Dare To Dream

DARE TO DREAM tells the story of Herman Wittwer, a slightly reserved man who hadan idea in the 1920s about creating a new kind of insurance company. Wittwer, 38, became convinced he could provide lower-priced auto insurance forWisconsin farmers, confident that those rural residents posed a lower risk than otherdrivers because they didn’t drive much in the state’s brutal winters. From that very simple observation, Wittwer began to doggedlypursue his dream, despite great obstacles. Dare to Dream is the storyof how he created and built Farmers Mutual Insurance Company,which grew to become American Family Insurance, a Fortune 500enterprise. Wittwer first opened the doors of his tiny company on Oct. 3,1927 in Madison, Wisconsin. Through the following 90 years, FarmersMutual — now American Family — weathered incredible challenges.Despite industry setbacks, recessions, a constantly shifting market-place and personality conflicts, American Family has thrived for nearly acentury because its leaders, agents and employees continued to work with thesense of optimism, selflessness and resolve that Wittwer instilled in his business. Dare to Dream outlines this success by focusing on the many people who have contrib-uted to it, starting with Wittwer. It examines their strengths and weaknesses, personal-ities, good and questionable decisions, collaboration and conflicts. Dare to Dream is astory about a company that has flourished in a volatile industry while constantly facingunprecedented change and disruption, offering perspective on why some companiessucceed while others fail. In fact, Wittwer was an unlikely entrepreneur and founding force behind what becamean insurance juggernaut. Fresh out of college, he’d initially taken a job selling insurance,but decided it just wasn’t for him. He tried dental school instead, but quickly learned hedidn’t want to spend his life doing “damned tooth carpentry,” either. Somewhat reluctantly, Wittwer returned to the insurance business, but this time hedid so determined to start his own company and control his own future. Dare to Dreamis filled with insights and inspiration for those men and women, who like Wittwer, arewilling to take their future in their own hands to achieve their dreams.



DARE TO DREAM ©2017 by American Family Mutual Insurance Company, S.I. All rights reserved.No part of this publication may be used or reproduced in any manner whatsoever without written permission, except in thecase of brief quotations in critical articles and reviews.For information, contact Communications Division, American Family Insurance, 6000 American Parkway,Madison, Wisconsin 53783-0001ISBN 978-0-692-85246-0Printed in the United States of AmericaProject Director/Author: Rick Fetherston, Senior Vice President, Communications (retired) — American Family InsuranceDesign and Layout: Ian Chalgren, Graphic Designer, Communications Division — American Family Insurance Photography: S hawn Harper, Steve Schumacher, Steve Tingley and many othersCopy Editors: Kelly O’Hara Dyer and Tom TeigenPrinting: Zimmermann, Sheboygan, WIBinding: Reindl Bindery, Germantown, WIPaper: Appleton Coated, Combined Locks, WI; Neenah Paper, Neenah, WI

TABLE OF CONTENTSAcknowledgmentsForeword1 One Man’s Dream......................................................................................22 Surviving and Thriving in Tough Times...............................................243 Bold Moves and Growing Pains............................................................464 Too Many People, Too Little Space.....................................................725 Advertising a New Name.......................................................................866 Changing With the Times...................................................................1087 More Than a Survivor...........................................................................1348 Focus on the Future.............................................................................1609 Strong, Growing and Friendly...........................................................19210 Computers, the Company and Customers.........................................21611 Good Times and Challenges................................................................23012 Pain and Progress..................................................................................25013 A New Era — With Tough Times Ahead...........................................26814 Forward, Despite the Great Recession.............................................28415 Advancing Into High Gear..................................................................30416 Writing Our Own Rules, Charting Our Own Course...................31617 Strategy and Transformation............................................................33218 Bigger, Bolder and Booming!...............................................................35219 Inventing the Future...........................................................................380Appendix Index

ACKNOWLEDGMENTSThis incredible story could not have been told without the help of many people. CEO Jack Salzwedel initiated the proj-ect and provided unwavering encouragement and support. More than 100 individuals shared their candid recollectionsand views about the company, its founders, leaders and development. Lists of people who provided interviews or infor-mation are included in the appendix. Seven American Family CEOs were interviewed, including Irving Maurer, Pete Miller, Bob Koch, Dale Mathwich,Harvey Pierce, Dave Anderson and Jack Salzwedel. Former President Dan Schultz provided his thoughtful insight, aswell. All of these leaders offered frank perspectives about American Family, particularly Irving Maurer, whose infor-mal histories of the company provided an excellent framework for identifying key events that shaped the company’searly years. In Chapter 1, readers will notice some brief dialogue between the company pioneers; these conversations werethoughtfully created, based on interviews with people who knew them, as well as diaries, letters and other documents.Most of the information, photographs and graphics used to tell the story were found in American Family’s publica-tions and archives. Much of the content in the first nine chapters of Dare to Dream was meticulously researched by Bill Hakala, whoproduced an American Family history book in 1997 titled Under One Roof. Those chapters, primarily written by TomTeigen, were significantly revised and updated for Dare to Dream but remain essentially intact. I researched and authoredChapters 10 through 19, having gained a firsthand perspective while working closely with four CEOs during my 22-yeartenure at the company. Dan Kelly, Dan Schultz, Gerry Benusa and Joe Zwettler provided valuable executive review and edits of the narrative.Kelly O’Hara Dyer’s eagle eye as an editor improved the manuscript immensely, assisted by Tom Teigen, whose knowl-edge of the company’s early years through his authorship of Under One Roof helped maintain continuity in the new book. The bright, bold design of Dare to Dream is the product of Ian Chalgren’s wonderful imagination and excep-tional creativity. His work brings the words of the story to life and he has been an incredibly dedicated, critical partnerthroughout this project. Several Corporate Communications team members wrote brief sidebar stories, including Jon Ahlgrim, SarahBarman, Paul Bauman, Tom Buchheim, Chris Iglar, Kelly Kick, Ellen Lawrence, Janet Masters, Miri McDonald, PatMiller and Michele Wingate. Steve Schumacher and Shawn Harper took photos. Jim Buchheim, communications vicepresident, provided generous financial support for the endeavor. Thank you to everyone who contributed.— R ick Fetherston Project Director and Author

FOREWORDAnyone who knows me understands that I focus on the future. Mypassion, in every aspect of my life, is to imagine how things can bebetter — and then make it happen. So, why did I commission thishistory of American Family Insurance — Dare to Dream — an in-depthlook at our past? The answer is really quite simple: History helps us understand whowe are and how we got here. How could anyone grasp the essence ofAmerican Family without knowing the forces, culture and people whocreated it? History is essential to appreciate our identity and purpose. Itis the foundation for our future. It all started, of course, with Herman Wittwer — a man who daredto dream and was willing to take risks. We must always do the same sothat this great enterprise can continue to grow and serve our customers. As you read Dare to Dream, you will quickly realize signifi-cant change is nothing new. American Family itself sprung from thedisruption and opportunity created by the growing popularity of theautomobile. From the outset, our company faced incredible challenges.We survived and thrived because of the courage, commitment, optimismand selflessness that leaders, employees and agents demonstrated overand over through the years. This isn’t a history through rose-colored glasses. Carefully researched,this is the story of our successes and setbacks, the good and the bad.Reading our story helps us recognize which decisions and parts of ourculture contributed to our progress, and which ones slowed us down. Finally, Dare to Dream is a fascinating story because it’s aboutpeople. This book is dedicated to the thousands of men and womenwho contributed to the remarkable success of the American FamilyInsurance enterprise. It is their story and your story, and it is worth tell-ing and remembering.— Jack Salzwedel Chairman & Chief Executive Officer August 2017



1 The ‘first hundred years are the toughest’ had a meaning all of its own for Farmers Mutual back in 1927. Friends, relatives and men in the insurance business, who were not in sympathy with the idea, said it couldn’t be done; they predicted its early failure, saying the organization never knew anything about running an insurance company in the first place. Maybe they were correct, but the subsequent record stands by itself and tells its own story. — H ERMAN L. WITTWER, speaking to his board of directors in 1942, his company’s 15th anniversary ONE MAN’S DREAM

CHAPTER 1 | ONE MAN’S DREAMEvery successful business starts with a dream of something bigger, better or different. There’s a need to be filled, a service to be provided. And maybe, if all goes well, you can build something that will thrive — even survive beyond you.Far more often than not, those dreams fade as skeptics ask embraced the automobile — among them Warren G. Harding,questions, focus on the negatives and point out the inevitable who in 1921 became the first president to arrive at his inaugura-challenges. “Common sense” takes over and dreams are put on tion in the backseat of an open-air Packard Twin Six. As postwarhold, leaving it to others to live their dreams. depression gave way to prosperity, cars became faster, flashier, more reliable — and most importantly, “closed.” In 1919, nine out Herman Wittwer, a struggling insurance agent in his late 30s, of 10 automobiles were open-air touring vehicles. By 1927, morewas determined to turn his dream into reality. He wanted to start than 80 percent of the nation’s automobiles were closed sedansa new type of insurance company that cut against the conven- that could be driven year-round.tional wisdom of 1927. Mass production also made the car more affordable. When His dream was a product of the changing times, particu- Ford introduced the Model T in 1908, it sold for $850. Eightlarly in the way Americans traveled. In the 1920s, Americans years later, the price of a new “Tin Lizzie” was less than $300. The installment plan also made motorcars easier to buy. Would-beBELOW: Assembly line production made the Model T the first drivers would buy a coupon book from the local dealer for $5 down, and with payments of $5 a week, could drive a new Modelcar to be affordable for most Americans. T off the lot in just over a year. By the end of the 1920s, eager car owners were buying more than 4 million cars annually, and nearly half of the nation’s consumer debt was tied up in auto financing. By 1927, the car was so popular that the year’s biggest story was not about Charles Lindbergh’s solo flight across the Atlantic Ocean, or Calvin Coolidge not running for reelection or even Alvin “Shipwreck” Kelly’s 23 days and seven hours atop a flag- pole. The biggest story was that the Ford Motor Company had reclaimed the top slot among automakers by introducing the new Model A roadster. Enthusiasm and expertise did not necessarily go hand in hand. Driver’s education was informal at best. A new car4 | One Man’s Dream

