FDR, New Deals, and the Limits of Power 173the Bonus aRMy
Roosevelt faced a monumental task in dealing with the depression, but even
before he was inaugurated there was a crisis he would have to confront.
Everyone was aware of the human crisis of the depression and Hoover’s failure
to fix it, so Americans were bleak and restless for help already. Yet, somehow,
amid the economic crash, a political crisis emerged to actually makes
Americans feel more alarmed—the Bonus Army. Americans who had fought
in the Great War had been promised a bonus, basically a pension, that they
would receive in 1945. They were homeless and hungry by the early 1930s,
however, and wanted to relieve the pressures on them and their families, and
contribute to the problem of consumption by spending money so they asked
the government to give them their bonuses early, in 1932. They also began
arriving in Washington, D.C. to make their requests, or demands, in person.
Their “Military Certificates,” [basically, bonds] supposed to mature in 13 years,
amounted to over $3.6 billion [about $50 billion today], a huge sum in any
circumstances let alone during a financial meltdown, so Hoover, still president,
did not offer the veterans a friendly welcome. Congress had already tried to
help vets by establishing a fund that allowed them to borrow a little over 20
percent of the value of their certificates, and in 1931 doubled the amount they
could take out as loans.
By 1932, a significant percentage of political leaders, and the population in
general, began to support the movement to provide the entire bonus to each
vet immediately. While the vets and others thought that the bonus money
would stimulate spending and consumption, Hoover opposed it. He was a
“classical” liberal in the sense that he believed that budgets had to be bal-
anced, that debts and deficits harmed the economy by forcing the government
to pay interest on loans it would have to take out to create revenues, or to
raise taxes. Indeed, the balanced budget idea was like a biblical truth to vir-
tually all politicians from both major parties in the early 20th Century. So
Hoover , naturally, believed that early payment of the bonuses would create a
massive budget crisis, since over $2 billion of the trust fund, or about 55 per-
cent, was still unpaid. An increase in the federal deficit , he feared, might lead
to severe cuts in current relief programs, such as soup kitchens or shelters, or
higher taxes—and Hoover had already raised corporate taxes and increased
the top tax bracket from 25 to 63 percent, expecting the wealthy to do more
to help the country out of the depression.