Veterans have played an important role in the political and economic life of the United States throughout its history. Politicians and interest groups continue to seek the support of veterans and their organizations. Women and minority veterans have become assertive symbols of competence and patriotism. And the institutions created for veterans, such as pensions and the hospital system, have been the testing grounds for the welfare state. This chapter provides background for understanding these issues and the historical statistics they generated.

In general terms, veterans are simply former members of the armed forces - "those who served.”  Traditionally, in times of peace, the United States relies on a small professional force; however, that force is augmented during major wars by large numbers of volunteers or draftees. When a major war is over, the programs and facilities designed to care for disabled and retired professional soldiers cannot be expanded easily to take care of the needs of citizen soldiers. Instead, to meet these needs, Congress creates new programs and facilities that are run by special veterans' agencies. Most of the statistics shown here refer to programs originally created for these temporary members of the armed forces rather than for the professionals.

Two types of data on veterans are presented: (1) data on the number of veterans by age and by period of service; and (2) data on the benefits that have been awarded to veterans, whether in cash or in kind. Examples of in-kind benefits are medical care and domiciliary care. The nature and limitations of the data will emerge from the historical narrative, but a few general remarks on the quality of the data will be useful to have in mind from the start. As is often the case, the amount and quality of the data improve as one moves forward in time. Considerable information about veterans from the colonial and antebellum periods can be found in government documents, but this information has only rarely been assembled by scholars. (Table Ed-D documents some of the important events in the history of veterans.) Some of the unique problems associated with these periods - the important role of land grants, for example- will be discussed here. The Civil War also presents problems for the chronicler of America's veterans primarily because of the incomplete information about the number of people serving in the Confederate forces, their subsequent histories, and the scattered records of the Southern states concerning aid to Confederate veterans.

Beginning with the Union veterans of the Civil War, however, the records of the Commissioner of Pensions (founded in 1833, it became the Veterans Administration in 1930 after consolidations with other agencies), combined with data collected by the military services and, in more recent decades, by the Bureau of the Census and other government agencies, provide an accurate record of how the federal government has rewarded its veterans. Inevitably, many things remain uncounted. Many laws, for example, gave veterans preferences in hiring, and many employers have acted on this principle even when not compelled to do so. Comprehensive estimates of the value of these preferences have not been made. In addition, certain categories of aid to veterans have been subject to manipulation. Often the amount of benefits received by a veteran depended on whether a disability suffered by the veteran was found to be service-connected or non-service-connected. For this reason, the breakdown in the tables based on this distinction, although highly accurate with respect to ex-post decisions, may not reflect the division that would be made by an impartial observer. Nevertheless, the data presented here, especially the broad totals, provide an accurate record of how the United States has rewarded, or in some cases failed to reward, its veterans.

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The colonial system of veterans' benefits was derived from the British system. Legislation passed during the Elizabethan era (the 1592–1593 session of parliament) provided relief for the crown's soldiers and sailors who had become sick or disabled while serving. In the English North American colonies, legislation passed in Virginia in 1624 would have provided for medical care and maintenance of disabled soldiers, but this legislation was not ratified in London. Plymouth colony in New England was the first to pass veterans' legislation that went into effect. This law, passed in 1636 to encourage service in the Pequot War, provided for the public maintenance of disabled soldiers. Similar legislation was passed in other colonies throughout the colonial era. A Maryland law of 1678 is notable because it provided pensions for the widows and dependent children of soldiers killed in military service, as well as relief for disabled soldiers.

Given the colonial tradition, it was naturally assumed that the new state governments and the Continental Congress would provide benefits for soldiers and sailors disabled during the Revolutionary War and for their widows and orphans. In August 1776, Congress adopted the first national pension law. It provided half pay for life for soldiers and sailors incapable of earning a living as a result of wounds suffered in the War for Independence. After the war, considerable pressure was brought to bear to increase the pensions and liberalize eligibility. In 1818 a service pension (a pension that required military service but not a service-connected disability) was finally signed for Revolutionary officers and men "in need of assistance.”  This law was revised repeatedly. In 1820, concerns about the federal budget led to the striking of many pensioners from the rolls. But the law of 1823, passed in more prosperous circumstances, restored many pensioners.

The demand made by Continental Army officers for annual half pay for life contingent solely on service until the end of the war, a demand based on the policy in the British army, generated far more controversy than did the demand for pensions for soldiers who were suffering from disabling injuries or in need of financial assistance. George Washington, although dubious at first, became a strong advocate of half pay when resignations at Valley Forge threatened the very existence of the Army. In 1778, Congress promised seven years' half pay. And in 1780, this allowance was extended to the widows and orphans of officers who died during the war. As the end of the war neared, the officers became increasingly concerned about the willingness and ability of Congress and the states to finance their pensions. At Newburgh, New York, the site of the so-called Newburgh Conspiracy, Washington himself was forced to address his officers on March 12, 1783, when the idea that the army should not be disbanded until Congress addressed its financial needs gained headway. Congress responded by passing the Commutation Act. In lieu of half pay for life, the officers were offered five years' full pay in government securities bearing 6 percent interest. There was considerable opposition to the Act, based partly on fiscal considerations and partly on the distinction between the officers and the enlisted men, who were offered only one year's pay.

As many of the officers had feared, the Confederation failed to pay even the interest on the Commutation Bonds. The Society of Cincinnati, formed in 1783 by ex-officers after the end of the war and before the Army disbanded, was the first American veterans' organization. Its goals were to continue the ties formed during the war and to pressure the government to fulfill the pledges made to the officers. Although the Society was initially feared as a threat to democracy, the decrease in the number of surviving officers and the requirement that membership pass through the eldest son led to a gradual decrease in the influence wielded by the Society in the postwar era.

