Bonus

In 1924, Congress authorized a bonus of up to $500 for American veterans of World War I, with additional sums up to a total of $625 depending on how long they served overseas.  This was a lot of money at the time and was meant to compensate those soldiers for lost wages during their service.

The money would not be paid out until 1945, which wasn’t too much of a problem for most of the veterans at the time.  The 1920s were a decade of superficial but real prosperity – a decade not unlike our own, with wide and worsening inequalities of wealth and deteriorating conditions for the poor, but with a small but steady growth of the middle class and a general sense that even if you weren’t currently part of it this prosperity might eventually trickle down to you.  In many ways this sense of optimism was an illusion – vast sectors of the economy were left out of this prosperity, including agriculture, textiles and coal mining – but sometimes illusions are enough.

And then in 1929 the bottom fell out of the economy with the onset of the Great Depression.

The banking system collapsed.  The GDP fell by nearly half, from $103 billion in 1929 to $58 billion in 1932.  Private investment dropped by 88% over that time frame.  Construction dropped by 78%.  Corporate profits fell by 90%.  Exports and imports fell by nearly 70%.  Farm income – already precariously low – dropped by 60% between 1929 and 1932.  At one point in 1932 one quarter of all the land in Mississippi was up for foreclosure sale.

Unemployment, meanwhile, skyrocketed.  Unemployment stood at 3.2% in 1929 – a deceptively low figure given the extreme volatility of the job market in the laissez-faire 1920s when job security was pretty much nonexistent for most people, but manageably small nonetheless.  By 1932 it was 20%.  By 1933 it was 25%.  And those numbers are almost certainly low, given the crude statistics of the day.  In the cities it was higher – closer to 50% in industrial centers such as Cleveland, Chicago, Detroit, Philadelphia, and Pittsburgh.  Nearly 80% in Toledo.  Unemployment would average 20% for the rest of the 1930s and never dropped below 15% during the entire decade.

Herbert Hoover had no idea how to handle this.

Hoover was not a hard-hearted man, despite his later reputation.  His nickname, in fact, was The Great Humanitarian – something he earned by being instrumental in the relief efforts that kept much of Europe from starving in the immediate aftermath of WWI. 

But he was a prisoner of his ideology and he firmly believed that the responsibility for recovering from the Great Depression, as it was being called by then, lay entirely in the hands of individuals, private charities, corporations, and local governments, and should be implemented according to supply-side economics – wealth transferred to the rich in the hopes that enough of it would trickle down to everyone else to solve the problem.  This is a favorite tactic of the right wing even today, and immensely popular among those who are already rich and powerful, for obvious reasons.

The problem, though, is that supply side economics doesn’t work in a demand side economy.  Never has.  Never will.  It’s not complicated, people.  It’s just math.  Politicians may lie but the numbers don’t, and you can crunch the numbers any way you want but you’ll never get to a place where they tell you anything else unless you lie, which gets us back to the beginning of this sentence fairly quickly. 

The US shifted over from a producer (supply side) economy to a consumer (demand side) economy in the 1920s and has never shifted back and the things you do to fix a producer economy are exactly the things that will intensify a crisis in a consumer economy, which made Hoover’s efforts to respond to the Depression ineffective at best and counterproductive at worst.  Individuals, private charities, corporations, and local governments were completely overwhelmed by the scale of the crisis and could provide little help.  And things got worse.

Americans literally starved in the streets even as unsellable crops were plowed under.

When Hoover proved willing to bail out big business and the rich in the name of supply side economics but remained adamant in refusing to help the vast majority of Americans directly, the Depression became personal.  It became the Hoover Depression.  Tar-paper shacks occupied by the homeless unemployed became Hoovervilles.  Old newspapers used to keep warm became Hoover blankets.  Jackrabbits became Hoover hogs.  The mood got ugly.

And into this came the Bonus Army.

In May 1932 some 400 World War I veterans under the leadership of Walter Waters gathered in Portland Oregon and began the long journey to Washington DC.  Their goal, in the middle of the worst economic collapse in the American history, was to convince the government to pay out the bonuses now, when they needed them, rather than wait until 1945 when they might well be dead.

As Harry Hopkins, one of the leaders of the later New Deal, put it, “People don’t eat in the long run.  They eat every day.”

