The Depression was foreshadowed in Elgin before the great crash on Wall Street.
"Never in the history of the watch industry have conditions been so demoralizing as they have in the year just past ... Many channels of distribution have been wiped out ... Persons having income have lost confidence."1
Chapter VIII Depression and War
In 1929, when the Home Banks opened the fifteen-story skyscraper that dominated Fountain Square, it was hailed as the symbol of Elgin's business progress. "The strength of this building," read a front page article about the new landmark in the Courier-News, "is fully matched by the financial strength and stability of the banks it houses."2 In 1932 the Home National Bank and the Home Trust and Savings Bank closed their doors, and the building, less than a fifth of its office space occupied, was turned over to a receiver.
The withering Depression brought unemployment, idle capital, home foreclosures, hunger and fear. Private charities and local relief could not cope with the overwhelming burden, and the federal government began taking the steps leading to the welfare state. Mired in troubles of their own, the people of Elgin had little interest in pondering the rise to power of Adolf Hitler in Germany and militarists in Japan. Their Midwest isolationist mood deepened, and few wanted to believe that their generation had a rendezvous with destiny.
1. The Wolf at the Door
An ebbing of prosperity was noticeable in Elgin before the great New York Stock Exchange crash of October 24, 1929. By the end of the '20's the American watch industry was in trouble. Domestic production had dropped from 1,815,438 movements in 1923 to 1,757,282 in 1928. Imports, mainly from Switzerland, Jumped during this same period from 2,019,000 to 4,375,000. Of the thirty-five manufacturers which had once been in production, only five-Elgin, Waltham, Hamilton, Illinois, and Howard were left. In 1929 daily production at the watch factory was cut back from four thousand movements to thirty-five hundred, and the Saturday half-day was eliminated, reducing hours to forty per week for the first time in years. There were 210 new homes built in 1928, but only 145 were erected in 1929. Between October 3, 1928 and June 29, 1929, local bank deposits dropped more than six percent. The Star Theater ended showings in May, the shirt factory shut down for a time, and the Selz-Schwab shoe plant was closed in October, leaving about three hundred without jobs.
Even after "Black Thursday," official optimism prevailed. In December 1929, Mayor Earle R. Kelley, his eyes on the Republican nomination for Congress, claimed that "Elgin's people are of that calibre who don't believe especially in the story about the wolf at the door."3 But when the work week at the city's biggest plant was cut to thirty-two hours in the summer of 1930 and reduced again to twenty-four hours on October 1, the Depression had become a grim presence. The Community Chest campaign for that year fell more than twenty percent below its goal, just when need was increasing, and a fund-raising drive for Sherman Hospital collapsed. Stories began circulating about one family subsisting on oatmeal; of another family, out of coal, keeping a baby warm by sliding it in a basket in and out of an oven.
U.S. Senator Robert M. LaFollette of Wisconsin published in the Congressional Record for December 10, 1930, replies by mayors to a questionnaire on unemployment. Question No. 7 read: "Do you favor the federal government appropriating a sum of money that will share with city and state governments the increased relief burdens that the present emergency has necessitated?" Most Illinois mayors answered, "Yes," but Mayor Kelley bravely affirmed the ideal of local self-reliance, replying: "No, Elgin citizens will be cared for by Elgin citizens." He had already appointed a special municipal relief committee, supported by private donations. The committee set up a store for receiving and distributing clothing and shoes, provided money for fuel and food, and attempted to find jobs for the unemployed.
In 1930, the Elgin & Belvidere Electric stopped running, and the Cutter & Crossette shirt factory closed for good. The Leath furniture plant shut down in 1931, and on September 14 of that year, the watch factory began operating only four hours each morning, Monday through Friday -a total of only twenty hours per week. Fears of foreclosures and evictions spread.
As the number of impoverished families multiplied, the resources of the churches, Salvation Army, the Associated Charities, the office of the township supervisor of general assistance, and the municipal committee were drained. In the spring of 1931, when local unemployment was estimated at 2,500, the chairman of the committee reported enough destitution to "bring tears to the eyes of men."4 One case had already shaken the community. A watch worker whose time had been reduced couldn't meet the payments on his St. Charles Street home. It was foreclosed, and the day before the property was to be surrendered, he and his wife committed suicide.
The Associated Charities took over the activities of the municipal relief committee on June 1, 1931. Its allotment from the Community Chest that fall was raised from $2,400 to $30,000, an increase made possible by a $20,000 contribution from the Elgin National Watch Company. Reorganized as the Family Welfare Association and directed by Louise Logan, it became the main coordinator for relief efforts. Because state funds could not be allocated to a private agency, the Family Welfare office was "loaned" to the county branch of the Illinois Emergency Relief Commission. By the end of the summer of 1932, there were 582 families on its lists.
