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^ Library A



UNIVERSITY OP
CAL PORNIA

IRVINE



UNEMPLOYMENT



UNEMPLOYMENT

A PROBLEM OF INDUSTRY



BY

W. H. BEVERTDGE

STOWELL CrVIL LAW FELLOW OF UNIVERSITY COLLEGE, OXFORD, I902-I9O9 I

FORMERLY SUBWARDEN OF TOYNBEE HALL AND MEMBER OF THE

CENTRAL (unemployed) BODY FOR LONDON



THIRD EDITION



LONGMANS, GREEN, AND CO.

39 PATERNOSTER ROW, LONDON

NEW YORK, BOMBAY, AND CALCUTTA

igi2



TO

MY FATHER AND MY MOTHER

THIS BOOK IS DEDICATED

WITH THE HOPE THAT, IN A DIFFERENT FIELD

OF STUDY FROM THEIRS, IT MAY YET

APPEAR TOUCHED BY SOMETHING

OF THEIR OWN SPIRIT.



PREFACE TO FIRST EDITION.

This volume contains a course of lectures delivered in Oxford,
during Michaelmas term of the year now ending, for the Dele-
gates of the Common University Fund. Its object is to com-
bine a record of the principal facts of unemployment with a
continuous argument as to the causes of unemployment. It
includes a good deal of matter from published sources to which
in the lectures I merely gave references, and appendices, the most
important of which deal with " Public Labour Exchanges in
Germany" (reprinted from the Economic Journal for March,
1908) and " Methods of Seeking Employment in Great Britain".
I am only too conscious that the treatment given in the fol-
lowing pages to one of the most perplexing and urgent of indus-
trial problems is in many points defective ; that, not once but
many times, I have been compelled to leave the record of facts or
their analysis incomplete, to give probabilities in place of searching
for certainties, to turn back unsatisfied from whole fields of inquiry
as fascinating as they are important. Among these last is to be 1
mentioned particularly the problem of the underlying causes ot 1
cyclical fluctuation in trade and employment. In so far as the
main obstacle to further inquiry into these causes has, in my case,
been immersion in actual dealing with distress as member of the
Central (Unemployed) Body for London during the past three
years, I can only hope that the following discussion may prove to
have gained on the side of practical experience something to set
against what it has lost on the side of theory. After all, what- ,
ever may be the underlying causes of cyclical fluctuation, the fact
of cyclical fluctuation has to be reckoned with by governments
and individuals for many years to come. No analysis of its causes
can hope within the range of practical politics, if indeed ever, to
dispense with the need for providing against its results.



viii PREFACE TO FIRST EDITION

Another point of incompleteness is involved in the publication
of these lectures now rather than six months or a year hence.
The trade of the country appears to be passing through a depres-
sion more severe, or at least more general, than any that has
occurred within recent times. It is possible, therefore, though,
I think, not probable, that the experience of Distress Committees
during the present winter may be such as to modify considerably
some of the conclusions based upon their working in the past.
In any case, howeve., the modification will be one of emphasis
rather than of substance. The present winter's experience may
bring to light more distress that can truly be called exceptional.
It cannot diminish the seriousness of the distress that is chronic.
I would gladly have delayed publication in order to test, by the
experience of a fresh and in some ways abnormal winter, the
conclusions already drawn. Since circumstances make this delay
impossible I can only hope that here, too, loss may be counter-
balanced by gain and the present volume have additional value
as contributing to discussion at a critical moment.

The final chapters serve to define what needs to be done
rather than to set out in section and subsection the way of do-
ing it. They must be judged as a statement of remedial policy,
not as a compendium of practical reforms. The guiding principle
of this policy is the reduction of the question of unemployment
to a question of wages. Along that line alone but along that line
certainly will the problem of distress through unemployment at
last be solved. It is not in any substantial sense insoluble. The
main part of it lies within ascertainable limits. It represents, not
an immeasurable and irredeemable failure of the existing social
system, but incompleteness of organisation at certain points.
There is, indeed, something almost fantastic in supposing that
a nation capable of raising the edifice of British industry must
be forever baffled by the business problem of organising and
maintaining adequately the reserve forces of labour.

