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Class No. Book No. Acc. No. Date \Q

THE CAUSES AND SOCIAL SIGNIFICANCE OF UNEMPLOYMENT

THESIS ./KITTEN FOR a MASTER'S DEGREE

G. VINTON JONES

1932

COLBY COLi^EGE, 1928, B. S.

OUTLINE ..INLEX

PAGE

I. INTRODUCTION - FOREWORD 1

PART I

I. TIE GENERAL APPROACH TO 3? HE PROBLEM OF UNE MPLO YME NT

1. DEFINITIONS OF UNEMPLC YMK NT 4

2. THE PRC3LE.il OF UNEfitPLOYJtENT IS IMPORTANT 5

3. tfORK, tne OBVIOUS CURE FOR UNEM- PLOYMENT 6

4. THERE ARE SOME WHO .VI LL NOT RECOG- NIZE UKEMPLOYMEIIT PROBLEM 7

5. THE VaSTNESS OF the PROBLEM 8

6. THE SOLUTION OF SHE MPLO YME NT PROBLEM

IS OF UTMOST IMPORTANCE 9

II. THE CAUSES OF UNEMPLOYMENT

1. THE ALLEGED CAUSES OF UNEMPLOYMENT

and _>EP?...oSION 10

2. SUPERFICIAL REASONS GIVEN FOR the FLUCTUATIONS OF UNEMPLOYMENT 11

3. BRIE P SUMMARY: CAUSES PRE-WAR UNEMPLOYMENT 12

4. CYCLES OF UNEMPLOYMENT - and OTHER CYCLES 12

III. DIRECT MAJOR CAUSES CF UNEMPLOYMENT

PAGE

1. SEASONABILITY IN IKD0STRY 13

2. THE BUSINESS CYCLE 14

30MGLUSIOS 16

3. PRODUCTION OVERrRUNNING CON- SUMPTION 17

4. THE SLGftfESS tflTH tfHICH MONEY

13 CIRCULATING 19

5. TECHNOLOGICAL UNEMPLOYMENT 21

a. MEANS CF REDUCING LOSSES OF... 22

b. T.I?: CASE AGAINST TECHNO- LOGICAL UNEMPLOYMENT 23

IV. INDIRECT MAJOR CAUSES C? U1BMPLOYMENT

1 . V/AR 26

2. IORLjD AGRICULTURAL CRISIS 28

a. THE POOR FARMER 28

3. SPECULATION 29

4. LIFE IS UNCERTAIN (UNCERTAINTIES

C:~ LIFE) 30

5. HOARDING MONEY AS A CAUSE OF DEPRESSION 51

6. PARaLYEEoj CREDIT: FEE REASON 33

7. TiiS LACK OF 3AVI2JGS 36

V. DIRECT MINOR CAUSES OF UNEMPLOYMENT

1 . GREATER . EFFI CIENCY IN MANAGEMENT . . 39

PAGE

2. CHANGED OUTLGGxv IN REGARD TO POPULATION 40

3. IMMOBILITY CE LABOR 41

4. INADEQUACY GE PLACEMENT AGENCIES. .42 VI. INDIRECT JINOR CAUSES

1. EXCESSIVE OPTIMISE 43

2. GOLD : THE SHIFTING CE GOLD HOLDINGS 44

3. TARIEES 45

4. OLD AGE 46

5. THUS PALIS IN the PRICE OF

SILVER 48

6. EFFORT TO O^HOID CGX10DITY

PRICES 48

7. CKIJE 50

PART II

I. IROPOSBS REMEDIES AND RELIEF MEASURES

1. UiTEi£PLOY.iiENT - * PROBER OF INDUSTRY . . .51

2. BUSINESS 51

3. THE GOVERNMENT a^SPONSIBILIT Y 51

4. TrIE OPINIONS AS TO PLACING RESPONSIBILITY:

a. jVhat Can t.ie Federal Reserve System Do To Stabilize 53

b. T'ne President's Stand On Unemployment . 53

c. A Scheme For the Return Of Prosperi ty 53

PAGE

d. Trie *ay Out Of Unemployment 55

e. The Power Of trie Control Of Money.. 55

f. Utopian Plan - Reconstruction Corp. 57

g. Responsibility Is Partially Individual 58

n. The Problem Must Be Attacked Prom

the Consumers' Angle 59

i. Methods Por the Stabilization

Of Employment 59

j. Insurance... 59

k. Conclusion .61

5. RELISP OP U1JEMPL0YMENT DISCUSSED:

a. Industrial Emphasis. 63

b. Snorter forking Day 63

c. People Protected From Tnemselves . . . 64

d. Loss of Paith 65

e. Money Without fork 66

f. Charity 67

g. The Dole 68

h. Clothing and Food Gifts - A Dole?.. 68

i. Tne Family's A'elfare Is Important .. 69 j. Tne Dole, and tne Government's

Attitude 69

k. Welfare Organization 69

1. Conclusion 70

PART III

I. SOCIAL' SIGNIFICANCE

1. SIGNIFICANCE TO THE FAMILY:

a. Social and Individual Significance . 72