The Unemployment Bureau became a recipient agency of the Community Chest. Given the impossible task of finding jobs, the bureau opened a soup kitchen, the Canteen, in the basement of the Salvation Army building on Thanksgiving Day, 1931. By the following January, it was serving 185 meals daily. The police department was also feeding a growing number of itinerants who sought overnight shelter in the lock-up. To assist youngsters who were missing school for lack of decent footwear, the CourierNews established a Shoe Fund and distributed 324 pairs in the winter of 1931-32.
The day after the Home Banks closed their doors, there was a run on the First National, but the management had set aside excess reserves. Delivery men, accompanied by three guards, arrived from the Federal Reserve Bank in Chicago with more than one Million dollars in gold certificates packed in suitcases, and the bank remained open after regular hours to meet the demands of depositors. The next day, after the panic subsided, the money Poured back into the bank. Those who had money in the defunct Horne Banks were denied funds when the need for money was Most desperate. Payments by the receivers to depositors and other creditors were distributed in installments over several years. The Home National eventually paid out 99.3 percent and the Home Trust and Savings, 73.7 percent.
In a wide-ranging effort to cut expenses, the Elgin National Watch Company in 1932 moved some of its Chicago offices to Elgin, cut both piecework and hourly wages, eliminated many watch styles, reduced monthly pay days from three to two, razed the National House, and suspended publication of The Watch Word. And yet the net loss in earnings that year was the greatest the company had ever suffered. The many employee-shareholders saw the price of its stock plummet below six dollars per share; in 1929 it had sold above seventy dollars. The firm's capital was lowered from $10 million to $6 million by reducing the par value of its shares from twenty-five dollars to fifteen dollars. About 1,700 were on the job in January 1932; a year later, there were only about five hundred workers at the plant, and even during the seasonal rush in the fall of that year, the factory were employing only about a thousand.
Many small enterprises quietly disappeared and others were functioning at only a fraction of their capacity. In 1932 the Professional Building, the I. Cohien women's wear and dry goods store, and the Van Sicklen Corporation were placed in receivership. The Elgin Windmill Company had produced 1,592 mills in 1929; in 1932 the firm turned out only 288. An exception to the declining profits and employment was the David C. Cook Publishing Company. Employment averaged above two hundred fifty, and hours and wages were unchanged. Sales remained relatively constant, and a profit was made each year. Cook employees donated five hundred dollars towards the operation of the Canteen in 1932 and provided a Christmas party for underprivileged children.
Company I of the 129th Infantry was called into federal service in MarCh 1941. The National Guard unit left for defense training at Camp Forrest, Tennessee, from Elgin's high North Western station. Regiments left for Civil War battlefields on the same railroad.
The mayor and all of the commissioners were defeated in the 1931 municipal election. The new Council was soon wrestling with a legacy of debt. The extensive program of street paving begun in the '20's had cost about three and a half million dollars. The work involved fifty-five special assessment projects financed by issuing bonds in which the city government had assumed a liberal public benefit obligation of twenty percent and more. With the drop in assessed valuations and increased tax delinquencies, the municipality was pressed for funds with which to pay its debts. In 1932, salaries of all city officials and employees were cut five percent, seven and a half percent and ten percent depending on their pay range, and the base pay of firefighters and policemen was reduced twenty-five percent. Both uniformed departments were cut in numbers. The three outlying fire stations were closed, leaving only the two downtown stations operating. By the end of the year, city employees, with the exception of those in the water departments, received scrip instead of paychecks because the city had reached the limit allowed in issuing tax anticipation warrants. In 1933 the city defaulted on a portion of its bonded debt, and businessmen had to donate a new squad to insure a two-car patrol.
Like the city government, the school district had to face a reckoning. Having failed to convince the public of the need for expanding physical facilities during the '20s, the Board of Education now had to accomplish that feat in the midst of a deepening depression. The high school was jammed with students who had nowhere else to go, and the enrollment on October 1, 1930, reached 1,434 in a building designed to house about a thousand. A "ninth and elementary grade school building," so designated to avoid public animosity toward the junior high school concept, was finally approved by voters and constructed on the west side. It was named the Edward H. Abbott School upon completion in 1932, and was used to house students in grades eight, nine and ten.
The expenditure for Abbott School was accompanied by drastic cuts in the district's assessed valuation and a rise in tax delinquencies. For the school year 1932-33, teachers earning more than $1,400 annually had their salaries reduced ten percent, and the next year, all salaries were reduced another ten percent. Compensation was stretched over twelve months to reduce the interest on tax anticipation warrants the district began issuing early in 1932. To further economize, teacher class loads were increased by not replacing teachers who resigned.
There were few jobs for students graduating from Elgin High School. In the fall of 1930, twenty-nine members of the previous June's class enrolled in "post-graduate" courses, and the next year, seventy-three alumni were in attendance. This outlet for those who had nowhere else to go was ended in 1932 as an economy measure. To help reduce expenses for those continuing their education, Elgin Academy re-activated its Junior College in 1933.