In 1791, under the new federal government, provision was made for paying the Commutation Bonds as part of the general funding of the debt. In the meantime, many officers had parted with their bonds at bargain prices and so began a long campaign for relief. Success did not come until 1828 when full pay for life was granted to surviving officers, noncommissioned officers, and soldiers who had served until the end of the war. In 1832, pensions were authorized on the basis of two years of service. The eligibility of widows and orphans continued to be an issue. The Widows Pension Act of 1836 pensioned widows who were married at the time of the Revolution to men who would have been eligible for a service pension under the Act of 1832. In subsequent years, the requirement that the marriage date from the Revolution was gradually eased and eventually eliminated.

In addition to the pensions paid in cash, veterans of the Revolution received warrants for western public land ranging from 100 acres for a private to 1,100 acres for a major general. This was a standard policy of British and colonial governments. During the Revolution, the government had even offered land to Hessian soldiers who deserted from the British forces. In all, warrants for more than 9.5 million acres were awarded to veterans of the Revolution. Warrants were also issued to veterans of the War of 1812, the Indian Wars, and the Mexican War. During the Revolution, the warrants were for land in certain designated western tracts (perhaps to provide protection for the frontier), but during the Mexican War transferable warrants to 160 acres of any part of the public domain were offered to men volunteering for service. Because the land could be sold, these land grants were essentially cash grants.

Warrants for almost 73.5 million acres had been issued by 1860. The value of the land transferred through veteran warrants has not been determined. Valued at $1.10 per acre (a small discount from $1.25, the price at which much of the public domain was sold), the total would be about $81 million, about $1.8 billion today. The settlement of these claims became a major political issue in a number of states, Tennessee in particular. Close to 40 percent of the arable land in Iowa (the state with the highest percentage) was transferred on the basis of veteran warrants. Many of the warrants, once they were made transferable, were sold to speculators. This practice led to considerable criticism of the warrant system and was another reason, along with the declining amount of suitable land, for its abandonment. Nevertheless, the cash-like system adopted in the Mexican War provided an important precedent for the use of land grants to finance the land grant college system and the transcontinental railroads.¹

Although land grants were by far the most important form of in-kind aid provided to veterans, there were also attempts to provide more direct forms of aid. In 1798, a tax was levied on seamen to provide funds for hospital care and, in the event of a surplus, for the construction of hospitals. This system was extended to the Navy the following year. Eventually, a system of naval hospitals was constructed including facilities on the East Coast and the Mississippi River. In 1834, a home was established for old and disabled naval personnel, and in 1851, a home for old and disabled soldiers was created.

In some important respects, the evolution of monetary pensions for veterans of the War of 1812, the Mexican War, and the Indian Wars was similar to that of the Revolutionary War. Initially pensions were established only for invalids, or their widows and orphans. Then pressure gradually mounted for pensions based on service alone. Eventually, service pensions were granted, but they were established so many years after the conflict that they were, in effect, old-age pensions. The service pension for the War of 1812 was established in 1871. The rules were liberalized in 1878: the required service was reduced to 14 days, and for widows the requirement that the marriage date from the war was eliminated. Service pensions for veterans of the Mexican War were first granted in 1887. Service pensions for veterans of some of the Indian Wars- such as the Black Hawk War and the Seminole Wars - were not granted until 1892. Subsequent legislation liberalized the requirements, increased the benefits, and pensioned veterans of other campaigns against Native Americans.

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The sheer magnitude of the Civil War and prosperity in the postwar North meant that the veterans of this conflict would play a far different role in postbellum America than had the veterans of earlier conflicts. About 9.6 percent of Americans (North and South) participated, which is similar to the Revolution in which about 10.4 percent of all Americans served. The percentage serving was much smaller in other wars in the nineteenth and twentieth centuries, with the exception of World War II, in which 11.8 percent served. Perhaps equally important in creating pressure for veterans' benefits was the sanguinary nature of the conflict. Of those serving in the Union forces, 16.5 percent died in battle or from other causes, and 12.7 percent were wounded. No other war really compares. In the Mexican War, although the death rate was similar (16.9 percent), the proportion wounded was much lower (5.3 percent).²

Figure Ed-E shows the number of veterans as a percentage of total population, beginning in 1865 and continuing to 1999. The lower line includes only Union veterans of the Civil War. The upper line includes a makeshift estimate of the number of Confederate veterans. Estimates of the number of soldiers and sailors who served in the Confederate forces are subject to a wide margin of error, and there are no estimates of the number of surviving Confederate veterans in the postbellum era. Here the ratio of Confederate survivors of the war to Union survivors (0.4685) was applied to the number of Union veterans in subsequent years (series Ed248) to get an estimate of the number of Confederate veterans. Most likely mortality at younger ages would have been higher for Confederate veterans than for Union veterans because of lower standards of living in the South, lower payments to veterans, and a less favorable disease environment. So this procedure probably overestimates the number of Confederate veterans. Nevertheless, the main point is evident - the important political and economic role played by veterans of the Civil War. Veterans were close to 8 percent of the American population at the end of the Civil War, a share not surpassed until World War II.

