The World War Adjusted Compensation Act
, or Bonus Act
, was a United States federal law passed on May 19, 1924, that granted a benefit to veteran
A veteran is a person who has had long service or experience in a particular occupation or field; " A veteran of ..."...
s of American military service in World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
The act awarded veterans additional pay in various forms, with only limited payments available in the short term. The value of each veteran's "credit" was based on each recipient's service in the United States Armed Forces
The United States Armed Forces are the military forces of the United States. They consist of the Army, Navy, Marine Corps, Air Force, and Coast Guard.The United States has a strong tradition of civilian control of the military...
between April 5, 1917 and July 1, 1919, with $1.00 awarded for each day served in the United States and $1.25 for each day served abroad. It set maximum payments at $500 for a veteran who served stateside and $625 for a veteran who served overseas, senior officers and anyone whose service began after November 11, 1918.
It authorized immediate payments to anyone due less than $50. The estate of a deceased veteran could be paid his award immediately if the amount was less than $500. All others were awarded an "adjusted service certificate," which functioned like an insurance policy. Based on standard actuarial calculations, the value of a veteran's certificate was set as the value of a 20-year insurance policy equal to 125% of the value of his service credit. Certificates were to be awarded on the veteran's birthday no earlier than January 1, 1925 and redeemable in full on his birthday in 1945, with payments to his estate if he died before then. Certificate holders were allowed to use them as collateral for loans under certain restrictions.
The American Legion
The American Legion is a mutual-aid organization of veterans of the United States armed forces chartered by the United States Congress. It was founded to benefit those veterans who served during a wartime period as defined by Congress...
was a principal proponent of the legislation on behalf of World War I veterans, and it objected to the term "bonus", because "bonus has come to mean 'full payment plus,' and there has not yet been full payment, or anywhere near full payment, so there cannot be any plus." The Legion said that the government needed to "restore the faith of men sorely tried by what they feel to be National ingratitude and injustice." The Legion pointed out that the Wilson
Thomas Woodrow Wilson was the 28th President of the United States, from 1913 to 1921. A leader of the Progressive Movement, he served as President of Princeton University from 1902 to 1910, and then as the Governor of New Jersey from 1911 to 1913...
Administration had made additional payments to government workers in 1917-18 to help offset the effects of inflation, without making any comparable provision for members of the military. It fought President Warren G. Harding
Warren Gamaliel Harding was the 29th President of the United States . A Republican from Ohio, Harding was an influential self-made newspaper publisher. He served in the Ohio Senate , as the 28th Lieutenant Governor of Ohio and as a U.S. Senator...
as his position changed from supporting payments if paired with a revenue measure to supporting a future pension system. So strongly did Harding feel about the issue that he visited the Senate to make his case against one version of the bill in 1921, and the Senate voted it down 47-29. Harding vetoed another version of the Adjusted Compensation Act on September 19, 1922, and the House overrode his veto 258-54 but the Senate failed to override by 4 votes on a vote that split both Democrats and Republicans. Harding's veto of the popular measure particularly alienated the Senate Republicans, who thought the President's defense of fiscal integrity endangered the party's electoral prospects.
In preliminary negotiations between Congress and President Calvin Coolidge
John Calvin Coolidge, Jr. was the 30th President of the United States . A Republican lawyer from Vermont, Coolidge worked his way up the ladder of Massachusetts state politics, eventually becoming governor of that state...
, it became clear that the President would veto any law that proposed immediate cash payments to veterans and that the Senate would sustain that veto. The legislation, popularly called the Insurance Bill, provided the veteran instead with a variety of future payment scenarios rather than cash in the short term.
On May 15, 1924, President 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.
The Act was amended with respect to minor details on July 3, 1926.
Veterans were able to take out loans against their certificates beginning in 1927. By June 30, 1932, more than 2 and a half million veterans had borrowed $1.369 billion.
In 1936, the Adjusted Compensation Payment Act
The Adjusted Compensation Payment Act , one of several pieces of legislation popularly called the "Bonus Act," was enacted when Congress overrode President Franklin D. Roosevelt's veto on January 27, 1936....
(January 27, 1936, ch. 32, 49 Stat. 1099) replaced the 1924 Act's service certificates with bonds issued by the Treasury Department that could be redeemed at any time.