Fears of outsiders were prevalent. Following a rumor that a Communist planned to address an Elgin audience, Post 57 of the American Legion declared that no Red should be permitted to talk or work in the city. A secret committee known only to the post commander was to investigate possible activities of Communists in Elgin. When large contingents of Jehovah's Witnesses arrived to spread their gospel in February and May 1933, they were ordered by the police to leave town. They returned in July and flooded the city with a magazine containing various accounts of their previous troubles in Elgin. The Ku Klux Klan marched down Dundee Avenue in August 1933. The leaders were mounted on horses decked out in colored cloths. The marchers were in full regalia, but unmasked, a condition imposed by Mayor Myron M. Lehman in granting the parade permit.
As old values and institutions crumbled under the challenge of harsh new realities, many clung to the past in desperation. In the presidential election of 1932, township voters followed the slogan, "Hold on to Hoover," and gave the incumbent a whopping twothirds of the major party vote. Plans were started for the city's approaching Centennial celebration, and in August 1933, the Road Races were revived. Financed in great part by Martin Skok, whose replacement piston pins were in demand as motorists repaired old cars instead of buying new ones, the venture lost money.
As it had in former years, the Association of Commerce tried to attract new industries to replace those that failed. A unit of the B-G Garment Company was brought to Elgin and began operations in the former shoe factory in September 1930. The Allied Shoe Company went into the vacant shirt factory, attracted by moving expenses from Chicago and the offer of a deed to the building if the firm had a total payroll of a half million dollars at the end of five years. When Allied began receiving job applications in August 1933, a crowd of unemployed men and women estimated at twelve hundred swarmed their offices on Liberty Street. Both of these firms were low-paying, marginal producers whose combined employment never exceeded three hundred.
The bottom came in 1933. In April, the Canteen was serving an average of 450 vegetable stew meals daily, 230 of which were sent to various schools where there were undernourished children. By July, there were only about five hundred workers at the watch factory, and even during the seasonal rush in the fall, the plant was employing little more than a thousand. In September there were nineteen hundred families on relief-fifteen hundred registered with the Family Welfare Association and the balance on the township government rolls. Men pleaded for some kind of work to do in return for the aid they were receiving.
Nature added to the despair. A tornado on July 2,1933, demolished the airport facilities, including the beacon and the main hangar, and destroyed the power lines for the Dundee-Carpentersville-Elgin interurban. Neither the electric line nor the landing field were placed back in operation. Three factory buildings in the north end and the botanical garden in Trout Park were severely damaged. Farmers were hard-hit. Crops were flattened by the hail and wind, and many farm buildings were damaged or destroyed. Street car service, to be replaced by a bus line, ended in November 1934, and the Elgin-Aurora interurban was abandoned in 1935.
This was a Depression far more severe and of longer duration than Elgin had endured after the Panic of '93. Probably more than half of all those in the city able and willing to work were laid off for extended periods on one or more occasions as the economy declined and stagnated. The 1929 U. S. Census of Manufacturing reported 6,999 employees in eight-two Elgin manufacturing establishments; the 1933 count revealed only 2,835 employees in fifty-two firms. Women, especially those who were married, bore the brunt of the layoffs. Jobs in construction were practically non-existent, despite the willingness of trade unions to accept cuts in wages. For the three-year period from 1931-33, only sixty-three homes were built. Local bank deposits fell from $12.1 million at the end of 1929 to $5.6 million at the end of 1933.
Elgin's economy, based on the output of quality watches with a highly elastic demand, was more vulnerable than that of the nation and state. The decline in manufacturing and construction was reflected in the retail sector.
Elgin was prostrate during the '30s. Excluding the state hospital, where the number of patients and resident staff jumped from 3,744 to 5,352, the city's population gain was only 634. Statistics do not reveal the personal effects of the Depression-of marriages postponed; of vanished savings; of hopes of higher education crushed; of the feeling of helplessness and uselessness of those without jobs; of the "jungles" of homeless men in the gravel pits southeast of town. The wolf was at the door.
2. Elgin in 1935
Elgin's centennial year was an occasion for the city to recall its heritage and reaffirm in the depths of a Depression its confidence in the future. A replica of James T. Gifford's cabin was erected in the little park at Fulton and Villa Streets within a block of the original site. Walter H. Kimball, son of Samuel J. Kimball and the oldest native born resident, cut the first piece of a 700-pound birthday cake. Marguerite Gifford, grandniece of the founder, was elected Centennial Queen. Souvenir wooden money in denominations of five, ten and twenty-five cents was issued to help finance the celebration, which included a concert, three parades, a costume ball and four performances of a huge pageant, "On Wings of 'nine," portraying the city's one hundred years of progress. The Courier-News published a 148-page special centennial edition.
Hard at work in the abandoned Fire Station No. 5 was Elgin sculptor Trygve Rovelstad. He was modeling a four-figure group twelve feet tall called the Pioneer Memorial. The monument would consist of a scout or huntsman, dressed in coonskin cap and fringed buckskin, carrying a long rifle and breaking the trail; his pioneer father looking eagerly ahead to new horizons; his mother with a baby at her breast; and a youth bearing a staff in one hand and a scroll in the other, symbolic of strength and knowledge. Its foundation had already been poured in Davidson Park, but funds to complete the project were scarce.