In 1862, soon after the outbreak of the Civil War, Congress passed legislation providing pensions for disabilities caused by the war, as well as pensions for widows, orphans, and, in some cases - a new feature - dependent mothers and sisters. This was the basic law in force until 1890. In addition, in 1865, Congress authorized the establishment of a "National Asylum”  for Disabled Veterans.³ Facilities had been established earlier for soldiers and sailors in the regular armed forces, but they had been relatively small affairs supported by contributions from the soldiers and sailors and from naval prizes. The scale of the Civil War recommended a new agency.

To receive a pension, veterans had to be able to demonstrate some disability that could be traced to the war. Inevitably, pressure grew to liberalize the rules and their administration. The Grand Army of the Republic (GAR), an association of Union army veterans formed in 1866, became a formidable lobbying force on behalf of larger pensions. On other issues, the GAR tended to avoid controversy. Although some 216,000 black soldiers had served with great distinction with the Union forces, almost 10 percent of the total (Chambers 1999, p. 8), the GAR generally avoided racial issues. White veterans typically viewed the war as a fight over union and states rights. And the organization of local units was left to the localities, which in practice meant that they were segregated.

Success in increasing benefits varied with the state of the federal budget (surpluses were good for the veterans), with the party in power (Republican Congresses and administrations were good for the veterans), and with the proximity to elections. Lawyers who specialized in winning pensions for their clients, it must be admitted, also became effective lobbyists for more generous pensions. The amount of money transferred to veterans and their families, mainly Union veterans until World War I, is shown in Figure Ed-F, which traces the total amount spent by the Department of Veterans Affairs and its predecessor agencies, and the amount spent on compensation and pensions, per thousand dollars of gross domestic product (GDP) from 1869 to 1998. In the 1870s, spending on Union veterans amounted to about $3.50 per $1,000 of GDP, almost all in the form of compensation for death or disabilities caused by the war.

The Arrears Act of 1879 was an important victory for advocates of more generous pensions. Prior to this law, a veteran's pension began when he was added to the roles, no matter how long after the original disability was incurred. Under the Arrears Act, pensioners could have their cases reopened and be awarded the amount of pension due from the time they incurred their disability to the time they were placed on the rolls. The law also covered veterans whose eligibility for a pension would be recognized in the future. Substantial amounts were awarded under the Arrears Act, and the incentive to apply for a pension was increased substantially.

The effect of the Arrears Act on the level of pension payments can be observed in Figure Ed-F, which indicates that Civil War pensions and benefits reached a peak relative to a five-year moving average of GNP in the early 1890s at a figure of more than $10.00 per $1,000 of GNP. This was nearly thirty years after the end of the fighting, when many of the surviving veterans were in their fifties. The contrast with World War II, when spending relative to GDP reached its peak in the immediate aftermath of the war and then trended downward, is evident.

Despite lobbying by the Civil War veterans and their allies, the ultimate goal of many of the veterans - a service pension - was long in coming, as it was for veterans of earlier wars. In 1887, while signing legislation granting service pensions for Mexican War veterans, President Grover Cleveland, a Democrat, vetoed a similar measure for veterans of the Civil War on the grounds that they were still too young. Three years later, however, Congress passed the Disability Pension Act of 1890, understandably signed by Republican President Benjamin Harrison. This Act, although nominally a disability law, came very close to meeting the demand for a pure service pension. Under the Act of 1890, the mere existence of a disability limiting the veteran's ability to earn a living was sufficient for a pension (as long as the disability didn't arise from "vicious habits”): it wasn't necessary to show that the disability had resulted from military service. Eligibility was not limited to the poor, and the service requirement was simply ninety days and honorable discharge. Because the commissioner of pensions was given some discretion under the law when it came to fixing individual pensions, the policy of the commissioner became a major political issue. Pressure for more liberal pension benefits continued, and in 1904 Republican President Roosevelt issued Executive Order 78, which defined age itself to be a disability, creating an authentic service pension. Thus, the service pension came thirty-nine years after the end of the Civil War, the same period that veterans of the Mexican War had to wait, and a bit shorter than the forty-four-year wait of veterans of the Revolution and the fifty-six-year wait of veterans of the War of 1812. Between 1865 and 1905, the number of Northern veterans of the Civil War, to put the figure in a somewhat different perspective, declined from 1,830,000 to 821,000 (series Ed248).

Under the 1904 executive order, pensions started at age 62, and the amount awarded increased at ages 65, 68, and 70. Subsequent legislation broadened and codified the idea behind Executive Order 78. The law of 1912, for example, included a schedule of pensions ranging from $13 per month for a man aged 62, who had served only ninety days, to a maximum of $30 per month for a man aged 75, who had served for three years. The rules with respect to widows were also gradually eased, so in the end it became possible for a young woman to marry an aged veteran of the Civil War and thus to secure a pension throughout her adult life.

The liberalization of the pension system in 1890 was the result of a number of important factors: precedent established by earlier wars (a factor often neglected by historians), lobbying by the Grand Army of the Republic, lobbying by the pension lawyers, increasing sympathy for the veterans as they entered middle age, and the bitter political struggles between the Democrats and the Republicans (the Republicans who controlled both houses and the presidency in 1890 relied on the overwhelming support of the veterans). But the state of the federal budget also played a role. The federal budget had been in surplus for a number of years prior to 1890. Taxes could be cut, but this would have meant cutting the tariff, which would offend powerful business interests, or cutting the alcohol and tobacco taxes, which would offend anti-drinking and anti-tobacco activists. The close association between the surplus, the tariff, and pensions for veterans of the Civil War was a reprise of events in the 1820s involving veterans of the Revolutionary War. Various schemes for increased spending were floated, but liberalizing the pension emerged as the plan with the greatest political payoff (Skocpol 1992, 1993; Holcombe 1999).

