by Paul Dickson
Despite the racial issue, the 1920 version of the “Soldier Bonus Bill” did pass in the House, but it was shelved by the Senate, where key members of both parties opposed the idea, essentially because it would cost at least $2 billion. As Assistant Secretary of the Treasury R. C. Leffingwell put it in an article in the Saturday Evening Post, the money “is not in the Treasury and available for distribution.” The only feasible way to pay for it, he said, was through new taxes.54 And President Wilson let it be known that he opposed the payment as a matter of fiscal responsibility.55
America’s elected leaders were not disputing the veterans’ claim to back pay for wartime service. They just did not want to write the check.
2
The Tombstone Bonus
How Happy to be a soldier
Of the old Red, White and Blue
Paid like a banker in time of war,
And cared for afterward too,
With a job and a home in the city
Or a fertile farm in the dell,
For like Princes, we treat our Veterans—
We do, like Hell!
—Third stanza of “The Happy American,”
Ballads of the B.E.F.
NEITHER PARTY SUPPORTED the bonus in the 1920 presidential election platforms; but noncandidate William Jennings Bryan did suggest it be financed by a “war profits tax,” and Republican nominee Warren G. Harding suggested that he was ready to challenge the platform.
As a senator, Harding had been one of the strongest supporters of Shafer’s proposal. During the campaign, Harding went to Norfolk on the yacht of Ned McLean, owner of the Washington Post and husband of heiress Evalyn Walsh McLean, for a boozy, Prohibition-defying $10-a-plate dinner where he told Shafer that if elected he would sign the bonus bill even if the amount paid “doubled.” (The dinner set the tone for the Harding presidency. Shafer later spoke of McLean’s behavior at the banquet: “He had a habit of getting a seltzer bottle and squirting it on his friends, after a few drinks. The police picked him up and carried him out of the banquet to jail. Someone went and got him later.”)1
After Harding was elected and in office, he still supported the idea of the bonus but suddenly turned against it, saying it would increase the national debt and thwart his plan to cut taxes. He had the support of business and the voices of major employers like George Eastman, the Kodak man, who claimed it would make “mercenaries out of our patriotic boys,” and Pierre S. Dupont, whose chemical corporation was a major war contractor.2
Opponents pointed out that the cost of the bonus would be $2 billion to $4 billion at a time when the total federal budget was just over $4 billion. Cowboy humorist Will Rogers, who supported it simply because the boys deserved it, wrote, “Apple Sauce . . . this country is not broke, automobile manufacturers are three months behind in their orders, and whiskey was never as high in its life. . . . If we owed it to some Foreign Nation you would talk about honor and then pay it.”3
The most powerful voices demanding passage of the bonus were the American Legion and the Veterans of Foreign Wars, which had popular support among members of both houses of Congress. But Harding and Secretary of the Treasury Andrew Mellon worked hard to get a bonus bill, which had been introduced earlier in the year, tabled. Harding intervened directly at a luncheon with his former Senate colleagues and personally delivered an anti-bonus message on July 12, 1921, saying that the first priority of Congress was tax reduction, not the soldier’s bonus.4 Congress tabled the bonus until the next session in 1922.5
Throughout the country the American Legion, the Veterans of Foreign Wars, and other veterans’ groups held mass meetings in support of the bonus. Pressure was building against the bonus as well, with strong business opposition, especially from Wall Street. A New York American Legion chapter charged a leading brokerage house with compelling 247 of its employees to write anti-bonus letters to Congress. Thomas Edison weighed in on the issue during an interview on his seventy-fifth birthday: “I think we should postpone the bonus. The country is in no condition for it.”6
The House vote—taken on March 23, 1922, with jammed galleries of supporters—disregarded party lines; the final count was 333 to 70, with 242 Republicans, 90 Democrats, and 1 Socialist in favor.7 The Senate then passed it 47 to 22 and sent it to the president for his signature. After suggesting again that he was in favor of the bonus, Harding vetoed the bill on September 19, 1922, while heaping thanks on the veterans for their noble service: “The United States will never cease to be grateful.”8 He justified his veto by stating the country did not have the money. A tax cut, he said, was more important to veterans than a bonus because it would make America “a better country for which to fight, or to have fought, and affords a surer abiding place in which to live and attain.”9 Shafer, for one, was appalled by the veto and was told by congressional sources that the veto was written by “the fifth richest man in the world,” Andrew Mellon. Pro-bonus legislators overrode Harding in the House but lacked the four votes needed to override in the Senate.10
The close veto-overriding vote worried the National Industrial Conference Board, whose thirty-one trade associations included the National Association of Manufacturers and the Institute of Makers of Explosives. The board produced a forty-eight-page booklet entitled The Soldiers’ Bonus. It concluded that payment could not be justified on the grounds of economic equity and that its adoption might “tend to hamper the nation’s efforts in behalf of incapacitated veterans at present and of the needy or aged veterans in the future.” Now more than ever, it was clear that there was a growing opposition to the bonus from the same corporations that had received postwar compensation for their efforts in the “war to end all wars.”11
By the summer of 1923 Harding had become totally dispirited by the corruption of his cronies, who were selling out the nation’s naval oil reserve at Wyoming’s Teapot Dome and Elk Hills, stealing from the Veterans Bureau, and diverting confiscated liquor into their own hands for resale. Friends said he was ill from the betrayals of his “gang.” He embarked on a West Coast speech-making tour, hoping to determine what could be done about the scandals, the extent of which had not yet become public. On the night of August 2 he suffered a fatal stroke in San Francisco. The public would soon learn that his administration had been one of the most corrupt in history. Of particular interest to veterans was the fact that Charles R. Forbes, director of the Veterans Bureau, was found guilty of diverting $250 million into his own pockets and those of his friends.12
