PART 2

REPORT ON WISCONSIN BUSINESS FROM THE

DEPARTMENT OF COMMERCE

(U. S. Department of Commerce, Office of Domestic Commerce, Area Development Division)

SECTION I. HIGH LIGHTS

The dawn of industry in Wisconsin

By 1840 no fewer than 1,600 "hands" were busy in the mills and manufactories of the Territory. They made a pound of silk, valued at $5, in that year, and turned out $61 worth of hats. But the leading interests were the 124 sawmills and the few grist and flour mills whose products, so much in demand by the settlers, were worth more than all other types of manufactures combined. The record shows 7 brick and stone houses built in 1840, and 509 wooden ones. Soap and tallow candles were made by the thousands of pounds, and three breweries were in operation. Six weekly newspapers existed to serve the intellectual. And, a shadow of future events, ships and boats worth $7,000 were built.

The people

The number of people in Wisconsin shot up from 30,000 in 1840 to 300,000 10 years later, and 775,000 by 1860. It has continued to rise, decade by decade, to new heights. The 1947 figure was over 3 millions. Since the turn of the century, however, growth has been a little less rapid; in fact, Wisconsin's population formed a somewhat smaller share of the national total in 1947 than in 1900. This means only that newer areas have been taking their turns at shooting upward. The cities have grown even faster than the countryside. From three small cities in 1850--Milwaukee, Racine, and Kenosha, with only 30,000 people between them-Wisconsin's cities and towns of 2,500 and over had increased in number by 1940 to 93, and in size to more than a million and a half inhabitants. The 1930 census was the first count to find more than half the people of the State living in these urban places. The percent of urban dwellers has been rising similarly throughout the country. For a hundred years it has been just a little higher in the Nation than in the State. The increasing urbanism of Wisconsin in fact very well typifies that of the whole United States.

The growth of industry

The population did not increase in a vacuum, for a whole new economy was growing up in Wisconsin during these years. For many decades the farmers were to be its chief base. The 1850 census found 40,000 farming a million acres of improved land. Already they had created specialties which sound familiar today: 3%1⁄2 million pounds of butter were made, and 400,000 pounds of cheese.

But not all men were farmers. Three thousand miners, many of them in the lead mines, were enumerated by the census. The sawmills were busier than before, and there were nearly a thousand lumbermen, while 350 workmen in iron and lead furnaces and in foundries gave a hint of the future in another direction. There were carpenters, masons, brickmakers, cordwainers, and "black and white smiths." Merchants and tailors were multiplying, and so on down the line, to one chemist, and one undertaker. More than 10,000 were listed simply as "laborers." Six thousand men altogether were recorded as earning wages in the manufacturing industries, and their products were valued at $9,000,000.

Twenty years later, in 1870, the railroads had spread across the State, the number of manufacturing wage earners had jumped to more than 40,000, and the products manufactured had multiplied in value 8 times. The sawmills employed 12,000 of the 40,000 workers, as the great days of lumbering got under way. Twenty-five hundred men were making boots and shoes, in seven hundred and fifty different establishments. There were carriage and wagon makers, the flour mills continued active, and a couple of hundred shops employed nearly 2,000 in the manufacture of men's clothing. Women's clothing still remained largely a home process.

So manufactures went on growing from year to year. The 1,600 wage earners of 1840 and the 6,000 of 1849 and 40,000 of 1869 became 140,000 by the end of the century, and more than 250,000 in 1919 and 1929 (not counting salaried and other personnel). Meanwhile, though the value of manufactured products ceased after 1870 to triple every 10 years, each new census until 1929 revealed a new peak, up to a high of more than $2,000,000,000. From 1929 to 1939, however, there was a sharp drop. The same trends have been visible in the country as a whole, though the 1849 to 1929 rise was less sharp and the drop after 1929 was less steep elsewhere than in Wisconsin. Wisconsin's industrial contribution to World War II

Then came the Second World War. Naturally heavy demands. were made on Wisconsin manufacturing plants and on the experience and skill of Wisconsin personnel. Manufacturing facilities to the tune of $500,000,000 were installed during a period of 5 years-15 times as much new plant and equipment as in the year 1939. The greatest share of this investment went to the Milwaukee area, but the big ordnance plant in Sauk County and large installations in many other communities added greatly to Wisconsin's war-production facilities.