The question is simply that of determining that the problem
shall be solved. Upon that and that alone depends the practic-
ability of all the essential reforms — of the voluntan,^ or compulsory
organisation of the labour market, and of the voluntary or com-
pulsory averaging of earnings. " Practicability " is never anything
but a relative term — dependent upon the urgency with which an



PREFACE TO FIRST EDITION ix

object is desired and upon the inconveniences which men are
prepared to undergo in its pursuit. It is practicable for most
people to run a mile to save a life. It is not practicable for
any one to run a mile unless he is prepared to get warm. So
it is not practicable for a nation to get a mastery of unemployment
without being prepared to submit to some change of industrial
methods and customs. The problem of unemployment — this is
a point that cannot be too strongly emphasised — is insoluble by
any mere expenditure of public money. It represents not a want
to be satisfied but a disease to be eradicated. It needs not money
so much as thought and organisation. It needs above all to be
taken seriously. A problem of industrial organisation is not taken
seriously so long as it is left to the Poor Law or to " Distress "
Committees, so long as it is forgotten with every temporary im-
provement of trade, so long as it is made a peg on which to
hang all other projects of social or political change.

I have to thank many friends for help in the publication of
these lectures — more particularly my aunt Mrs. North, who col-
lected and prepared the material for many of the statistical tables ;
Mr. A. Andrewes- Uthwatt, who read a large part of the proofs and
compiled the index ; and Mr. J. S. Nicholson, who is mainly re-
sponsible for the bibliography and also gave invaluable aid at the
last moment in completing statistics and verifying references.

I have to thank also the Editors of the Albany Review, the
Contemporary Review and the Economic Journal for placing at
my disposal again matter which had already appeared in those
periodicals.

W. H. BEVERIDGE.

December, 1908.



PREFACE TO THIRD EDITION.

Since the first publication of this book the position in regard to
the treatment of unemployment in the United Kingdom has been
radically altered by the passage of the Labour Exchanges Act,
1909, and the National Insurance Act, 191 1. The most import-
ant of the relevant public documents have accordingly been
reprinted in Appendix E : Board of Trade Labour Exchanges,
and Appendix F : Unemployment Insurance. These include
an account of the working of the Labour Exchanges Act and
an official summary of the Unemployment Insurance Scheme
embodied in Part. II. of the National Insurance Act, together
with Part II. of the Act itself, and the Regulations made there-
under. No revision of the book itself has been attempted.

W. H. B.

August, 1912.



CONTENTS.



CHAPTER I.



The Problem and its Limits

Growth of sense of public responsibility in regard to unemployment. Growth
of accurate knowledge; general theory of causes now possible. Inquiry
must be (a) economic, (b) as to unemployment rather than as to the
unemployed. The problem that of the adjustment of supply of and
demand for labour.

The forces making for adjustment. Supply influenced by demand ; demand
ultimately governed by supply. The demand for the products of labour
unlimited. This demand, however, is not for the products of labour
alone but for those of labour in combination with land and capital.
Relations of labour and land. No shortage of latter. No pressure of
population on the means of subsistence to-day. Relations of labour and
capital. No general displacement of men by machines. The reward to
labour rising not falling. The negative conclusion reached : Unemploy-
ment does not represent general failure of adjustment between growth of
supply of labour and growth of demand. The positive conclusion reached :
Unemployment does represent specific imperfections of adjustment.
Changes of industrial structure. Fluctuations of industrial activity.
The glutting of the labour market. Outline of subsequent discussion.

The positive conclusion more certain and more important than the negative
conclusion. A rising demand for labour no cure for unemployment.



CHAPTER n.

The Sources of Information i6

1. The unemployed percentage. Returns from trade unions paying unem-

ployed benefit. Percentages 1894-1908. Returns fairly complete as to
unions reporting. Not a fair sample of the whole of industry. Stable
trades unrepresented. Fluctuating trades over-represented. No ac-
count taken of short time. The unemployed percentage no indication of
the volume of general unemployment but only of its growth or diminution.

2. Records of Distress Committees. Include only distressed unemployed.

Detailed information as to applicants.

3. Subsidiary sources of information. Statistics of commerce and manu-

facture. Days worked in coal-mines. Trade union reports. Pauperism.
No possibility of numbering the unemployed. Analysis must be of unemploy-
ment.



xii CONTENTS

CHAPTER III.

PAGB

Seasonal Fluctuations 29

A familiar and common phenomenon. Spring and summer trades. Winter
trades. Trades dependent on social habits. Differences of period,
range, regularity and cause. Seasonal fluctuations met (a) by reduction
of hours ; (b) by use of subsidiary trades ; (3) by private or collective t
saving. A surface movement. A question less of unemployment than Ij
of wages. j\

CHAPTER IV.

