When unemployment benefits fail: the bonus army protests

In 1932, WW1 veterans marched on Washington over a bonus promised them at a later date but needed now in the throes of the Great Depression. Congress refused to pay this bonus because of concerns over budget shortages and creating a moral hazard through this “free” money.

Documentary done with original footage

A quick history lesson

For a full history of the bonus army protest, see this documentary in four parts. Please watch all four parts (around 30 minutes).

Technically, the bonus army protest predates the creation of unemployment benefits. But, the idea of what the bonus army wanted — money to pay rent and buy groceries — is essentially what unemployment benefits were geared to provide. The response to the bonus army back then seems all too familiar with how government leaders are responding to the unemployment crisis today: phantom concerns over moral hazard and safeguarding a government budget.

More than a decade after these protesters were shot at and turned away, the solution for the bonus army was a GI Bill after WW2 to create a broad-based economic stimulus (though African-American service men were left out of large portions of the GI Bill).

I guess in this current pandemic we still have a long way to go.

What has been is what will be, and what has been done is what will be done; and there is nothing new under the sun. Ecclesiastes 1:9.

Update (26 Oct. 2020): Prof. Daniel Mitchell provides some additional detail:

There is a further back story to the Bonus Army. After the Civil War, disabled vets were granted pensions. Of course, they were Union vets, not Confederates. That meant that most of the money flowed into northern districts, i.e., potentially Republican districts. Over time the pensions were made more generous so that they covered all vets, not just the disabled, and eventually the wives of vets. Republicans were also the party of protection so the expense of the pension plan could be used to justify higher tariffs, a main source of federal revenue at the time. A kind of ersatz Social Security system arose but just for Union vets. The last “Civil War” widow collecting a pension died in 2003 (!). Old geezers could marry young women who were attracted by a lifetime annuity (and with the knowledge they did not have to put up with their husbands for any length of time). Some former Confederate states set up pensions for their vets, but without federal money.  

There was concern after World War I that a similar expensive pension might be in the offing so instead Congress ultimately enacted just the one-time bonus and put the date off in the future for actual distribution.
One artifact of the Civil War pension remains — the Pension Building in Washington, DC, now an architectural museum, which was built to house the bureaucrats to administer the plan. And, of course, there is the legacy of the GI Bill, passed in part to avoid another Bonus Army after World War II.

Below is a slide I used to use in class showing the last Civil War widow, her obituary, and the Pension Building.

One thought on “When unemployment benefits fail: the bonus army protests

  1. Pingback: Unemployment delays, part 3: your stories here | Wisconsin Unemployment

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