Looking ahead, a round-up dinner meeting after the Centennial celebration heard proposals for the betterment of Elgin. Suggestions included a community building, a new bridge over the Fox, a bypass route for U. S. 20, highway widening, and the construction of an armory. All of these would eventually become realities.
The economic gloom was brightened somewhat with four quarterly dividends of the Elgin National Watch Company, totaling one dollar per share, the first since February 1931. It was announced that The Watch Word would resume publication. Teachers' salaries were restored to 90 percent of their pre-Depression level. Nevertheless, there were many reminders that the New Deal had not revived the economy. Population was stationary except at the Elgin State Hospital, where the number of patients had risen about eleven hundred since 1930. It was becoming a poor farm, and many recovered patients could not be discharged because of the hard times. Only sixteen dwelling units were erected in 1935, in contrast to the 388 built ten years earlier. The year's only commercial construction was a building for a small dairy operation. The number of telephones in the Elgin district had declined from 9,591 on January 1, 1930, to 7,435 on January 1, 1935.
The scarcity of jobs attracted four mayoral candidates and thirty-five hopefuls for the four commissionerships in the municipal primary. A record number of 13,500 went to the polls to narrow the list. Myron M. Lehman, the incumbent mayor, won a return match with Earle R. Kelley in the final election. The turnout of 15,496 has never been surpassed.
The Elgin office of the Illinois Emergency Relief Commission, which included Dundee Township, reported a record caseload of 1,429 families in February. This was reduced about forty percent during the year, as many of the employables, found jobs on WPA and PWA projects. One of these was the transformation of a useless patch of mud and scrub brush in the Fox River into Walton Island. With the financial assistance of a $28,000 WPA grant, about eleven thousand cubic yards of gravel had been dredged from the river bed to expand the surface area and build it well above the normal river level. Work was done with hand shovels and wheel barrows to give more men jobs. In the spring of 1935, the area was seeded and landscaped with trees and shrubbery.
Violence flared when striking dairy farmers stopped milk wagons in various parts of the city, unhitched horses, dumped and smashed milk bottles in the street, intimidating and attacking drivers.
The strike that caused the most comment, however, occurred at Elgin High School. Student restlessness with the approach of vacation is a perennial event, but it took an unusual turn in 1935. The spring that year was unseasonably warm, and it came earlier than usual. Headlines and radio broadcasts brought news of labor unrest and the congressional debates over the Wagner Act. This climatic and social setting was stirred by a surprising action of the Board of Education at a special session on May 2. It was decided that Principal W. L. Goble would be retired at the end of the term and replaced by the principal of Abbott School. Without explanation, T. A. Larsen, the assistant principal, was to be offered a contract as a teacher and department head.
These personnel changes ignored the intense loyalty of Elgin High School students for "T. A." Most of the student body regarded his shift as an insult after twenty-seven years of service to the school. Larsen became the unwilling and embarrassed center of the storm to come. By the time the board met in its next regular session on May 7, the students were sufficiently aroused to gather by the hundreds around the high school building while their representatives presented petitions. They were informed that Larsen did not want the principalship and preferred the position of assistant, an answer which raised the question of why he was removed from that post.
The board agreed to reconsider its decision, but the students were not satisfied with the delay in action. Student strikers assembled around eight the next morning in front of the high school. An estimated twelve hundred of the fourteen hundred students joined the walkout, despite pleas by Goble and Larsen for a return to orderly school routine. Placards bearing such inscriptions as "WE WANT LARSEN!" and "T. A. OR STRIKE" were hoisted aloft as the students overflowed streets, sidewalks, and stores. The marchers crossed the river and proceeded to Abbott School, and further demonstrations took place in front of the watch factory, in Fountain Square and in Gifford Park. That night, about two thousand attended a fire-light demonstration in a parking lot near Maroon Field. A loud speaker system was used to bring messages of support from parents and alumni, many of whom shared their sons' and daughters' affection for Larsen.
The strike continued the next day, and in the evening another crowd milled about the building and park while a citizens group met with a student committee and the board. The board agreed to retain Larsen, and students returned to class the next day. The wire service publicity given to these events inspired students in other Illinois cities, and walkouts occurred at East Peoria, Champaign and Madison.
Several fraternal lodges and clubs succumbed during the depression years because of the attractions on radio and the inability of members to pay dues, but one new organization quickly gained members. A local Townsend Club was formed in November 1935 to further a pension plan which proposed two hundred dollars a month grants to those older than sixty.
3. Federal Aid
Money from Washington lessened the hardships of the Depression. Even before the arrival of the New Deal, a Reconstruction Finance Corporation loan had provided funds for the Illinois Emergency Relief Commission that rescued local public assistance in 1932. A city whose mayor had claimed residents could take care of themselves filed its initial application for federal aid in August 1933. In addition to the municipality, the school district and sanitary district received funds directly from the U. S. government or indirectly from the state of Illinois.
