum of $385,000,000, according to the Treasury statement.
How many people in the United States today have paid any attention to these various enactments as they have occurred since the time of President Harding up to the present? It is only when we run into a period of terrible depression and financial difficulty, when the burden of taxation means something to the people, that they begin to consider some of the things to which in the past they paid no attention whatever. In 1932 the people of the country have suddenly awakened to the burden placed upon them by additional taxation to meet the deficits in the Treasury of the United States, and are inquiring into the causes.
The Rising Tide of Relief Measures
In studying the Federal budget for 1933, let us pay some attention to the largest single item in it, which is for veterans’ relief. It amounted this year to $928,387,795, or approximately one-fourth of the total Federal appropriations for the conduct of the National Government in every detail. From the close of the war in 1918 to June 1931, more than $6,000,000,000 has been spent by the Federal Government in various forms of relief to veterans of the World War, their dependents and beneficiaries. State governments acting by themselves, either for hospitalization, special acts for relief of veterans or direct bonus, have spent more than $580,000,000 additional.
Statisticians have figured out that by 1945, only 13 years from date, the Government will have spent $23,500,000,000, even under existing relief commitments. It is noteworthy that this sum is practically equivalent to the total cost of this country’s actual participation in the war. Twenty years later, if Congress maintains the existing laws and should add the new laws, which are proposed by veterans’ organizations, the veterans will be costing the American people annually, not one-quarter of the present cost of the Federal Government but the whole of the cost of the present Government, which is close to $5,000,000,000.
There is probably no group in the United States today that would be more resentful of a dole system than would the American Legion and those veterans of the World War not members of it, but it is, nevertheless, the fact that the general tendency of all legislation changing the basis of veterans’ relief has had for its purpose diverting increasing amounts to men who suffered no disability due to war service. Veterans’ relief in this respect is certainly in danger of becoming a thinly disguised dole system. As a matter of fact, the United States spends in a single year nearly twice as much for veterans’ relief as the British Government spent in 11 years for its unemployment insurance — its so-called dole.
Unless and until all the facts are known, public men will be besieged on all sides by people who, for sentimental reasons, are with the soldiers without any understanding of what is sought to be done. I have had my personal experience. After I spoke about this situation in a nation-wide hook-up over the radio on May 16 of this year, I received a great many letters from well-meaning people finding fault with me for my attitude, and the general tenor of the letters was along the line that I was out of sympathy with the veterans and unwilling to be with the country in its attempt to take care of them. Of course, nothing could be farther from the fact. These letters came from people who, on the one hand, are finding fault with the cost of the Government and, on the other hand, finding fault with those who would point out injustice and inequalities and waste and extravagance because of the enactments fostered by an organized lobby and not approved even by the American Legion itself.
When Taxicabs Are War Risks
For instance, how many people know that under existing statutes a man who served for 90 days in an American cantonment and who never left this country, but received an honorable discharge at the close of the World War, if he was unable to pay income tax for a full year before he applies for relief, might be injured in a taxicab and, sustaining a permanent injury, become the beneficiary of a pension, ranging from $12 to $40 a month, during the rest of his natural life? One of the proposed enactments, passed in the House of Representatives, but defeated in the Senate, would grant a pension to the widow of a soldier whom she may have married any time after the war, upon his death from natural causes not traceable in any respect to his service to the country. He may also have been one who had never left the United States, but received an honorable discharge.
Headaches in the Pension Systems
In a recent publication, the example is cited of a former soldier who, for example, may get recurring headaches in 1923. He is told that if they can be traced to a wartime origin he can be paid for them. He then recalls that while unloading potatoes in training camp, a sack hit him on the head. He looks about for witnesses to support his story, and since the Government cannot prove that his headaches do not date from the potato-sack episode, he becomes the recipient of a monthly allowance.
The Disabled Emergency Officers’ Retirement Act, passed in 1928, awarded three-quarters retirement pay to civilians who were officers in the World War and who are now considered to be 30 percent permanently disabled because of their war service. Some 6000-odd emergency officers of this category are at the present time drawing an average of $139 a month. One of the ways this operates is shown in the case of a physician who receives a salary of $8000 from the Veterans’ Bureau. In view of his service as an emergency officer in the war, he requested a disability record. He was examined by the staff of the bureau, found partially disabled, and awarded $150 a month. Another doctor, earning $5000 a year as examining physician for the bureau, had himself examined, declared unfit for work and placed on the retired list; consequently, he gets, in addition to this salary, $125 a month.
