Service certificates were issued to compensate American World War I veterans for missed wages. The certificates matured in 1945 but were redeemed 10 years early due to economic hardships. The bonus included $1 USD per day of service and an additional 25 cents per day for overseas service. Congress issued approximately $3.6 billion in face value of service certificates. The Bonus Army protested in 1932 for immediate redemption, and Congress redeemed them at face value 10 years early in 1936.
Service certificates are a type of bond issued by the United States government to American World War I veterans. The certificates were designed to be a bonus payment to veterans that makes up the difference between military pay and what veterans would have earned in the private sector if they weren’t served. Issued in 1925, 20-year service certificates were due to mature in 1945, but the United States Congress allowed them to be redeemed 10 years earlier due to the economic hardships of the Great Depression and for political reasons.
Prior to issuing the 1925 service certificates, it was traditional in the United States for veterans to receive some sort of bonus to compensate for the missed opportunity for higher wages caused by military service. For conflicts fought by US armies up until the Spanish-American War, the bonus was land and money. There was no bonus for the Spanish American War, and World War I veterans initially received only a $60 bonus in US dollars (USD). This was a politically unpopular move that sparked the formation of the American Legion, a veterans’ rights organization; and was eventually resolved with Congress creating Service Certificates.
The bonus included in service certificates was $1 USD per day of service, with an additional 25 cents per day for overseas service. Domestic service bonuses were capped at $500 USD, $600 USD for foreign service. Certificates could be redeemed after 20 years, or in 1945, unless they were in the amount of $50 USD or less, in which case they were paid immediately.
Congress has issued approximately $3.6 billion in face value of service certificates financed by 20 annual payments of $112 million plus interest. The initial terms of service certificates allowed the holder to borrow up to 25 percent of the certificate’s face value. This amount was raised to 50 percent in 1931 due to widespread unemployment during the depression.
In 1932, to protest economic hardship and demand immediate redemption of service certificates, approximately 17,000 veterans, family members, and supporters marched on Washington, DC, and set up a tent city. The protesters were called the bonus army. People, their tents and possessions were forcibly removed by the US military.
By 1933, protesters had returned still demanding immediate and full redemption of service certificates. Many veterans have been lured into participating in a government work program working on a new highway in Florida. When a hurricane hit that project killing hundreds of veterans, a public outcry led Congress to override a presidential veto and redeem service certificates at face value 10 years early.
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