The US’ GI Bill: the “New Deal for Veterans”

Great Policy Successes This case study corresponds to a chapter by Mallory E. Compton, entitled "The ‘Social Warfare State’: Americans’ making of a civic generation", in the book Great Policy Successes, co-edited by Mallory Compton and Paul 't Hart. The book brings together fifteen cases of highly successful governance from around the world. For further information on this line of research, see: https://successfulpublicgovernance.com.

With the second world war still being fought in Europe and the Pacific, domestic policy in the United States turned to the economic impact of millions of veterans simultaneously returning to civilian life when the war eventually ended. Memories of the widespread unemployment and economic depression caused by veterans returning following the first world war still lingered, along with the struggles of the Great Depression. 

The GI Bill, introduced by the US federal government in 1944, offered an unprecedented range of benefits to returning veterans – including unemployment benefits and assistance in finding employment; funded tuition for college and training; loans for homes, businesses and farms; and treatment at specialist hospitals – all in an effort to reintegrate veterans into the labour market as smoothly as possible. In fact, the bill went far beyond this remit, inadvertently generating a huge economic boost. The bill has been heralded as one of the most significant pieces of legislation ever enacted by the US government, impacting the nation socially, economically and politically.[1]

The challenge

The US has a long history of assistance for veterans. Legislation and programmes were enacted after both the American civil war and the first world war, but these were widely considered to be deficient both in terms of rewarding the service and sacrifices of veterans and in countering the economic impact of demobilisation (the removal of troops from active service).

Enlisted Americans leaving military service at the end of the first world war were offered little more than USD60 (equivalent to USD871 in 2019, as adjusted for inflation)[2] and a train ticket home.[1] There was neither a pension nor any bonus provision for soldiers who had served and returned home able-bodied.[3] The US was unprepared for the economic impact of the first world war, “when unemployed veterans were reduced to relying on charities for food and shelter”.[4]

In 1924, a veterans’ bonus scheme based on the number of days in service was enacted into law, although the scheme delayed payment by 20 years for most recipients.[1] With the onset of the Great Depression, 20,000 dissatisfied veterans and their families marched on Washington, DC in 1932, culminating in an angry standoff between the “Bonus Army” protesters and government troops.[5]

President Franklin D. Roosevelt (FDR) took office in 1933 in the midst of the Great Depression. He swiftly began implementing a series of social reforms known as the New Deal, aimed at stabilising the economy and restoring prosperity to Americans. One of the most radical reforms was the Social Security Act of 1934, which provided pensions to millions of Americans, created a system of unemployment insurance, and stipulated federal government funding for the care of dependent children and those with disabilities. With the exception of the 19th century poorhouses, this was the first scheme of social assistance available to most Americans.[6][7]

FDR’s belief was that veterans should have the same class of benefits as all other citizens, and he introduced the Economy Act in Congress only six days after his inauguration. This Act focused on government cost-cutting, in particular cutting veterans’ benefits and pensions by more than USD460 million. Just over half a million veterans and their dependents were removed from the pension roll as a result, and veterans receiving disability benefits faced a 25-80 percent income reduction. The cuts were later alleviated by the Independent Offices Appropriation Act of July 1933, and – despite FDR’s opposition – were reversed by the passage of the Independent Offices Bill in March 1934.[8]

By the time of the D-Day invasion on 6 June 1944, more than 11.6 million men and women were enlisted in the armed services.[3] Fears of the economic impact of veterans returning after the end of the war were widespread and a very real concern: “some saw inaction as an invitation to another depression”.[1] FDR’s government endeavoured to avoid a repeat of the extensive unemployment and economic depression experienced after the first world war. It faced the challenge of preemptively tackling the economic, political and social impacts of second world war demobilisation, all in the context of a nation that would be already adjusting domestically to the postwar state of affairs.