b. Incidence Rests Upon Children -

Prom tne Family Angle 72

c. Significance of Unemployment to

the Family 73

d. Tne Unemployed Man T .links 73

e. No way Out 74

f . Total Effect On the Nation Of Unemployed Families 75

g. Human Side Of Unemployment 75

n. All Men Are Created Equal 76

i. helplessness Of Man JVno Has Notning

To Offer Except Labor 76

PAGE

2. SIGSiyiCAVGB TO I HE SOVERNMENT

a. Family Point Of View Not .leant

To 3e Pessimistic - Yet 80

b . Ratioalization Of tae Group Not Affected :The Employea-At ti tuae .... .81

c. If >ve .lad Savedl 81

d. //ho Is At Fault? 82

e. Is the Government Responsible For

Its Tolerance 82

f. Inuividual Status And the Defini- tion Of Unemployed . (T le Scope Of Tnis Thesis Necessarily Limited)

g. Employment the Concern Of All 83

h. Una ermines Citizens nip 84

i. Losses Because Of Idleness - To National Producers 84

j. Government Not To Accept Resoonsi-

bility 85

k. In Effect, Deprived Of Constitu- tional Rights 85

(1) The Vision Is Clouded 86

1. Leaders .lust Rise To the Occasion.. 86 m. Depression and the Citizens' Minds. 87 n. Crucial Turning Point In Our Civi- lization 87

c . A Warning 88

p. Present Breakdown 88

3 . Constructive Value of This Thesis . . 89

4. Conclusion 91

1

INrRG-jjUCTION

Wherever people are gathered together, DNEICPLOYMEIiifT and trie business depression are tne topics of con- versation. The results of unemployment and under- c>) employment affect trie great majority of the people of tne United Gtates. National Congress has con- sidered tne problem and has passed measures that constitute its attempt to cope with the situation that is not only national, but international. Notable among the bills passed by Congress is the one bringing into existence a gigantic Government corporation with a financial power of 42,000,000, 000 W to t law out the frozen assets of the nation's busi- ness.

It is assumed by tne Government that the inactivity of industry and trade hinder the well-being of the economic system By placing tnis vast sum of money in tne nands of ban^s to lenu to industries and to the farmers, it is noped that business will pick up as this ncney gets into tne nands of the consumers. I would have you note especially that this is un- doubtedly tne outstanding attempt of the Government to stimulate tne process of business operation.

I raise the issue at the beginning of this thesis on UNEMPLOYMENT i If tne Government without a.iy pro- test from its citizens can "interfere** with the inactivity of industry (used in the bro ad sense ) can it not "interfere" with tne over-activity of industry?

There is ostensibly a lack of control of the economic activity of the nation whether in time of prosperity or depression. The Government represents the greatest power of control, but whether the United States Govern- ment should s<aek: to control the over-activity of indus- try as well as the inactivity of industry, is problemati- cal^

2 Congressional Record-Aooendix. January 20, 1932

P. 2454. Index January 18-29. P. 47 .H.B .#7360. Also Congressional Digest .February 1932. P. 55. (Reconstruction Finance Corporation)

1 President's Conference on Unemoloyment . Seoteiber

26 to October 13, 1921. Page 47.

