“An Adventure In Prosperity”


The law of unintended consequences is usually invoked to explain political disasters. Take Prohibition. Its millions of advocates thought that it would free the country from the scourge of drink, inducing fathers to spend time with their children instead of squandering their pay at the local saloon. What we got, of course, was Al Capone.

Sometimes, however, while the consequences are just as unintended, they turn out to be beneficial. This was true of the Servicemen’s Readjustment Act of 1944, far better known as the GI Bill of Rights. The ostensible purpose of this famous piece of legislation was to reward millions of World War II veterans for a job well done. Its underlying aim was to keep as many of those veterans as possible out of the job market for as long as possible, for nearly every economist was predicting renewed depression with the war’s end.

A booklet from war’s end explains the benificent new program.
library of congress/veterans history project/william joseph o’keefe collection2005_5_22

The GI Bill accomplished these purposes, and much, much more besides. Indeed, it played no small part in powering the longest sustained burst of economic growth in American economic history and allowing the baby-boom generation to grow up nestled in the bosom of an economic prosperity such as the world had never seen.

Veteran benefits have a long history in the United States. As early as 1636 the Plymouth Colony passed a law stating that “if any person shall be sent forth as a soldier and shall return maimed he shall be maintained competently by the Colony during his life.” Revolutionary War soldiers who had been wounded were given pensions, as were the widows and dependents of those killed. Nineteenth-century soldiers often got land grants as a reward for service, and these amounted over the course of the century to almost 75,000 square miles, an area larger than the state of Missouri.

In the early twentieth century, the frontier having closed, veterans were promised bonuses in future years. After World War I, disabled veterans were eligible for a monthly education assistance allowance.

As early as 1942, while the outcome of the struggle was still far from certain, planning began for the postwar era. With the American economy turning increasingly into a war machine and with eventually 16 million men and women in uniform, it was clear that strong measures were needed to prevent economic chaos in the wake of victory.

In January 1944 what would become the GI Bill was introduced in Congress, and veterans’ groups such as the American Legion and the Veterans of Foreign Wars pushed it hard. The bill initially called for a large increase in medical benefits for veterans and unemployment benefits of about $20 a week for up to a year.

More important, it asked the federal government to underwrite the education of returning veterans up to $500 a year for tuition and a subsistence allowance of $50 a month. Loans of up to $1,000 per veteran were to be available to help them buy or build housing or to begin or acquire a business. By the time the bill emerged from Congress, the loan portion of the legislation had been changed to a government guarantee of half of loans, up to a maximum of $2,000.

There were basically two groups that opposed the bill. The first, unsurprisingly, consisted of those who worried about the cost of such a generous program. It was, of course, impossible to have any sure notion of exactly what that cost would be, but congressional estimates in early 1944 ranged from $3 billion to $3.5 billion—no negligible sum when you consider that the 1947 federal budget was less than $33 billion.

The other locus of opposition was more surprising: academia. With federal subsidies for education available to millions, the number of people going to college was bound to increase sharply. Many professors and college administrators were appalled. “Education is not a device for coping with mass unemployment,” said Robert Maynard Hutchins, president of the University of Chicago. “Colleges and universities will find themselves converted into educational hobo jungles.”

Pressure to pass the legislation, however, soon became overwhelming; given the fact that fully 16.4 million Americans served in the armed forces in World War II and would therefore benefit from it, that was almost inevitable. The final bill passed both houses unanimously and was signed into law by President Roosevelt on June 22, 1944.

By that time, of course, victory was in sight, and not only the government but families were beginning to plan for the future. America’s overwhelming success in the greatest war in history induced a mood that was nearly the opposite of what had prevailed just a decade earlier in the depths of the Great Depression.

With the end of the war in August 1945, the pressure to demobilize became intense. There were 12.1 million in the armed forces that month, but only 3 million 10 months later, with plans in place for a million-man military in 1947. More than 8 million veterans took advantage of the “52-20” unemployment provisions ($20 a week for a year) of the GI Bill.