ABOVE: A country road near Madison, Wisconsin in the 1920s.INTERSTATE owner might know someone who could provide a few point-HIGHWAY SYSTEM ers — mainly about how to crank the engine without breaking an arm. Otherwise, drivers simply got behind the wheel andIn 1916, Congress appropriated $75 drove, learning along the way. As millions of novices took to the million for road construction over five road, accidents increased — and so, inevitably, did the demand years. Three years later, Maj. Dwight for insurance. D. Eisenhower led a convoy of U.S. Army vehicles from New York to San Francisco Auto insurance had been around since 1898, when Travelers to dramatize the link between better Insurance wrote the first policy using a standard “horse-drawn roads and national security. Congress carriage”form with a special endorsement. By 1905, an auto owner responded in 1921 with the Federal could get liability, fire and theft coverage. These early policies Highway Act, sharing with the states the covered only damage for accidents with a moving object, based cost of road construction and resurfacing. on the assumption that in a collision with an immobile object, the Eisenhower would eventually become driver was obviously at fault. Coverage for personal injury to the the Supreme Allied Commander in World driver or his passengers wasn’t available until the 1930s. War II, leading the D-Day invasion of France. And, later, as president of the Lacking meaningful statistics, insurers could only experi- United States, Eisenhower would sign the ment with underwriting, which involves classifying acceptable Federal-Aid Highway Act of 1956, which risks and selecting those the company will insure. Using such led to the creation of today’s interstate characteristics as a car’s weight, horsepower and number of cylin- highway system. ders, the industry established the first automobile classifications Today’s network of interstates has been — W, X, Y, Z, with the Model T in a class of its own. To attract called the greatest public works project lower risks, some companies gave discounts to people who drove in history. often, figuring practice made them better drivers. But policies favoring the experienced driver worked against farmers. At the time, most country roads were dirt paths that became muddy rivers in the spring and fall. The Model T, the farmer’s car of choice, was useless in the snow, and farmers Dare to Dream | 5

typically put them up on blocks for half the year. When farmers BELOW: First coupe built in Wisconsin in 1905 by Gus Wilke,were able to drive, it was on empty country roads and small-townstreets. Accidents were few. Nevertheless, farmers paid the same fire chief of Sheboygan.premiums for car insurance as city dwellers — $25 a year for anew Ford sedan. To many, this practice seemed unfair, particularly becausemost farmers hadn’t shared in the general American prosperityof the 1920s. The government dropped price supports followingWorld War I, and farm prices plunged. During the 1920s, morethan 4 million discouraged farmers abandoned their land andmoved to cities and suburbs to find work in the nation’s expand-ing industrial economy. Herman Wittwer, who grew up in southern Wisconsin’sdairy country, understood the plight of farmers. And as a specialagent for the Wisconsin Automobile Insurance Company, hetraveled the state meeting regularly with farmers who sold autoinsurance on the side. Small and soft-spoken, Wittwer earned theWISCONSIN: Wisconsin, physician, built the By 1927, when Herman WittwerTHE AUTO STATE first successful steam-powered car and Richard Kalbskopf started in 1872, and Gottfried Schloemer, Farmers Mutual AutomobileIn the first part of the 20th a Milwaukee barrel-maker, built Insurance Company, Wisconsin century, more than 125 car the first practical gasoline-pow- factories had built more than 4 companies scrambled to begin ered car in 1889 — four years million motorcars. The state was manufacturing vehicles in the before the Duryeas even tested home to the Nash, the Rambler, Detroit region, eventually making their invention. the Jeffery, the Case, the Mitchell the manufacturing and indus- of Racine, the Kissel Kar of trial area nearly synonymous with Although the Duryea broth- Hartford and the Lafayette of the new cult of the automobile. ers were the first to “mass Milwaukee and Kenosha. There However, in the very earliest days produce” the automobile for sale, was the Hayberg, the Monarch, of the automobile, when inven- a Wisconsin man actually sold the Merkel (later the Merkel tion and not mass production was the first automobile, too. In 1895, motorcycle), the Superior, the the driving force, Wisconsin was the same year the Duryeas set up Kunz, the Pierce-Racine, the Earl, among the leaders in automobile their factory, A.W. Ballard, a bicy- the four-wheel-drive motorcars innovation. cle repairman from Oshkosh, built built in Clintonville, the Petrel Charles and Frank Duryea, an autocar for a physician living in friction-drive car, the Ogren, a couple of Ohio boys living in Wausau. the Vixen Cyclecar, the Johnson Peoria, typically receive credit for Steamer, the Badger “30” and launching the American automo- The Wisconsin legislature many more. bile industry with the first autocar sponsored the world’s first auto- to come off the production line. mobile race in 1878, offering a The Great Depression, two The brothers built 13 two- $10,000 prize for the first prac- world wars and the success- cylinder Duryeas in 1896. But any tical, self-propelled highway ful mass production of other Wisconsin auto-buff can tell you vehicle. Two steam wagons partic- makes drove these and other car that Dr. J.W. Carhart, a Racine, ipated, with the winner complet- companies out of business. And ing the 150-mile trip from Green Wisconsin settled contentedly for Bay to Madison at the average being the nation’s dairy state. speed of 6 mph.6 | One Man’s Dream

Poor country roads forced farmers to storetheir cars during the winter and spring.Because Wisconsin farmers drove their carsonly half the year, Herman Wittwer believedthey deserved better insurance rates. Dare to Dream | 7

In the late 1920s, state legislatures respect of these farmer-agents through his honest, easy manner as and insurance commissioners, frus- he recruited and trained, answered questions and settled disputes.trated by the time required to review policiesand rates, considered mandating uniform auto Wittwer, it was said, was a man to whom you could talkinsurance policies. To derail the government straight, a man who would listen. As these farmer-agentsintrusion, the American Mutual Alliance began complained to him about the unfairness of auto insurance rates,to work on a uniform policy. The National he found that he agreed with them. He thought it was timeBureau of Casualty Underwriters, represent- for a different kind of insurance company centered on “a newing the for-profit insurance companies owned idea based on the principle of creating an occupational group,by stockholders, joined the effort in 1933. With namely farmers, to give them lower automobile insurance coststhe help of the American Bar Association, the commensurate with their decreased hazard.” More and more, asgroups developed the first standard provisions he traveled Wisconsin’s back roads, Wittwer decided it was aof a Basic Automobile Liability Policy, effec- cause worth pursuing. Finally, he had found a mission that wouldtive Jan. 1, 1936. bring some focus to his wandering, rudderless career. Lord knows, he’d been looking since he left Monticello. SEARCHING FOR THE RIGHT NOTE Born Jan. 6, 1889, Herman Louis Wittwer grew up in Monticello, a small cheese and lumber town at the intersection of two busy railroads in southwestern Wisconsin. His father and uncle owned the Grand Central Hotel, where the two men and their families lived and worked. Wittwer’s parents were of Swiss descent — his father was an immigrant — as were most residents of Monticello. Known to non-Swiss as Switzers, they tended to be industrious, no-nonsense people, for whom funBELOW: A view of Monticello in 1907. OPPOSITE PAGE: Young Herman Wittwer (second row, second from right, behind bass drummer)played the alto horn in Monticello’s Messenger band.8 | One Man’s Dream

must be preceded by work. From them, Herman developed a Music helped to mold Wittwer’s personality. In learningsense of decorum and propriety that shaped both his personal the fundamentals of musicianship, he acquired the disciplineand business relationships. Friendly without being too famil- of practice that carried into every aspect of his life. Playing iniar, confident without being arrogant, he grew to be a popular various bands, he learned to blend his musical voice with others.though somewhat reserved young man. Taking the lead to perform a solo, he elaborated on the melody, then stepped back to support others in carrying the main theme. Usually surrounded by strangers at the hotel, he learned to Sensitive to the moods of others, he knew when to step in andlisten attentively, making people feel he was interested — not when to lay back, trusting his own intuition and that of thoseonly in what they were saying but in them personally. around him. In Monticello, young Wittwer also discovered his first Wittwer brought along his clarinet and his love of musicpassion — music. A dance hall attached to the hotel often hosted when he left Monticello for Madison and the University oftraveling shows, dance bands, high school plays and community Wisconsin in 1909.performances. As a junior member of the Monticello MessengerBand, Herman played the alto horn. Later, he took up the clari- Wittwer’s clarinet carried him beyond the world of classi-net and in high school, earned extra money playing in area dance cal music and fight songs into the vaudeville house, landing him abands. Years later, an in-law recounted how he and Herman one spot in the pit orchestra at the old Orpheum Theater on Mononanight — spirits high from an evening of merrymaking — walked Avenue (now Martin Luther King Boulevard). Several nights athe dozen miles of train tracks between Monroe and Monticello, week, he sat in the pit playing popular songs such as “Meet Me inplaying their clarinets as they went. St. Louis”and “In My Merry Oldsmobile”to earn money for school. Dare to Dream | 9

ABOVE: The University of Wisconsin Regimental Band appeared in the Badger yearbook in 1911. Wittwer (seated in the first row,third from right) played first chair clarinet. BELOW: Herman Wittwer, Class of 1911, University of Wisconsin-Madison. At the Orpheum, Herman Wittwer met Barbara Hickey, a After graduation, Wittwer, like many young men of the era,fiery young woman of Irish descent who grew up near Madison’s drifted. Unsure what to do with this life, he enrolled in graduate“bloody Fourth Ward,” the primarily Irish neighborhood in the school and stayed on at the Orpheum. He recalled later that herailroad district around West Washington Avenue. Barbara “stumbled” into the insurance business in 1913, when he becameattended the Wisconsin School of Music and the Four C an agent in New Glarus. His career as a field man was lacklus-Business College before becoming a secretary at the theater. Her ter. His only boast from those days was that he introduced thesaucy spirit and cutting wit contrasted sharply with Herman’s brandy Manhattan to that small Wisconsin town.polite and somewhat formal demeanor. She gave him the petname “Pootsy,” playfully violating his sense of propriety. Wittwer’s friends at the university called him “Witty.” Anenjoyable companion, he liked poker, brandy Manhattans andgood cigars — although true to his upbringing, good timesalways followed studying. Majoring in German, he took coursesin Spanish and English as well. His senior thesis, “A Study ofthe New York Central Stocks and Bonds in Relation to theMoney Market,” seems indicative of an early interest in business,a passion that would stay with him all his life.10 | One Man’s Dream

RIGHT: Herman Wittwer Wittwer was more enthusiastic about dating Barbara Hickey. In 1915 — perhaps on a whim for Barbara but after carefulused his musical talent to consideration on Herman’s part — the two eloped, catchingearn money for school. He a night train to Crown Point, Indiana, where they married onworked in the orchestra pit November 23. Married life appealed greatly to Wittwer, but hisat the Orpheum Theater, future as an insurance man did not. In 1917, the year Americaa vaudeville house in joined the Great War in Europe, Wittwer returned to graduateMadison. school and the old Orpheum Theater — though he continued to sell insurance on the side. A year later, he enrolled in dental school at Marquette University, playing his clarinet part-time at the Empress, a Milwaukee burlesque house. But dentistry disappointed Herman, too. “Damn tooth carpentry,” he called it. Spiraling infla- tion made it difficult to keep up with the bills. In March 1919, Barbara gave birth to their first daughter, Jane. Later that year Herman dropped out of Marquette and packed the family up for the return trip to Madison. The day they left, Barbara salvaged a set of plaster-cast teeth from a box destined for the trash bin. Time and again when Herman’s spirits were low, she pulled out the plaster teeth to remind him things could be worse. Back in Madison, Herman Wittwer joined the Wisconsin Automobile Insurance Company of Monroe, Wisconsin, as a special agent. Again, he immersed himself in the insurance busi- ness — this time with a sense of urgency that came from having a family to support. The Wittwers rode out the postwar recession and, with the rest of the country, turned onto Prosperity Street in 1922. When he was on the road, Herman became an active city and cultural booster. In 1926, he was one of the founding members and treasurer of the Madison Civic Symphony Orchestra. At a time when Prohibition was an occasionally observed law, Herman and Barbara also found time to duck into speakeasies in her old In 1927, traffic accidents killed 592 Wisconsin residents, a six-fold increase in 10 years. The following year, the Wisconsin legislature required all automobile drivers to be licensed and gave the state the authority to revoke someone’s license if found to be incompetent, reckless, physically hand- icapped or otherwise a menace to the public. Dare to Dream | 11

ABOVE: Herman Wittwer (first row, far right) with a group of his university pals. BOTTOM CENTER: Herman Wittwer holding his daugh-ter, Jane. BOTTOM RIGHT: Barbara Wittwer.neighborhood and attend cocktail parties with Superior CourtJudge Roy Proctor and society writer Alexius Baas. On week-ends, Herman hit the golf course in a pair of baggy plus-fours andcheckered knee socks, emulating the great Bobby Jones. At 38, Wittwer’s life seemed full, yet he could not shakean underlying sense of dissatisfaction. Secretary of CommerceHerbert Hoover was preaching the gospel of small business,and new ventures were sprouting up all around. Wittwer oftenbumped into Phil Snodgrass, a fellow employeeat Wisconsin Auto who had left to help launchGeneral Casualty, a new insurance company.Snodgrass talked enthusiastically of the compa-ny’s plans for the future. When he asked howWittwer’s job was going, Herman smiled thinlyand said little. His career seemed stuck in thedeep ruts of a muddy Wisconsin road. Monday mornings were especially difficult.While Herman packed his bags into the back ofthe Chrysler, Barbara would be up early makingbreakfast. She seemed cheerful and optimistic, butHerman knew she wasn’t happy to have him goneso often. Their daughters were growing up between12 | One Man’s Dream

