The Bonus Army

At 4:30 PM on July 28, 1932, General Douglas MacArthur led a small army composed of some 200 cavalry, 300 infantry, and five tanks down Pennsylvania Avenue in Washington, D.C. Its mission: to clear Washington of an estimated 8000 or so World War I veterans, the remnants of a much larger group (perhaps as many as 25,000) who had begun assembling in the capital in May. This Bonus Expeditionary Force, as it was called, had come from all over the country to demand that Congress immediately pay their service “bonus” not due until 1945. Congress refused and President Hoover ordered out the Army.

Within an hour the troops with drawn sabers and some 1500 tear gas bombs had cleared the downtown areas. After pausing for dinner, the Army moved across the bridge to Anacostia Flats, the site of the shantytown Camp Marks, which had served as home for the majority of the BEFers and their families. By midnight the camp had been burned and the destitute bonus marchers driven out of the city and left to fend for themselves. Nearly 6000 regrouped in the next few days at the Ideal Amusement Park in Johnstown, Pennsylvania, but with little food or water and no prospects for improved conditions, this last group dispersed by August 6^th.

The whole incident, from its spontaneous beginnings to its violent end, was a curious moment in American history. The country was in the grip of the Great Depression. One-fourth of the people belonged to families which had no regular income; over 13 million Americans were unemployed. Those fortunate enough to still have jobs generally earned substantially less than they had in the 1920s. In an age before federal relief programs, the little public welfare available on the state or local level was totally inadequate. The frustrations of the veterans were understandable, the reaction of the federal government to their sit-in much less so. In fact, as a recent historian observed: “Perhaps no other incident better symbolizes the utter inability of Herbert Hoover’s administration to understand and to cope with the unprecedented problems of the Great Depression.”

Veterans’ benefits have probably been around since the beginnings of organized warfare. In our century, the rationale is two-fold: first, to reward those who have risked life and limb in defending our country, and second, to narrow the gap between the earnings of civilians and those of soldiers during the war years (assuming always that civilian workers made more than servicemen). American soldiers in the Revolutionary War, the War of 1812, and the Mexican War all benefited from a system of bonuses—generally grants of land. Such benefits posed no real financial burden on the government. The number of men eligible was small and land was plentiful. After the Civil War, however, the cost of veterans’ benefits skyrocketed. Increased pensions were a great plank in a party’s platform and successive Congresses enacted more and more generous legislation. By 1893, veterans’ benefits amounted to 43¢ of every $1.00 spent by the federal government.

With the outbreak of World War I, the government was concerned about holding down benefit costs. As a result, Treasury Secretary McAdoo drafted a scheme whereby wives of servicemen received $15 a month, $10 for a first child, $7.50 for a second, and $5 for each additional child up to a monthly maximum of $50. This was financed by withholding half of each enlisted man’s pay (later changed to a maximum of $15 a month). The government made up any difference between the two amounts. Similarly a schedule of payments for death or disablement was established and life insurance was subsidized so that servicemen could purchase insurance at roughly the same rate that civilians could. Setting aside the cost of the insurance programs, by the time the allotments and allowances ended in July 1921, the government had actually collected more from servicemen than it had paid out.

Despite such prudent planning, the war was no sooner over than Congress began to consider other bonus schemes. Bonus legislation was not enacted until 1924, almost six years after the armistice, and then only after both houses overrode President Coolidge’s veto. The exact provisions of that bill aren’t important except to note that it provided a government paid-for insurance certificate, based on one’s service pay plus interest, which a veteran could either borrow against or take as a lump-sum payment in twenty years. Not much happened for the next six years, but then as the Depression began to spread, veterans lobbied for an immediate payment of their bonus certificates. They wanted now what they were scheduled to get in 1945.

Congress responded in February 1931, again after a veto by President Hoover, by offering the veterans the opportunity to borrow more of their certificates (50% instead of the original 22½%) at a lower interest rate (cut from 6% to 4½%). Even this was not enough and the bonus issue found a powerful champion in Wright Patman, a Democratic congressman. Patman pushed for an immediate payment of the bonus, arguing that it would help restore the nation’s troubled economy. President Hoover stood firmly against any accelerated payment schedule.