Less than three months after President Roosevelt had proposed what became the Civilian Conservation Corp (CCC), eighty Elgin enlistees were treated to a supper at the Canteen and left for assignments planting trees and preventing soil erosion. The youths were unemployed members of families receiving aid from a welfare agency. Of their thirty dollars per month wages, twenty-five dollars was sent home. The CCC offered three meals a day, medical attention and the self-respect which came from a useful job.
The Home Owners' Loan Corporation (HOLC) eased the pressure on the savings and loan associations. Elgin Loan and Homestead, the city's oldest and largest, had made $1,888,485 in real estate loans during the fiscal year 1928-29; in 1931-32, only $9,317. Unemployment accelerated the requests for withdrawals, which had to be restricted to the funds available. Borrowers found it difficult to meet their monthly Payments, and foreclosure proceedings were started on more than a hundred mortgages in 1932 and 1933. Beginning in December 1933, Elgin Loan & Homestead turned over distressed loans to the HOLC and received marketable bonds at low rates of interest. By 1939, its assets had dropped nearly forty-six percent from the peak in 1929.
The unemployed were put to work by Civil Works Administration (CWA), Public Works Administration (PWA), and Works Progress Administration (WPA) grants. They graded, landscaped, and reforested the cemeteries and Parks; remodeled the City Hall; installed larger water mains; extended sewer lines; constructed a river seawall at the water pumping station; removed the no longer used street car tracks; and repaired streets and highways. There was a federally subsidized recreation program, and high school students were paid National Youth Administration (NYA) funds for after-class work. The aim was to give people jobs and increase purchasing power.
The major construction projects of the late '30s were governmental. They consisted of new state hospital units, a new water treatment plant, additions to Elgin High School, a National Guard Armory and a new city bridge at Chicago Street. Government expenditures dwarfed the amounts spent on the new J. C. Penney store and the McGraw Electric plant.
New Deal efforts at getting the economy moving were unavailing. The National Industrial Recovery Act provided for industry codes which established maximum hours and minimum wages. "Follow the Blue Eagle Back to Prosperity" was the slogan of an NRA (National Recovery Administration) parade through Elgin's business district in November 1933. A long line of marchers, estimated at eight to ten thousand, and about one hundred floats and decorated automobiles threaded through the business district. The march culminated in a furieral and cremation of Old Man Depression in Fountain Square. Some businessmen were less enthusiastic; Ben Pearsall was so incensed by NRA regulations that he threatened to close his margarine plant. In any event, the NRA, declared unconstitutional by the Supreme Court, was dead before the Depression ended.
The first indications of a short-li recovery came at the watch factory 'in 1936. A full-time working schedule for all departments was restored on January 2. Employment climbed above three thousand during the peak seasons, dividends rose, wages were increased five percent, and a year-end bonus-the first in nine years-was distributed. The Canteen closed, a sign that the worst was over, and the Grove Theater reopened. If business was better, FDR received little credit in Elgin. The president may have swept every state except Maine and Vermont, but in Elgin, he got only 34.8 percent of the major party vote. The little boom continued into the next year. By the end of 1937, local bank deposits climbed above $11 million, about double what they had been four years earlier.
The first major store building to be erected in downtown Elgin in many Years was occupied by Penney's, but even more heartening in 1937 was the arrival of two new manufacturers. ShakeProof Division of Illinois Tool Works moved into a former Collinbourne building on Grace Street in September. The firm turned Out fastening devices for the ma -production industries, beginning with its introduction of a revolutionary twisted-tooth lock washer in 1923 and a pre-assembled screw and twisted-tooth lock washer. Production started in 1938. The Elgin operation made a newly developed hardened-metal screw that cut its own mating thread into the workpiece, eliminating the expensive tapping.
In October, the McGraw Electric Company, which had perfected the automatic pop-up toaster, began construction of a $250,000 plant on a twenty-five-acre tract of land just south of the city limits on the west side of Illinois 25. The Association of Commerce raised $25,000 from contributors to purchase the site and provide water and sewer lines and a railroad siding. The building contained 123,000 square feet of floor space. Both plants began operation in 1938. The president, Max McGraw, was interested in wildlife conservation and started his own preserve with the purchase of about two thousand acres along the river north of the city.
Relief and unemployment lists fell. When the Illinois Emergency Relief Commission ended its local operations on June 30, 1936, there were 650 Elgin Township families on the caseload. This number had shrunk to 243 at the end of April 1937. An unemployment census conducted in November 1937 disclosed an even one thousand totally unemployed and desiring work. An additional 552 were listed as partially employed and desirous of more work.
The revival stimulated union activity which had begun with Section 7-A of the National Industrial Recovery Act of 1933. This provided for freedom from interference by management with union formation, but eighty-nine Woodruff & Edwards employees who had joined Local 159 of the International Moulders Union were discharged anyway. Their appeal was dismissed when the legislation was declared unconstitutional.