Movie houses, live theater and concerts added luster toMadison life in 1927. Herman and Barbara Wittwer wereactive in the capital city’s cultural scene, and he wasa founding member of the Madison Civic SymphonyOrchestra, playing clarinet during many performances. Dare to Dream | 13

ABOVE: Herman Wittwer met Richard Kalbskopf at the Hotel Charles in Marshfield, Wisconsin to outline Wittwer’s dream to createa new insurance company. Farmers Mutual became a reality when Kalbskopf quickly agreed to finance the startup with a signif-icant investment.his visits home. Jane had turned eight early in March. Herman the Wisconsin Automobile Insurance Company. “Catch theirhadn’t missed her birthday, but car troubles made it a close call. eye,” she said. “Then ask for a promotion that will keep you inJoyce, their second daughter, was already three. He had to get the office.”off the road. He did. And when management said no — standing by One possibility involved offering special auto insurance the conventional wisdom that farmers presented greater risk —rates for farmers. An Illinois company founded in 1922 called Barbara said, “To hell with them, Pootsy! Do it on your own.”State Farm Mutual Automobile Insurance Company was grow-ing rapidly by giving farmers a preferred rate. No company was In March 1927, Wittwer followed his wife’s advice anddoing that for Wisconsin farmers, who owned roughly half of the arranged a meeting with Richard Kalbskopf, an old friend, at560,000 automobiles in the state. Wittwer spent several weeks in the Hotel Charles in Marshfield. He needed Kalbskopf ’s finan-early 1927 studying the files, finding that farmers did indeed have cial backing to have any chance of creating his new insurancefewer accidents than people in small towns and cities. company.Though no official record exists of their meeting, based on reflections of others who knew both of them, one can easily Barbara encouraged him to take his analysis to his employer, imagine the conversation.14 | One Man’s Dream

LAYING THE FOUNDATION At the turn of the century, the era of the Progressives,Smartly dressed in a Hickey-Freeman suit and freshly polished state governments wrestled withFlorsheim shoes, Wittwer nodded to a couple familiar faces their role as regulators of the insur-in the spacious lobby of the Hotel Charles. Walking into the ance industry. In 1889, the Wisconsinrestaurant, he heard the man he’d come to meet from a table legislature debated the first bill propos-near the back, gesturing wildly to a waiter. “Borrow the money,” ing state control of accident insurancehe bellowed. “Buy on margin. Hell, rob a bank if you have to. rates. In 1906, Gov. Robert La FolletteBut get it now. Prices are going up, and you’ll be a millionaire launched an investigation of life insur-in a few years.” ance companies. In 1911, the legislature held 14 weeks of hearings on the role of As Wittwer approached the table a bit apprehensively, rating bureaus in fire insurance.Kalbskopf jumped to his feet. “Herman!” he shouted. ABOVE: Farmers Mutual founders Richard Kalbskopf and “Nice to see you again, Richard,” Wittwer said. Kalbskopf slapped the waiter’s shoulder. “I was just telling Herman Wittwer.my good friend here that the stock market is a racket to get into,”he said. “You’d agree, wouldn’t you?” “I don’t know,”Wittwer said, the typical voice of caution thatat times irritated Kalbskopf. “Some say prices are inflated. Couldbe a correction coming.” “The same gloom-and-doom prophets who can’t accept thefact that prosperity is here to stay,” Kalbskopf said, with a dismis-sive wave. “You need to act before it’s too late.” Wittwer’s smileat the waiter showed he disagreed with his friend. In contrast to the guarded Wittwer, Kalbskopf held littleback. The 33-year-old son of a traveling salesman who settledin Marshfield, he was an imposing figure, over 6 feet tall andweighing more than 200 pounds. Boisterous, with a shock ofblack hair greased to his head, Kalbskopf had a firm handshakeand a slap on the back for everyone in Marshfield. He joined hisfather’s insurance agency after a stint as an army private duringWorld War I. Kalbskopf was a self-promoter, unafraid to mention that hewas the best insurance man in Wood County, whether it was trueor not. He was also wealthy, having married Esther Lang, thedaughter of a well-to-do industrialist with a hand in many profit-able ventures. Over the years, Kalbskopf had often boasted abouthis wife’s inheritance, offering many times to become Wittwer’sbusiness partner. Wittwer was about to take him up on it. But first, Kalbskopf had to tell Wittwer about the Fedspadlocking the Marshfield Brewery. “The near beer was a bitnearer than it should have been,” he said. “I hear the legislature is going to debate a resolution callingon Congress to repeal Prohibition,” Wittwer said. “At least bring back beer,” Kalbskopf asserted. “I don’t drinkthe stuff myself, but we’ve got a perfectly good brewery justsitting there.” After dinner, the waiter brought ice, and Wittwer pulled aflask of brandy from his vest, discreetly pouring its contents into Dare to Dream | 15

their teacups. “Richard,” Wittwer began with an uncertainty he “If we’re going to do this, Herman, let’s do it right,” Kalbskopfwas not accustomed to, “I have a proposition for you.” said, a bit loudly for Wittwer’s comfort. “I’ll kick in $50,000.” (This was a large sum for the times, given that a brand-new Slowly, over several trips to the flask, Wittwer laid out his 1927 Model T touring car only cost $380 and a complete Searsplan for a company selling auto insurance to Wisconsin farmers pre-fabricated house could be ordered for under $3,000. Thatonly. He told Kalbskopf about how State Farm was doing the $50,000 is also equivalent to nearly $700,000 in 2017 dollars.)same thing in Illinois. “Herman Ekern. You remember him —former Wisconsin insurance commissioner. He’s their attorney,” Wittwer shifted uncomfortably in his chair. The $50,000Wittwer said. “I think we could get him to help us.” would allow a new insurance company to charge a premium while reserving the right to make assessments. But Wittwer preferred Kalbskopf was sold long before Wittwer finished. “Sounds starting a mutual company, which required 200 charter members,like a good racket,” he said. “Count me in.” not a specific sum of money. Wittwer agreed to accept Kalbskopf ’s contribution, but only as a startup loan to the new corporation. Now came the hard part. Selling a good idea was one thing; Unwilling to live off Esther Kalbskopf ’s inheritance, Wittwer alsoasking for money was another. Wittwer had a sense of decorum insisted on keeping his job with Wisconsin Auto until he andand propriety he learned in his youth, particularly concerning Kalbskopf were ready to start selling policies for their new company.finances. “I’ve saved a few thousand dollars to help us get started,”he said slowly, letting the sentence trail off into the restaurant din.BELOW: Farmers Mutual’s first office consisted of two rooms and a broom closet above Breitenbach’s Shoe Store in the oldTenney Building on Madison’s Capitol Square.16 | One Man’s Dream

“You’re a stubborn man, Herman,” Kalbskopf said. “Have it Chicago, Milwaukee, St. Paul and Pacific Railroad, Aberg hadyour way. You got a name for this company of ours?” little background in insurance law. But he was a capable attorney with a sound reputation and was a familiar face in the halls of “Farmers Mutual Automobile Insurance Company,”Wittwer said. THE RISE OF MUTUAL INSURANCE “I like it. Says exactly what we’re all about.” That settled, they laid out a plan for developing a field force. The roots of America’s mutual insur-Wittwer thought Farmers Mutual should work with town mutual ance movement stretch back tosecretaries. Wisconsin had more than 200 of these locally based 1752, when Ben Franklin organizedinsurance organizations insuring farmers against fire and wind- the Philadelphia Contributorship for thestorm damage. Often town mutual secretaries, farmers themselves, Insurance of Houses from Loss by Fire.also sold auto insurance, many of them for Wisconsin Auto, and This and countless other mutual compa-Wittwer met regularly with these agent-farmers during his nies helped the capital-scarce economyweekly travels. distribute among many people the risk of Wittwer occasionally asked questions to which he already losses caused by fire.knew the answer as a way of measuring the listener by hisresponse. “So who do we need to support our little venture?” he In 1857, New York State codified theasked Kalbskopf. formation of town mutuals with legisla- “August Rammer,” Kalbskopf said. “Big farmer from tion allowing 25 or more people living inSheboygan. He’s secretary of the Wisconsin Association of a township (36 square miles) to estab-Mutual Insurance Companies. There’s Ben Lang at McMillan lish a mutual fire insurance company.Mutual, Charles Klevene at Seneca, Henry Ott at Plymouth Wisconsin enacted a similar law two yearsFarmers, a few others I can’t think of offhand. Harvey Spriggs is later. The rise of the Grange, an activistanother. Down by Racine. If we can get letters of support from farmers’ association that often claimed athese fellows, we should have no trouble recruiting agents and conspiracy between for-profit insurancemembers, and getting approval from the insurance commissioner.” companies and big railroads, fostered the Wittwer was impressed. Kalbskopf even mentioned a few spread of town mutuals. By 1920, morenames he hadn’t thought of. They would begin by contacting than a thousand of these small mutu-these men. Then while Wittwer made his rounds for Wisconsin als had formed in the nation. The vastAuto, he’d raise the subject with other town mutual secretaries. majority wrote fire and lightning insur-When someone showed interest, Wittwer would pass the name ance, but many sold windstorm and otheralong to Kalbskopf, who would follow up, working out an indi- coverage as well. Over time, town mutu-vidual agreement with each agent. It was an arrangement that als expanded to serve larger areas, and bywould come back to haunt the company. the middle of the 20th century, many had By the time the two men finished, the restaurant was empty. become commercial ventures.On the dark street outside, they shook hands. “I may be crazy,Richard,”Wittwer said, in what seemed for him a display of wild Most town mutuals were assessmentoptimism, “but this could be a million-dollar company some day.” companies that charged a small policy fee to pay the secretary for typing upTWO ROOMS AND A BROOM CLOSET the policy and managing the compa- ny’s few administrative matters. At theHerman Ekern, the Chicago attorney Wittwer had mentioned, end of the year, losses were tallied and awas supportive of the plan and offered some helpful advice, but member assessment levied to cover thedeclined to serve as Farmers Mutual’s attorney because of his losses. One early Farmer’s Mutual agentties to State Farm, which was seeking a Wisconsin license. described the arrangement as “the fortu- nate reimbursing the unfortunate.” Wittwer turned to William J.P. Aberg, a Madison attor-ney with Sanborn, Blake and Aberg. As the local counsel for the In the 1920s, more than 200 Wisconsin town mutuals served farmers primarily. Town mutual secretaries often sold auto insurance on the side, providing a ready- made sales force for Farmers Mutual. Dare to Dream | 17