The liberalization of the Civil War pension system helped to offset the decrease in the number of veterans and their widows. The dollar amount paid out in Civil War pensions actually peaked in 1921, fifty-six years after the end of the war. The Union pension system eventually covered a substantial fraction of native-born Northern men and their survivors. By 1900, according to Dora L. Costa, a leading authority on the Civil War pensions, "21 percent of all white males over the age of 55, were on the pension roles,”  and "the average pension paid to Union Army veterans from 1866 to 1912 replaced about 30 percent of the income of an unskilled laborer, making the Union army pension program as generous as Social Security retirement benefits today”  (Costa 1998, p. 197).

The Civil War pension system, as a number of prominent scholars have argued, was America's first national welfare system (Skocpol 1992). At the turn of the twentieth century, liberal reformers, such as Isaac Max Rubinow, hoped that as the number of veterans and their survivors declined, "room”  would be created in the federal budget for a general old-age pension and other welfare-state benefits (Rubinow 1913). As a share of the federal budget, veterans spending reached its peak, 43 percent, in 1893. In 1914, on the eve of World War I, payments to veterans accounted for 25 percent of the budget. Conservatives, on the other hand, hoped that the unsavory reputation of the Civil War pension would discourage welfare experiments. The pension system was often perceived, with some justice, as a system rampant with abuses (such as the "pension marriages”  mentioned earlier) and as a system that debased national political life, as both parties sought to buy the votes of the pension recipients. A number of states created welfare benefits for women and children prior to 1929, but a national social security system was not established until the 1930s. Although the establishment of a national system was mainly a product of the Great Depression, it also owed a great deal to the Civil War pension. As Baack and Ray showed, the Civil War pension educated congressmen about the political benefits of old-age pensions and was a focal point for the development of special interests that could lobby effectively for benefits (Baack and Ray 1988).

Civil War veterans were not awarded warrants for land. But their military service was counted toward the residence requirement of the Homestead Act. Civil War veterans were also given preference in hiring by the federal civil service and by many states. Military service, moreover, was a valuable help, although not a requirement, for those seeking political office. No estimate of the monetary value of these privileges is available.

Federal benefits were paid only to veterans of the Union forces.⁴ The Southern states, however, provided pensions and benefits in kind for Confederate veterans, such as soldiers' homes. Prosthetic devices were a major item in several state budgets after the war, illustrating both the severity of the war and the poverty of Southern states. Like their Northern counterparts, the Confederate veterans organized effectively. Local veterans associations formed soon after the war ended, and in 1889 a national organization, the United Confederate Veterans, was formed from these separate associations. The relative poverty of the South and the lack of certain fiscal resources (such as the tariff) meant, however, that the amount of resources that veterans could expect from Southern legislatures was limited. Exact figures on the amount of benefits paid to Confederate veterans are not available, but these benefits were clearly meager compared with the benefits paid to Union veterans and their survivors. One estimate places the total amount spent by the Southern states on Confederate pensions at $350 million to $400 million, perhaps 4.1 to 4.7 percent of what was spent on Union veterans (or 9.0 to 10.3 percent on a per capita basis). Veterans of the Confederacy were also accorded preferences in hiring and political life in the South because of their veteran status.

Overall, the statistics that we do have, mainly on the amount of pensions paid to Union veterans, appear to be highly accurate. The problem areas are the lack of statistics for the Confederate veterans, and the amount of nonfinancial benefits, such as preferences for jobs in civilian life.

The Civil War pensions left behind an enormous quantity of medical records because a medical disability attested to by a pension office surgeon was a requirement for a pension. Modern computers make encoding and manipulating this mass of data possible. As a result, scholars have used these records in recent years to analyze the effects of income, wartime stress, and other factors on the health and economic behavior of the veterans. Robert Fogel has been the leader of the effort to use these data. Research based on these data has led to a number of important academic papers and monographs. At the time of writing, considerable information on the project, and data created by it, was available at the Internet site of the Center for Population Economics, at the University of Chicago Graduate School of Business.

After the Spanish-American War (1898) and the Philippine Insurrection (1899–1902), a number of veterans' organizations were founded to provide mutual support, to affirm the values shared by the veterans, and to lobby for benefits. In 1913, the merger of two of these organizations (which had grown through earlier mergers) produced the Veterans of Foreign Wars, an organization that would continue to play a major role in veterans' affairs for the remainder of the century. In truth, however, the veterans of these two wars had an easier time winning recognition for their services in part because of the previous work done by the Civil War veterans. Because the total number of men and women engaged was relatively small, these two wars made a relatively small impact on the number of veterans in civilian life, and on the overall level of federal spending on veterans, as can be seen in Figure Ed-E and Figure Ed-F.

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Although America's relatively brief (1917–1918) involvement in World War I would not leave as large an imprint on the structure of the nation's population as the Civil War or World War II, the impact - as shown in Figure Ed-E - was nonetheless significant. In the immediate aftermath of the war, close to 5 percent of Americans were veterans, a level not seen in the United States for decades. Even though the number of veterans was reminiscent of the Civil War era, the structure of benefits created to aid them was very different. Insurance and medical care, rather than pensions, became the immediate priorities.

