World War Adjusted Compensation Act

The World War Adjusted Compensation Act, or Bonus Act, was a United States federal law passed on May 19, 1924, that granted a benefit to veterans of American military service in World War I.

The act awarded veterans additional pay in various forms, with only limited payments available in the short term. The value of each veteran's "credit" was based on each recipient's service in the United States Armed Forces between April 5, 1917, and July 1, 1919, with $1.00 awarded for each day served in the United States and $1.25 for each day served abroad. It set maximum payments at $500 for a veteran who served stateside and $625 for a veteran who served overseas, senior officers and anyone whose service began after November 11, 1918.

It authorized immediate payments to anyone due less than $50. The estate of a deceased veteran could be paid his award immediately if the amount was less than $500. All others were awarded an "Adjusted Service Certificate," which functioned like an insurance policy. Based on standard actuarial calculations, the value of a veteran's certificate was set as the value of a 20-year insurance policy equal to 125% of the value of his service credit. Certificates were to be awarded on the veteran's birthday no earlier than January 1, 1925, and redeemable in full on his birthday in 1945, with payments to his estate if he died before then. Certificate holders were allowed to use them as collateral for loans under certain restrictions.

The American Legion was a principal proponent of the legislation on behalf of World War I veterans, and it objected to the term "bonus", because "bonus has come to mean 'full payment plus,' and there has not yet been full payment, or anywhere near full payment, so there cannot be any plus." The Legion said that the government needed to "restore the faith of men sorely tried by what they feel to be National ingratitude and injustice." The Legion pointed out that the Wilson Administration had made additional payments to government workers in 1917-18 to help offset the effects of inflation, without making any comparable provision for members of the military.

It fought President Warren G. Harding as his position changed from supporting payments if paired with a revenue measure to supporting a future pension system. So strongly did Harding feel about the issue that he visited the Senate to make his case against one version of the bill in 1921, and the Senate voted it down 47-29. Harding vetoed another version of the Adjusted Compensation Act on September 19, 1922, and the House overrode his veto 258-54 but the Senate failed to override by 4 votes on a vote that split both Democrats and Republicans. Harding's veto of the popular measure particularly alienated the Senate Republicans, who thought the President's defense of fiscal integrity endangered the party's electoral prospects.

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