2

IHTHODUCTIQH

Of course, the conduction of the business activi- ties of the Government itself (the greatest single (. business in the United States), as to how, and when, constitutes an appreciable measure of control.

To my mind tne crux: of the whole situation hinges on the necessity that the Government know and ap- preciate the CAUSES and the SOCIAL SIGNIFICANCE OF UNElCPLOYltfEBT . It was the awakening of the evils of Slavery that caused the United States to "inter- fere" with what was at one time a citizen's personal property (ownership of slaves) and to eradicate the evil and the disgrace to Society, which was even toleratec by the Father of the Country.

This thesis is an humble attempt to collect and record nany of tie <nown causes of unemployment, and to s.iow the social significance of unemployment in its true light and color as a great evil of our social and economic system. I believe reform will come only after the multiple causes and the social significance of tne problem are clearly understood.

Tne recurring condition of business depression and its corresponding unemployment of would-be-wage-earners show a lack: of acceptance of responsibility by all to a certain degree. An investigation of tne problem will be of assistance in relieving and curing the unhealthy economic situation if it can but nelp localize the responsibility.

A man pays a life penalty to society if he takea the life of another. The resocnsibi 1 i ty is placed at tie feet of the person who caused tne otner person tc lose nis life. Yet w.ien a man loses lis job-whieh is so essential 'for living-nei ther the Government, ncr industry, nor any person is forced to accept the responsibility for the loss.

1 President's Conference on Unemployment.

Business Cycles and Unemployment .Pp. 27-29 .

3

INTRODUCTION

The discussion of the causes will tend to show the responsibility for the cause. The discussion of the cost-trie social significance-will show the amount of payment that we (Society) have a right to expect from some source for the relief and the ultimate cure.

The thesis is written from the point of view of j& the United States. The causes an; the social significance, that is, are discussed in relation to tae unemployment conditions in the United States.

G. Vinton Jones

February 27, 1932

»START THE BALL ROLLIHG*- A Picture

Part I

A Definition of the tern "Unemployment "

"In a general sense a person is unemployed who isr^ willing and. wants to work for wages but due to cer- tain conditions beyond his control fines it impos- sible to find labor which is reasonably suited to lis capacity."

Another -definition

"Definition of unemployment as the difference be-^ tween the number of persons who are actually em- ployed and the number desiring and habitually de- pendent upon employment."

The two definitions of unemployment are essentially the 3ane in meaning. An unemployed oerscn is the same as a wage-earner without work. The conception cf the term is not new as it is quoted here. The misconception of the tern to include the bum and the riff-raff is, no doubt, the result cf loose thinking and is indeed not the meaning given to the term unem ployed by the intelligent citizen.

Throughout the thesis 1 may .mention sickness, for example, as a cause of unemployment. Indirectly sickness qualifies e/en under these definitions of the term unemployed; while a person has been sick, another wage-earner may have taken the former's place. Since the vacancy has been filled while the person was sick, sickness is the indirect cause of his unemployment.

To prove that the above conceptions of the term as defihed are not new or especially modern, the econo- mist I own tree of England in 1911 defined unemploy- ment: " person is unemployed who is seeking work^ for wages, but unable to find any suited to his capacities and under conditions which are reasonable judged by_local standards."

1 Reference Shelf. Volume 711 , No. 6., Compulsory

Unemployment Insurance . .E .C .Buehler .Page 12.

2 Hoover's Committee .Recent Economic Chages .P. 469 .

3 Rowntree ,3 . S . . .Unemployment .?. 301 .

5

Definition of Unemployment 13 y Still Another Authority

_ . ..'.el

"As 1 see it, unemployment is that condition arising 7

when a number of workers are available, who are capa- ble and willing to work, but cannot find work because of industrial maladjustments within the plant or indus- try or because of general economic conditions at home or abroad."

At first it may seem that a person, because of a change in tie family by death or misfortune, might not be classified as unemployed even though he or sie lad not been habitually dependent upon work, t .10 ugh he or she now wishes employment. According to tie definition quoted above, however, this type of unemployed person would-be really unemployed.

