Depression-era Retailers

Update: Jan 12th, 2012

Waterville’s Jewish Retailers during the Great Depression

by Yichen Jiang ’13 (September 2011)

The Great Depression was a decade of hardship for many Americans across the country. Although Maine was spared the destitution that faced the Midwest, it was by no means immune to he greatest global depression of the 20th century. Interestingly, however, the Jewish population in Waterville fared relatively well during this period of adversity.

Context

Due to its maritime location and proximity to Canada, Maine was a major shipping hub on the East coast during the 19th century. Although Waterville never benefited from marine shipping as Portland and Bangor did, its location on the Kennebec River and the Messalonskee Stream meant that the city was able to easily harness waterpower. The availability of waterpower combined with a steady inflow of immigrant labor, mainly French Canadian, transformed Waterville into a factory town. With the advent of the railroads, it no longer mattered that Waterville was not a coastal city, because goods were now shipped by rail. Waterville ousted Portland to become Maine Central Railroad’s home depot in 1884, which effectively secured the city as a major hub for rail traffic in Maine (Plocher, 11).

Waterville at the turn of the century saw rapid rises in living standards, as well as the inauguration of a new City Hall and Opera House. The 1920s spelled a decade of prosperity for the lumber and agricultural industries in Waterville because of the high commodity prices around the country. The retail industry of Waterville also flourished, not only as a result of the increase in through traffic brought by the railroads, but also as a consequence of the increase in disposable incomes of local residents during the decade.

Yet Maine stood relatively apart from the rest of America in terms of its indulgence, mainly due to the fact that it remained mostly rural as a state despite the industrial advances in its mill towns. Fortunately, this isolation also distanced the state from the stock market crash of October 1929. The panic on Wall Street initially had little other than psychological effects on Maine’s economy. As one Maine historian recalls, “Immediately following the devastating October 24 stock market crash, the Kennebec Journal announced that speculators got what was coming to them” (Condon, 512).

Furthermore, Maine’s farmers did not suffer from the dust storms that plagued the Midwest, which meant that they could at least feed themselves if nothing else. “Some farm families, partly self-sufficient and isolated from national markets, had endured generations of hard times and hardly noticed the slump after 1929” (Condon, 513). Relatively, Maine was in a much better position than most other states in the U.S. to weather the Great Depression (Maine History Online).

Nonetheless, declining commodity prices and rising import tariffs following the stock market crash quickly slowed economic growth in Waterville. As investor confidence fell on Wall Street, commodity prices, short-term interest rates, real income and nominal money stock all followed (Temin, 109). The increase in Canadian import tariffs meant that Maine’s ports and railroads no longer offered a profitable route for European shipments to Canada. The sharp dip in food prices promptly erased profit margins for farmers in Maine. According to historian Richard Condon, mill towns were the hardest hit in Maine; “by 1933 about 20 percent of Maine’s manufacturing workers were on the street” (Condon, 514). Luckily for Waterville, the diversity of its industries provided it with the stability that many other mill towns lacked.

The Jewish community

Although they were fully reported in the English and Yiddish press, few Jews linked the happenings on Wall Street in October 1929 to their own working lives.

- Henry L. Feingold, A Time for Searching: Entering the Mainstream, 1920-1945, 146

By the start of the Great Depression, most of the Jews who came to Maine had already established themselves financially and economically. The typical Jewish peddler of the 1910s was now a store owner. [For more, visit Occupational Trends]. Most working Jews in Waterville during the Depression era were self-employed and therefore did not have to navigate the turbulent job market. Since very few Jews at the time were farmers, the Jewish community was largely unhurt economically by the plummeting food and produce prices. No Jews were involved in the lumber and paper industry in town, which experienced steady declines throughout the 1930s. Rather, Jews were disproportionately represented in Waterville’s retail sector. This fact is not surprising, considering that the same occupational trend was evident in Jews living in Europe during the nineteenth century. Data from Waterville’s city directories and U.S. census records show that Jews had the highest participation rate in the retail sector compared to all other ethnicities.

 

*  Data based on 1930 US Census population statistics for Waterville. We used 1929 and 1931 as reference points for the number of retail merchants since there does not appear to have been a 1930 directory for the city of Waterville.

**  Number in brackets indicates total population for each ethnicity. The Jewish data is derived from analyses of 1930 Census manuscript. Numbers for other ethnicities come from the published population report and include both non-natives and the children of non-native parents.

***  Native born of native parents.

The high participation rate of Jews in the retail industry in Waterville may explain how the Jewish community in town was able to sidestep the brunt of the Great Depression. But even within the retail industry in Waterville, businesses owned by Jews were more likely to weather the economic downturn than those owned by members of other ethnic groups.  The following graph plots the survival rate of businesses listed in the 1929 city directory.

