in Wisconsin History
Depression and Unemployment
When Herbert Hoover was elected President in November of 1928, Americans were generally optimistic. Many people believed that the prosperity of the 1920s, which felt rather like the upbeat 1990s, would continue indefinitely. The horrors of World War I were behind them, new conveniences such as cars, radios, and electrical appliances were becoming common, and new possibilities were opening up for women and small entrepreneurs.
The stock market crash of October 1929 therefore came as a surprise, and drastically curtailed a creative period of economic growth throughout the nation. In Wisconsin, people turned from sneaking bootleg beer into jazz halls to devising ways of surviving the worst depression in the nation's history. Wisconsin suffered severely as factories closed, wages dropped, and unemployment swelled. Although farmers were somewhat more secure than factory workers in terms of food and shelter, they still suffered a dramatic decline in income and property values. Under the leadership of Robert La Follette's sons, Robert La Follette Jr. and Phil La Follette, Wisconsin Progressives tried to develop programs to respond to the needs of the struggling population. Many of their ideas would be echoed or expanded on the federal level in the New Deal.
Milwaukee was especially hit hard by the depression, despite its diversified industries. Between 1929 and 1933, the number of people who had jobs in the city fell by 75%, and 20% of people received some form of direct relief from Milwaukee County. Milwaukee's mayor, Daniel Hoan, organized a national conference of mayors in 1933 to pressure the federal government for help. Adding insult to injury, a severe drought settled onto the Midwest in the early 1930s, crippling Wisconsin agriculture.
Efforts by policy makers to overcome the economic stagnation took place in an atmosphere of intense social conflict. Extremists all across the political spectrum, from communists on the left to fascists on the right, thought they understood who was to blame for the current catastrophe and what should be done to fix it. Certain in their own viewpoint and anxious about the future, many activists felt justified in using force to try to bring about their ends.
In Milwaukee, the number of strikes increased sevenfold between 1933 and 1934. Violence broke out in several counties as farmers sought to halt the delivery of milk until they received better prices. Industrial workers, faced with falling wages and rising lay-offs, organized more tightly as labor leaders sought to increase union influence. This trend was helped by the passage of Wisconsin's first comprehensive labor code in 1931, which gave all workers the right to organize and sanctioned a range of union organizing activities.
A major stumbling block to recovery was the failure of financial institutions. Despite a trend in the 1920s toward consolidation, the state still had many small banks in 1929, and when the stock market crashed large numbers of them closed their doors forever. The situation became so precarious that in March of 1933, Governor Albert George Schmedeman declared a two-week statewide banking moratorium to settle the volatile atmosphere. This collapse of Wisconsin's banking system was unmatched in state history and recovery from it was a slow and painful process. Banking in Wisconsin would not exceed its pre-1929 strength until 1942, when military production for World War II had begun to lift the country's entire economy.
Even before Roosevelt's New Deal started to bring federal relief in the mid-1930s, the Wisconsin legislature enacted the nation's first unemployment compensation law. At the time, University of Wisconsin economist John R. Commons had been promoting unemployment compensation for two decades, but the bill he wrote was repeatedly introduced without success during the prosperous 1920s. As more and more people lost their jobs after the 1929 crash, however, public opinion changed and a new unemployment bill, drafted by Harold Groves, finally passed in early 1932 and became a model for the nation.
Seeing its success, President Franklin Roosevelt appointed UW economists and Wisconsin natives Arthur Altmeyer and Edwin Witte to serve on the Committee on Economic Security in 1934. After studying the unemployment and pension programs of other nations, Witte and Altmeyer devised a program that established a national retirement-age insurance system, federal-state unemployment insurance, and aid to dependent mothers and others who could not work. The federal government extended protection to the unemployed, the aged, and the disabled with the passage of the Social Security Act in 1935.
The state legislature also approved public works projects, including improvements to railroads and a forestry program for northern Wisconsin. Nationally, the Civilian Conservation Corps (CCC), a program designed to reduce unemployment among young men and to preserve the nation's natural resources, was one of the earliest and most effective of the New Deal relief agencies. The federal CCC program was segregated by race and, against the objections of both Robert and Phil La Follette, Wisconsin's black volunteers were sent to camps in Illinois. In Wisconsin, 92,000 men carried out conservation projects such as tree planting, trail building, and erosion control in 45 camps around the state. Today many of the foot bridges, beaches, and hiking trails we enjoy in Wisconsin state parks survive as testimony to the effectiveness of these federal and state programs.
While early relief efforts succeeded in helping many urban workers, New Deal programs for farmers were largely ineffective. The Agricultural Adjustment Act (AAA) tried to raise prices by asking farmers to destroy crops, thereby reducing supply while demand remained stable. It identified nine basic crops and paid farmers to decrease their acreage of them. While this program helped some large farms, small farmers or those who grew crops outside the chosen nine tended to see little benefit. In the spring of 1933, dairymen in the Fox River Valley went on strike, withholding milk, closing down cheese and butter factories, and barricading roads in hopes of raising prices. Their milk strike was too localized to influence dairy prices nationally, though, and by the time the AAA went into effect in June of 1933, it had essentially ended. The AAA limitations on milk production provided a slight improvement in dairy prices but it was far from a permanent solution for Wisconsin's struggling dairy farmers. Low market prices and drought kept the decade of the 1930s a desperate time for most Wisconsin farm families.
The coming of war in Europe in 1939 rapidly increased the pace of economic recovery in the United States. Although New Deal policies and programs had done much to reduce the suffering of Wisconsin's residents, it was America's entrance into World War II that finally stimulated the economy back to health. Wartime industries provided jobs for Wisconsin's urban workers while farmers increased production to meet the demand of feeding soldiers and civilians, helping to create a wave of economic prosperity in the 1940s.
[Sources: The History of Wisconsin vol 4 (Madison: State Historical Society of Wisconsin); Kasparek, Jon, Bobbie Malone and Erica Schock. Wisconsin History Highlights: Delving into the Past (Madison: Wisconsin Historical Society Press, 2004); Gara, Larry. A Short History of Wisconsin. (Madison: State Historical Society of Wisconsin, 1962)]