The initiative

The Servicemen’s Readjustment Act of 1944, commonly known as the GI Bill, was signed into law by FDR on 22 June 1944 (just days after the Allied invasion of Normandy began) and officially expired on 25 July 1956.[4][9]

The underlying primary goal of the GI Bill was macroeconomic – to prevent widespread unemployment and economic depression by successfully reintegrating returning servicemen and women into civilian society. Altruistic goals of rewarding the patriotic service and sacrifice of veterans, and also of implementing national social care schemes, were always secondary objectives for FDR’s government. PR and public statements surrounding the GI Bill, however, emphasised these altruistic goals above the macroeconomic ones in a bid to muster support. Nevertheless, the design of the GI Bill was such that all of these goals were able to go hand-in-hand without conflict or compromise.

Veterans were provided with unemployment benefits, job counselling and re-employment support, tuition for higher education or training, federally-backed guarantees on loans for homes, farms and businesses, and specialised treatment and care at a range of new and existing veterans’ hospitals.

Eligibility for most benefits in the GI Bill required service in the active military or naval service for at least 90 days (save where discharged earlier for disability incurred in the line of duty), between 16 September 1940 and the end of the war, without dishonourable discharge.[10] Some job counselling and re-employment services applied to other war veterans as well.

Section 700 of the GI Bill provided unemployment benefit of USD20 per week, for a maximum of 52 weeks (equivalent to USD288 in 2019, as adjusted for inflation).[11] It was one of the more controversial aspects of the bill, and the section’s critics dubbed its beneficiaries as the “52-20 Club” and predicted most veterans would avoid jobs for those 52 weeks. However, in practice only one out of every 19 veterans claimed for the full 52 weeks.[4]

Tuition was available to service men and women under the age of 25, and bursaries not exceeding USD500 per year for up to 4 years were provided for colleges, training schools and other educational establishments. This was enough to fund education at the most expensive Ivy League colleges. A stipend for living costs, books, supplies and equipment was also provided at a cost of USD50 a month for veterans with no dependents and USD75 for veterans with dependents.

As FDR stated upon signing the GI Bill, “it gives emphatic notice to the men and women in our armed forces that the American people do not intend to let them down”.[1]

The public impact

The GI Bill is generally lauded as a runaway success, with many historians, economists and sociologists agreeing that the bill did all it was intended to do – and more.[12] It caused a revolution in American life in terms of homeownership and access to higher education. It enabled millions to climb the socioeconomic ladder, achieving standards of living that would otherwise have been out of reach.[12]

According to the Department of Veterans Affairs (VA), “the GI Bill had more impact on the American way of life than any law since the Homestead Act of 1862”, whose significance lay in propelling the westward expansion of the US population by offering 160 acres of land to any man or woman (including freed slaves).[4]

Before the war, college and homeownership were, for the most part, unreachable dreams for the average American. Only 10-15 percent of young Americans were able to attend college, and university campuses had become known as a haven for the most privileged classes.[1][5]

The VA reports that 7.8 million of the 16 million veterans returning from the second world war took advantage of GI Bill’s education opportunities, with 49 percent of college admissions in the peak year of 1947 being veterans utilising the bill’s funding.[1][9] The number of degrees awarded by American colleges and universities more than doubled between 1940 and 1950.[13]

As well as avoiding the situation where millions were suddenly looking for work, by giving veterans the option of going to college, the GI Bill effectively transformed higher education in America. Stereotypes of college students being the wealthy, the privileged, and subsequently members of an old boy’s network were cast aside as the veterans proved themselves overall to be hardworking, disciplined and capable students. Stipends even allowed those with families and dependents to study or train. 

The huge increase in the number of students led to colleges implementing widespread improvements and an expansion of university facilities and teaching staff to reduce overcrowding in classrooms and residences. An array of new vocational courses were developed across the country, including advanced training in education, agriculture, commerce, mining, and fishing – skills that had previously been taught only informally.[5] That the bill funded the education of 22,000 dentists, 67,000 doctors, 91,000 scientists, 238,000 teachers, 240,000 accountants and 450,000 engineers – as well as 3 Supreme Court justices, 3 presidents, 12 senators, 14 Nobel Prize winners and 24 Pulitzer Prize winners – is testament to its extended impact on American society.[14]

Millions of veterans took advantage of the GI Bill’s home loan guarantee. From 1944 to 1952, the VA backed nearly 2.4 million home loans under the programme.[1] By 1955, that total had risen to 4.3 million, with a total face value of USD33 billion.[13] These home loans had a transformative effect on American society, allowing millions of families to move out of urban centres to build or buy homes outside the city, thus making suburban life a norm for people from all social backgrounds.[5] Veterans were responsible for buying 20 percent of all new homes built after the second world war, and the results rippled through the rest of the economy.

