Wednesday, August 21, 2013

The Great Depression Shifted Utah's Economy

By Lynn Arave

The Federal government replaced Wall Street as the keystone in Utah's economy during the Great Depression (1929-39), according to Brigham Young University professor Thomas G. Alexander.
In a Utah State Archives brown bag lunch lecture in March of 1999 at the White Memorial Chapel in Salt Lake City, he said the Great Depression and the accompanying major assistance from the federal government changed the sort of colony Utah was."It became a colony of the federal government and not Wall Street," Alexander told an audience of some 80 people.

                                Kennecott's Bingham Canyon Mine.
He said that meant mining and agriculture -- extractive industries -- were no longer the cornerstones of the economy in the Beehive State.
Utah received $57 million in federal funds for public works projects in the Depression -- a lot of money in those days, $342 spent for every Utah resident -- and 270 percent greater than the national state per capita average.
Alexander credits strong lobbying efforts by Utah Gov. Henry H. Blood and former Gov. George H. Dern, then secretary of war, for the federal funding.
Utah's unemployment rate in 1933 was 36 percent vs. the national rate of 25 percent.
"People who had always worked searched hopelessly for jobs . . . People were frustrated by the harsh conditions," Alexander said.
Many women also lost their jobs as employers tried to retain more men on their payrolls.
Some areas were harder hit than others. For example, in 1932 half the families in Smithfield, Cache County, were on welfare.
Utah looked increasingly like a Third World country.
Thanks to that federal money, people went back to work in Utah on public works projects, and by the mid-1930s the unemployment rate had dropped below the U.S. average.
However, since states were supposed to provide some matching funding for the federal money, Utah started its first-ever sales tax.
"It was supposed to be an emergency tax," Alexander said, except it took on a life of its own and never went away.
The infusion of construction projects also helped spur on private businesses.
"The federal government was a pump primer for the state of Utah," he said.
The LDS Church also established its own welfare program during the Great Depression, and a bartering system also appeared in various communities.
Strangely, Alexander said, movie attendance increased during the Depression. He believes this was because of such bonuses as Thursday being grocery giveaway night in movie houses.
Even more surprising, he said, Utahns temporarily shifted from support of the Republican to the Democratic party in the Depression.
By 1942, Utah's per capita income was higher than the U.S. average, something that hasn't happened since because of all the federal defense plants built in Utah for World War II.
He said federal expenditures aren't as important in Utah today because the economy has diversified. But the Great Depression had a severe and lasting impact that permanently transformed the economy of Utah.

-NOTE: The author, Lynn Arave, is available to speak to groups, clubs, classes or other organizations about Utah history at no charge. He can be contacted by email at:  


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