THE PROBITY OF UNZ.'JP LQ YaENT is important

The seeds of socialism are sown in people's minds in these critical periods of national unemployment. Aany persons are idle and unhappy. Any scheme to deliver tiem from hard tines has a great aopeal. The present systen of economy does not seem to work for them.

"The misery of undeserved loss of employment is the ^ greatest terror which besets tie industrious poor wio have no possessions .. .People are famisiing in tie nidst of a superfluity of production, iasses of nungry laborers are able and willing to produce, but tiere is no employment for tnem. . .Tnis evil col- lectivism promises to remove."

The disciples of tiis system advocate tie abolition of the wage system, which involves tie continuous enslavement of the proletariat. "Wage slavery" is to be superseded by a system of universal service because tiere is no doubt that private service is in principle very irksome and oppressive to workmen of high self-respect and personal superiority, so say tie Socialists.

1 Sebring, Edgar U.Taylor Society .Bulletin 9:177

2- --Bullock, Charles J. Selected headings in Economics.'

Pg. 693-4-5.

6

In spite of the fact that theories of socialism have their merits, belief and practice of them in our capitalistic economy from a national standpoint is to ma;ce a "house-divided." To my mind our greatest insurance against all radicalism is to secure work for the idle Hands and minds at a reasonable wage.

WORK, THE OBVIOUS JURE FOR UNEMPLOYMENT

The whole progress of man can be read in the way taat he earns nis "bread." He cannot keep his self-respect if he aoes not earn his living, and that means tne way he works for his living. Tne health of an indi- vidual depends upon his work. The sctietie of the world is based upon the plan of purposeful activity. There las never been a successful man whose success has not been secured through work.

tfork, of course, can mean either nental or physical activity, or botn. One has to work to Keep what he las; one has to work to secure what some one else has. It is our competitive system. Even in religious circles ,--t.ie cardinal of tne Catholic faitn has his position because of his competitive right to be at the head, the leader of nis Faith. A rich man may see his fortune dwindle away unless he is willing to find means to protect against decay. Anything that is not used, rusts and decays. Work is in the very scheme of things .

Work for the unemployed is tie obvious cure for un- employment. j3ut when shall there be work? "It has^ been said that once the men and women of tne United dtates snail take the stand tnat tne denial of oppor- tunity for work to the least of tnem is the concern of all, and no longer to be endured in our conmon life, economic and social invention will quickly de- vise means for making that opportunity secure." How snail tnere be work? "For every employee who is (P-) steady in nis work;; tnere snail be work. The rignt to regularity in employment is co-equal witn the rignt to regularity in the payment of rent, in tne payment of interest on homes, in the delivery to ccnsuners of tne rignt quality of products contracted for." Why is there hope that tnere shall be work?

1 Calkins, Clinch. oome Folks tfon't Mork.Pg. 156-7

2 Justice Loui3 D. Srandeis.The Right to tfork.P.161

7

Dr. Einstein sees in present conditions ;MA posi- tive proof that the economic organization, so far as one can speak of such a thing today, does not satisfy needs. But the establishment of this fact is not to "be used as an indictment, "but as a motive to seeK to regulate eccno.iic life in such a fashion that the existence of human jeings shall no longer be threatened by crisis." ftrhy have we not been more mindful of the work responsibility in the past? "V/e have not hitherto set up reserves to protect ourselves against unemployment because we have professed to believe that every man was able to safeguard his own future. This belief was partly true when we wer« a nation of farmers. Now that this country is predominantly urban and industrial it is no longer true."

There ^re_ooae Who ,;ill Not Recognize Unemployment As A Problem

Conviction of the importance of the unemployment situation may not lead immediately to effort on the part of the person who has been convinced. He may think that this problem is not his own personal responsibility; he may think that help should, and will, be provided by some other agency. First of all, however, there cannot be even an appreciation of the seriousness of the situation without a knowledge of its real extent. Without information as to the real number of unemployed, many people will rationalize and carelessly think there are but a f ew seeking work who are really unable to find it.

There are two economists who have made an accusation against a class of people in tne United States that do not a jpear to be in real sympathy with the distress situation;

1 Nation's Business Magazine .Editorial .Page 14.

April 1931

2- --Collier • s Magazine .Edi tori al .Column 2.