I have not gone into the problems of preference to veterans in the civil-service laws of the nation and the various states, because I wish to deal here with the economic phase of the situation and the financial injustices brought about by these laws.
There is a vast difference in responsibility for the care of injured and disabled veterans who met with their disability in the war or who thereafter were rendered helpless or died from causes directly traceable to the war. They should be provided for to the limit of the country’s ability. Their dependents should also be cared for. It is an entirely different matter to pass out hundreds of millions of dollars a year to men — to say nothing of their dependents — who received no injury in the war, who saw no real service and who incurred no disability as a result of their enlistment under the colors of their country, pursuant to the call of the President.
It is, to say the least, a bit discouraging to the youth of the country to think that the high and idealistic patriotism spoken of during the time of the war is sought to be cashed in dollars and cents when the war is over by a small percentage of the people, who, in the height and glory of the situation calling for the defense of the flag and the principles for which it stands, were ready to take their place beside Nathan Hale, who regretted that he had only one life to give for his country.
When Leaders Are Misled
The distressing part of this whole thing is that it seems, to me, to be like a snowball going downhill. As it is encouraged, it gathers strength and momentum, and I am afraid that the public authorities in Washington have not heard the real facts from those in control. On the other hand, those agitating for these additional benefits have been encouraged by the attempt of the House of Representatives to make their pilgrimage to Washington successful. Every one of those who came to Washington with the bonus army must know of the present economic situation. Every one of them must have heard of the universal distress in all parts of the country; and certainly they would not, if their patriotism is genuine, desire to be made a favored class of the community to receive relief at the expense of countless millions just as unfortunate in their present position as they are. They were petitioning the Government, a fundamental American right.
The Government made no reply to the petition, as far as anybody is able to see, and, on the other hand, they were sufficiently encouraged to permit the situation to become so aggravated that the United States was compelled to assert its sovereignty by the force of arms.
In times of stress a great many well-meaning people — and they will be found particularly in the ranks of men willing to offer themselves to the Government in times of need — are ready victims of a false and misleading propaganda flowing from people who may not, deep in their hearts, have any great regard for the veteran himself, but who would seize upon such a gathering as the bonus marchers as an opportunity to give vent to some political doctrine contrary to the principles upon which this Government is founded. There is no doubt in my mind that many of the marchers who left the various big cities to camp in Washington were encouraged on their way by groups who had not themselves the desire or the courage to face the hardships.
It certainly must have encouraged the organized minority to have the economy bill suggested by the President — though only a drop in the bucket, with its possible saving of about 5 percent of the total veterans’ appropriations — entirely disregarded by the House of Representatives and immediately thereafter to find the House passing, without debate of any kind, a new bill to include “widows and children of deceased war veterans who die of a disability not acquired in the service.” This legislation, if adopted, would have added a further burden to the American people of $100,000,000 in the next five years, and more thereafter.
How many people in the United States today, paying these additional taxes, suffering silently because of their imposition, hidden and unforeseen victims of an impost on capital that prevents it from pouring its money into the channels of trade and increasing the chances for employment, really realize that the House of Representatives not only refused to relieve but voted to add to their burden?
Robbing the Just for the Unjust
I desire to have myself placed clearly and fairly on the record. I believe that unfair, unjust and inequitable payments to veterans who are not deserving tends to operate against the deserving veteran. It is impossible for any group to receive veterans’ benefits unjustly and unfairly without interfering with that group which is justly entitled to every single thing that this Government can do for them.
In my speech before the Jefferson Day dinner at Washington on April 13, this year, I made the definite suggestion that Congress should publicly air the whole question of veterans’ relief. I had in my mind not only economic but substantial justice to the deserving veteran as against a waste of public money to the organized group which succeeded in securing laws beneficial to those who were not entitled, by any stretch of the human imagination, to the money of the people of the United States.
Yet I deplore the published information that the investigation of the veterans’ laws by the joint congressional committee is to be delayed to a point where right and proper consideration cannot be given to it prior to the convening of Congress. It appears that the committee has notified at least one organization of veterans that it will not meet until the latter part of November, although it is to report to Congress on January 1, 1933.