BELOW: Sale of 50 shares of common stock and 200 shares worked at opposite ends of a long, wooden table at one side of the office. Hazel Jacobson, the receptionist/secretary, sat at a desk nearof preferred stock generated the initial capital for FarmersMutual Managers, Inc. the management company which the door. For meetings, they borrowed chairs fromoperated Farmers Mutual Automobile a neighbor, the law firm of Hall, Baker and Hall.Insurance Company. In addition to Farmers Mutual Automobilethe Wisconsin State Capitol. An avid conservationist, Aberg was Insurance Company, the directory in the lobbyinstrumental in crafting the Conservation Act of 1927. listed the Wittwer, Kalbskopf Insurance Agency. Aberg turned over much of the legal legwork to Ernest To make ends meet, both men continued toPett, a junior partner. Like Wittwer, Pett was interested in the write insurance, not only for Farmers Mutualarts. He’d traveled in France during the First World War with but also other companies. This enabled theman “old-fashioned minstrel show” and produced similar shows inMadison. Pett and Wittwer hit it off immediately. to sell insurance to drivers who did not meet Farmers Mutual’s strict qualifications. In April, Farmers Mutual filed articles of organiza-tion, bylaws, a plan of operation and letters of support from To launch Farmers Mutual, Abergtown mutual secretaries around the state with the Wisconsin suggested Wittwer and Kalbskopf followDepartment of Insurance. With minor changes, Commissioner common practice and form a managementM.A. Freedy approved the plan, allowing the company to incor-porate and begin the challenging task of recruiting agents and company. That summer, they incorporatedselling the 200 charter policies required to receive an insurance Farmers Mutual Managers, Inc., capi-charter in the state. talized by 50 shares of common stock Wittwer quit his job at Wisconsin Auto, and Kalbskopf and 200 shares of preferred stock, withmoved his family to Madison. The partners rented space in the shares valued at $100.old Tenney Building, a three-story, white brick structure at thecorner of Pinckney and East Main on the Capitol Square. The Wittwer and Kalbskopf eachoffice consisted of two second-story rooms and a broom closet invested $3,500 in cash, credited themselvesabove Julius Breitenbach’s shoe store. Wittwer and Kalbskopf $1,000 for three months of promotional services, and took 17 shares of common stock and 75 shares of preferred stock valued at $9,200. In return for his legal services, Pett received a single share of common stock, making him the third voting member of the management company. The management firm held the remaining 15 shares of common stock in reserve. Kalbskopf took on the role of chief salesman and recruiter, selling most of the preferred stock for Farmers Mutual to new district agents, who were required to purchase ABOVE: Herman Wittwer’s handwritten draft of an early Far- mers Mutual promotional letter.18 | One Man’s Dream

August J. Rammer Herman L. Wittwer Richard J. Kalbskopf$500 worth of stock. The stock didn’t carry voting rights, butoffered an 8 percent annual return. August Rammer was one of the first town mutual secre-taries to become a district agent for Farmers Mutual. WhenWittwer called on him, Rammer was the secretary of WisconsinAssociation of Mutual Insurance Companies, a title he wouldhold for 24 years. Like Kalbskopf, Rammer had a husky frameand hearty laugh, but he was more statesman than salesman, andless rough around the edges. Wittwer approached him aboutsigning a letter of support. After hearing Wittwer’s plans andjudging him sincere, Rammer signed on. Rather than wait for Wittwer to approach him, HarveySpriggs, a sheep farmer from Racine, traveled to Madison to getin on the ground floor of the new company. Small and thin, withan angular face, Spriggs wore a black suit and black hat in themode of an aging Wyatt Earp. “Where is this man Wittwer?” heasked the startled Hazel Jacobson, as he strode into the FarmersMutual office.RIGHT: In the summer of 1927, Farmers Mutual enrolled 346 chartermembers. Shown are a partial list and copy of the first issued policy.Although the Jagodzinski brothers were the first to buy a Farmers Mutual policy, Gar-field Caley, a farmer near Waterford, was issued Policy No. 1 on Oct. 3, 1927, the day the companyreceived its charter. Caley, like many farmers, was reticent about buying a policy from a company not yetlicensed. “I had to guarantee [the policy] personally before the applicant would accept it,” Harvey Spriggs recalled.The policy on the 1925 Ford roadster provided liability coverage of $10,000 per person, $20,000 per accident, and $1,000for property damage. Impressed with the company, Caley himself became a Farmers Mutual agent. Dare to Dream | 19

“Right here,” Wittwer said, rising from the back table. 200 policies per line. Farmers Mutual offered five separate cover- Spriggs surveyed the barren room as he crossed the ages for automobiles — liability, property damage, fire, theft andwooden floor. tornado. There were more sales to be made. “Thought for a minute there I walked into the governor’soffice,” Spriggs said through his heavy, soup-strainer mustache. Because farmers best understood fire and theft insur- The old farmer’s wry sense of humor wasn’t wasted ance, Farmers Mutual charter sales were strongest in these lines.on Wittwer. Farmers Mutual Managers launched the company’s first sales “Nothing but the best for Wisconsin farmers,” he responded, contest in late August. The three-week contest recognized onlycovering a half-eaten Limburger cheese sandwich with yester- combination policies — liability and property damage combinedday’s Wisconsin State Journal. with fire, theft or tornado coverage.The grand prize was an all-ex- Spriggs signed on immediately as a district agent. penses-paid trip to Madison for the first Policyholders Meeting.CHARTER AGENTS, The contest produced the needed sales, and Wittwer sentCHARTER MEMBERS letters to the company’s 346 charter members, inviting them to the first Policyholders Meeting on Oct. 3, 1927, at the officesWittwer, Kalbskopf and a dozen district agents spent the spring of Sanborn, Blake and Aberg on the eighth floor of the Gayand summer of 1927 signing up charter members. The task Building on North Carroll Street.required determined salesmanship. Wisconsin — as was the casewith all states but Massachusetts — did not require insurance on BELOW: An early promotion for Farmers Mutual Insurance.private automobiles. Thus an agent’s first challenge was to sellthe prospect on the importance of insuring his car. Complicatingthe sale was the requirement that each application be accom-panied by a check for the first year’s premium — though thecoverage wouldn’t go into effect and provide protection until all200 policies were sold and the company received its charter. On May 17, 1927, the Jagodzinski brothers, who farmednear Marshfield, bought the first Farmers Mutual policy, payingJoseph Radtke $15.22. Radtke’s commission: $2.28. When thebrothers renewed the policy, Radtke received $1.52. Other earlymembers, such as Gustav Schultz, a farmer near Poy Sippi, weremore frugal, buying just the fire, theft and tornado coverage, withan annual premium of $4.80. On Friday, August 19, Farmers Mutual presented to theinsurance commissioner more than 200 applications. The follow-ing Monday, Farmers Mutual Managers, Inc., held its firstmeeting at the office of Sanborn, Blake and Aberg. The three shareholders, Wittwer, Kalbskopf and Pett, met inPett’s office, conducting business over a desk covered with papersand coffee cups. The brief, uneventful meeting was dominated bydetails and formalities. The group named Kalbskopf presidentof the management company, Pett vice president, and Wittwersecretary/treasurer. The next week, State Insurance Commissioner M.A. Freedythrew an unexpected curve at Farmers Mutual. Previously, theinsurance department required a new company to show 200 char-ter applications, but Freedy now interpreted the law as requiring20 | One Man’s Dream

BIRTH OF A COMPANY ABOVE: Farmers Mutual incurred its first claim 10 days afterAs Wittwer and Kalbskopf walked receiving its charter. The company paid $14 to repair an Over-into the Gay Building an hour land Whippet’s fender and bumper.before the Policyholders Meeting,several farmers were gathered in for their coverage. “An insolvent insurance company,” said thethe lobby. Some spent the night man known for prudence, “is of no service to anyone.”in Madison, taking their wivesto the Strand to see Ramon The audience greeted Ekern’s words with the thunderousNovarro in “Ben-Hur.” But applause Wittwer and Kalbskopf had hoped for, christening whattheir conversation focused would become a close, if occasionally tumultuous, relationshipon the insurance company between Farmers Mutual and State Farm.they’d joined. At 10 a.m., 25 mencrammed into the eighth-floorconference room, but it was socrowded that some membershad to stand with their backsagainst the walls. Wittwerdecided to move the gath-ering to the Green Room ofthe Loraine Hotel. There hecalled the meeting to order.“We started this company,”he said, “because farmersdeserve a lower premiumfor their auto insurance.It’s being done in otherstates, but not here inWisconsin — at leastnot until today! Thereare those who say such acompany cannot succeed.To them I say,‘Watch usgrow, and grow with us.’” The room, filledwith men who had sold policies for and bought policies from acompany that did not yet exist, echoed with applause. The policyholders elected seven members to the first boardof directors of Farmers Mutual Automobile Insurance Company:Aberg, Kalbskopf, Rammer, Spriggs, Wittwer, Albert Schiferl ofHewitt and R.A. Baxter of Brodhead. After lunch, Herman Ekern, a former Wisconsin insur-ance commissioner and co-founder of Lutheran Brotherhood(later named Thrivent Financial for Lutherans), spoke. Ekernhad recently completed two terms as state attorney general, from1923 to 1927, and the crowd was eager to hear what he had to say. Ekern complimented the men for their initiative andcommitment to farmers, but cautioned them to set adequate rates Dare to Dream | 21

WATCH US GROW AND GROW WITH US “Watch us grow and grow with us” served as Farmers Mutual’s motto during those early years. Although the economy remained flat through 1927, and many speculated that the Big Bull Market was over, the company charged ahead. Just 39 appli- cations arrived the first month, but by year’s end, largely due to Kalbskopf ’s recruiting efforts, Farmers Mutual had 14 district agents, 236 local agents and 486 policyholders paying $8,130 in premiums. The first claim arrived on October 13. A policyholder had crashed his 1926 Nash into an Overland Whippet, badly damag- ing the Whippet’s fender and bumper.Total cost: $14. By the end of the year, Farmers Mutual had incurred a mere $45.85 in losses, proving that farmers were preferred risks. Other Wisconsin insurers noted the early success of Farmers Mutual. By the time the company held its annual Policyholders Meeting on Jan. 17, 1928, several competitors had issued “special farm rates.” While Wittwer and Kalbskopf felt vindicated by the advent of these special farm rates, Farmers Mutual was not yet a moneymaker. At this point, Kalbskopf, Wittwer and Pett proved that their management company, Farmers Mutual Managers, did not exist to milk the insurance company of its profits — as some similar firms had done. At the close of 1927, after paying commissions, the insurance company owed the managers $450. To help Farmers Mutual build its reserves, the managers waived the entire amount.The managers followed LEFT: First financial statement of Farmers Mutual Automobile Insurance Company, Oct. 3, 1927, to Dec. 31, 1927.22 | One Man’s Dream

this precedent time and time again, waiving tens of thousands of THE FIRST DUBIOUS CLAIMdollars by the early 1930s; the figure approached $200,000 annu-ally after World War II. Herman Wittwer believed that members paid their premiums in The year 1928 was a roller-coaster ride for the country and good faith, and the company had afor the company. As the stock market rallied in March only to duty to pay legitimate claims quickly. Butfall again in June, Farmer’s Mutual grew tenfold. By the end of Farmers Mutual’s low premiums, based1928, a sales force of almost 700 agents had sold more than 4,500 on the firm belief that its members werepolicies and collected $81,000 in premiums. But the management careful, conscientious drivers, dependedcompany, again turning back thousands of dollars to Farmers on paying legitimate claims only.Mutual, lost money. When a railroad line submitted a When Harold Frank joined the company on May 8 — $47 bill for damages to a crossing gate,replacing first accountant James Nugent — Farmers Mutual Wittwer was tenacious in investigatinghad four employees, excluding Wittwer and Kalbskopf. The staff his company’s ninth claim. He discovereddoubled within a year. Alex Opgenorth and Harold Koerner that an inexperienced gate operator hadhandled claims; Harold Frank and his wife Maybelle took care neglected to sound the warning bell andof accounting and office management; Hazel Jacobson was lowered the gate just moments beforethe receptionist, and Clarice Doane Every, Eldora Campbell the train passed. To avoid being hit byand Gertrude Coffey Koltes — the clerical staff — did the oncoming train, a farmer whose truckeverything else. stalled on the tracks had to drive through the gate. In the fall of 1928, Herbert Hoover, promising continuedprosperity, defeated Alfred Smith in a landslide, and rode down The railroad company disputedPennsylvania Avenue in the rain to take the oath of office. No Wittwer’s findings and demandedone then could have recognized the rain as an omen. At the payment from Farmers Mutual or theJanuary 1929 Policyholders Meeting, the bullish but conserva- farmer himself. After some negotiation,tive members of Farmers Mutual debated lowering premiums as Wittwer agreed to pay half the claim;opposed to building a surplus that eventually would enable the the railroad accepted responsibility forcompany to pay dividends. Remembering Ekern’s warning at the the other half. Considering that Farmersfirst Policyholders Meeting, caution ruled as they chose to build Mutual paid claims totaling $45.85 in 1927,the tiny company’s surplus. a $23.50 savings was significant. Dare to Dream | 23

Unemployed men filling out Social Secu-rity benefit claims, circa 1938. In January1938, new Social Security programs madeunemployment compensation available.