The International Jewelry Workers Union began organizing drives at the watch and case factories in the summer of 1934. Little success was achieved until after the principle of 7-A was resurrected in the Wagner Act of 1935. By February 1937, the majority of the Illinois Watch Case Company employees were members of Local 85. After a strike lasting more than three weeks, marked by some violence along the picket line, the union gained recognition; a forty-four-hour week ' time and a half for overtime and a minimum wage of sixteen dollars per week. The IJWU hoped to organize the watch factory workers, too, but they voted 2,126 to 1,014 on April 20,1937, to accept the Employees Advisory Council as their bargaining agent. By August, more than ninety percent of those eligible had signed up, and the first contract between the company and its employees was signed in December. It followed the lines of the case factory settlement. Before the agreement was negotiated, the company had expanded the fringe benefits to include up to two weeks' vacation with pay and a group hospital care plan.
The business recovery of 1936-37 didn't approach pre-Depression levels, and the local economy receded the next year. Although more than five hundred workers were on the McGraw Electric payrolls by the early summer of 1938, this gain did not compensate for the drop in employment at the watch factory and elsewhere. Several concerns went to the wall in 1938. Collingbourne Mills was in the hands of receivers. Swan's department store, which had always operated on a cash basis, could not survive when customers needed credit. Scheele's, which had extended credit that was not repaid, had sold out two years earlier. The hardware store established by David Barclay and carried on by his son and grandson was discontinued.
Consumer credit needs were the impetus for the formation of ten non-profit credit unions in Elgin during the '30s. The largest of these was organized by the watch workers in 1931. Four were started during the 1938 downturn by Woodruff & Edwards, Elgin Metal Casket, McGraw Electric and Brethren Publishing House employees.
Tariff reduction was the most unpopular locally of all the Roosevelt policies. The New York YYmes had declared in 1888 that the history of the Elgin National Watch Company was "a splendid refutation of the theory of American industry requiring artificial stimulus or legislative favor."5 The growing number of Swiss watch imports became the circumstance that confirmed the theory. The Smoot-Hawley Tariff of 1930 had raised duties on foreign movements, but the onslaught of the Depression nullified any advantage this may have brought.
A high tariff was not an effective method of limiting imports of watches because the small size of the movements made smuggling hard to detect. In 1932, for example, federal inspectors uncovered twenty-two bales of duty-free rabbit skins, each containing at its center from one thousand to fifteen hundred Swiss timepieces. Duties could be evaded by importing movements without an essential part. In that condition, the rate was lower and the missing part later could be restored at a small cost. After entry eighteen-jewel plates could be substituted for plates with a smaller number of jewels, a process called upjeweling.
A reciprocal trade agreement with Switzerland went into effect on February 15, 1936. Duties on watches were cut an average of thirty-four percent below the 1930 rates, but the tariff still amounted to fifty-three percent ad valorem. Above seventeen jewels, the tariff of $10.75 remained unchanged. The Swiss, in turn, lowered their tariffs and quotas on American goods, including wheat, lard, canned vegetables, chewing gum, typewriters and office equipment. Prior to this agreement, the domestic industry had about fifty-three percent of the American jeweled watch market; from 1936 to 1941, the U. S. manufacturers' share of the market declined to about thirty-nine percent.
The clearest indication of the continuing Depression was the financial plight of School District U46. Its assessed valuation had dropped from $31.6 million in 1930 to $21.5 million in 1935, while the education fund tax rate remained stationary. Voters decisively rejected proposed tax increases in April 1938 and September 1939. The accumulating deficit compelled a drastic retrenchment. Kindergarten classes were eliminated, the George P. Lord School was closed, and staff was reduced, but these and other cutbacks could not prevent ending the school year one month early in May 1940. The University of Illinois promptly voted to suspend action on the accreditation of Elgin High. The Board of Education applied additional pressure on public opinion by withholding contracts from the music teachers. Threatened with the loss of the very popular music program, the electorate finally approved a tax increase in July 1940.
A school controversy that attracted widespread attention provided evidence that old attitudes still lingered. In the fall of 1939, the principal of Abbott School, S. C. Miller, noted that some children were going without lunch and interested the PTA in providing warm meals at noon. Food was supplied from the federal surplus commodities depot, and the township supervisor assigned a WPA worker to assist. The program was suspended after three weeks when a four to three majority of the Board of Education ruled against distributing free food to students. The majority felt students would learn to adopt a dependent attitude toward life and expect a living from the government. One member of the majority was disturbed that the food was given indiscriminately to all children, whether or not their families were underprivileged. "I'm not in favor at any time of feeding the children in the schools of this town," said another member. "I think it's wrong to do it. It has strong socialistic tendencies, and I say that's unAmerican."6
FTA members countered that taxpayers were paying for the surplus food, whether or not it was used; that children benefitted from the program (one student was alleged to have gained seven pounds); and that the board itself had accepted federal funds to build the new additions to the high school. Mayor Lehman, the Elgin chapter of the American Red Cross, and Local 90 of the International Ladies Garment Workers sided with the PTA, but the board refused to rescind its decision. The dispute was carried all over the country by the press associations. Editors stepped into the fray. Some agreed with the board and took occasion to indict the entire New Deal, while others branded the board majority as inhumane fanatics. The affair came to the attention of Eleanor Roosevelt, wife of the President, who commented in her "My Day" column: "Are we fostering the American spirit by starving little children? Oh, yes, I know that some of them may not have needed a meal. Perhaps some families were 'chiseling.' Would the Man who said: 'Drink ye all of it,' have had one child go hungry because some ate who could have eaten at home?"7
Permanent federal programs began operating which put the citizen in direct contact with the U. S. government. The initial Federal Housing Administration (FHA) home improvement loans were approved for Elgin residents in October 1934. Old-age assistance payments, the first federally aided state welfare program, began in July 1936. Unemployment compensation, a state-run program under federal regulation, was first distributed in July 1939. Some of those eligible were reluctant to register because they confused this insurance system with charity. The first Social Security retirement checks were received in February 1940. Un-American or not, government assistance had come to Elgin.
