The pre-paid bonus is the latest brain child of Washington New Dealers. Concocted from a combination of Keynes' plan of "How to Pay for the War" and extravagant demands of Veterans of Future Wars, it is a scheme simple enough for even the non-economist to grasp. Cambridge Professor John Maynard Keynes, now in the United States to speed Lend-Lease aid, has proposed lopping off the excess of total wages over total goods available for consumption by paying workers partly in bonds rather than cash. This would keep prices from rising in the wartime world when income soars while output is shifted to defense needs; and, in the post-war slump to be expected when the armament program is abandoned, the payment of these bonds would provide a cushion of consumer expenditure. England has already put the plan into effect by promising post-war rebates of the new taxes on low income groups. The full Keynsian program will go into effect this fall.
Washington, unable to take that drastic a step, feels that its bonus scheme would answer post-war slump problems as well as strengthen army morale. By paying the trainees in non-transferable five year bonds the $20 differences between the $30 a month that draftees get after four months service and the $50 a month which the minimum wage law would guarantee them in private industry, the Administration could boost esprit de corps. Later on the army's pay system might be a good argument for slipping the same medicine to labor.
The trainees in five years will have built up a $1,200,000,000 reservoir of deferred purchasing power to case the post-war let down. Far better than a W.P.A. for the ex-servicemen or a bonus paid like the last one at a time when it was economically unwise, this proposal (soon to be openly pushed by-Administration spokesmen) is from all angles desirable. It gives the economy as sound a start in the post-war world as is possible, and at the same time gives the youth in arms a no less than fair deal in the future.