Ann Arbor and the Great Depression
The rapid expansion of Ann Arbor and the University was not immediately halted by the October 1929 stock market crash. No banner headlines marked "Black Thursday." Instead the Daily News stressed short rallies rather than sharp declines in stock prices. In December 1929, when the unprecedented dimensions of the depression were becoming apparent, Ann Arbor's Mayor Edward Staebler assured local residents that the economy was sound and would weather this temporary financial crisis. Throughout the rest of the decade the city leaders and the local press continued to express confidence in the future of Ann Arbor. While this optimism masked many real economic reversals and personal hardships, it was indicative of the relative stability of Ann Arbor's retail economy compared to the economic and social plight of industrial cities like Detroit.
As the employer of twenty per cent of Ann Arbor's work force and the source of over 10,000 student and faculty consumers, the University buffered to some extent the immediate effects of the depression. Until 1931 it operated on a budget appropriated in the spring of 1929, when prosperity seemed assured. The number of students and tuition revenues did not seriously decline until the 1931-32 academic year. However, the expansion of the University's physical plant stopped abruptly and in 1931 a ten per cent pay decrease went into effect and enrollment declined ten per cent. University President A. G. Ruthven responded optimistically, "I am not at all discouraged...I must admit that the curtailment of our resources has permitted me to make certain changes in the organization which I believe will be of lasting benefit."
Despite marked declines, most of its industrial, farm, and retail establishment survived. Even during the national "bank holidays" Ann Arbor banks maintained limited business hours. In the ensuing years the city's relative stability attracted new residents and industries fleeing the economic distress of Detroit. Thus Ann Arbor's economic losses were balanced by modest gains.
But Ann Arbor did not escape the depression. Companies which supplied parts for the automotive industry, such as American Broach, King Seeley, and Hoover Ball & Bearing, accounted for a large per cent of the industrial work force and were immediately forced to reduce production and to lay off factory and office workers. Several firms went into receivership and withdrew from Ann Arbor. Others merged with out-of-state companies hoping that additional resources would allow them to survive, even if the patterns of employment shifted away from Ann Arbor. Retail establishments, which accounted for a majority of the city's income, suffered a fifty per cent drop in sales. Although few businesses declared bankruptcy, most were plagued by unpaid bills and increasing debts.
The building boom of the previous decade which had created new University buildings, factories, stores, and homes stopped short as Ann Arbor prepared to wait out the financial slump. Home-building permits declined from 260 in 1929 to an average of fewer than 50 during each of the next six years. Not only did contractors, carpenters, plumbers, electricians, and suppliers suffer, but unemployed factory workers were denied the temporary construction work which had previously allowed them to survive periodic unemployment.
With continuing price declines, the surrounding farm community was not a source of temporary employment either. With its diversified production of grain, vegetable, dairy, and poultry products, Washtenaw County suffered less than farm regions dependent on one crop. But the number of farm mortgage foreclosures increased steadily from 1930, and farm auctions became more frequent. Unemployment--its increasing magnitude and duration--became Ann Arbor's most critical problem of the depression. By 1931, ten per cent of the work force was without a regular paycheck to pay the rent and buy the family groceries. Without hope for a job in the foreseeable future, these people were completely dependent on their neighbors.