4. The Local Arsenal
The Depression ended with the increased expenditures for national defense that followed the outbreak of war in Europe. Late in April 1940, the Elgin National Watch Company received a War Department contract for developing equipment and a production plan for mechanical time fuses. In October, Plant No. 2, the former Van Sicklen building on Bluff City Boulevard, was acquired, and in January 1941 the firm was given a big order for manufacturing the fuses. Tooling up was a slow process because nearly all the machinery had to be designed and built from scratch, but assembly was under way before Pearl Harbor. There were additional government purchases for military and navigation watches. When the first contract was awarded, the firm was employing about 2,400. By November 1941, the payroll had climbed to 4,300.
Other Elgin plants also began national defense work or were acting as subcontractors, and the multiplier effects of this spending revived the economy. In 1941 alone, a big new store building was opened by Block & Kuhl on DuPage Street, additions to the McGraw and Borden plants were completed, and construction was started on a Woolworth's store and a factory for the Chicago Metal Hose Company. Residential construction spurted, despite a growing shortage of materials. Retail business picked up, and the City Council made plans to purchase parking meters to ration curb space. Car registrations, telephones in service and bank deposits reached new highs.
The return of prosperity was accompanied by fears that the United States would become a belligerent. Headlines and radio reports flashed stories about Nazi victories in Europe and Japanese gains in Asia. Many residents joined the America First Committee to oppose lend-lease aid to Britain, and hundreds participated in a motorcade to St. Charles on Labor Day 1941 to hear U.S. Senator Burton K. Wheeler resolve that "this republic will not become embroiled in a foreign war."8
Nevertheless, preparation for defense mounted. Two selective service boards were organized, one for the east side and one for the west side, and the first draftees left on November 30, 1940. Company I of the 129th Infantry, the local National Guard unit, departed for defense training on March 20, 1941. The sale of defense bonds and stamps, pleas for ftmds for the USO and the Red Cross, and scrap metal drives added to the forboding. U. S. Navy patrols in the North Atlantic had already engaged German U-boats when the Japanese attacked Pearl Harbor.
Prevailing isolationist sentiment had no effect on the upsurge of patriotism as the city enlisted in a long, all-out war. More than four thousand Elgin men and women served in uniform. By mid1943, homes on tiny Michigan Street, one block long, were displaying twenty-four blue service stars in their windows. The relatives and friends they left behind participated in the conflict through their sacrifices and war work, but few were gripped by the fanaticism and illusions of the First World War. "Gun" Clifford, a Courier-News columnist, voiced a common attitude:
"While the war is on, we are promised Utopia and when the war is over, we get a 'Treaty of Versailles' and a group of 'Willful Men,' which combine to settle nothing and pave the way for the next war."9
Total war transformed living patterns at home. The thirty-five-mile per hour speed limit, gas rationing and the ban on new car production jammed the city's buses. Shortages of consumer goods appeared; roast beef or a steak of any description became a rarity. The city was stripped of most of its physicians and nurses of service age. Hundreds of housewives left their homes for work on assembly lines or took over jobs, such as truck driving, once only held by men. Victory gardens sprouted in back yards and vacant lots. A salvage drive for rubber in 1942 rounded up some seventy-five tons of old tires, and a metal collection that fall created a pile of 386 tons in Gifford Park. Another mound of 334 tons arose early in 1943. Residents saved tin cans and grease, donated blood at Red Cross centers and bought war bonds. A movie siren, Dorothy Lamour, appeared in person in Fountain Square to auction off a sarong to the highest bond subscriber at one rally.
President Roosevelt received a letter from a nervous Elgin lady protesting the locating of war plants here without providing bomb shelters, but an active civil defense group was charged with organizing local efforts in the event of an air assault or other catastrophe. It operated out of a control center in the City Hall with the aid of hundreds of volunteer air raid wardens, fire watchers, auxiliary fire fighters, auxiliary policemen, and first-aid workers. A full-scale test blackout was organized on the night of August 12-13, 1942.
