Service Certificates

AAA

DEFINITION of 'Service Certificates'

Bond-like certificates that promised payments at maturity date to World War I (WWI) veterans. Service certificates were granted to WWI veterans under the Adjusted Service Certificate Law in 1924, which promised "bonus" payments to eligible soldiers redeemable in 1945. Service certificates had a face value like a bond and the promised payment at maturity included compound interest.

INVESTOPEDIA EXPLAINS 'Service Certificates'

The long-term maturity date of these service certificates presented problems for holders and the U.S. goverment. In the 1930s, in the midst of the Great Depression, war veterans were desperate and tried to demand immediate payment of the service certificates. A group of war veterans and their families, known as the "Bonus' Army", marched to Washington D.C. to try to persuade Congress to move up the date of maturity of the certificates. The march in 1932 failed initially to get Congress to speed up the payments, only in 1936 did Congress pass a bill allowing veterans to collect the service certificate payment.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Compound Interest

    Interest calculated on the initial principal and also on the ...
  3. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  4. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  5. Face Value

    The nominal value or dollar value of a security stated by the ...
  6. Great Depression

    An economic recession that began on October 29, 1929, following ...
RELATED FAQS
  1. What are the advantages of using an effective interest rate figure?

    The primary advantage of using the effective interest rate figure is simply that it is a more accurate figure of actual interest ... Read Full Answer >>
  2. What are the pros and cons of operating on a balanced-budget?

    Few issues are more complicated, contentious and controversial in contemporary American politics than balancing the federal ... Read Full Answer >>
  3. What are the risks associated with investing in a treasury bond?

    It's common for financial analysts and investment publications to refer to U.S. Treasury bonds (T-bonds) as risk-free investments. ... Read Full Answer >>
  4. How is it possible for a rate to be entirely risk-free?

    It is not possible for a rate to be entirely risk-free. The risk-free rate of return is a theoretical construct that underlies ... Read Full Answer >>
  5. How is the risk-free rate of interest used to calculate other types of interest rates ...

    The risk-free rate for bonds is used for pricing the yield spread as the difference between the interest rate on a bond and ... Read Full Answer >>
  6. What is the difference between a repurchase agreement and reverse repurchase agreement?

    A repurchase agreement, or repo, is a form of collateralized lending, while a reverse repurchase agreement, or reverse repo, ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    War's Influence On Wall Street

    Blitzkrieg? Dawn raids? Sounds like the markets and the battlefield have a few things in common.
  2. Personal Finance

    Protect Your Personal Assets

    A family limited partnership (FLP) can go a long way toward securing your family's property.
  3. Forex Education

    The History Of Money: Currency Wars

    Find out how conflicts have changed the role money plays in our lives.
  4. Active Trading

    The Financial Markets: When Fear And Greed Take Over

    If these unpleasant emotions are allowed to influence your decision-making, they may cost you dearly.
  5. Mutual Funds & ETFs

    Pros & Cons Of Bond Funds Vs. Bond ETFs

    Understanding the pros and cons of bond funds and bond ETFs will help you choose the instrument that is best for building your diversified bond portfolio.
  6. Bonds & Fixed Income

    African Sovereign Debt: Risks and Rewards

    African sovereign debt offers high yields and upside — if one has the stomach for the risk.
  7. Economics

    A Risky Maneuver To Jumpstart Japan's Economy

    Japan's government and the Bank of Japan are buying large amounts of government bonds in an effort to spark economic activity, but there are great risks.
  8. Investing Basics

    CDs or Bonds: Which Investment is Better For You

    When choosing between CDs and bonds, investors who seek to maximize their returns but also want a large measure of safety should consider the following:
  9. Bonds & Fixed Income

    Interested In West African Debt? Look Here First

    Promising high yields that the Eurozone and U.S. can't match, West African sovereign debt has caught the attention of savvy investors.
  10. Taxes

    10 Sources Of Nontaxable Income

    Taxes are often a deterrent from investing and saving. These financial practices will bring you no tax grief.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center