, Cyclical Fluctuation 3^

Alternate rise and fall of average unemployed percentage in periods of years.
All principal trades affected together. Fluctuation in the labour market,
part of general economic ebb and flow. The pulse of the nation.
Shown in bank rate, foreign trade, marriage rate, consumption of beer,
crime, pauperism, company formation, railway receipts, bankers' clear-
ances, wages, prices. Peculiar features since 1900. Material life of the
nation governed by alternations of expansion and contraction.

Causes of cyclical fluctuation still in dispute. Distinction between financial
crises and industrial depressions. Two types of theory untenable, viz. :
those not applicable to all advanced industrial countries alike and those
requiring fixed periods. Foreign trade fluctuation of principal countries.
Three types of theory still possible : (i) Fluctuation in supply of gold
and silver. (2) Misdirection of productive energy'. (3) Superfluity of
productive energy. The " under-consumption " theory. The competi-
tion theory. Cyclical fluctuation as the necessary form of progress
under competition

No final theory as to cyclical fluctuation can yet be given. Fluctuation itself
certain to continue. Average rate of growth of demand for labour
adequate for growth of population ; actual rate sometimes greater,
sometimes less. Recurrent pressure in labour market more or less suc-
cessfully met in some trades. Not met by unorganised workmen.
Mansion House Relief Funds. Better measures of palliation needed.

CHAPTER V.
The Reserve of Labour 68

1. The irreducible minimum of unemployment. Unemployed percentages of

skilled men never down to zero. Chronic distress of unskilled men.
The paradox of the labour market : general and normal excess of supply
over demand. Constitution of irreducible minimum shown by distri-
bution of unemployment in trade unions. Loss of time by many, not
chronic idleness of a few. Men out of work on any one day only that
day's sample of labour reserve. Confirmation by experience of Distress
Committees. The typical applicant is not a chronically unemployed
man but a casual labourer, is industrial not parasitic upon industry.

2. Economics of casual employment. Labour reser\es swollen (a) by lack of

mobility, (b) by chance engagement. Abstract analysis illustrated by
London riverside labour. Work at the docks and wharves. Reform by
London and India Docks Company. Organised fluidity. The bulk of
employment still unorganised. The observed excess of labour. Average
earnings of casual dockers.

3. The glutting of the labour market. Other ports than London. Other

forms of casual employment. The building trades. Casual employment
only acute form of general phenomenon. Dissipation of fluctuating
demands causes over-recruiting of all trades. The sense in which methods
of employment may be said to call excessive reserves of labour into being.



CONTENTS xiii



4. Under-employment. Irreducible minimum only a sample of irrec;ular
reserves of labour. Reserve of labour not necessarily so great or so
irregular as to involve distress or under-employment. Tendency to
glutting of labour market varies in strength and meets with varying
obstacles in different occupations. Distinction between skilled and
unskilled. " Under-employment " as a form of sweating. The beating
down of average earnings to subsistence level. Charity and public
relief as subsidies to casual employment. The problem one of business
organisation. How to provide properly maintained reserves of labour
for fluctuations of demand.

CHAPTER VI.

Loss AND Lack of Industrial Quality iii

1. Changes of industrial structure. Illustrated by census. Decay of par-

ticular trades. New processes or machines. New forms of labour.
Shifting of locality. Common feature the destruction of established
livelihoods. Not, however, of great apparent importance. Such changes
best considered under a more general heading as one type of factors
producing qualitative maladjustment in the labour market Other factors
are age and deficiencies of industrial training,

2. Influence of advancing years. Applicants to Distress Committees drawn

in comparable proportions from all ages though more from the later
ones. Unemployment not specifically a disease of old age. Popular
idea that men get displaced at earlier ages than before contradicted by
statistics of superannuation in two important unions Old men and
the standard rate. Advancing years, by destroying adaptability, increase
the difficulty of obtaining new employment.

3. Deficiencies of industrial training. The bulk of applicants to Distress

Committees have taken to "blind-alley" and uneducative employments
on leaving school. Inference from this that improvements of industrial
training are the principal remedy for unemployment not justified.
Distress Committees register only some, not all the unemployed. Casual
labour market recruited from many sources and at all ages; age distribution
in residuary and skilled occupations compared. Casual labour dependent
upon casual demand. Possible influence of industrial training upon
unemployment limited. Need for revival of principle only of apprentice-
ship — that every boy should be learning something as well as earning.