And war supplies began to flow out. Products manufactured in the State in the year 1939 had been valued altogether at 1.6 billion dollars. In 4 years of national defense and war, the contracts let in Wisconsin for war supplies alone, and exclusive not only of civilian supplies produced, but of food, even for the armed forces, amounted to 4.6 billions. Ordnance and ammunition poured forth from Eau Claire, Janesville, La Crosse, Merrimac, and Racine. (Only seven States produced more ordnance than Wisconsin.) Superior and Manitowoc built ships and submarines; Beloit and Madison manufactured machinery; Sturgeon Bay turned out subchasers; Kenosha and Racine made airplane engines and tanks. In Milwaukee, they manufactured nearly everything.

How did Wisconsin fare during these years, compared with other States? It appears that the State's share was very slightly less than in peacetime. The prewar population, which was 2.4 percent of the national total, supplied 2.5 percent of the Nation's factory workers, put in 2.4 percent of 1939 national expenditures for new manufacturing plant and equipment, and turned out 2.8 percent of the national industrial product, by value. But war industrial facilities authorized for Wisconsin were only 2.2 percent of the United States total. However, expenditures for new plant were characteristically lower, proportionately, in such older manufacturing States as Wisconsin, which were already well equipped to produce heavy metal goods. Newer States had less to start with, and comparatively more capital expenditure was required.

When Wisconsin's 2.8 percent of the national value of product in 1939 is compared with the 2.4 percent of all war supply contracts which were let in this State, account has to be taken of another factor. Wisconsin is better able than most States to produce such manufactured food items as butter, cheese, canned foods, etc., as well as machinery and ordnance. But food orders for the armed forces are not included in the figures. Wisconsin probably turned out more than 2.4 percent of the total of war supplies—that is, more than its share in proportion to its population-if food were counted in. The present economic scene

Now the war is over, and Wisconsin has been a State for 100 years. What kind of economy has emerged from all these changes? It is still a great agricultural and a great industrial State. It has more people engaged in manufacture, in proportion to its population, than the Nation has. Despite large numbers in retail trade, in services, and in many other kinds of work, over half the nonagricultural employees are in manufacturing, and even larger share of the State's total pay roll is met from this source.

What are all these people doing? And how does the scene differ from that of a hundred years ago? The great change which has occurred is in the place assumed by the metal-using industries. As iron mines were developed to the north and coal in States to the south, and with the developing middle States as a market, Wisconsin manufacturers came to turn their chief attention to machinery and other metal products. A hundred thousand men, more than one out of every four factory workers, are engaged in making some kind of machines or machine equipment. If we add in the ships, autos, and other transportation equipment, and other metal and metal-fabricating industries, we get nearly 185,000, or half of all manufacturing employees, who are working in metal industries. (There were 350 in the iron and lead works of 1850.) The national percentage is much lower.

Wisconsin is by far the first State in the manufacture of aluminum kitchenware. It is a leading producer of enameled-iron sanitary ware, steel castings, construction machinery, tractors and other agricultural machinery, internal-combustion engines, and a long list of other machines and metal objects, not forgetting automobiles.

But all this is only half the story. A good deal of the remainder rests on the solid foundation of Wisconsin woods and Wisconsin farms. Lumbering and sawmilling, so important in the early days, have never

ceased. After the great boom of the 1880's, and the great decline that followed the early years of this century, they still claim the time of thousands. Even more important, Wisconsin now uses more of its wood, not to export as lumber, but as the raw material for hundreds of manufactured products. In fact, this early lumbering State now imports wood for these purposes from outside its borders. And the 40,000 people who have jobs in the paper and pulp mills and in making furniture, boxes, and other objects of wood outnumber those working in the primary operations of getting out the logs and lumber.