Vice President Calvin Coolidge was sworn in as president. A former governor of Massachusetts and U.S. senator, Coolidge had stood outside Harding’s inner circle of cronies and was never tainted by their corruption. But he followed the same fiscal policies as Harding, and after some temporizing went on the record saying he opposed the bonus. The more prosperous states were providing for their own vets with bonuses. This seemed unfair to vets in the majority of states. By the end of the year nineteen states had authorized bond issues for $361,970,141 to pay state bonuses. The leader was Illinois ($55 million), followed by New York ($45 million), although the Empire State had run into legal problems and had yet to raise the money.13
In the early days of 1924, the bonus was again an issue, with parades and petitions to gain support for it. There was also strongly organized opposition, including nasty campaigning by business executives who threatened employees if they did not oppose the bonus. Coolidge denounced the practice as “utterly un-American.” A Treasury whistle-blower claimed that his department had “juggled” numbers to make the estimated cost of the bonus appear bigger.14
A new bill was introduced on February 26 by Representative Hamilton Fish Jr. of New York, who had been one of the white officers of the “Harlem Hellfighters” regiment and winner of the Croix de Guerre and the Silver Star. He proposed that the cash bonus be paid not immediately but in 1945, with accrued interest. Veterans could borrow on their policies but not redeem them until 1945.15 The twenty-year wait for cash was seen as a w
ay to nullify Coolidge’s promised veto. The American Legion supported the compromise.
Support for the bonus continued to grow. On March 1 between four and five thousand members of the American Legion and VFW paraded through the streets of Brooklyn in support of the bonus. The marchers delivered a petition with 130,000 signatures to Senator Royal S. Copeland.16
For the third time in four years the House passed a soldier’s bonus bill— this time by a vote of 355 to 54 in the House, followed by a 67 to 17 vote in the Senate—but the delayed payment provision was not enough to keep Coolidge from vetoing the new bill for two stated reasons: he believed the budget had to be preserved, and it was not right to favor one group of people over all other Americans.17 Coolidge then added, “Patriotism which is bought and paid for is not patriotism. . . . Service to our country in time of war means sacrifice. It is for that reason alone that we honor and revere it. To attempt to make a money payment out of the earnings of the people to those who are physically well and financially able is to abandon one of our most cherished American ideals.”18
Coolidge’s comment on patriotism backfired because it was superfluous to the veto, and doubly so because he had not been in uniform himself. He infuriated even those who were against the bonus. Congressman Fiorello La Guardia of New York, a veteran and a Republican, was hurt and offended by Coolidge’s message, saying that it placed a “question mark” on the honorable discharges of four million soldiers. La Guardia, who had been elected in 1916 as America’s first Italian-American congressman and who was known throughout his long political career as “the Little Flower,” had taken leave from Congress to enlist in 1917 and served as a pilot and flight school administrator in the U.S. Army Flying Service in Italy. He returned to politics after the war with the rank of major, a brilliant war record, and living proof that “hyphenated Americans” could be both patriotic and heroic.19
Congress—encouraged by Coolidge’s intemperate comments and La Guardia’s anger—overrode the veto. The vote in the Senate was 59 to 26, two votes more than the requisite two-thirds needed.20 Now, six years after the war had ended, the vets’ demands that the nation fulfill promises to compensate them for their service—and to correct the disparity between civilian and military pay—had finally produced results: the World War Veterans Act was now law, granting “adjusted service compensation” to veterans of that war in 1945.21
The bonus issue could define or defile political careers—what politicians refer to as “a third rail.” Republican Senate leader Henry Cabot Lodge of Massachusetts, the scholarly successor to Daniel Webster, had voted to override the veto. The party would not easily forgive him for this affront to a Republican president. Lodge claimed justification—a promise to the Massachusetts Republican Convention a year earlier.22 The Boston Globe looked at Lodge and other Republicans who opposed Coolidge and saw “the amazing spectacle of a Chief Executive who has lost the backing of his own political majority in Congress.” The Boston Herald saw New England failing a New England president and noted that three other Republican senators from New England—one from Maine and two from Connecticut—had worked against their leader.23
Under the terms of the new law, any veteran who had served in the armed forces between April 5, 1917, and July 1, 1919, was due compensation at the rate of $1 a day for home service and $1.25 a day for overseas service. From this was deducted sixty days’ service because of $60 that had been paid to each veteran upon discharge. Those entitled to $50 or less were to be paid immediately, while the rest received certificates to be redeemed in 1945 with 4 percent interest. Since the note was issued in place of cash, an additional 25 percent was tacked on to the final payment in 1945. Three and a third million vets were issued certificates with a total face value of $3.5 billion—averaging a payout of about $1,000 per man.24
The so-called bonus was neither compensation nor a bonus. It was a twenty-one-year endowment life insurance policy payable at death or in 1945, whichever came first. But the term “bonus” had been ingrained in the national consciousness, and it was the label given to the legislation and the certificates. Veterans thought of it as just that—a bonus, an overdue monetary gift from a grateful nation. The misnomer was aided in part by Coolidge’s infamous words, “We owe no bonus to able-bodied veterans of the World War.”