Always bear in mind that your own resolution to succeed is more important than any other. — A BRAHAM LINCOLN2 SURVIVING AND THRIVING IN TOUGH TIMES

CHAPTER 2 | SURVIVING AND THRIVING IN TOUGH TIMESHerman Wittwer walked out of the Tenney Building on a mild autumn afternoon, gave a newsboy 3 cents and carried the Capital Times to a park bench on the square. It was Oct. 3, 1929. Farmers Mutual turned two years oldthat day, and Wittwer basked in his sense of accomplishment. of Wall Street’s turmoil: “For a community like Madison to takeAs he unfolded the newspaper, Joseph Boyd, a well-known seriously the crash of the stock market seems very foolish.”Madison businessman who’d opened the state’s first brokeragefirm, approached. Wittwer rose to greet him, but Boyd merely Wittwer and Kalbskopf were too preoccupied to worry aboutnodded. Wittwer wrote it off as a hard day at Boyd’s investment the crash. Premiums increased 122 percent to just over $180,000firm. He didn’t understand how hard until he got to the financialpages. The stock market had taken a beating. Final quotations BELOW: Completed in 1929, the new Tenney Building was oneweren’t available for the afternoon edition because the ticker tapecouldn’t keep pace. Wittwer and Kalbskopf were extremely care- of the most prestigious office addresses of the 1930s.ful with Farmers Mutual’s money — too careful for Kalbskopf ’stastes. Everything was in high-grade bonds, investment certifi-cates or the bank. But at Kalbskopf ’s urging, the managementcompany invested some of its money in the market. Despite thesudden downturn, Kalbskopf remained bullish. After calling thecompany’s Chicago brokerage firm the following morning, hetold Wittwer, “Hold pat. Prices will bounce back.” The bounce never came. When Wittwer unfolded theWisconsin State Journal on Tuesday, October 29, the banner head-line read, “More Billions Slashed from Stock Values.” To givetraders a chance to catch up, the market closed Thursday after-noon and didn’t reopen until the following Monday. Several Madison business leaders, toeing President Hoover’soptimistic line, asserted that the drop in stock prices was goodfor the economy. In a statement that appealed to Wittwer, LeoCrowley, president of the Bank of Wisconsin, blamed the crashon “folks who were playing [the market] for speculation and notfor investment.” The crash would purge speculators from themarket, Crowley said, and redirect investments to other areas. Few Midwesterners took the crash seriously. The hottesttopic of conversation at Madison hotels booked for Wisconsin’shomecoming game against undefeated Purdue focused on federalagents coming in to enforce Prohibition during homecomingweekend.The Baron’s store manager best expressed the local view26 | Surviving and Thriving in Tough Times

in 1929, and the company’s surplus jumped from $6,000 at the Underwriters at that time not only classified and selectedend of 1928 to more than $23,000. risks but set corresponding premiums. For two years, Farmers Mutual had survived without this essential position by insur- Farmers Mutual had also moved into the eighth floor of the ing one class — farmers. It set premiums by simply shaving 25new Tenney Building built on the same site as its namesake. The percent off those posted by the rating bureaus most companieslavish, 10-story, steel and glass structure quickly became the most used. But in the fall of 1929, Farmers Mutual Managers decidedprestigious office address of its day. The art deco design featured to sell insurance to non-farmers and needed an underwriter.a marble lobby and corridors and a bank of elevators, each with Harold Frank knew Maurer from his days at Hardware Mutualits own attendant. Hall, Baker and Hall, Farmers Mutual’s neigh- Insurance Company (later Sentry Insurance) in Stevens Point,bors from the old building, moved into the new office tower. So Wisconsin, and recommended him.did the barber and the shoeshine man. One of the new tenantswas R.G. Dun & Company, which later merged with Bradstreet. Maurer, the son of German immigrants, was born in Marshfield in 1905 and raised in Stevens Point. With dreams of After settling into the new office, Wittwer organized the 15 becoming a lawyer, he enrolled in Stevens Point Normal Schoolemployees into nine departments — accounting, underwriting, and took a night job with the railroad. But in 1925, Carl Jacobs,policy writing, statistical, mailing, supplies and purchases, agency, a family friend and head of Hardware Mutual, offered Maurerstenographic and claims. He also appointed three department an assistant underwriting job. At the time, assistant underwrit-heads: Harold Frank as director of accounting, Alex Opgenorth ers typically were women, and the job paid only $75 a month,director of claims, and a self-confident young man named Irving less than Maurer made as a night clerk with the railroad. ButMaurer as director of underwriting.BELOW: Irving Maurer joined Farmers Mutual as its first underwriter in December 1929. Over the next few decades he would becomea powerful force in the company. Dare to Dream | 27

28 | Surviving and Thriving in Tough Times

Jacobs sold Maurer on the prospect of learning the insurance Spriggs and Kalbskopf. “This broker friend of Dick’s checkedbusiness from the ground up, and the young man left school. into a Chicago hotel and the clerk asked if he wanted a room forMaurer advanced steadily at Hardware Mutual, learning both sleeping or jumping,” Spriggs deadpanned.underwriting and sales. But he was still interested in earning alaw degree, and when he heard about the position at Farmers Kalbskopf, his face red with laughter, added, “I knew aMutual, he jumped at the chance — not because he was inter- fellow and his wife who jumped together because they had aested in the fledgling company but because he might be able to joint account.”enroll at the University of Wisconsin. He joined Farmers Mutualin late 1929.The job demanded long hours, and Maurer again put Other than patting themselves on the back, the only signif-his schooling on hold. icant business that day was to elect Bernard Gehrmann, a farmer and state assemblyman from Mellen, to the board. A leader in Maurer’s workload reflected the company’s success. The the state’s co-op movement, Gehrmann was well known to the1930 annual meeting occurred only a year into the decade that mutual members who elected him unanimously. A large manwould later become known as the Great Depression, the deep- given to long speeches about the plight of farmers and, in trueest and longest-lasting economic downturn in history. But there Progressive form, the need for cooperative action, Gehrmann waswas no talk of it that day, save for a couple of jokes from Harvey a Republican legislator from 1927 to 1933. Elected to Congress as a Progressive in 1934, he represented the 10th District for 10 years.LEFT: Cautious stewards of its policyholders’ money, Farmers Mutual didn’t lose a dime in the crash of 1929. The company had allits money in double-A and triple-A bonds, utility and municipal bonds, investment certificates and savings accounts. BELOW: Unem-ployed people in Wisconsin’s Winnebago County lined up at a relief station for a ration of rough fish. Dare to Dream | 29

NO BOUNCE ABOVE: Farmers Mutual continued to grow even as theTO THE RECOVERY country entered the Great Depression.When the market crashed in the fall of 1929,more than $30 billion evaporated from the would restore a portion of that cut in December with its first holi-nation’s economy. To aid the expected recovery, day bonus — $50 for married men and $25 for all others.the Federal Reserve loosened credit arrangementsfor business. Fixed investment trusts, which prom- FARM CRISIS AND A MUTUAL DILEMMAised to buy only the best stocks and hold them“until hell freezes over,” lured Americans back into The Hoover administration fought “deflation” with a sizablethe market. In the spring of 1930, the “Little Bull tax cut and a $400 million public works program. The federalMarket” set in, and “Happy Days Are Here Again” government also bought surplus commodities in a vain attemptwas the most popular song on the radio. to stop the downward spiral of the farm economy, which dropped from $12 billion in 1929 to just over $5 billion in three Insurance companies, confident in the stock years. But commodity prices continued to slide. For Wisconsin’smarket, grew fat during the 1920s by underpricing dairy farmers, dairy fat used in cheese and other products fellpolicies and offsetting losses with investment income. from 30 cents per hundredweight to 19 cents. The FarmersBut as the depression deepened, spreading across the Holiday Association responded with milk strikes across thecountry, many of those companies collapsed. In 1931 country, including Wisconsin. Farm foreclosures were epidemic,alone, 56 insurance organizations, including three in and clashes among farmers, bankers and auctioneers became aWisconsin, closed their doors. Farmers Mutual, on the regular occurrence.other hand, had been a cautious steward of its policy-holders’ money. At the time of the crash, it held $88,000in double- and triple-A bonds issued by utility companiesand municipal governments; $6,000 in investment certif-icates, and $18,000 in savings accounts. Others scoffed atFarmers Mutual’s conservative investment approach — onlyto find themselves playing catchup. The economic collapse took its toll on bonds as well as stocks.But Wittwer’s inclination, and the company’s policy, was to buyhigh-quality bonds and hold them to maturity. By 1932, onlyone bond in the company’s portfolio had defaulted. Nevertheless,the sharp drop in bond values threatened Farmers Mutual’s “A”rating.To avoid this downgrade, the company established in 1930a $2,500 voluntary contingency fund to offset the lower marketvalue of its bonds. A year later, the board increased that reserveto $40,000. Some policyholders were critical of the action. Higherreserves meant the company showed only a small profit, delay-ing dividends for at least another year. But after a long discussion,members demonstrated their interest in the long-term health ofthe company by approving the action. The home office also sacrificed. In 1930, Wittwer andKalbskopf each took a 12.5 percent pay cut, bringing theirmonthly salaries down to $350. Three years later — in the midstof the Great Depression when jobs were scarce, competitionfierce and employees in many professions were afraid to take timeoff — Farmers Mutual staff accepted a 10 percent pay cut, andfew took vacations, fearing to even raise the issue. The company30 | Surviving and Thriving in Tough Times