Home fabrication of home grown materials is evident again in the production of food. The dairy products of 1850, already a respectable pile, gained in importance as the emphasis began to shift, after 1870, from wheat and other field crops to livestock. Gradually Wisconsin has achieved fame in this field; it has taken over cheese making for the Nation, and is a leading producer of butter and canned milk. Meat packing is important, and so are the canning of fruits and vegetables. The breweries, after a hundred years, are as busy as ever. Other great industries employ their thousands in the manufacture of shoes and leather, of hosiery and other apparel. And the six weekly newspapers which catered to the readers of 1840 had grown by 1946 to 700 printing establishments, requiring the services of 13,000 employees. Wisconsin continues to build houses, even as in 1840. But there are more of them, and more "hands" are needed for the work. Private construction activity, which in 1941 amounted to more than $100,000,000, declined rapidly during the war, to little more than $30,000,000. Meanwhile public work shot up to nearly $190,000,000 in 1942, and then dropped back. By 1946 public building activity was still at a low point, but private construction was rising rapidly, and had reached $170,000,000. (As the figures are in dollars allowance must be made, however, for the rise in prices. An increase of 50 percent does not mean that many more houses.)

Total construction activity in Wisconsin accordingly shows a sharp peak in 1942, three-fourths of it attributable to public contracts, and a lower 1946 peak composed chiefly of private activity. This trend is similar to that in the Nation as a whole. The national level rose higher during the war, by comparison with 1939. But since 1944 Wisconsin trends in construction activity have been practically the same as those of the Nation.

SECTION II. INCOME PAYMENTS IN WISCONSIN

All of the activities we have described so far are reflected in miniature in one set of figures-those on income payments in the State. In the year-to-year fluctuations of this sensitive index may be detected the influence on Wisconsin economy of the striking changes that have characterized the period since 1929. Years of depression, of recovery, and of war are here shown, in their effects upon the incomes received by residents of the State.

These income payments in 1946 reached an all-time high of 3.8 billion dollars. This was more than double the 1.8 billions received in prosperous 1929, and two and one-third times as high as the total of 1.6 billions for prewar 1940. Wisconsin's very large income total in 1946 reflected in part, however, a materially higher level of prices.

The estimates of total income payments for Wisconsin presented in this study, as published in the August 1947 Survey of Current Business, reflect the large variations in price levels prevailing during the period, as well as changes in "real" income. They show that the total income received by individuals in Wisconsin fell from 1.8 billion dollars in 1929 to 938 million dollars in 1933 at the depth of the depression and then, except for the recession year 1938, rose uninterruptedly throughout the period 1934-46. The limited information now available indicates that income payments in Wisconsin expanded further in 1947, attaining an approximate volume of 4.3 billion dollars.

"Income payments to individuals" is a measure of the income received by residents of each State from business establishments and governmental agencies. It comprises income received by individuals. in the form of wages and salaries, net income of proprietors (including farmers), dividends, interest, net rents, and other items such as social insurance benefits, relief, veterans' pensions and benefits, musteringout payments to discharged servicemen, and family-allowance payments and voluntary allotments of pay to dependents of military personnel.

Since the economic fortunes of any State are tied closely to those of the Nation, it is not surprising that the general course of income contraction and expansion in Wisconsin between 1929 and 1946 paralleled that for the United States as a whole. But comparison of the movements of income in Wisconsin and the Nation reveals two significant aspects of the State's income flow.

First, short-term changes in income payments in Wisconsin generally are somewhat more volatile than those in the Nation. This is evident from the prewar experience. As compared with Nation-wide developments, income payments in Wisconsin dropped by a larger percentage from 1929 to 1933, advanced at a sharper rate during the recovery from 1933 to 1937, showed the same relative decline in 1938, and rose at a faster rate in the subsequent upturn from 1938 to 1940. The upsurge of income after 1940 stemmed in large measure from special, abnormal factors surrounding war and inflation, but it is nevertheless to be noted that Wisconsin's 1940-46 rate of income expansion exceeded the national average.

An explanation of why income tends to move up and down by somewhat larger rates in Wisconsin than in the Nation is to be found in a comparison of their principal sources of income. Wisconsin is more agricultural than is the country as a whole, and farm income characteristically fluctuates more than nonfarm income. Further, heavy-goods manufacturing industries producing or fabricating metal products account, as has been shown, for a much larger proportion of total income in Wisconsin than in the Nation generally. Pay rolls in these types of industries are more susceptible to changes in general business activity than are pay rolls in food, textiles, apparel, and other softgoods types of manufactures.

The second aspect of Wisconsin's income to be noted is that the long-term trend of income payments in the State is closely similar to that in the Nation. Over a long period the State has tended to receive a relatively constant share of the country's total income. In each of the prosperous years 1929, 1941, and 1946, Wisconsin received approximately 2 percent of all income payments in the United States. This