By 1956, when the GI Bill expired, the education and training provisions of the bill had paid out USD14.5 billion. However, the VA estimated the increase in federal income taxes alone would pay for the entire cost of the bill several times over. Congress estimated that for every dollar spent under the GI Bill, the US economy received seven dollars in return.[14]

Despite the GI Bill being heralded as a resounding success, major criticisms are commonly raised about its bias against non-white veterans. Deficiencies crept into the system after administrative tasks were delegated to state and local agencies. These delegations were compromises to appease the fears of some Republicans that the federal government was extending its reach, and so bring those Republicans on board with the bill. This delegation allowed local racial bias to limit the benefits available to non-white veterans. "Written under Southern auspices, the [GI Bill] was deliberately designed to accommodate Jim Crow."[15]

Generally, enrolment at traditionally black colleges increased exponentially after the second world war because of the GI Bill. One study shows enrolment of veterans at such colleges rose from 1,310 in 1945, to 17,518 in 1946 and 34,068 in 1947.[16] Black veterans in the Deep South, where many black colleges were based, faced tremendous obstacles to attending higher education, however. They were required to have completed high school or to be able to pass a high school equivalency test. Those who managed to enrol faced often deplorable conditions, including buildings with no heating, doors or windows and inadequate tuition. The huge increase in enrolment at white colleges was met with an increase in expenditure on resources, facilities and staff at such institutions. Black colleges, however, received only a fraction of the funding allocated to their white counterparts – “40 percent of what the [black] colleges estimated they would require to provide academic programmes”.[17] The result was classes of 80 students with one teacher and no assistants, students sitting on the floor, and six students sleeping and studying in dorm rooms designed for two.[18]

Inequalities aside, the GI Bill is regarded as a programmatic, economic, political and social success. The public impact of the bill transformed American society for the better. While the authors and supporters of the bill never intended it to play such a huge role in reshaping postwar American society, it nevertheless became one of the major forces that drove economic expansion in America for a full 30 years after the second world war had ended.[5][12]

This case study was written by Glynn Sullings

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Public Confidence Strong

There was strong public support for the bill as a means to manage the risk of an economic depression and help and honour former soldiers. 

The American public has long been united in its belief that former soldiers deserve respect and honour, but around the time of the GI Bill’s introduction there were reservations about the degree of reward to be given. In 1937, a public poll showed a strong majority of 71 percent in favour of pensions for veterans, but one year later another poll showed 56 percent of the public believing veterans pensions should not be provided to widows and children of veterans who died of non-combat related causes. “A 1953 Gallup poll found that 49 percent did not believe that veterans should receive medical care from the government for non-war related health problems; 45 percent said they should.”[20]

For the public, the common sentiment towards veterans was one of gratitude for service mixed with fear of the economic danger posed by millions of unemployed veterans returning to civilian life, fears manifested by the memories of the returning first world war veterans and the Great Depression.[12] However, many of the public believed that this economic danger could be greatly reduced by providing veterans with opportunities such as returning to education.[12]

The Legion’s aggressive PR campaign also focused heavily on public support for the GI Bill. Two-minute films featuring battle scenes were shown in cinemas, while 400 radio spots explained the programme of the bill. Newspapers were full of articles and editorials promoting the GI Bill, with some even providing readers with coupons they could cut out and send to their members of Congress to show support.[3] Ultimately, with one-third of the US male population over the age of 15 having served in the armed forces during the second world war, public support for any bill giving sufficient support to veterans would inevitably be strong.[21]