It is not clear from the statistics why Jewish businesses in Waterville fared better than businesses of other ethnicities during the Great Depression. However, oral accounts of life during that time period suggest that dedication to customers and a genuine connection to the local community might have given the local Jewish businesses an advantage in surviving the Great Depression. Take Levine’s Store. for instance. The owners, who also rented out apartments in town, used to either give out clothing or offer steep discounts to tenants that were in need. In terms of connecting with the community, Levine’s Store offered lines of credit to its customers. This may seem like a risky business practice during the economic climate of the Depression, but this dedication to the community ultimately guaranteed customer loyalty to the store. [For more, visit Levine's Store]

Historian Judith Goldstein’s observation about the Bangor Jewish community may also help shed some light on the question: “Although they still lacked real wealth and conspicuous success, the Jews were hardworking merchants, expanding modest and middle-sized businesses. They were also ambitious, self-sacrificing parents who resolutely promoted educational and professional achievements for their children.” (Goldstein, 99)

On the management side, almost all of the Jewish businesses in Waterville were family stores run by family members, which naturally meant that there was a strong sense of commitment and responsibility. Harvey Sterns recounts that his father, who graduated college in 1929 and was accepted at Harvard Business School, instead went straight into the family business because Harvey’s grandfather fell ill.  Lester Jolovitz remembers about his father’s grocery store in neighboring Winslow, “My mother and the three of us, the children, if they got busy downstairs, we had a signal.  My father would rap, knock on one of the pipes that came from the store upstairs, I guess a water pipe or whatever, and that was a signal that somebody should go down and help out, that we were busy.  So, we all participated in the store; we didn’t have certain hours or whatever.” The fact that these stores were family owned and run also led to a significant operational cost saving, since there is no disconnect between owners and management. By having family members operate the stores, there is no need to set aside regular wages from the store revenues, which understandably led to cost savings. The small and versatile business model employed by these Jewish family stores was exactly what was needed to navigate the turbulent 1930s in Waterville.

Furthermore, not only were the Jewish merchants in Waterville apt at cutting running costs for their businesses, they were also savvy enough to spot the perfect opportunity for investment during the Great Depression. As Bob Rosenthal remembers about his father: “When he couldn’t sell the wool waste during the Depression, he would hire someone to make wool blankets and sell the blankets, and he eventually bought the mills…. and we were involved in that business until the ’70s.” For the Rosenthals, the Great Depression was a terrific demonstration of their entrepreneurial instinct, not to mention a display of sheer guts. For the other Jewish business owners in Waterville, their investments were in the form of human capital: their children’s college education. The emphasis Jewish parents put on education, even during the Great Depression, was pivotal for the new generation of Jews entering the professions in the following decade. [For more, visit Jews in Waterville in the Interwar Years]

Unfortunately, we do not have the same amount of data on the gentile businesses in Waterville throughout the Great Depression as we do on Jewish businesses. It may be that our analyses also hold for gentile businesses during the Great Depression, but the fact remains that Jewish retail businesses performed statistically better than their gentile counterparts in Waterville.

Consequences

 During the Great Depression, people who had full-time jobs were usually better off, at least economically, than they had been before 1929. This was true because in nearly every nation, the cost of living fell faster and further than wages fell.

-  John A. Garraty, The Great Depression, 86

The economic independence induced by their success in retail business was crucial for the Jewish community in Waterville during the Great Depression. As one British historian observed about the Depression: “a clear divergence of interest emerged, between those in employment who benefited by cheap food and cheap services, and those eking out an existence on the dole or perhaps without any income whatever,” (Garraty, 87) By this analysis, because of the fact that the Jewish families living in towns like Waterville were mainly self-employed shop owners, they turned out a lot better off due to their financial security and may even have benefited somewhat from the lower costs of living.

As Harvey Sterns remembers, some Jewish families were building new houses during the Great Depression. “My parents built a new home in Skowhegan, it would have been about the period of 1937, ’38. It was one of the few new houses built in Skowhegan, it was a very nice colonial. And I remember my father saying that, because this was during the Great Depression, every week he would go to the building site and pay the workmen, cash.”  Likewise, Jewish families in Waterville took the opportunity to purchase better houses or relocate to more affluent neighborhoods. [For more, visit Settlement Patterns]

By surviving the Great Depression and outlasting the economic turmoil, many Jewish families and businesses in Waterville were able to take advantage of the record low interest rates and low commodity prices of the 1930s and continue their climb up the socioeconomic ladder. One of the most important consequences of the economic success of these Jewish families was that it provided the foundation for the education of their children, who were then able to go on and pursue careers in the professions. Furthermore, the Jewish families in Waterville managed to maintain a strong sense of community during the Great Depression that lasted well beyond World War II

Print Sources

Bernstein, Michael A. The Great Depression: Delayed Recovery and Economic Change in America, 1929-1939. Cambridge: Cambridge UP, 1987. Print.

Condon, Richard H. “Maine in Depression and & War,” in  Maine the Pine Tree State from Prehistory to the Present. Ed. Richard W. Judd, Edwin A. Churchill, and Joel W. Eastman. Orono, Me.: University of Maine, 1995, pp. 506-29. Print.

Feingold, Henry L. A Time for Searching: Entering the Mainstream, 1920-1945. The Jewish People in America. Baltimore: Johns Hopkins UP, 1992. Print.

Garraty, John A. The Great Depression: an Inquiry into the Causes, Course, and Consequences of the Worldwide Depression of the 1930s, as Seen by Contemporaries and in the Light of History. San Diego: Harcourt Brace Jovanovich, 1986. Print.

Goldstein, Judith S. Crossing Lines: Histories of Jews and Gentiles in Three Communities. New York: Morrow, 1992. Print.

Maine History Online – 1920-1945: Countryside at Midcentury.” The Maine Memory Network. Maine Historical Society. Web. 20 Sept. 2011.

Plocher, Stephen. “A Short History of Waterville, Maine.” 2007. Web. 20 Sept. 2011.

Temin, Peter. The Great Depression Revisited. Ed. Karl Brunner. Boston: Martinus Nijhoff, 1981. Print.

Interviews

Sterns, Harvey. Interview by Kimi Kossler, April 2011

Jolovitz, Lester. Interview by Sam Levine, January 10, 2009

Rosenthal, Bob. Interview by Becky Muller, January 19, 2010

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