Recently there has been organized a National Economy League, which is a nonpartisan citizens’ organization stating its general purpose: “To revive and restore the American principle that our Government shall truly be a Government for the benefit of the whole people — a Government of law and order economically administered for all the people, and not for the benefit or at the dictation of any special or sectional interest.” Though their immediate objective is to attempt to eliminate the abuses, which have crept into the administration of veterans’ laws generally, they state they desire, “to cooperate with other nonpartisan citizens’ organizations concerned with the reduction of governmental expenses and taxes.”
Veterans and Party Platforms
Their membership and their advisory board entitle them to the respectful consideration of thoughtful American citizens. I cite their advisory board because that should inspire confidence in the nonpartisanship and disinterestedness of the body. It contains Elihu Root, who, having been signally honored during his lifetime by the people of his own state, to say nothing of the Federal Government, must certainly be considered to speak for this country as a whole; Calvin Coolidge, honored by election to the presidency, must also be admitted to be able to speak for the country; Newton D. Baker, former Secretary of War, progressive, able and thoroughly acquainted with the problem from his personal experience in aiding with the drafting of the early legislation of President Wilson; Rear Admiral Sims and General Pershing, who must certainly have at heart the good of the men who served under them; I leave myself to the last because I am not actuated by any motive other than what is best for the whole country and all its people, including its veterans.
Another vital consideration at the present moment is where the two major parties stand with reference to this question. The Republican platform, citing the achievements of the Republican Party for the benefit of veterans and other dependents, ends the section dealing with the subject by saying:
Disability from causes subsequent and not attributable to war and the support of dependents of deceased veterans whose death is unconnected with war, have been to some measure accepted obligations of the nation as a part of the debt due.
A careful study should be made of existing veterans’ legislation with a view to eliminating inequalities and injustices and effecting all possible economies, but without departing from our purpose to provide on a sound basis full and adequate relief for our service-disabled men, their widows and orphans.
The Democratic platform is brief on the subject. It merely says:
We advocate the full measure of justice and generosity for all war veterans who have suffered disability or disease caused by or resulting from actual service in time of war, and for their dependents.
So much for the platforms. The American people have a right to know where the candidates stand. Let us have pretty plain talk — the American people are entitled to hear it. They should not only be afforded opportunity for study of what has happened in the past, and its relationship to the whole question of public money, but they are entitled to know what their candidates for high office intend to recommend with respect to the future.
There can be no mistake about the gratitude of the American people to the soldiers. Individual states, irrespective of Federal statutes, in the outpouring of their gratitude, incurred large bonded indebtedness for the purpose of showing the states’ individual gratitude to the soldiers who enlisted. In my own state of New York, the people themselves, by their own act, amended their Constitution so that they might bond the state for $45,000,000 to be distributed to the veterans of the World War who enlisted from the state of New York.
Nobody can question the feeling of the people generally for the veteran, but when the burden becomes so great that it oppresses everybody, these forms of gratuities and compensation that are not actually related to the disability or suffering as a result of the World War should be stricken out, and undoubtedly would not be found in the Federal statutes if it were not for the organized lobby.
Where Government Aid Belongs
It is also undoubtedly true that the veteran has a spirit of patriotism, and he must stand in the position of being entirely unwilling to have improper payments made for the benefit of less than 5 percent of the people of the United States when that relief must fall directly or indirectly upon 120,000,000 people through taxation.
I am satisfied that I reflect the opinion of a great majority of the veterans that they were fighting for a great principle when they offered themselves in defense of the flag of our country. They were striking at those who would question the sovereignty, the dignity and the majesty of the greatest republic in the world. They could not have had in their minds the fact that they were later to become favored charges upon the Government.
As to the men who were disabled, again I say, with emphasis: To those who were killed, to their relatives and their dependents and beneficiaries, the gratitude of the American people cannot even be expressed in dollars. For them, I say, everything; but, for those accidental beneficiaries of an organized lobby, it is time to call a halt.
I earnestly hope that a time will never come when the people of the United States will be lacking in expression of their gratitude to the men who offered themselves to the country in her time of trouble, but we must, of necessity, realize that this organized effort on the part of representatives of an organized group must cease when they go beyond the limits of justice, fair dealing and fair play to the rank and file of the American people who must foot the bills.