CHAPTER VII.

The Personal Factor 133

Defects of character and the volume of unemployment. The vagrant and
" unemployable ". The half-employable. All instability of character
increases unemployment.
Defects of character and the incidence of unemployment. Unequal efficiency
of workmen. The less efficient are dismissed and thereby further de-
moralised. Concentration of unemployment upon the inferior men
illustrated by (a) costliness of relief works, (b) proportions of unpunctu-
ality in good and bad times, (c) statistics of unemployed claims in trade
unions. The casual fringe among compositors and bookbinders. Influ-
ence of personal character upon the incidence of unemployment a
dominant fact of the situation.
The unemployed present as a rule many economic and personal factors in
combination. The limbo of casual labour. The main visible effect of
exceptional depression is to accentuate normal poverty — making more
casual those who were casual before. Trade union statistics. Numbers
unemployed and average period of unemployment in good and bad years
respectively. Complication of many factors impedes direct treatment of
the unemployed.



xiv CONTENTS

CHAPTER VIII,

PAGE

Remedies of the Past 150

1. The able-bodied under the Poor Law. Relief in the workhouse. Relief of

family outside and head of family inside the workhouse. Outdoor relief
with a labour test. Outdoor relief without a labour test. The casual
ward.

2. Municipal relief works. The circulars of 1886 and 1892. " Work " with

no standard of competence.

3. Special charitable funds. Development in London i860, 1867, 1885,

1S92-5. The " colony system " of 1903-4. Mr. Long's scheme of joint
committees, 1904-5.

4. The Unemployed Workmen Act. Summary of provisions. A conglome-

rate of ideas from Poor Law, municipal relief work and special
charitable funds. Working of Act 1905-S. Numbers and occupations
of applicants. Difficulties of investigation and selection. The pre-
dominant casual labourer. Cost of relief work. Absence of permanent
benefit. Farm colonies. Emigration. Labour Exchanges.

5. Conclusions as to Unemployed Workmen Act. Departures from original

policy in respect of finance, persons to be assisted, conditions of assistance,
effect of assistance. Failure to deal with exceptional distress. Assumed
advantages of relief by work rather than by money gifts unreal. Need
for improved industrial conditions. A country cannot treat its dependants
less badly than its citizens. Need for measures of organisation not of
relief.



CHAPTER IX.

Principles of Future Policy. I. The Organised Fluidity of Labour . 192
Summary of preceding discussion. Unemployment a matter of fluctuations
and changes in the demand for labour. Its treatment a matter of business
organisation — to provide reserve power for fluctuations and to ease tran-
sitions. Criticism of proposals for State employment as a reservoir of
labour for ordinary employment.
The labour market. Different treatment of labour and other commodities
to-day. The hawking of labour. Wastefulness of this plan shown in
two ways, (a) delay of production or (6) maintenance of excessive reserves
of labour. Abolition of this plan by organisation of labour market the
first step in the treatment of unemployment. De-casualisation. All men
not regularly employed under one firm to be engaged only from an Ex-
change in touch with many firms. Concentration of work on some, displac-
ing of others. Theoretical and practical answers to objection on ground of
this displacement. Organisation of labour market as an increase of
industrial efficiency. Subsidiary use of emigration, afforestation, etc.
Analogies between casual employment and casual relief, and between
under-employment and under-payment. Principle clear ; practical appli-
cation varied. De-casualisation only special form of general labour
market organisation. Organised and therefore limited fluidity of labour
a protection to those in each trade or district.
Labour Exchanges and other factors in unemployment. Seasonal fluctuations.
Changes of industrial structure. The problem of age. The problem
of youth ; relation between Labour Exchanges and industrial training.
The unemployable. The Labour Exchange test of unemployment.
An alternative to deterrence.
Conclusions. The demand of economists for mobility of labour. Ignorance
a principal barrier to movement. The two functions of the modern
workman. Organisation of the search for work increases working
efficiency. Need for this on any view of relations between population
and industry. The cardinal principle of social policy — to make youth
adventurous and keep age secure.



CONTENTS XV

CHAPTER X.

PAGE

Principles of Future Policy. II. The Averaging of Work and Earnings 219
The averaging of work and earnings. Elasticity of working hours. The
example of coal and cotton. Unemployed insurance. The example of
the trade unions. Expenditure on unemployed benefits. Cost per
member per week. Flexibility- of the provision made. The burden of
unemployment borne by the trade as a whole. Foreign examples. The
German report. Value of the method of insurance. Possibility of
extension depends upon test of unemployment.
Minor and collateral measures. Systematic distribution of public work on
business lines. Elasticity of wages. Absorption of temporary surplus.
General progress. Poor Law Reform. The principles and functions of
public relief.