Against this backdrop, Farmers Mutual faced one of its produced at the rate of 1,000 per hour by a new business machine,most difficult challenges. Across the industry, claims payments which the company rented. Second, instead of using an agent tosoared as the number of accidents rose and the state legislatures deliver the renewal certificates and collect premiums at a cost ofmandated broader coverage. At Farmers Mutual, claims losses about $3 per policy, renewals would be handled through the mailnearly doubled to $74,000 between 1930 and 1931. at the cost of a first-class stamp — three cents. To prevent a tide of red ink, insurance companies raised auto But the most significant departure from orthodoxy waspremiums in Wisconsin 30 to 50 percent. Farmers Mutual hadn’t shifting to a semi-annual plan similar to that used by State Farm.raised its annual $17 premium since it began. Given the plight Under this approach, members paid two six-month premiumsof the farmers, it would not do so now. Instead, the company, led rather than one annual premium. The approach would make itby Underwriting Director Irving Maurer, hammered out a new easier for cash-strapped farmers to pay the premium. The firstplan of operation that broke radically with the more conventional six-month premium would be slightly higher, the additionalinsurance companies. revenue paying some of the cost of generating new business — primarily the agent’s commission.The result: lower out-of-pocket To compensate for his lack of formal education, Maurer costs at renewal helped retain members.had become a dedicated student of insurance, devouring indus-try journals until he understood and could apply the most arcane Getting state approval of the plan was sure to be difficult.concepts. After studying the situation with Wittwer and William Farmers Mutual had proposed a similar plan in 1927 and againAberg, Maurer reasoned that Farmers Mutual could not continue in 1931. But Insurance Commissioner M.A. Freedy rejected it,to follow the orthodox methods of the insurance industry and arguing the unequal premiums violated the state’s anti-discrimi-expect to avoid rate increases. They would have to reduce costs. nation law by applying different rates to the same class of business. He repeatedly rejected State Farm’s application for similar reasons. First, instead of issuing complete renewal policies everyyear, which the policy writing department typed up at the rate of Wisconsin’s next insurance commissioner, Harry Mortensen,eight per hour, Farmers Mutual would issue a renewal certificate, also rejected Farmers Mutual’s semi-annual plan. But this time,A MAN AND HIS CHEESEThe nephew of a man who owned a cheese factory, Herman Wittwer became a connoisseur of cheese. Unfortunately, for those around him, Wittwer’scheese of choice was the potent-smelling Limburger.A favorite casual lunch for the Farmers Mutual executivewas a Limburger cheese sandwich and a bottle of SpecialExport, followed by an Upmann or Perfecto Garcia queencigar. The combination prompted him to stash a supply ofWrigley’s Spearmint Gum in his desk. Wittwer’s wife, Barbara, was not a Limburger enthu-siast. One day Herman came home for lunch to find herfumigating the house with air freshener. Unable to find theLimburger, he asked where it was. “Buried,” she ranted,“Like all dead things should be!” Dare to Dream | 31

DRIVING UP PREMIUMS In one town after another, the agents gave Maurer a cool reception. Maurer’s manner — formal, occasionally long-winded During the 1930s, the Wisconsin — didn’t help. The meetings became long, ponderous discussions legislature passed numerous of the principles, history and future of insurance. Maurer, however, laws affecting drivers and insur- was convincing when he talked about the commitment Farmers ance companies. While many of these Mutual had and the agents shared in supporting the farmer laws offered greater protection for the through a mutual company. Slowly, the agents began to under- man or woman behind the wheel, they stand that the company’s future was at stake and that they were also contributed to the rise in insurance being asked to sacrifice their control over renewals for the good premiums. of the members. At the end of each meeting, Maurer took a vote. All but one man supported the change. A 1931 bill enabled passengers in an accident to recover damages. By 1932, The new plan went into effect April 1932. Farmers Mutual “guest” claims accounted for nearly dropped its slogan “Watch us grow and grow with us” in favor of one-third of all liability claims against “The company with the low renewal rates.” Farmers Mutual. A 1933 law allowed victims to recover damages even if the The semi-annual plan not only solidified the company’s posi- person at fault was killed in the accident, tion in the farm market but also benefited farmers who bought extending liability beyond the death of from competitors. Stock and mutual companies alike rolled back the wrongdoer. their rate increases to compete with Farmers Mutual. Perhaps the most significant 1930s- The new plan wreaked havoc in the home office as staff era law allowed plaintiffs to name insur- scrambled to adopt new processes and procedures for this unusual ance companies as defendants in personal approach. While many companies were cutting Saturday morn- injury and property damage cases, lead- ing from the traditional five-and-a-half-day work week, Farmers ing to a rash of lawsuits. “Not only is the Mutual staff worked overtime. The sacrifice paid off. Operating average verdict higher as a result of this expenses dropped to $57,000 in 1932, an $8,000 reduction. And law, but the cost of each claim is mate- membership doubled over the next three years. rially enhanced because of an insurance company’s inability to get a fair deal at GOING TO TOWN the hands of a jury,” Wittwer complained in 1936. The result was more out-of-court In 1930, Farmers Mutual entered the town market by way of the settlements “regardless of the merits of cattle pasture. Larger insurance companies had moved into the the case.” farm market with their own “special farm rates.” Farmers Mutual Managers realized that as a matter of survival, it needed toFarmers Mutual’s future depended on getting the plan approved. expand beyond the farm market. The company’s bylaws, however,Wittwer, Maurer and Aberg set up a series of meetings with stipulated that it sell auto insurance to farmers only. ChangingMortensen. After a week of intense discussions and compromises, those bylaws required a 75 percent majority vote, which wouldhe approved the plan. be difficult to obtain. The battle, however, didn’t end there. In early April, Maurer August Rammer, who replaced Aberg on the managementpacked his car for a week-long trip to sell the overall plan to the company board, had the solution. Rammer was on the boardcompany’s 800 agents. At that time, Farmers Mutual, like most of the Sheboygan County Cattle Owners Mutual Insurancecompanies, operated on the American Agency System, under Company, organized in 1928 to protect nearly a thousand farm-which agents owned the policies and renewals. The agents, who ers from cattle losses due to tuberculosis.usually sold for many different companies, often shifted policy-holders from one insurance company to another, depending on By early 1930, the Sheboygan company, which was forcedwhich had the lower rate or was paying the higher commission. to levy a 100 percent assessment in 1928 and 1929, was readyWith the home office handling renewals by mail, agents would to close its operation — opening the door for Farmers Mutuallose control over where to place those policies. Managers to buy its charter. On Jan. 11, 1930 — after form- ing a new management company, National Mutual Managers,32 | Surviving and Thriving in Tough Times

Inc. — Wittwer, Kalbskopf and Rammer met with the Cattle With the death toll on AmericanOwners’ board, many of whom were members of Farmers Mutual. roadways surpassing 36,000 by theIn exchange for $300 to settle outstanding claims, the Cattle mid-1930s, Farmers Mutual and other insur-Owners’ board agreed to change the name of the company to ers exhorted the public to show some restraintNational Mutual Casualty Company and amend its bylaws to behind the wheel. “Sometimes one wonders ifauthorize the sale of automobile and other kinds of insurance. it wouldn’t be a good idea to quit improving roads and cars for a while and concentrate on A month later, members of the Sheboygan county Cattle bringing out some new, late 1936 model driv-Owners’ Mutual Insurance Company supported the change, then ers, with eight-cylinder brains and streamlinedelected a new board, including Wittwer, Kalbskopf, Rammer, Bill common sense,” Irving Maurer said in one ofAberg and Joseph Radtke of Marshfield. Farmers Mutual ’s morning radio spots on WIBA Madison. But Farmers Mutual didn’t find Wisconsin’s small townsand cities as fertile as the farm market. One problem was that Dare to Dream | 33the company adopted premiums based on national rating bureauschedules, meaning it had little to distinguish itself from otherinsurance companies. More important was the lack of a field force.Farmers Mutual had a ready-made agency force for the farmmarket — the town mutual secretaries, who sold fire andwindstorm damage insurance to farmers. Its new subsidi-ary — National Mutual — had no equivalent entrée intothe non-farm market. As a result, National Mutual didn’t generateenough charter policyholders to receive its license untilJuly 30, 1930. Sales continued to lag, and over the nextthree years, Wittwer, Kalbskopf, and Rammer contrib-uted nearly $30,000 to National Mutual to keep thecompany solvent. To survive, National Mutual would have tomerge with the financially robust Farmers Mutual.But such a merger would be politically difficult.Theperceived difference in behavior between townspeo-ple and farmers was a deep one. Farmers Mutualhad initially taken advantage of the different driv-ing behavior and claims experience by restrictingmembership to those who lived and worked onfarms, arguing that the careful farmer should notbe pooled with people who lived in towns or cities. The situation was complicated by rumors —spread mainly by competitors — that FarmersMutual was a farm company in name only.The rumors dumbfounded Wittwer, who wasstrongly committed to the mutual and co-opmovements. Farmers Mutual lived up toRIGHT: When the economy crashed, so didthe auto market. New car sales declined75 percent between 1929 and 1932.

LEFT: Farmers Mutual Automobile Insur- ance Company’s charter limited mem- bership to farmers. The metal emblem below was designed to be attached to the insured’s car radiator.Wittwer’s commitment, developing working relationships with farm market, rallied behind Wittwer’s David-and-Goliath appeal.some of the state’s largest farm organizations, including the When the merger was discussed at the 1934 annual PolicyholdersWisconsin State Grange. The Wisconsin Association of Farm Meeting, there was not one word of dissent.Companies even adopted Farmers Mutual as its official automo-bile insurance company. Still the rumors persisted, and merging BREAKING NEW GROUNDof the two companies might confirm them. As Farmers Mutual employees sorted through the Monday mail Wittwer, however, was willing to stake the company’s repu- early in March 1933, Harold Frank placed the premium checkstation on a merger, which he knew to be the only solution. He in a small stack. He wasn’t sure what he’d do with them. By orderlistened to the arguments of those who disagreed, but Wittwer of the new president, Franklin D. Roosevelt, the banks werehad a stubborn streak. Once convinced, he rarely swayed. closed. They wouldn’t reopen for several days — possibly longer. In Madison and many other communities, local merchants In a May 1933 notice to Farmers Mutual agents, Wittwer wouldn’t accept checks until the banking crisis was over.announced the merger, placing it in the context of the classic farmco-op battle against “outside interests.” Wittwer had been on the phone with Leo Crowley, at the Bank of Wisconsin, who assured him that the bank would reopen “Did you ever see it fail?” he wrote. “A farm cooperative orga- later that week — in plenty of time to meet the March 15 payroll.nization does what it sets out to do, and the minute a certaindegree of success is attained, outside interests step in, cut pricesand go to extremes to break up the membership. Your officers anddirectors unanimously decided to turn the trick and invade themembership of the outside organizations for the benefit of theentire company and its members.” Farmers, frustrated by low commodity prices and the evolu-tion of large corporations moving in as “the middle man” in the34 | Surviving and Thriving in Tough Times

HERMAN L. WITTWERA MAN OF MEANS IN TROUBLED TIMESA t the onset of the Great Founder/Secretary 1927 - 1959 After dinner, the women cleared the Depression, Herman Wittwer Board Chairman 1959 - 1968 dishes, and the men sat around the made $400 a month with table to talk sports, politics and reli-Farmers Mutual Managers and $100 a question: “So, have your parents got a gion. A generous host, Wittwer passedmonth with National Mutual Managers new roof on the outhouse?” out cigars and filled glasses with Chivas— plus commissions and overwrit- Regal. An articulate conversational-ing from his personal insurance sales Despite the demands of busi- ist, he read Fortune magazine, the Wallthrough the Wittwer and Kalbskopf ness, Wittwer remained active with the Street Journal and many insuranceAgency. He wasn’t rich, but considering Madison Civic Orchestra, serving as industry publications. But his personalthat three-fourths of American families president from 1937 to 1940 and as a library was filled with books on history,were living on less than $3,000 a year, playing member through 1946. He devel- philosophy, music and public affairs.he was more than comfortable. Wittwer oped a close friendship with conductorwas, in fact, in a growing class of busi- Sigfrid Prager. At dinner parties with An ardent Republican, Wittwernessmen and entrepreneurs carving out Prager at the piano and Wittwer on the gave grudging support to Franklinsuccessful careers in the nation’s indus- clarinet, the two men entertained guests Roosevelt in his bold steps to combattrial and service economy. with popular and classical numbers. the Depression. But as the economic Wittwer did a passable imitation of malaise wore on and Roosevelt claimed An accomplished businessman, Benny Goodman’s swing-style as well increasing executive power, the tepidWittwer was well regarded within as Paul Whiteman’s distinctive arrange- support of many businessmen such asinsurance circles. He served as secre- ment of “Rhapsody in Blue.” Wittwer evaporated. He believed thattary of the Association of Wisconsin the essential aspects of the New DealMutual Insurance Companies and the Herman and Barbara also hosted should be handled through the states,Wisconsin Mutual Insurance Alliance, large family gatherings at their home. charity through the churches andas well as chairman of the Casualty employment through private enterprise.Section of the National Association ofMutual Insurance Companies. His warm, The Wittwers themselves werefriendly nature, his quiet confidence generous, supporting several chari-and his honesty and dependabil- ties, as well as taking care of familyity made him many friends and few members. Wittwer was neverthelessenemies. He was as comfortable playing uncomfortable with the awkwardnessbridge at the Madison Club as he was created by charity among family andtalking Badger football with Ray Sather, friends, so Barbara handled most of it,the company’s longtime janitor. sometimes creating more awkwardness. Once she gave one of Herman’s suits to The Wittwers weren’t ostentatious. one of her brothers, down on his luck.Barbara, who knew many recently afflu- When she and Herman met her brotherent families, had little tolerance for on the Capitol Square, Barbara worriedthose who forgot or ignored where they about Herman’s reaction to seeingcame from. One evening Barbara inter- his suit on someone else. “That was arupted a woman talking endlessly of nice suit your brother had on,” Hermanher lavish redecorating with a simple commented. Dare to Dream | 35