The origins of the current programs for insuring members of the armed forces and veterans can be traced to World War I. Shortly after the war began, companies shipping goods to Europe found it hard to get marine insurance at what seemed like reasonable rates. The risks for commercial insurers were very great and very difficult to calculate on the basis of past experience. Under the War Risk Insurance Act (September 2, 1914), the U.S. government supplied marine insurance. When the United States entered the war in April 1917, the opportunity to buy insurance was extended to merchant marine personnel. A more comprehensive measure, the War Insurance Act (Soldiers and Sailor's Insurance Law), was passed a few months later, in October 1917. This law provided compulsory pay allotments for the families of service personnel during the war, compensation for death or disability, medical and rehabilitation services, as well as subsidized term life insurance. The idea was that a soldier would have the peacetime cost of the insurance deducted from his pay, but the government would pay the additional costs of insuring the higher risks caused by the war. The Bureau of War Risk Insurance was created within the Treasury to administer the new system. More than four million policies were issued during the war.

The insurance program that emerged from World War I was continued after the war but modified in response to subsequent wars and changing economic conditions. The National Service Life Insurance program was established in 1940 in response to World War II. This legislation was replaced in 1951 by the Servicemen's Indemnity Insurance program. Another program, the Veterans' Special Life Insurance, was established a short time later to meet the needs of members of the armed forces serving during the Korean Conflict.

In the early 1950s, private insurers began to complain that competition from the Veterans Administration was unfair, and the industry began to lobby Congress for a new approach. The result was the Servicemembers' Group Life Insurance program (1965) for members of the armed forces serving during the Vietnam Conflict and in subsequent periods, and the Veterans' Group Life Insurance (1974) for veterans after separation from the armed forces. Under these programs, term life insurance is provided under group plans issued by private insurers, but the government defrays the costs. As a matter of accounting, and following earlier traditions, the member of the armed forces is said to pay for the ordinary cost of insurance through deductions from pay, and the government is said to pay for the extra part of the premium that reflects the additional risks of service in the armed forces. Over time, these popular programs have been expanded. The maximum amount of insurance per individual has been raised in a series of steps from $10,000 to $200,000 in 1992, and coverage has been extended to members of the National Guard. A program was created in 1971 to provide mortgage protection life insurance to disabled veterans who had received grants for the purchase of specially adapted housing (see Table Ed400–403).

A hospital system was also created to provide medical care for World War I veterans (see Table Ed404–414). Insurance and the government-provided hospital system were new departures in the government's approach to veterans. Previously, veterans had been aided mostly by writing checks based on disabilities or death resulting from service during a war. There had been some expenditure for homes for aged veterans, but quantitatively they were of minor importance. Now, however, more emphasis was placed on in-kind services and payments earmarked for education.

Part of the explanation for the emphasis on in-kind aid after World War I was the widespread perception, not always an accurate one, that the Civil War pension had been abused - for example, by encouraging pension marriages or by encouraging shirking by able-bodied men - and the hope that in-kind benefits would be harder to exploit (Blanck 2001). Another factor was the new view about the appropriate role of the government in the economy that had evolved during the Progressive Era. Historically, most Americans had been skeptical about the ability of government bureaucracies to perform efficiently. Now many Americans were convinced that government could provide high-quality services at a reasonable cost. The new view of government was especially relevant in the case of medical care because it was believed that veterans would face unique medical problems, "shell shock”  for example, that physicians in the private sector would lack the experience to handle properly.

After World War I, as after previous wars, pressure began to build to reward veterans more generously and to include those who had not suffered disabilities as a result of their service. The American Legion, founded by members of the American Expeditionary Forces in 1919, was especially effective in lobbying for a "bonus”  for veterans. The point was made that the enlisted men, who had served for a dollar a day during the war, had suffered from wartime inflation and deserved additional compensation. Congress finally agreed, and in 1924 a "bonus”  was awarded, but it was not scheduled for payment with interest until 1945. The amount of the "adjusted service certificate”  was calculated on the basis of $1.00 per day of service in the United States up to $500, and $1.25 per day overseas up to $625, plus an additional 25 percent (U.S. Veterans Administration 1936, pp. 21–2).

Although veterans could and did borrow against the security of their adjusted service compensation certificates, many veterans joined a campaign in the early 1930s for an early payment of the bonus in order to alleviate the distress caused by the Depression. In 1932, thousands of veterans (estimates run from fifteen thousand to forty thousand) converged on Washington to demand immediate payment of the bonus. Most of the veterans returned home after the Senate failed to pass a measure providing for immediate payment, but a small group remained. President Herbert Hoover ordered the police to clear out the remainder of the Bonus Army that was occupying some abandoned federal buildings. In the ensuing melee, two veterans and two policemen were killed. Hoover then asked the Army to assist the police, and federal forces commanded by General Douglas MacArthur drove the veterans from the city and forced them to burn their encampment. More than one hundred veterans were injured in the Bonus March. The use of what appeared to many to be excessive force further undermined Hoover's reputation. A second Bonus Army came to Washington in 1933, after Democrat Franklin Roosevelt replaced Hoover, but again no legislation was passed.

In 1936, however, Congress finally passed legislation, over a presidential veto, providing for immediate payment. The amount of the bonus was substantial given the depressed incomes of the day. The bonus averaged about $550 per veteran, about one third of mean family personal income at the time (U.S. Bureau of the Census 1975, series G308). Altogether, certificates worth $1.893 billion (after deductions for loans) were approved. About 80 percent were cashed in 1936 and 1937, a two-year total of $1.5 billion, equal to 23 percent of federal outlays in 1935 (U.S. Veterans Administration 1936, p. 24; U.S. Bureau of the Census 1975, series Y466). The bonus can be seen as the sharp peak in Figure Ed-F. From a Keynesian perspective, this is just what the economy needed. In his classic study of fiscal policy in the 1930s, E. Cary Brown concluded that there were only two years, 1931 and 1936, in which fiscal policy (combining all levels of government) was markedly more expansionary than it was in 1929, and that in both cases it was the result of payments to veterans (Brown 1956, p. 863).