CHAPTER XL
Conclusion , , > 235

APPENDIX A,
Public Labour Exchanges in Germany ..,.»•• 239

APPENDIX B.
Methods of Seeking Employment in Great Britain .... 255

APPENDIX C.
Report of the Departmental Committee on Vagrancy. . . . 267

APPENDIX D.

List of Reports and other Publications bearing on Unemployment . 270

APPENDIX E.
Board of Trade Labour Exchanges 279

APPENDIX F.
Unemployment Insurance 307

Index 363



LIST OF TABLES AND CHARTS.



TABLE PAGB

I. Principal Industries in United Kingdom, 1855-1907 .... 7

II. Rates of Money Wages and Prices, 1878- 1907 9

III. Unemploj'ed Percentage, 1894-190S 18

IV. Unemployed Percentage — Trades Represented 20

V. Coal-Mining — Days Worked per Week 25

VI. Seasonal Fluctuations in Certain Trades. {With Chart) . . 30, 31
VII. Building Trade — Increase and Decrease per cent, in Numbers Em-
ployed by Firms making Returns 33

VIII. Cyclical Fluctuation of Employment 39

IX. The Pulse of the Nation. {With Chart) 42-44

X. Foreign Trade of Principal Countries. {With Chart) . . 55, 56

XI. Cyclical Fluctuation and Relief Funds 66

XII. Percentage Membership of Certain Unions Unemployed at some time

in a year . . . . . . . . . . . -71

XIII. Distribution of Unemployment — Amalgamated Society of Engineers . 73

XIV. Distribution of Unemployment — London Society of Compositors . 74
XV. Distribution of Unemployment — London Society of Compositors . 74

XVI. London and India Docks — Percentage of Work Performed by each

Class of Labour 89

XVII. Average Weekly Earnings of Casual Docker . . . -94

XVIII. Ages of Applicants found Qualified by Distress Committees — England

and Wales ii7

XIX. Ages of Unemployed Applicants — London and West Ham . .119

XX. Age Distribution of Unemployed and Others 119

XXI. Age at Superannuation — ^Amalgamated Society of Engineers . . 122
XXII. Age at Superannuation — Friendly Society of Ironfounders . . . 122

XXIII. Superannuation in Amalgamated Society of Engineers, 1885 and

1907 123

XXIV. Age Distribution in Certain Occupations. England and Wales.

{With Chart) 129

XXV. Exceptional Depression in Trade Unions 147

XXVI. Distress Committees in England and Wales 166

XXVII. Occupations of Unemployed Applicants 168

XXVIII. Repeated Applications in London 178

XXIX. Men Assisted and Men Applying 179

XXX. Metropolitan Employment Exchanges, 1906-1908 .... 184

XXXI. Metropolitan Employment Exchanges (Year ended 30th June, 1908) . 184

XXXII. Principal Public Labour Exchanges in Germany 241

XXXIII. Development of Principal German Exchanges ..... 246

XXXIV. Travelling Benefit (Ironfounders) 259

XXXV. Travelling Benefit (Ironfounders) : Summp.ry 260

In addition. Appendix E contains, at pp. 293, 298. 301, 302, 304-306, Tables giving

Statistics as to the Board of Trade Labour Exchanges.

xvi



CHAPTER I.

THE PROBLEM AND ITS LIMITS.

Growth of sense of public responsibility in regard to unemployment. Growth of
accurate knowledge ; general theory of causes now possible. Inquiry must be
(a) economic, (b) as to unemployment rather than as to the unemployed. The
problem that of the adjustment of supply of and demand for labour.

The forces making for adjustment. Supply influenced by demand ; demand ulti-
mately governed by supply. The demand for the products of labour unlimited.
This demand, however, is not for the products of labour alone but for those of
labour in combination with land and capital. Relations of labour and land.
No shortage of latter. No pressure of population on the means of subsistence
to-day. Relations of labour and capital. No general displacement of men
by machines. The reward to labour rising not falling. The negative con-
clusion reached : Unemployment does not represent general failure of adjust-



Online LibraryWilliam Henry Beveridge BeveridgeUnemployment; a problem of industry → online text (page 1 of 44)