Waters and his supporters rode out on a freight train that had been loaned to them by supportive railroad leaders, and when the train stopped in Iowa they got out and continued on their journey, hitchhiking and walking.  By June 1 when they reached the capital there were about 1500 men in the Bonus Army (or Bonus Expeditionary Force, a play on the American Expeditionary Force that had gone overseas to fight WWI) as it was now called.  They set up a number of camps – a few in abandoned buildings within the city itself, and the largest on some swampy private land outside of the city known as Anacostia Flats.  The camps were well regulated, as you would imagine camps run by military veterans would be, and the veterans worked with the sympathetic head of the Washington DC police – a WWI veteran named Pelham Glassford – to maintain order.  Waters and the Bonus Army staged daily demonstrations and peaceful marches in front of the Capitol, but Hoover never bothered to talk with them.  Meanwhile more veterans and their families continued to pour into the city, until eventually there were nearly 20,000 people in the various camps.

In mid-June the House of Representatives voted to pay them their bonus, but Hoover promised to veto the bill if it came to him and the Senate rejected it.  Defeated, many of the Bonus Army members left the capital, but thousands stayed.  It was the Depression.  Many had lost their homes.  They had nowhere else to go.

Things came to a head in July.  Secretary of War Patrick Hurley ordered the police to clear the city of the Bonus Army – in part because they were a continuing embarrassment and in part because the buildings they occupied were scheduled to be demolished to make way for new government offices.  The confrontation turned violent despite the previous good relations between the Bonus Army and the local police, and in the melee that followed two veterans were killed.

At that point the President called out the Army and ordered it into action against American citizens on American soil.

To deal with the civilians in his midst, General Douglas MacArthur assembled a force of over a thousand infantry backed by a detachment of mounted cavalry and six tanks and, with his subordinates – Major Dwight D. Eisenhower and Major George S. Patton – and marched on the camps in the city itself.  Using tear gas and bayonets, MacArthur’s forces cleared the buildings.  At this point Hoover ordered the mission halted.

MacArthur, however – in what would become a signature characteristic of his military career – decided to exceed his authority.

Despite being twice ordered by Hoover not to cross the bridge into Anacostia Flats, MacArthur sent his forces to clear the camp there by force.  In the ensuing panic over a hundred veterans were injured and an infant was killed.  MacArthur then ordered the encampment burned.  All of this was captured in photographs and newsreel film and shown to a horrified American public.

Rather than condemn MacArthur for his insubordination, Hoover mounted a vigorous defense of his actions.  It did him no good.  The spectacle of American military forces firing on civilians – veterans and their families, no less – effectively destroyed Hoover in the public eye.

“I voted for Herbert Hoover in 1928,” said one woman.  “God forgive me and keep me alive at least till the polls open next November!”  On a campaign stop in Detroit later in 1932, Hoover was greeted with shouts of “Down with Hoover!  Slayer of veterans!”

He was destroyed in the 1932 election, and his party lost control of every branch of the government for the next decade.

We are rapidly reaching our Bonus Army moment here in 2020.  The current president is threatening to use military force against civilians, most of whom are peacefully protesting as is their right under the First Amendment.  The protests have been infiltrated by right-wing extremists bent on causing havoc, and he’s playing right into their hands.  He’s declared that antifascists are the enemy (which raises an interesting question as to what he considers himself and his supporters to be) and he is demanding blood.

It didn’t end well last time.

It won’t end well this time.

Unless you’ve studied the Depression in some detail you probably don’t realize how close to revolution this country came during that time.  That’s what happens when you take people with legitimate grievances and treat them like enemies.  We’ve reached the point where there are CIA agents openly describing der Sturmtrumper’s attempt to crush these protests as evidence of a failed state ready to collapse.  They’ve seen it happen elsewhere.  It can happen here.  It is happening here.

Franklin Roosevelt learned his lesson from the Bonus Army.  He didn’t want to pay them their bonus any more than Hoover did, but when a smaller second round of Bonus Army marchers showed up a couple of years later he didn’t send out the army.  He sent out his wife to talk to them, and he sent out food.  There was no violence, and Congress eventually passed a bonus payout over his veto and he was smart enough to accept it and let the matter drop.

If we’re lucky we’ll get to a new administration that will learn the lessons of the past sometime soon, one that will work to restore the damage done to the American republic over the last three years.

If we’re not, well, hang onto your hats folks.  We could end up miles from here.