Confusing matters further was the way the certificates were imprinted: they showed the amount ultimately due in 1945 rather than its current value. A veteran, who would have been qualified to get $400 in 1925 if payment had been made then, carried a piece of banknote paper with green filigreed borders that said it was worth $1,000. For large numbers of poor vets, it was the only thing they owned that had value. Somewhere along the way, as it became more broadly understood that the only way one could cash out before 1945 was to die, it was dubbed the Tombstone Bonus.25
The bonus issue seemed to have been resolved as the Coolidge years played out, although the president’s relationship with veterans remained cool, and he was not forgiven for his comments about them. In October 1924 it was discovered that he had exacted a fee of $250 for delivering a memorial speech to veterans in Bridgeport, Connecticut, when he was still vice president. It was alleged that “when money is in his own pocket” his attitude toward the veterans was a far cry from the one he conveyed at the time of the veto. “Everybody else donated his or her services for the meetings,” said a formal notice from the Democratic National Committee about the Bridgeport incident. “Can the American people imagine Lincoln, Roosevelt or Wilson exacting a fee from soldiers and sailors for delivering a memorial address?”26
But the vets, for the first time since the war ended, seemed to have the upper hand. A week before the Bridgeport revelation was made, Frank T. Hines, director of the Veterans Bureau and later the head of its successor, the Veterans Administration, notified the undersecretary of the Treasury that applications for bonus certificates were flooding his office and that 1,567,665 had already come in. Hines, who served in the Spanish-American War and was a brigadier general in the Great War, said that all veterans—about 4 million men—would probably apply for adjusted compensation.27
One veteran, a Texan named Wright Patman, was deeply bothered by the 1945 payment date—especially since the profiteers and large corporations had long since been paid in full with bonuses for their participation in the war. In July 1917, as a recent law school graduate, Patman had enlisted in the U.S. Army as a private and immediately began plumping for an overseas assignment but was rejected because of a minor heart ailment. He finished the war with a commission as a first lieutenant in the U.S. Guards, the only military group that would offer him chance for advancement. He left the Army with an awakened sense of moral outrage, especially about the money spent and corporate profits assured by the sales of weapons. He learned to fire an artillery piece with an eight-mile range, which he described to his sister in a letter: “What you would call a bullet is as big as a stove pipe and twice as long. It cost the government $1,250 to fire one of them.” Patman then observed that the cost of firing the “bullet” was ten times the cost of a new schoolhouse.28
In 1928 Patman ran for Congress as a vet and an agrarian progressive who boasted that he had raised money for law school as a tenant farmer. His Texas district was so poor that fewer than 2,000 of his 255,452 constituents made enough to pay income taxes. Time magazine described his district as being “where hillbillies corner their rabbits in hollow logs and take Levi Garrett snuff . . . with their politics.”29
During the campaign, a major issue for Patman was a “square deal” for American soldiers and sailors, an allusion to Theodore Roosevelt’s 1903 statement that “a man good enough to shed his blood for his country is good enough to get a square deal afterward.” As a former American Legion commander and a loyal member, he believed that the veterans of the Great War had been slighted and that the bonus was the first step toward correcting the injustice. Patman had lived on soldier’s pay of a dollar a day when shipyard workers were making $2
0 a day.30 “They [the average private] only got $21 a month and had to pay their own laundry bills. If they made an allotment to a wife or child they had nothing left,” he said, adding that the soldier was expected to purchase Liberty Bonds with any money left over. To refuse was to be derided as a “slacker.”31
Patman came to Congress as the undisputed leader of the pro-bonus forces. Two months after he took his oath of office and five months before the stock market crash, he first introduced a bill in the House calling for immediate cash payment of the bonus, to be financed by government borrowing at a cost of $3.4 billion. An identical Senate version came from Smith Wildman Brookhart, an Iowa Republican and a self-styled “cowhide radical.”
As the American Legion and other political groups supported their own legislation before Congress, the Patman-Brookhart bill attracted little notice, and never made it out of committee. But Patman, who would soon make a name for himself as a scathing critic of the economic policies of Secretary of the Treasury Andrew Mellon, had gained the attention of the veterans. He was one of their own, willing to be their advocate.
When President Coolidge decided not to run again in 1928, the Republican Party’s presidential nomination was won by Herbert Hoover, a California mining engineer and self-made millionaire who as wartime National Food Administrator had been responsible for getting millions of tons of food to the Allies and to famine areas of Europe. In 1927 he headed the rescue of thousands of Americans driven from their homes by disastrous Mississippi River floods.