Stakeholder Engagement Good

Of the many politically prominent veterans’ interest groups formed in the wake of the first world war, the American Legion emerged as the key player in the creation and passing of the GI Bill. After months of veterans assistance programmes and bills being unconvincingly debated in Congress, the Legion took the initiative. A bipartisan Legion committee fighting for veterans’ benefits in Washington, DC – led by Harry Colmery, a first world war veteran who had at one time served as the Legion’s national commander – penned a first draft, including the main features of what would become the GI Bill.[3][13]

Other veterans’ organisations, including Veterans of Foreign Wars, the Military Order of the Purple Heart, the Disabled American Veterans, and the Regular Veterans Association, opposed the Legion’s proposals. They believed that veterans suffering psychological or physical injury should be the priority, and that such a wide expansion of benefits would detract from the support and benefits available to them, as had occurred during the Great Depression. The groups drafted their own bill, advocating an adjusted compensation scheme.[3][12]

The Legion, however, took an aggressive approach to lobbying for the GI Bill, including an intensive PR campaign to get the public onside, as well as targeting dissenting or undeclared senators and representatives to bring them onboard.[3] When FDR signed the bill, the Legion’s leadership stood by him at his request, representing the key role they had played. As the Legion announced in their magazine: “the Legion conceived it, the Legion drafted it, and fought for it”.[12]

Political Commitment Good

Despite political disagreements over the design of the bill, it passed through Congress thanks to commitment by key political figures and interest groups including President Roosevelt and the American Legion. 

At the time of the GI Bill’s enactment, the Democrats held the presidency and controlled both houses of Congress. Despite some party and philosophical differences, all agreed that a programme was necessary to help veterans assimilate into civilian life, and there was a clear and urgent need to avoid the missteps that followed the first world war, which had contributed to the Great Depression. Self-interest played a part in the actions of career politicians in supporting the bill, with all of them aware of the political damage wreaked by dissatisfied first world war veterans and the Bonus Army in 1932.[12] However, the bill almost failed to pass, thanks to a series of disagreements over how it should be designed.[1][5][9]

FDR had originally been in favour of more sweeping social reforms rather than special privileges for veterans; he wanted benefits for veterans to form a part of the existing social care programmes implemented by his government’s New Deal reforms. In 1933, he spoke in front of a Legion national conference and stated: “no person, because he wore a uniform, must thereafter be placed in a special class of beneficiaries over and above all other citizens. The fact of wearing a uniform does not mean that he can demand and receive from his government a benefit which no other citizen receives.” The original bill that FDR presented to Congress in 1943 was significantly less generous to veterans, and notably included the barest of education provisions. This original bill gained no traction in Congress, despite the Democratic majority, and stalled.[8]

FDR had wanted the GI Bill for at least four reasons: 

  • He felt the country was “determined to show its gratitude to its returning veterans” 
  • He had realised that giving aid to veterans was good politics
  • He wanted to restock the nation’s supply of college-educated citizens, which the war had depleted
  • It was a solution to postwar economic problems.[12

When the Legion drafted the GI Bill, it had included all of FDR’s key proposals (whether for tactical reasons or because they believed in them), thus winning the president’s support. Upon signing the GI Bill into law, FDR commented that it “substantially carries out most of the recommendations made by me”.[12]

Some politicians shunned the idea of paying unemployed veterans USD20 a week, because they thought it diminished their incentive to look for work. Others questioned the concept of sending battle-hardened veterans to colleges and universities, a privilege then reserved for the rich.[1] The segregationist racism lingering in some southern states also encroached upon Congress. The chair of the House Veterans Committee made clear his belief that the employment bonus would particularly discourage black veterans from looking for work, and advocated giving them fewer benefits than their white counterparts.[3]

The Legion’s PR campaign, however, left senators and representatives in the uncomfortable position of having to vote for America’s brave GIs or against them, and versions of GI Bill were unanimously passed by both chambers of Congress in the spring of 1944.[4] The bill, however, almost died when senators and representatives came together to debate their versions, agreeing on education and home loan benefits, but with a deadlock on employment provisions.[1] Despite efforts by some politicians to kill the GI Bill by blocking the reconciliation of the different versions, the disagreements between the two houses were reconciled at the 11th hour on 12 June 1944. The senate approved the reconciled bill that same day, and the house of representatives the following day. FDR signed the GI Bill into law 10 days later.[10][19]

Policy

Clear Objectives Strong

The objectives of the bill were clearly stated when it passed into law. 