BELOW: In 1935, Farmers Mutual Managers named its new wind- Gaumnitz worked together to develop business in Minnesota. Though premiums totaled just $23,000 in 1935, they jumpedstorm company State Farm Mutual Insurance Company. The to $100,000 two years later and continued to grow, eventuallymanagers hoped the similarity of names would prevent its making Minnesota one of the company’s leading producers.role model, Illinois-based State Farm Mutual, from enteringWisconsin. In 1935, Farmers Mutual branched out from automobile coverage to offer windstorm insurance to farmers in Wisconsin. Because insurance law prohibited companies from writing unre- lated lines of insurance, Farmers Mutual Managers established State Farm Mutual Insurance Company of Madison, Wisconsin — with Erv Albrecht president, Wittwer secretary and Kalbskopf treasurer — to write windstorm coverage. Using the traditional town mutual approach, the company collected an initial $2 policy fee to cover the agent’s commission, then levied an assessment in October to cover the losses during the spring and summer storm season. The name State Farm Mutual erected yet another barrier to keeping Illinois-based State Farm Mutual Automobile Insurance Company out of Wisconsin.The new company quickly became the fastest-growing windstorm company in the state. Adding burglary and theft coverage in 1937, State Farm’s insur- ance in force rose to $48 million in 1938. MOVING OUT Throughout the Depression, while other companies were laying off employees or closing their doors, Farmers Mutual added staff. By the mid-1930s, the company’s nearly 30 employees filled halfWittwer wasn’t a man given to panic. If the bank didn’t reopen, BELOW: Farmers Mutual bought the Joseph Boyd mansion athe knew there was enough cash in the Farmers Mutual safe totide the company over. “There’s nothing to fear but fear itself,” 312 Wisconsin Avenue in 1935.Wittwer reassured the staff, echoing Roosevelt’s inaugurationspeech given two days earlier. While the nation struggled under the weight of the GreatDepression, Farmers Mutual’s premiums increased 50 percentin 1933 to more than $300,000. A fraction of that growth camefrom another state — Minnesota — where a new law requiredtrucks to file insurance policies with the Minnesota WarehouseCommission. Because St. Paul was a common destination forfarm trucks in northwestern Wisconsin, Farmers Mutual receiveda Minnesota license. “Inasmuch as we are in there,” Wittwer told the policyhold-ers, “we might as well try to get some business.” Kalbskopf recruited Dan Gaumnitz, a former State Farmagent, to be the company’s first “state agent.” Kalbskopf and36 | Surviving and Thriving in Tough Times

ABOVE: Farmers Mutual’s 30 employees gathered at the entrance of their new home office in 1935.of the eighth floor of the Tenney Building. With no room to The company’s growth accelerated in 1935 after Wisconsinexpand, Farmers Mutual bought the Joseph Boyd mansion at enacted its “Judgment Law.” Since 1921, lawmakers had regularly312 Wisconsin Avenue in March 1935. (This later becomes the introduced bills to require drivers to carry insurance. Insurancesite of Bethel Lutheran Church.) companies fought the legislation, fearing they would be required to accept all applicants. The “Judgment Law” was a compromise, From the turn of the century, Boyd had been a widely which prohibited people found liable in an accident from driv-respected man about Madison, becoming chairman of the Bank ing until all claims against them were paid. To capitalize on theof Wisconsin and founder of the state’s first authorized securi- anticipated rush of new business, Farmers Mutual aimed its firstties brokerage. But the stock market crash hit Boyd hard and in direct-mailing campaign at drivers in small towns. The response1931, the company went into receivership. Auditors uncovered was overwhelming, and premium income grew by 64 percent.improprieties in Boyd’s operation, and in 1934, at age 72, he wasconvicted on four counts of embezzlement and sentenced to the Farmers Mutual was unprepared for this rapid growth spurt.Wisconsin State Prison at Waupun for 10 to 25 years. In the insurance industry, a large surge in new business drains a company’s surplus. Although premiums are earned gradually over Farmers Mutual bought Boyd’s three-story colonial-style the course of a policy’s term, the expense associated with newhouse and a rooming house next door for $27,500, just over business — primarily agent commissions and issuance expensehalf the estimated $50,000 value. Landscaping and renovations — must be paid immediately. Rapid growth left Farmers Mutualbrought the total cost to $65,000. cash-poor in 1936. To relieve the situation, the management company moved its $40,000 contingency fund to Farmers Mutual. “This will give Farmers Mutual a permanent home,”Wittwerwrote Congressman Gehrmann. “After remodeling the house, we Meanwhile, underwriters with too little time to properlywill have nearly double the office space we now have, and the cost evaluate all the new applications let unqualified drivers slip in.of operating it will not be increased over present rentals.” Dare to Dream | 37

EXTRA! EXTRA! payments during the first half of the year. In addi-Farmers Mutual prided tion, the first issue carried itself on being a an article placing the fault small, friendly insur- for most accidents squarely ance company provid- on the driver. A list of the ing personal service to causes for highway fatal- its members. By 1937, the ities in 1936 showed 22 Farmers Mutual family had percent driving too fast, 16 grown to 45,000 members. percent on the wrong side To keep them informed, the of the road, 23 percent company produced Farmers without the right of way, Mutual News, becoming one 10 percent off the road, of the first insurers to send 10 percent driving reck- promotional material with lessly, 5 percent failing its renewal notices. First to signal properly and 14 published in the summer of percent miscellaneous 1937, the newsletter featured actions. a partial listing of members who filed claims and receivedBELOW: The stenography department churned through hundreds of dictations every week.38 | Surviving and Thriving in Tough Times

HOME OFFICE AGENCY Chuck Webster David ScherWhen Herman Wittwer and Richard became a leading salesman, and in 1967, he became Kalbskopf founded Farmers Mutual the company’s first agent to sell a million dollars of Automobile Insurance Company, money life coverage in a year.was scarce and profits — if any — were to be shov-eled back into the business. To help them through By 2017, his son, David Scher, was one of thethe lean years, the two insurance men formed the company’s most successful agents, growing hisWittwer & Kalbskopf Agency, through which each family’s legacy agency, the D Webster-Scherpartner sold insurance for Farmers Mutual and a Agency, Inc. on Madison’s east side. Scher hadn’tnumber of other insurance companies. planned to become an agent after college, but his dad asked him to try it for two years, and if he In 1933, they added Loudon Newell (Lod) didn’t like it, he could move on. Early on, he metWebster to the agency, forming Wittwer, Kalbskopf with a family to review their homeowners insur-& Webster, Inc. Each man held 50 shares of ance and increased their coverage limits. After acommon stock in the venture. Webster, one of fire destroyed their home, that review enabled theFarmers Mutual’s early agents, joined the company family to rebuild. “I saw the check and I knew thenin 1928. He later accepted an offer from another I could help people in this business,” Scher said. Hecompany, working there several years before return- never thought about quitting, even when he madeing to Farmers Mutual in 1933. Webster was the only $12,000 his first year. “I knew my business“active manager” of Wittwer, Kalbskopf & Webster, would grow if I got better every year.” In 2017, hewhich became known as the home office agency. still insured the first home he wrote in 1991. With exclusive rights to sell Farmers Mutualinsurance in Madison, the agency grew steadily,and Webster became one of the company’s lead-ing producers. When Kalbskopf left Farmers Mutual in 1944,Wittwer and Webster shared ownership of theagency. Lod’s son, Chuck Webster — who as a boyshoveled Kalbskopf’s sidewalk and as a youngman worked briefly as an underwriter for FarmersMutual — joined the agency in 1954. In 1963, hepurchased Wittwer’s stock in the corporation, form-ing Webster & Webster, Inc. Chuck Webster quicklyThe result was a 6 percent underwriting loss — the company’s to lower Farmer’s Mutual’s financial rating from “A” to “B”. Tofirst. To correct the situation, Farmers Mutual tightened under- prevent this, the management company — Wittwer, Kalbskopfwriting rules, discontinued unprofitable lines and — for the first and Rammer — again stepped in, contributing $50,000 to thetime in its nine-year history — raised its farm rates. mutual company’s surplus. The “Roosevelt Recession” intensified the problem. Early in Premiums surpassed $1 million in 1938. The following year,1937, the Federal Reserve, troubled by the rising national debt, Maurer, recently promoted to agency director, spent much of histightened credit, and Roosevelt slashed government spending. time on the road recruiting district agents in the company’s thirdThe economy collapsed, and the stock market plummeted 38 state — Missouri.percent between August and October (compared to 45 percentin the crash of 1929). Farmers Mutual — without the cushion In 1940, Farmers Mutual issued its first non-assessableof its contingency fund — took a $53,000 loss on its investments. policies. A non-assessable policy meant that policyholders would not be charged additional fees if the company’s oper- As a result, A.M. Best Company, a ratings agency that ating costs exceeded projections, creating a shortfall. Not onlymeasures insurance companies’ financial strength, was prepared was this a tribute to the company’s financial strength, but this Dare to Dream | 39