In some ways, World War II gave veterans more prominence in American society than they had ever had before. As can be seen in Figure Ed-E, the number of veterans as a percentage of the population rose to a height that exceeded even the level reached immediately after the Civil War. Overall, the military participation rate during World War II reached 11.8 percent, compared with 9.6 percent in the Civil War. The difference between the wars was the death rate. Deaths from combat, disease, and other service-related causes during the Civil War amounted to 1.4 percent of the 1865 population. The comparable figure for World War II was 0.3 percent of the 1945 population.⁵

The unity of the nation, the clear-cut victory over the Axis, and the return to prosperity ensured that the United States would do well by the veterans of World War II. The result was a large number of innovative programs. Planning for World War II veterans began during the war. The Postwar Manpower Committee reported to President Roosevelt in June 1943 proposing a number of benefits for veterans. The report was influenced by the perception that demobilization had gone badly after World War I, by the Wisconsin Educational Bonus Law of 1919 (which had provided tuition, a subsistence allowance, and other benefits for disabled veterans attending vocational schools, high schools, or colleges), and by recently passed Canadian legislation. These examples were brought home to the Congress through the lobbying efforts of the veterans' organizations, the Veterans of Foreign Wars, and the American Legion. The landmark legislation that finally passed Congress in 1944, the Servicemen's Readjustment Act, has been known ever since by its popular name, the GI Bill of Rights or GI Bill for short.

The GI Bill provided a wide range of benefits including health care; mustering out pay; job placement; unemployment insurance; loans to buy a home, farm, or business; reemployment rights and other employment preferences; and educational benefits (see Table Ed453–462, Table Ed463–466, Table Ed467–482). The bill reflected a variety of concerns, but the fear that the veterans would return to find the depressed economic conditions of the 1930s, that they would go from battle lines to bread lines, gave special urgency to the bill, and there was little opposition.

The revolutionary education title provided tuition, fees, and subsistence support. The Veterans Administration determined who was eligible, the veteran chose the school, and the school determined whether the veteran would be admitted. The schools had to be accredited, but the Act specifically denied the federal government any control over the schools that were accepting veterans. For white veterans, this system provided about as much freedom of choice as a veteran could reasonably expect. For African-American veterans, especially in the South, access was still severely restricted by segregation.

College enrollments boomed after the war, partly as a result of the GI Bill. The peak year in GI-Bill-financed education, when measured as a percentage of total college enrollment, was 1947 when 1.7 million veterans were enrolled in higher education, making up about 71 percent of the student body. The impact of the student loan program on the structure of federal spending on veterans can be seen in Figure Ed-F. A large gap opened up between total spending and spending on compensation and pensions: while the total reached unprecedented levels, the latter remained at levels comparable to those reached after the Civil War.

As Figure Ed-G shows, enrollment in colleges and universities remained high and continued to grow long after students supported by the GI Bill and its extensions ceased to be a major factor in total enrollment. Note that even though the number of veterans enrolled skyrocketed again during the Vietnam period, they never constituted more than 18 percent of a much larger total enrollment. Evidently, the often-made claim that the GI Bill was the major cause of the vast expansion of higher education in the United States after World War II cannot be taken at face value (Stanley 2000). The decision to stress education in the GI Bill simply reflected a widely shared underlying faith in education, a faith that earlier in the century had led to the expansion of America's high schools. Nevertheless, the GI Bill deserves some of the credit for the postwar expansion of higher education. There were effects on attitudes and institutions that don't show up in the numbers. Despite complaints that some veterans were just in college for a good time, most veterans acquitted themselves well, overcoming fears that the expansion of higher education would reduce quality. The training programs introduced during the war, especially on the East Coast, and the large number of veterans who entered immediately afterward, forced once genteel liberal arts colleges to learn how to provide higher education for a mass constituency. There would have been more resistance to the postwar expansion of higher education had the way not been paved by the veterans.

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In terms of sheer numbers, World War II gave the veteran an unprecedented prominence in American life. As Figure Ed-E shows, veterans represented more than 13 percent of the American population as a result of World War II. As this percentage declined, it was reinforced subsequently by veterans of the conflicts in Korea, Vietnam, the Persian Gulf, and elsewhere. As a result, the number of veterans as a share of the U.S. population was still higher at the end of the twentieth century than it had been in the immediate aftermath of the Civil War.

The Korean War GI Bill - the Veterans' Readjustment Assistance Act of 1952 - was similar in many ways to the World War II legislation. The education title of the Korean War bill was, however, somewhat less generous than that of the World War II bill. The 1952 Act, for example, limited educational or vocational training to thirty-six months, whereas the 1944 Act permitted training for up to forty-eight months. Reduced fears of widespread unemployment and a perception that some veterans had unfairly exploited the original GI Bill may account for the difference.

The Vietnam GI Bill was passed in 1966, and in some respects its education title was less generous again than the education title in the 1952 GI Bill. One would certainly reach this conclusion if one compared education benefits with current wages. The Vietnam Bill, however, did provide benefits for those who served between the Korean and Vietnam Conflicts. Initially, the number of veterans taking advantage of the Vietnam-era provisions was disappointing. But within a few years, partly in response to an increase in benefits, utilization of the education provisions increased so that usage was comparable to that of World War II benefits. Although educational benefits were substantial, subsequent research showed that serving in Vietnam was an economic disadvantage in the long run (Angrist 1990). Draftees who served in the Vietnam Conflict ended up earning 15 percent less in civilian life, other things being equal, than men who did not serve. The reason may simply be that the men who served lost time in the private sector that they would have spent developing their skills and advancing their careers. It is not known whether the experience of the Vietnam veterans in this respect was better or worse than that of the veterans of other wars, and research would be helpful.

