Adjusted Service Certificate. Left click to enlarge.
Adjusted Service Bonds & The WWI Bonus.
I recently found a scan of an Adjusted Service Bond (ASB). I had never even heard of such a bond before
so this opened up an interesting story for me about the military bonus program of The Great War (WWI).
The Adjusted Service Bonds are unusual in many respects. First, they were issued on 15 June 1936,
and matured nine years later on 15 June 1945. They were only issued in one denomination ($50.00). They were printed by the Bureau of Engraving and Printing, and have a Andrew Jackson vignette at the top which is similiar to the vignette used on the $20 bill of the era. They payed 3% per annum simple interest, but could be cashed at face value as soon as they were received. The amount due on 15 June 1945, was $63.50 per Bond. This particular bond was sold online within the last year for $750.00. You can view the bond at the following web address:
The full story starts at the end of the First World War (11 November 1918). Several veteran groups, and many
US Congressmen were already lobbying for a "soldiers bonus". Some wanted military scrip issued as
happened after previous wars - to be exchanged for land. Others wanted a simple cash bonus. The
debate went on for several years, and finally in 1924 the World War Adjusted Compensation Act was passed, over the veto of President Coolidge. It provided for the payment of a "bonus" with interest aimed to adjust the pay of armed forces members during World War I, in compensation for lost wages in the private sector during their service. The payment was not to be made until 1945.
The mechanism used to pay the bonus was to issue Adjusted Service Certificates (ASC). The picture at the lead of this post is an Adjusted Service Certificate. I think that this is the only ASC in collector hands? In effect, Adjusted Service Certificates were 20-year endowment insurance policies maturing on 15 June 1945. They earned 3% simple interest over this period. To qualify for the bonus, a veteran had to have at least 60-days service between April 15, 1917, and November 11, 1918. The bonus paid was $1 a day for Stateside service and $1.25 a day for overseas service. They (ASC) could not be used as collateral, so the money was out of circulation until 1945. The average payment due in 1945 was more than $1000.00.
In 1931 an ammended bill was passed over President Hoover’s veto that gave soldiers the right to borrow against bonus certificates for as much as 50 percent of their value. President Hoover warned against this
in his 1931 State of the Union Address when he said: "The law enacted last March authorizing loans of 50 per cent upon adjusted-service certificates has, together with the loans made under previous laws, resulted in payments of about $1,260,000,000. Appropriations have been exhausted. The Administrator of Veterans' Affairs advises that a further appropriation of $200,000,000 is required at once to meet the obligations made necessary by existing legislation. There will be demands for further veterans' legislation.... But our present expenditure upon these services now exceeds $1,000,000,000 per annum. I am opposed to any extension of these expenditures until the country has recovered from the present situation." It was also President Hoover who signed an Executive Order to establish the Veteran's Administration, possibly to put some of these events in order.
The Bonus March - In the spring of 1932, more than 20,000 veterans, most of them unemployed and in desperate financial straits, spontaneously made their way to Washington, D.C. They demanded passage of a bill providing for immediate payment of their World War I bonus. Calling themselves the Bonus Expeditionary Force (BEF), they camped in vacant government buildings and in open fields. One headline dubbed the event: "The Shame of Anacostia Flats". The veterans conducted themselves in a peaceful and orderly way, but when the Senate defeated the Pittman Bill (June 17, 1932) the marchers refused to return home. On July 28, President Herbert Hoover ordered the army, under the command of GEN Douglas MacArthur, to evict them forcibly. One of MacArthur's unit commanders was LTC George Patton. The Army had their camps set on fire, and the army drove the veterans from the city. Hoover was much criticized by the press and the general public for the severity of his response.
In 1935, Congress passed a bill providing for the immediate cash payment of the war bonuses. Franklin Delano Roosevelt vetoed it. In 1936, FDR vetoed the same bill again. But on Jan. 27, 1936, the veto was overridden. The next day's Washington Post headline read: "Soldier Bonus Becomes Law as Senate Crushes Veto, 76-19; Full Payment Sped for June 15." The payment method used was to issue Adjusted Service Bonds - so the story comes full circle.
The Bureau of Public Debt, US Department of Treasury reported in 1999 that there was $300,600.00 in unpaid Adjusted Service Bonds for the Veterans of The Great War. Since all the bonds were of $50.00 denomination, this means that in 1999, 6012 of these bonds were "still out there". The bonds can still be redeemed at the same office as can the Armed Forces Leave Bonds. That office says that only a "very few" ASBs have been redeemed since 1999. Also, just as in the case of the AFLBs, remainder amounts due were paid by check. One account I found (on a genealogy web site) was of a soldier who in 1936 was due to receive $973.00. He received his Adjusted Service Bonds and a check. There was no date on the notice. He received: 19 bonds with serial numbers 32,410,751 – 32,410,769 in the amount of $950.00. The check (No. 969,717) from the US Treasury was for $23.00.