In 1958, America found itself in the midst of its worst economic slump since the Great Depression. There had been other recessions, from 1948 to 1949 and from 1953 to 1954, but they were less severe. The latest downturn, which began in the summer of 1957, turned serious by winter. In January 1958, Life magazine visited Peoria, Illinois, and found the mood there to be gloomy. Caterpillar, the heavy equipment maker and the big provider of jobs in town, had already laid off 6,000 workers and cut back to a 4-day week. “Trouble is already here for some people,” said one Caterpillar worker. “But it’s under the surface for everybody.”
In Peoria and across the nation, things got steadily worse. By July, the national unemployment rate hit 7.5 percent. General Electric alone had sent home some 25,000 production workers by the summer of ’58; General Motors, 28,000. Things got so bad for Studebaker-Packard, the automaker, that it made a shocking announcement: It would no longer honor its pension obligations for more than 3,000 workers, handing an “I told you so” moment to those who’d been warning about the fragility of retirement promises.