G.I. Bill - History of Business in the U.S.
The Law: Federal legislation designed to provide benefits to veterans of the armed forces; also known as the Servicemen’s Readjustment Act
Date: Signed into law on June 24, 1944
Significance: Besides providing economic relief and financial benefits to returning veterans, the G.I. Bill strongly stimulated the post-World War II economy as veterans spent their government benefits on education opportunities and private housing. As an ongoing program, the G.I. Bill continues to provide economic opportunities to former members of the armed forces.
The U.S. government has a long history of rewarding veterans of its wars. Veterans of the Revolutionary War and early nineteenth century wars received land bounties as compensation for their services, and the government promised veterans of World War I (1917-1818) a cash bonus that veterans would collect in 1945. The onset of the Great Depression caused many veterans to demand their money early, and the 1932 clash between protesting veterans demanding their bonuses (the Bonus Army) and the army caused great embarrassment for the government and the U.S. Army. To prevent a reoccurrence of the Bonus Army, the government decided to implement a system of compensation to World War II veterans known as the G.I. Bill (“G.I.” was a World War II slang term for a common soldier), that provided assistance immediately, instead of years later like the World War I bonus.
Although Franklin D. Roosevelt often receives the credit for the G.I. Bill as part of his New Deal programs, the G.I. Bill (officially the Servicemen’s Readjustment Act, also known as the G.I. Bill of Rights) was the result of proposals by Henry W. Colmery, a World War I veteran and national commander of the American Legion, a veterans’ advocacy group. Colmery formed a series of proposals during the legion’s 1943 National Convention and presented them to President Roosevelt. Roosevelt convinced Congress to enact Colmery’s proposals (both houses of Congress passed the legislation by unanimous vote), and Roosevelt signed the act into law on June 22, 1944. The first G.I. Bill included three main benefits for veterans. First, the government offered to subsidize education or career training for returning veterans. Second, the government offered guaranteed home, business, or agricultural loans at low interest rates. Third, if veterans could not find employment, the government offered one year of unemployment compensation, often known as “52-20” because veterans could receive $20 per week for up to fifty-two weeks while they searched for work. To qualify for benefits, a veteran had to have served for at least ninety days in the military and have received an honorable discharge.
Impact of the Bill
The G.I. Bill was a significant reason that American society and the economy changed so rapidly after World War II. Thanks to subsidized education, 7.8 million veterans received a college education they might otherwise not have received. Before the G.I. Bill, relatively few Americans went to college, but the G.I. Bill started the process of expanding the system (and business) of higher education, making a college degree a middle-class expectation. University enrollments boomed as older veterans joined younger college students on campus. By 1948, the enrollment of Syracuse University had tripled, and veterans made up more than 60 percent of the students at the University of Iowa. Colleges had to expand their facilities to accommodate the new students. Government subsidization of education for veterans continued into the twenty-first century.
The availability of easy home loans also significantly changed the American economy and landscape, as 5.9 million veterans applied for housing loans. The shortage of existing homes meant that veterans used their G.I. Bill benefits to construct new homes, and the postwar housing boom fueled the economic surge of the 1950’s and 1960’s. The construction of new housing invigorated many associated industries. The construction of a home required the services of many different business entities, including construction firms, carpenters, electricians, landscapers, home furnishers, and the automobile industry. Relatively few single-family homes were available in American cities, so veterans used their loans to build new homes outside the city limits, starting the population shift out of American cities and into newly formed suburbs. The acquisition of new homes in the suburbs promoted larger families, and the G.I. Bill was, to a certain extent, responsible for the post-World War II baby boom.
Continuation of the Bill
The original G.I. Bill of 1944 expired in 1956, but the concept of veteran compensation continued, with all subsequent legislation still referred to as G.I. bills. In 1952 Congress passed the Veterans’ Adjustment Act to compensate veterans of the Korean War (1950-1953). There were some minor differences between the World War II and Korean G.I. Bills, but the outcome was broadly similar. More than two million Korean War veterans used the G.I. Bill to go to college, and 1.5 million financed new homes. The G.I. Bill underwent a significant change in 1966, when Congress passed the Veterans Readjustment Benefits Act (VRBA) as part of President Lyndon B. Johnson’s Great Society slate of social programs. The VRBA removed the requirement of serving in combat to receive government benefits, and instead made G.I. Bill benefits available to anyone who served in the military, whether in wartime or peacetime. Since 1966 the G.I. Bill has undergone a series of modifications and adjustments, but the fundamental benefits subsidizing education and home ownership remain the same. The Montgomery G.I. Bill (MGIB), enacted by Congress in 1985, provides educational stipends to former members of the military who contribute a small portion of their pay during their time in the service. The Post 9/11 Veterans Assistance Act of 2008 (effective date August, 2009) substantially increased the amount of tuition and housing assistance, allows veterans to transfer benefits to their spouses and children, and provides tuition benefits for National Guard and Reserve members.
Humes, Edward. Over Here: How the G.I. Bill Transformed the American Dream. New York: Harcourt, 2006. Excellent study of the G.I. Bill that offers a full description of the political struggle to create the bill and a discussion of how the law changed America’s definition of middle-class status.
Mettler, Suzanne. Soldiers to Citizens: The G.I. Bill and the Making of the Greatest Generation. New York: Oxford, 2005. An examination of the G.I. Bill from an economic standpoint, this book looks at how the G.I. Bill created a concept of civil virtue out of a successful government program.
Michel, Christopher. The Military Advantage: A Comprehensive Guide to Your Military and Veterans Benefits. New York: Simon & Schuster, 2006. An insider’s look at the G.I. Bill, this book contains a good history of the G.I. Bill and a clear explanation of benefits offered to American military personnel.
Simon, Richard. “Bush Signs EmergencyWar Funding Measure: It Also Expands Veterans Benefits Under the G.I. Bill and Extends Unemployment Aid.” Los Angeles Times, July 1, 2008, p. A5.
See also: automotive industry; construction industry; government spending.