The 30s

The Great Depression in the 1930s began with the stock market crash on  October 24, 1929. The fallout from the crash devastated the economy. Companies went bankrupt, banks failed, and unemployment soared.

The stock market crash was followed by a severe drought in the Midwest, one of the worst in history. That had a greater impact in the Otter Tail Power Company service area than the stock market crash because the economy in this region was so heavily dependent on agriculture.

The drought lasted for most of the 1930s. Crop yields dropped to a fraction of what they were in better times, and grain and livestock prices got so low that farmers couldn't recover their operating expenses.

Those were hard times and other than welfare there was little assistance available to relieve the hardships. There was no social security, no pensions, no food stamps, and no unemployment payments. As the drought continued year after year there was little reason for optimism. It didn't look like the good times would ever return; and yet people spent little time feeling sorry for themselves because their neighbors were just as poor as they were.

Those were also difficult times for Otter Tail Power Company. Customers reduced their use of electricity as much as they could. Some couldn't pay their bills because they didn't have the money. Few new customers were added compared to the 1920s. Maintenance was reduced as much as possible without compromising customer service. Otter Tail was at a disadvantage compared to many other electric utilities because it served a lot of small towns scattered over a large area.  That required an extensive transmission system, which was expensive to maintain.

The 1930s got off to a bad start for Otter Tail with two major sleet storms, some of the worst the company has ever experienced. The first one came in October 1930.  The second one followed in October of 1932. The wind and ice broke thousands of poles and left many towns without electric service for weeks. In 1930 Rugby, North Dakota had no electricity for 37 days. Restoration was slow because the repair crews had to work under the worst possible weather and ground conditions.

The drought and the sleet storms drained Otter Tail's cash reserves and put the company in a precarious financial position, which led some to doubt that it would survive. To conserve cash President Vernon Wright moved quickly to reduce expenses. In 1932 wages and salaries were cut ten percent, and the mileage allowance for employees who used their own car on the job was reduced. That same year Mr. Wright persuaded the board of directors to reduce common stock dividends, even though he was the largest shareholder. In 1933 and for some years after that no dividends were paid.

Mr. Wright saw that if Otter Tail were to survive, the company would have to become more efficient and more aggressive in containing costs. The situation called for a tough, competent manager who could make the hard decisions.  As it happened that person was already in place. That was Clifford S. Kennedy, Vice President and General Manager with the responsibility for all company operations.  Wright further withdrew from day to day operations and gave Kennedy the authority to do whatever he had to do to pull the company through the hard times ahead. 

C. S. Kennedy was the right man for the right job at the right time. He cut the budget to the bare bones. No work of any consequence was started without his approval, and he had to approve every expense of any significance. No new employees were added unless someone could convince him that a new hire was absolutely necessary. He was relentless in his drive to reduce operating expenses, yet he still kept customer service and customer satisfaction at an acceptable level. He may not have been loved by the employees but they all agreed that he was fair.

Without Kennedy's firm hand and Wright's strong support, there probably would not be an Otter Tail Power Company today.

Near the end of the 1930s, Otter Tail's future started to look brighter. Rainfall increased and for the first time in almost a decade customers had a little money in their pockets. In 1938 the company started to pay common stock dividends again. 

The Great Depression didn't really end until the United States entered World War II after the Japanese attack on Pearl Harbor on December 7, 1941.

Written by Myron Broschat, Otter Tail Power Company retiree
Sources: The Power People by Ralph Johnson and Otter Tail Power Company by Thomas Wright