- The pension system was established shortly after the end of the Civil War in 1865 to provide financial support to Union veterans who had been disabled or otherwise suffered as a result of their military service.
- Initially, the pension system was relatively modest, but over time, the number of pensioners and the amount of benefits paid out increased significantly.
- By the late 1880s, the pension system was costing the US government over $100 million per year, which was a significant portion of the federal budget.
Here are some specific reasons why civil war pensions created a problem for the US treasury:
- The number of pensioners grew rapidly over time. In 1865, there were about 100,000 Union veterans receiving pensions. By 1890, that number had grown to over 1 million, and by 1910, it had reached nearly 1.3 million.
- The amount of benefits paid out per pensioner also increased over time. In 1865, the average pension was about $8 per month. By 1890, the average pension had increased to over $12 per month, and by 1910, it had reached nearly $15 per month.
- The cost of the pension system was further compounded by the fact that many pensioners lived for many years. The average life expectancy of a Civil War veteran was about 65 years, which meant that the government had to pay pensions for many years.
The combination of these factors put a significant strain on the US treasury and made it difficult for the government to meet other financial obligations, such as paying off its war debt and funding other government programs.