The veterans' bonus of 1936
Lester G. Telser
Journal of Post Keynesian Economics, 2003, vol. 26, issue 2, 227-244
The Veterans' Bonus, enacted January 1936, disbursed nine-year nonmarketable U.S bonds with a 3 percent annual interest rate to 3 million World War I veterans when bank savings accounts paid 2.5 percent. The average bonus per person exceeded 30 percent of the mean household income for the veterans' age bracket. The June 1936 Federal deficit set a peacetime record of nearly one percent of annual gross national product. In two weeks that June, veterans cashed in 46 percent of their total bonus. The economic recovery in 1936 was more than 2.5 times greater than in the preceding two years. The June 1937 redemptions, 45 percent of the 1936 amount, had less effect.
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