In 1973, the United States ended the draft and established an all-volunteer armed force. The movement toward an all-volunteer force was driven partly by the desire to implement libertarian political principles, and partly by the hope that ending the draft would reduce antiwar activities and domestic dissension. Although changes had been in the works for some time, the establishment of an all-volunteer force significantly altered the role of veterans' benefits. Historically veterans' benefits, although occasionally legislated with an eye toward current recruitment, had mainly been a reward granted ex-post by a grateful nation for service performed during a war (and by politicians anxious to curry favor with a powerful interest group). But with a volunteer army, veterans' benefits became a recruiting tool designed to help fill the ranks.

Beginning in the 1970s, the general pressure from the women's rights movements for equality in all lines of work, and the need from the all-volunteer armed forces to recruit from as large a pool as possible, led to a gradual easing of the restrictions imposed on women in the military, and to an increase in their numbers. To be sure, women had served in all of America's wars, but until World War II, they had served in very small numbers and with little official recognition for women veterans. About 34,000 women served in World War I, mainly in the Army and Navy Nurse Corps and in clerical positions. More than 350,000 women served in World War II - about 2.2 percent of the veteran population (Chambers 1999, p. 808) - primarily in medical and administrative jobs, but also as pilots, truck drivers, electricians, among many other jobs. Many served in the Women's Army Corps created in 1942. The Veterans Preference Act of 1944, which gave veterans a preference in federal employment, explicitly included women veterans and their husbands and widowers. This law may have been the first official recognition of women veterans. In 1948, Congress passed the Women's Armed Services Integration Act, which provided a legal framework defining and limiting the role of women in the armed forces. Under this Act, the number of women in the armed forces was capped at 2 percent of active duty personnel, and women were excluded from combat. The latter limitation remained in effect (with an exception for pilots) into the late 1990s. As more women have served in the armed forces, the number of women veterans in civilian life has increased. About 41,000 women took part in the Persian Gulf War, about 7 percent of the total. In March 1994, the Veterans Administration established the Women Veterans Program Office to improve the delivery of services to women veterans and to increase recognition for their contributions. This legislation was followed in 1995 by the establishment of a number of health care centers dedicated to dealing with the unique health care problems of women veterans.

In the late 1970s, as soaring inflation cut the purchasing power of the wages of the average enlisted person's income, it became increasingly clear that significant financial incentives would be needed to fill the ranks with higher quality personnel. In 1977, Congress passed the Post-Vietnam Era Veterans' Educational Assistance Act. The Act instituted a system of federal matching funds for personal expenditures for education, but it was not utilized as much as had been hoped. In 1984, Congress passed a new measure, the All-Volunteer Force Educational Assistance Program, to provide a permanent system of benefits and to make service in the armed forces more attractive. The title was later changed to the Montgomery GI Bill - Active Duty Educational Assistance Program, in honor of G.V. "Sonny”  Montgomery, Democrat of Mississippi, who served on the House Veterans Affairs and Armed Services Committees. It provides cash grants for education based on service and financial contributions made while on active duty and continues to be the basis for educational aid for veterans. Most of the veterans who make use of this program attend colleges or universities. Research by Joshua Angrist showed that these programs did encourage veterans to attend school and did increase their long-run income, although whether this effect offset the loss of experience in the civilian labor market is an open question (Angrist 1993).

Increased understanding of the physiological and psychological problems faced by veterans has repeatedly produced additions to the list of benefits and services provided veterans. In 1979, responding to the concern that Vietnam veterans were not receiving sufficient help adjusting to civilian life, the Veterans Administration set up a group of centers specially designed to help Vietnam veterans with post-traumatic stress disorder, alcohol and drug dependency, and similar problems. In 1988, in response to disclosures about service people's exposure to nuclear testing during the early Cold War era, Congress passed the Radiation-Exposed Veterans Compensation Act that provided for veterans suffering from disabilities caused by atomic radiation. A long-drawn-out battle, one that involved considerable criticism of the Veterans Administration, concerned the payment of compensation and provision of medical care for health problems caused by the use of Agent Orange as a defoliant in Vietnam. The Veterans Administration responded by gradually adding to the list of disabilities that it considered to have been caused by Agent Orange. Finally, in 1991, Congress passed the Agent Orange Act creating the presumption that a range of disabilities were linked to the use of herbicides in Vietnam and should be treated as service-related disabilities.

Prompted by these and related concerns, the Department of Veterans Affairs has continually devoted resources to basic medical research. Although a small part of total spending on medical programs (less than 3 percent in recent years), this area has become a source of pride for the Department of Veterans Affairs, especially in 1977 when two scientists from the Department, Rosalyn Yalow and Andrew Schally, shared the Nobel Prize in Medicine with Roger Guillemin for their work on peptide hormones.

Although veterans' benefits have long been one of the major items in the federal budget and the Veterans Administration has been one of the largest federal employers, the agency did not become a cabinet-level department until 1989. A year later in fall 1990, the United States launched operation Desert Shield to block further expansion of Saddam Hussein's Iraq. In January 1991, Operation Desert Storm was launched, marking the beginning of the Persian Gulf War, which drove Iraqi forces out of Kuwait. In the following month, Congress passed the Persian Gulf Conflict Supplemental Authorization and Personnel Benefits Act, which declared the military action in the Persian Gulf to be a war for the purposes of determining eligibility for veterans' benefits.