The tagline of the GI Bill was: “a comprehensive programme to aid returning veterans – both men and women – in a speedy readjustment to civilian life, and to enable them to fit once more into the civilian economy as promptly and effectively as possible”.[10] Upon signing the bill into law, FDR released a statement setting out its six main objectives in more detail:

  1. Facilitating education or training for veterans
  2. Guaranteeing loans to veterans for homes, farms or businesses
  3. Providing veterans with unemployment payments
  4. Providing job counselling and searching services for veterans
  5. Authorising construction of hospital facilities
  6. Strengthening the authority of the VA.[1]

Despite such stated and achievable objectives, however, the fundamental purpose of the GI Bill had always been to prevent a repeat of the widespread unemployment, economic depression and political damage caused by the returning first world war veterans. As early as 28 July 1943, FDR stated publicly that veterans “must not be demobilised into an environment of inflation and unemployment, to a place on the breadline, or on a corner selling apples”.[22]

Evidence Good

In planning support for veterans returning from the war, FDR’s government had the benefit of hindsight about the deficient policies enacted following previous US-fought wars, and in particular the first world war. With over 10 years of New Deal policies under the administration's belt, they also had significant experience in administering federal welfare programmes and evidence of their success on a macro level.

While the second world war was still being fought, the US Department of Labor estimated that 15 million men and women who had been serving in the armed services would be unemployed after the war. The National Resources Planning Board studied postwar manpower needs as early as 1942, and in June 1943 recommended a series of programmes for education and training, intended to “reduce the possibility of postwar depression brought on by widespread unemployment”.[13]

Colmery and his fellow Legion draughtsmen met with experts, organisations and lobbyists specialising in education, banking and employment; incorporating their advice into the first draft of the GI Bill. “The final draft of the GI Bill represented months of study and discussion on the part of the Congress, and especially of the members of the Senate Committee on Finance and the House Committee on World War Veterans’ Legislation. Literally hundreds of bills were submitted, debated and reviewed, and many others proposed without ever reaching the stage of a final draft.”[19]

Feasibility Good

The G.I. Bill was seen as a large but necessary investment to mediate the negative economic impact returning veterans could have; dedicated funds therefore made the bill economically feasible.

The GI Bill was more extensive and generous than any such veterans’ benefits programme that had gone before. However, the Senate Committee believed that despite the significant costs of the bill, it would be “of greater advantage to veterans and of lesser expense to the government” than any alternative, adjusted compensation act could be, and certainly less expensive than the economic impact of failing to reintegrate returning veterans effectively into civilian life. [19]

The Senate Committee recognised that the GI Bill authorised a programme that would be “costly to the Nation”, but emphasised that it was a “true economy”, “part of the bare-bones, necessary cost of war”, and “the best money that could be spent for the welfare of the Nation”. [19]

Action

Management Good

The Department of Veterans Affairs and individual state and local institutions took responsibility for executing and administrating the G.I. Bill.  

The VA was charged with executing the GI Bill’s key provisions to offer veterans unemployment pay, funds for education and training, and loan guarantees for homes, farms and businesses.[9] To enable this, the bill elevated the status of the VA, recognising it as an “essential war-agency”, second only to the War and Navy Departments in personnel, equipment and supplies. This promotion allowed the VA to fulfil the essential role of providing hospitals and healthcare, along with other resources, to veterans.[10][13]

As a political compromise to quell Republican fears of broader social care policies and encroachment on states’ autonomy (regarding education administration, in particular), much of the administration of the GI Bill was delegated from federal to state and local level institutions. 

Each state’s educational agency, or in some cases the federal administrator of veterans affairs, determined eligible schools and training institutions. Local and private banks determined eligibility for loans, and through the VA the government provided a guarantee of up to 50 percent (but no more than USD2,000) for each loan.[10]

In line with the senate’s proposals, the existing US Employment Service (USES) would provide “effective job counselling and employment placement service for veterans”, with the Veterans’ Placement Service Board created to cooperate and assist the USES, with responsibilities for determining all matters of policy relating to such veterans’ employment services.[10] The GI Bill also established provisions for Army and Navy Boards of Review, of up to five persons, to review questions of irregular or questionable discharge.[10]

Measurement Good

The VA measured the effect of the G.I. Bill on key aspects such as education and house ownership. 

