Service certificates were issued by the US government to World War I veterans, providing an additional payment to make up for the difference between military pay and private sector earnings. They were redeemable after 20 years, but due to economic hardships and political reasons, Congress allowed early redemption in 1935. The certificates were issued for $3.6 billion in face value and were protested by the Bonus Army in 1932.
Service certificates are a type of bond issued by the United States government to American veterans of World War I. The certificates were designed to be an additional payment to veterans that make up the difference between military pay and what veterans would have earned in the private sector. if they had not served. Issued in 1925, the 20-year service certificates were to have matured in 1945, but redemption was allowed 10 years earlier by the United States Congress due to the economic hardships of the Great Depression and for political reasons.
Before the issuance of the 1925 service certificates, it was a tradition in the US for veterans to receive some type of bonus to make up for the missed opportunity of higher wages generated 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 United States Dollars (USD) bonus. This was a politically unpopular move that led to the formation of the American Legion, a veterans’ rights organization; and finally it was resolved with the creation by Congress of 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. Bonds for domestic service were limited to $500 USD, $600 USD for service abroad. Certificates could be redeemed after 20 years, or in 1945, unless they were for an amount of $50 USD or less, in which case they were paid immediately.
Congress issued about $3.6 billion in face value certificates of service financed by 20 annual payments of $112 million plus interest. The initial terms of the service certificates allowed the holder to borrow up to 25 percent of the face value of the certificate. That number rose 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, some 17,000 veterans, family members, and supporters marched on Washington, DC, and set up a tent city. The protesters were called the Bonus Army. The town, its stores and possessions were forcibly removed by the US military.
By 1933, the protesters were again demanding the immediate and complete redemption of service certificates. Many veterans were enticed to join a government job program working on a new highway in Florida. When a hurricane struck that project and killed hundreds of veterans, a public outcry led Congress to override a presidential veto and redeem the service certificates for face value 10 years early.
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