At the time of this writing, the current rules and regulations governing the payment of veterans benefits, and recent statistics on the number of veterans in civil life by age and period of service, expenditures of the Department of Veterans Affairs, and so on could be found at the Internet site of the U.S. Department of Veterans Affairs.

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After America's wars, especially the Civil War, World War I, and World War II, America's veterans were at the center of the national stage. Politicians from both major parties listened intently to the millions of veterans and vied for their support. Veterans' organizations, such as the Grand Army of the Republic for Union Army veterans of the Civil War, the Veterans of Foreign Wars, and the American Legion, played important roles in focusing and maintaining the influence of veterans. But these organizations were not the source of the veterans' influence. Ultimately, this influence grew out of both the moral debt that Americans believed they owed the veterans, those former citizen soldiers, and the sheer numerical weight of veterans in the polity. The result was a series of laws establishing veterans' benefits, laws that created major precedents for the welfare state: the Civil War pension for Union veterans, insurance and hospital care for World War I veterans, and the famous GI Bill of Rights, which provided educational, housing, and other benefits for World War II veterans. Liberals have cited the Civil War pensions as a form of old-age pension and wondered why it took the United States so long to enact social security; conservatives have cited the educational benefits provided to GIs after World War II as a successful example of educational vouchers, and wondered why educational vouchers provoke so much opposition. Supporters and opponents of socialized health care point to the Veterans Hospital and Medical care system, the nation's largest, as an example of what could or would happen if health care were socialized.

In the post-World War II era, however, the role of veterans changed. The smaller scale of the wars between 1950 and 1991, the deep divisions over the Vietnam Conflict, and the establishment of the all-volunteer armed forces meant that there were fewer young veterans in society, and that they spoke with distinct voices, and in the long run that meant that veterans would have less weight in political deliberations. A more mundane consideration, the need to provide an attractive package of benefits to men and women planning a career in the armed forces, will determine the type of benefits won by veterans.

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[TABLE Ed-D Important events in the history of veterans: 1636–1989]

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Veterans: series Ed229 and series Ed248. Resident population: series Aa7.

Confederate veterans were estimated by multiplying the number of Union veterans, series Ed248, by 0.4685, an estimate of the ratio of Confederate to Union forces.

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Total expenditures of the Veterans Administration and predecessor agencies: through 1959, series Ed297; thereafter, series Ed311.

Expenditures on pensions and compensation: through 1959, series Ed298 plus series Ed305; thereafter, series Ed318.

Gross domestic product or gross national product: through 1928, gross national product (GNP), Christina D. Romer, "Prewar Estimates of GNP Reconsidered: New Estimates of Gross National Product, 1869–1908,”  Journal of Political Economy 97 (February 1987): 22–3; thereafter, gross domestic product (GDP), series Ca1.

For display purposes, the GNP/GDP data were converted to five-year moving averages in order to abstract from sharp cyclical fluctuations.

The peak during the 1930s is the Veteran's bonus (see the essay text).

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Veteran enrollment: the sum of series Ed468, series Ed472, series Ed476, and series Ed481–482.

Total enrollment: through 1995, series Bc523; thereafter, U.S. Bureau of the Census, Statistical Abstract of the United States (annual issues).

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Angrist, Joshua D. 1990. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records.”  American Economic Review 80 (3): 313–36.

Angrist, Joshua D. 1993. "The Effect of Veterans Benefits on Education and Earnings.”  Industrial and Labor Relations Review 46 (July): 637–52.

Baack, Ben, and Edward John Ray. 1988. "Federal Transfer Payments in America: Veterans' Pensions and the Rise of Social Security.”  Economic Inquiry 26: 687–702.

Blanck, Peter. 2001. "Civil War Pensions and Disabilities.”  Ohio State Law Journal 62 (1): 109–238.

Brown, E. Cary. 1956. "Fiscal Policy in the Thirties: A Reappraisal.”  American Economic Review 46 (5): 857–79.

Chambers, John Whiteclay, II, editor in chief. 1999. The Oxford Companion to American Military History. Oxford University Press.

Costa, Dora L. 1998. The Evolution of Retirement: An American Economic History, 1880–1990. University of Chicago Press.

Holcombe, Randall G. 1999. "Veterans Interests and the Transition to Government Growth: 1870–1915.”  Public Choice 99 (3–4): 311–26.

Oberly, James W. 1990. Sixty Million Acres: American Veterans and the Public Lands before the Civil War. Kent State University Press.

O'Callaghan, Jerry. 1954. "The War Veteran and the Public Lands.”  Agricultural History 28: 163–68.

Rubinow, Isaac Max. 1913. Social Insurance: With Special Reference to American Conditions. H. Holt.

Skocpol, Theda. 1992. Protecting Soldiers and Mothers: The Political Origins of Social Policy in the United States. Belknap Press of Harvard University Press.

Skocpol, Theda. 1993. "America's First Social Security System: The Expansion of Benefits for Civil War Veterans.”  Political Science Quarterly 108 (1): 85–116.

Stanley, Marcus Magnus. 2000. "Essays in Program Evaluation.”  Ph.D. dissertation, Harvard University.

U.S. Bureau of the Census. 1975. Historical Statistics of the United States.

U.S. Veterans Administration. 1936. Annual Report.

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