In FDR’s statement on signing the GI Bill, he said that “further study and experience may suggest some changes and improvements” to the bill.[1] The VA was largely responsible for monitoring the impact of the bill. At first, red tape kept large numbers of veterans from using the GI Bill to buy houses. Monitoring of the programme meant that home loan provisions were modified, enabling 2.4 million veterans to buy houses between 1944 and 1952.[3]

The initial estimates of the number of veterans making use of the education funding “proved of little value. In the spring of 1944, the Army conducted a survey and concluded that eight per cent of its personnel would return to school (high school, college, and all other) if government aid were available. Four months later a new Army survey lowered the figure to seven percent and a follow-up study in October held to the same statistic. In December 1944, FDR estimated the number at ‘hundreds of thousands’.”[12] The VA measurements showed that the real figures exceeded all expectations, and by 30 June 1955, 14.3 percent (2.2 million) of all the second world war veterans had taken higher education courses, with a further 3.5 million studying at schools below college level.

The VA also monitored the establishments providing education to the returning veterans. In 1950, the VA administrator published a report demonstrating a widespread abuse of the educational provisions, with 1,237 schools being identified as having irregularities or questionable practices, with 963 of those being for-profit institutions. That same year a crackdown began.[23]

Alignment Fair

There was a misalignment between FDR’s government and congressional leaders; the latter took control of parts of the bill’s implementation in order to enforce racial segregation of veterans. 

Jim Crow laws, which enforced racial segregation in southern states, were still in full effect when the second world war came to an end. The same racial segregation was imposed upon the armed forces for most of the war, with segregated units for non-white service men and women.[24] At the beginning of the war most black units were relegated to non-combat roles., however as the war progressed and as civil-rights campaigners fought for equality at home, many segregated black units were placed in combat so that the initial D-Day invasion included 1,700 black troops.[25][26] Following shortages of manpower, General Eisenhower did experiment with mixed-race units during the Battle of the Bulge (1944-1945). Over 80% of white officers surveyed reported that the black soldiers had performed "very well".[24] Despite such front-line service many black veterans returned home to the reality that they were still regarded as second-class citizens. [27]

FDR’s government had intended the GI Bill to be a progressive social programme with equal benefits available to qualifying veterans, regardless of race, ethnicity or gender. Unfortunately, Southern congressional leaders made certain that the administration of the various programmes under the bill were directed not by Washington, DC and the federal government, but by state and local institutions.[15]

The delegation of administrative functions of the GI Bill to state and local institutions led to widespread discrimination, not only in the South but across the whole of the US. Local, white officials, businessmen, bankers and college administrators upheld discriminatory practices. As a result, thousands of black veterans were denied housing and business loans, as well as admission to traditionally white colleges. In New York and northern New Jersey, fewer than 100 of the 67,000 mortgages insured by the GI Bill supported home purchases by non-whites. Education admissions demonstrated similarly disparate treatment: “the University of Pennsylvania, along with Columbia the least discriminatory of the Ivy League colleges, enrolled only 46 black students in its student body of 9,000 in 1946”. [15]

By giving far greater opportunities for social movement and improvement to white as against black veterans, the local and state administrators twisted the GI Bill such that it actually increased racial differences in social standing in American society. [15][28][29]

The bill’s benefits helped millions of white Americans into the middle class, while the administrative denial of the same benefits held black Americans back. This was the opposite of FDR’s intentions for the bill, although it was the precise intention of some Republican legislators.

Some veterans’ payments and benefits had in the past been funnelled through local institutions and politicians. This had allowed widespread corruption and patronage to siphon off money from those funds. Significantly, benefits payments issued under the GI Bill were provided directly to the veterans by way of direct payments or supplied vouchers for tuition, removing the prospect of corrupt local administration.