Elgin industries quickly converted to full-time war production, and the city became an "arsenal of democracy." Workers toiled long hours, and there were no strikes. A critical shortage of labor Prompted a house-to-house canvass in 1944. The Army-Navy "E" was Presented to firms that excelled in the quality and quantity Of their output. The award consisted of a flag to be flown above the Plant and a lapel pin for each worker. White stars were added for continued outstanding performance. Only a small minority of the nation's war plants were thus recognized. The following is a list of Elgin factories flying the "E":
The mechanical time fuse produced by the watch company's Plant No. 2 was a cone-shaped metal device attached to the front of anti-aircraft shells. Its purpose was to explode the shell at the right time and height. Because the projectile's speed exceeded that of the plane, great precision was necessary; yet the fuse had to withstand the shock when the gun was fired. In one engagement the battleship South Dakota's batteries, firing shells with these fuses, downed thirty-two attacking planes in twenty-five minutes. George G. Ensign, Carl N. Challacombe, and Walter Kolhagen, company scientists, received citations from the War Production Board in 1943 for improvements in their manufacture. They increased the predictable accuracy of the explosion and allowed testing at the factory without damaging the mechanism. At times, output reached twenty thousand per day.
Women comprised most of the labor force at the two local plants of the Elgin National Watch Company. Many of them joined the WOWs-Women Ordinance Workers-which organized dances, roller skating, and theater parties for lonely members. They also supplied Christmas packages and cigarettes for servicemen and raised funds for the purchase of a mobile canteen unit for use overseas, an ambulance and Braille watches for blinded veterans. Especially welcome at the social functions were the men in uniform stationed at the Fox Hotel from April 15, 1943, through July 8, 1944. They were soldiers enrolled at the Elgin Watchmakers College to learn how to repair watches in the field. About 350 attended the streamlined courses. There were as many as seventy-five enrolled at one time.
The city's admirable production records were shadowed by one of the most publicized munitions scandals of World War 11. On December 22, 1941, Illinois Watch Case was purchased by Allen B. Gellman and Joseph T. Weiss of Chicago. The plant was leased to Erie Basin Metal Products Inc., which was organized on February 4, 1942. This firm's directors were Gellman, Weiss and the Garsson brothers, Henry and Murray. They also controlled Batavia Metal Products, another paper corporation set up to produce war material in the old United States Wind Engine & Pump factory in the downriver city. On February 28, 1942, Erie Basin received its first government contract. The old case factory became a major producer of chemical mortar shells, eventually turning out more than two million.
A Senate investigating committee in 1946 unearthed information that the Garssons had conspired with Congressman Andrew Jackson May to defraud the government through the two interlocking corporations set up in the Fox Valley. They were convicted and sent to prison. Gellman claimed he was unaware of the Garssons' manipulations. Batavia Metal Products declared bankruptcy. A war contract adjustment board ruled that Erie Basin had made excessive profits of $1,270,000, but the suit to collect this SUM was finally settled years later with the government receiving about $70,000 in cash and some rusted ordnance machinery.
Young men from Elgin who had never seen an ocean or visited a foreign country were sent to fight all over the world. Unlike Company E of the 129th Infantry in the First World War, most of Company I's original roster was split up by promotions and transfers to other units. After thirty months of combat in the Fiji Islands and Bougainville with the 37th Division, the 129th landed in the Philippines with the 33rd Division and was heavily engaged in the drive to capture Baguio through the entry into the Caguayan Valley.
More than a hundred died in the service of their country. Where they fell is a measure of Elgin's participation in the global conflict. Airmen crashed over Europe in Thunderbolt fighters and Liberator and Marauder bombers. Two were bombardiers with Chenault's 14th Air Force in China, and one was a crew member of a B-29 based in the Mariannas. Pilots and gunners on Navy planes went into the sea on raids "somewhere in the Pacific." Two sailors were killed at Pearl Harbor and one in the Battle of Leyte Gulf. Other Elgin seamen went down with the torpedoed heavy cruiser Indianapolis, disappeared with the submarine Keyte, "overdue from patrol and presumed lost," or were killed in kamikaze attacks on the carrier Franklin. Six Marines were cut down on Iwo Jima, one on Tarawa, and one on Okinawa. More than a dozen soldiers of the 1st and 3rd Annies fell in drives across France in '44; many others perished in Belgium, Germany, North Africa, and the Philippines or died while held as prisoners of war.
Dreaded War and Navy Department telegrams to relatives at home multiplied
in the last year of the war. It was a mechanized struggle on a vast scale,
but individual human beings were the targets. If their sacrifices failed
to bring an enduring peace, they had defended in their time the cause of
freedom in its never-ending struggle with tyranny.
Town in the West
II The Dividing Line
III Watches, Milk and Butter
IV The Expanding City
V Boom and Panic
VI The Good Years
VII Whirling Twenties
VIII Depression and War
IX Civic Pride
X Modern Elgin
Town in the West
© 2001 by E. C. Alft and ElginHistory.com. All Rights Reservered.