After 40 years of experimentation, the insurance industry modernizedits rating system in 1939. Rather than focus on thecost or the size of an automobile, it now rated carsbased on how they would be used. Cars designated“A-1” had annual mileage under 7,500, were notused in business and were driven by no more thantwo people, neither under age 25. “A” was for allother individually owned automobiles not usedin a business, and “B” for all other automobiles.Three years later, the rating system was adaptedto the national gas-rationing system.vote of confidence on the part of the company may have helped ABOVE: Americans, encouraged by posters such as this, con-increase sales. Traditionally, many mutual companies charged apolicy fee or a token premium up front, and then at the end of the served gasoline for the war effort by reducing their depen-year, charged members an assessment to cover losses. Although dence on automobiles.Farmers Mutual never issued an assessment on its auto poli- WAR AT HOME AND ABROAD cies, many prospects remained wary of the assessable cover- While Roosevelt offered the New Deal as an answer to America’s age. Competitors exploited economic woes, across the Atlantic Adolf Hitler offered a that fear, painting a different solution — expansion and conquest. By 1938, Hitler bleak picture of Farmers had rebuilt the German army from its defeat in World War I. Mutual and raising the Austria, Czechoslovakia and Poland fell in rapid succession. In specter of large year-end America, isolation versus intervention in the affairs of Europe assessments. To mark the dominated the 1940 elections. Bernard Gehrmann, an ardent isolationist, missed Farmers Mutual’s 1940 annual meeting tobeginning of its non-assessable policies, Farmers Mutual adopted stay in Washington and fight Roosevelt’s request for increaseda new logo that boasted its non-assessable coverage. military funding to aid England. But after the Japanese bombed Pearl Harbor on Dec. 7, 1941, Gehrmann was among 388 Two words dominated the center of the new logo: Safe congressmen supporting the declaration of war. Nine men fromDrivers. As more people took to the road and the number of acci- the home office — Art Babler, P.K. Bruce, Charles Carman,dents increased, Farmers Mutual and other insurers aggressively Gordon Erdman, John Farnsworth, Newman Himley, Bobpromoted safe, conscientious driving. Accident rates and claims Kelliher, Les Ramiker and Alfred Seidl — went on to serve inpayments continued to climb. Farmers Mutual responded intwo ways. In 1941, the company refined its classification system,dividing city drivers into two classes — occupational and non-oc-cupational — and raising rates for those who drove excessivelyfor work. The following year, Farmers Mutual implemented itsfirst field underwriting program, with district supervisors train-ing agents to be more selective in their prospecting.The programoffered increased commissions to supervisors with loss ratiosbelow 45 percent and imposed penalties on those with loss ratiosexceeding 55 percent.40 | Surviving and Thriving in Tough Times

ABOVE: Under federally imposed gas rationing, attendants at the Old Log Cabin Filling Station near Tomah, Wisconsin, handledmore than money. Each ration coupon had to have the holder’s name, license number and home state written on the back.the U.S. military. Those left at home worked evenings and week- gallons of gas each month, about 240 miles of driving. “B” card-ends through the end of the war. Even relatives came in to help. holders received an additional 16 gallons, and “C” cardholders were entitled to unlimited rations. Farmers Mutual revamped To boost morale, Wittwer suggested the personnel commit- its classification of private cars to correspond with the rationingtee publish a newsletter for the home office and the field force. system. Its A-1 class included farmers and select “A” cardholders.The first issue of Coverall appeared in July 1942. Carrying office City “A” included the remaining “A” and “B” cardholders. Classand industry news, cartoons and miscellaneous articles written C, the highest premium, applied to all others.by staff, Coverall ran for the duration of the war.The war affectedthe nation and the company in many other ways. Just as the Though inconvenient for Americans who’d grown dependentautomobile industry was picking up, the War Production Board on their cars, gasoline rationing was a mixed blessing to Farmerscommandeered its factories to produce planes, tanks, trucks and Mutual and other auto insurance companies. The industry beganjeeps. Except on a limited basis, factories didn’t resume making adopting more liberal policies suchprivate automobiles until 1945. Congress froze prices, wages, as comprehensive coverage andsalaries and rents throughout the country, and the Office of Price personal bodily injury coverage,Administration rationed everything from canned goods to fuel oil. which, combined with ever-in- creasing accident rates, drove On Dec. 1, 1942, Americans began receiving gas rationing up claims payments. Gascards. In the Midwest, an “A” card entitled the holder to 16 Dare to Dream | 41

ABOVE: Under gas rationing, Claims Director Alex Opgenorth saw fewer claims but higher claim payments.rationing, along with a lower national speed limit (first 40 mph night before you go, and we’ll take care of it.” That night, the carand later 35 mph) greatly reduced the number and severity of would mysteriously catch fire.accidents. Farmers Mutual was among the first to cut premiumsin the wake of gas rationing. After talking with Opgenorth, Caskey met with Wittwer. “You’re the only guy we know we can trust in Missouri,” Wittwer But rationing also discouraged agents, convincing many told him. “Would you go down there and see what you can do tothat people weren’t interested in buying auto insurance. Farmers straighten the damn thing out?”Mutual responded by mailing 43,000 letters to prospects offeringa free ration book cover in exchange for information about their Wittwer convinced Caskey to transfer to Missouri as a stateinsurance coverage. The campaign provided agents with thou- agent. The company provided a company car, moving expensessands of leads. and an expense account. Rationing was more than a minor inconvenience for Jim Caskey and his wife moved to Jefferson City, Missouri, thatCaskey, who joined Farmers Mutual in 1939 as one of four field spring and Caskey started cleaning house, firing all the used-car-claims representatives. Shortly after the war started, Wittwer dealer agents and many of the district agents, who should havecalled Caskey to the home office to discuss Caskey’s home dealt with the problem. “It was a hell of a lot of work for a longstate, Missouri. time,” Caskey remembered. Since the beginning of the war, Missouri agents had Gas rationing also made Caskey’s job more difficult. Citizens’submitted almost one claim a day for cars destroyed by fire. Alex committees in each community determined which rationing cardOpgenorth, Farmers Mutual claims director, discovered that local residents received. Two committee members in Jeffersonsome used-car dealers selling insurance for Farmers Mutual were City were agents for competing insurance companies, and theymaking deals with draftees to get their cars paid off. “Don’t worry decided Caskey should get an “A” card — four gallons a week.about it, George,” the agent would say with a wink. “You just After talking with Wittwer and Kalbskopf, Caskey movedgo defend our country. But leave your car out on the road some to Kansas City, where a Farmers Mutual agent served on the committee. There Caskey was able to get the gas he needed.42 | Surviving and Thriving in Tough Times

STATE FARM OF realized State Farm would be a ruled against the Illinois companyMADISON VS. formidable competitor of Farmers in 1940, 1942, 1943 and 1944.STATE FARM OF Mutual. So in 1935 ­— with an eyeBLOOMINGTON to setting up another barrier to Even during this period, rela- State Farm’s entry into the state tions between the two compa-The battle to keep State — Farmer’s Mutual dubbed its new nies remained cordial. Often after Farm Mutual Automobile windstorm company State Farm arguing the case in court, William Insurance Company of Mutual Insurance Company of Aberg (Farmers Mutual boardIllinois out of Wisconsin started Madison, Wisconsin. member and attorney), Erwinbefore the birth of Farmers Meyers (State Farm’s attorney)Mutual. State Farm, organized Late in June 1939, Mortensen, and Sterling Schallert (Meyers’sin 1922, applied for a Wisconsin whose term as commissioner was nephew, a law student and futurelicense in 1925, 1926, 1927 and about to expire, prepared to give Farmers Mutual employee) went1932, and was rejected by four the Illinois company a Wisconsin to lunch together.different insurance commission- license. In a legal battle thaters because the company did played out on the front pages of The fight boiled over intonot set up reserves against its the Wisconsin State Journal and the legislature in 1941, where“life membership fee,” which the the Capital Times, Farmers Mutual bills allowing State Farm intocompany charged all new poli- won an injunction preventing him Wisconsin failed. Republican lead-cyholders to cover the cost of from doing so. The circuit judge, ers threatened to hold the legis-generating new business. however, vacated his own injunc- lature in session through the tion and Mortensen dropped the summer unless Commissioner In 1931, State Farm attorney license in the mail before Bill Duel issued State Farm a license.Herman Ekern, former Wisconsin Aberg, Farmers Mutual’s attorney, Charges and counter chargesinsurance commissioner and could appeal. spilled onto the front page ofattorney general, launched the the daily papers. Even JuliusWorkman’s Mutual Insurance The Wisconsin Mutual Heil, governor of Wisconsin, wasCompany of Milwaukee, using the Insurance Alliance, represent- dragged into the controversy.State Farm plan. Commissioner ing 117 mutual insurance compa-Harry Mortensen, a former nies in the state, joined Farmers The battle also seeped acrossProgressive Party ally of Ekern’s, Mutual in its suit to force the state lines, creating hardordered the company to cease Mortensen to withdraw the feelings among Illinois legisla-operations, but Ekern ignored license. The Wisconsin mutual tors and bureaucrats. In 1945,him. An alliance of Wisconsin companies dropped their case Farmers Mutual inquired aboutmutuals took Workman’s to court, after the new insurance commis- obtaining an Illinois license. Soforcing it to abandon the life sioner, Marvin Duel, a former much antagonism had built upmembership fee. insurance agent from Fond du between the states that Farmers Lac, refused to renew the Illinois Mutual didn’t secure a license in Herman Wittwer, Richard company’s license. Illinois until 1951.Kalbskopf and Irving Maurer alllooked to State Farm as a model, The battle continued, however, Despite the early, fractiousand developed personal as well as when State Farm filed suit, asking interactions between the twoprofessional relationships with its the courts to force Duel to renew insurance giants, there was noexecutives. Nevertheless, Wittwer the company’s license. State lasting animosity. Today, lead- Farm appealed the case to the ers of both companies main- Wisconsin Supreme Court, which tain a cordial and respectful relationship. By the time the war ended, cars were in such high demand WAR IN THE OFFICEthat Caskey was able to sell his 1941 Plymouth, driven morethan 100,000 miles, for twice what the company had paid. When As war raged in Europe and the Pacific, tempers flared andHarold Frank, who handled the company’s purchases, heard that, factions formed in Farmers Mutual’s home office. Almosthe bragged all over the company about his investment profit. from the beginning, there was friction between Wittwer and Kalbskopf. In retrospect, this conflict was probably inevitable, Dare to Dream | 43

given the significant differences in both personality and style Maurer’s style rubbed Kalbskopf and Wittwer the wrongbetween the two. While Wittwer ran the home office business, way as well. Maurer pushed for aggressive expansion, at timesKalbskopf was the promoter. More comfortable launching an criticizing the Farmers Mutual leadership for being too cautious.idea than following through on the details, he spent much of At the 1940 Policyholders Meeting, Wittwer took him gentlyhis time on the road, meeting with the field force, promoting to task, saying, “When discussing the company’s growth, Mr.contests and spreading goodwill — much of it in the form of Maurer, our agency manager, made a rather pertinent comment.scotch. Kalbskopf enjoyed nothing more than a good meal and a He said: ‘When a company has entered the stabilization stage tonight at the bar with one of the company’s field men, racking up such an extent that no new blood, no new ideas, no new marketshefty expenses that rankled Wittwer’s frugal nature. and no new ambitions are brought in, old age and death are around the corner.’ I’m sure Mr. Maurer was making no refer- Conversely, Wittwer’s conservative, buttoned-up attitude in ence to Farmers Mutual in his remarks.” Wittwer then went onturn annoyed Kalbskopf, who felt his contributions as a recruiter to detail the various developments that demonstrated the compa-and financier were under-appreciated. The animosity eventually ny’s growth, including expansion into Minnesota and Missourigrew so strong that August Rammer spent most of his limited and application for licenses in North and South Dakota, Iowatime in the office settling feuds. and Nebraska. Agency manager Irving Maurer was a third powerful Aberg tried to put a happy face on the almost-open hostility.personality in this volatile mix. Maurer, who had proven himself “No group ever got together which could be unanimous in theira master of the insurance business, expected much of himself opinions,” he told policyholders. “We have differences on theand worked late most nights, leaving his wife, Kathryn, to care board, and we contemplate having them in the future. It showsfor their two young children. By nature introverted and insecure, virility, and it shows that the company is not made up of a lot ofMaurer compensated by being outwardly aggressive — some said stooges, but men who think for themselves.”intimidating — which enabled him to make difficult decisionsbut won him few friends among employees or agents. In 1940, at Aberg’s suggestion, the company hired aBELOW: Differences in personality and opinions frayed the relationship between Richard Kalbskopf and Herman Wittwer.44 | Surviving and Thriving in Tough Times