November 7, 1931

8

"The comfortable men and women of the ruling class do not like to admit tne unpleasant facts about a social system which has proved its worth by giving t .em - tne deserving persons - its material rewards. Hence, until the evidence is available tney will continue to believe that there is little unemploy- ment, iiven then, some will continue to believe it - but not so many."

The Vastne3S of the Problem

Last year General Wood, who was called by Presi- ^) dent .{cover to give his assistance to direct re- lief, said that there were 4,000,000 unemployed. This year estimates have placed the total higher., Jr. Leval of Prance estimated that there were 10,000,000 unemployed in the Unitea States. Presi- dent iVilliam Grr.en of the American Federation of Labor in February 1932 placed tne figure at 8,300,000. United States Secretary of Agriculture places the figure (in 1932) at 6,000,000.

In subsequent paragraphs it is shown that autnorities differ in tneir opinions as much as to tne causes as they disagree in their estimates of the number of un- employed .

But why should international authorities be consulted as to tneir estimates and opinions? Tne editor of^; tne Time Magazine (in footnote) contends that only British and German Governments compile reasonably accurate statistics.

Unemployment today is not produced by local causes alone. The forces at work which cause the shut-down of factories, the curtailment of activity in the mines ana on the railroads, are forces which operate on a nr tional and even world-wide scale. Tnis is the gen- eral consensus of opinion of autnorities at home and abroad. They agree upon tnis one point, at least. Ample testimony as to the stuoenucusness of the rami- fies problem aopear daily in our newspapers. Towns ana cities throughout the United States have organized especially to give relief. State and National congresses are considering relief measures.

1 Bouglas & .Director . . .The Problem of Unemployment, p. 3

2 Boston herald. Jan.7 ,1931 <Col .'.Vood -See Relief Unenp.)

3 Tine Magazine . .Editor ial . .February 29, 1932

Pages 3-7

9

Anything that is said that is constructive in the effort to co something about the condition of af- fairs is helping along the go©d work. The very com- plexity of the problem is one reason why many dif- ferent points of view snould be expressed. The fact that there is a great deal of suffering snould moti- vate even the unsuffering person to contribute in some manner. And now, it appears, is the zero nour of the great scourge.

Solution of the Unemployment Problem is of Paramount Importance

Another author emphasizes this same fact:

"For the sake of tne unemployed men an'' their wives 0> and children; for the sake of the workers still em- ployee:, whose position is jeopardized by the compe- tition of men ariven to desperation by nunger to tne point where t ley are compelled to sell their labor power and drag down tne level of wages; for tne sa^e of civilized society, whose very foundations are tnreatened by the pnysical aeteriorat i on and the ttental and moral degradation caused by aire poverty-- it is of tne utmost importance that measures be taken to 3olve tne problem of unemployment witnout relay."

If there are actually 3,000,000 unemployed (according^ to the census figures of 1930 adjusted to read strict- ly as a real estimate by our definitions), think of the sum total of the persons affectec. xhere are several persons depending on tne one wage earner and when those dependents are women and children, the prob- lem nust appear important even to the unimaginative.

Conditions outside the control of millions of people nave brought them to the helpless stage of being unable to earn a living. Unemployment which is tem- porary does not seem to tpset a person's life, but when unemployment is prolonged, the result, or the consequence, damns a person's entire life. Naooleon is credited with the saying that an amy marches on its s to mac i. j/no can disprove the assertion that ci vil i zati_on marches on its stomach!

1 Towne, E.T., Pid.. Social Pro ble ns .Page 157

2 Douglas, Paul II. & Director , Aaron. .The Problem

of Unemployment .Page 17

10

CAUSES OF UNEMPLOYMENT

This compilation of the causes of unemoloyment should propitiously help to awaken the most inap- preciative person to tnis exigent problem* 60 many good authorities quoted nere must in part, at least, be rignt in their opinion. It all affords proof that a great national problem exists; so great a problem needs tne assistance of all of us to solve it; no one can shoulder the blame on a few of our citizens, and remain idle himself.

The alleged .Causes mof Unemployment .and Depression

Unemployment has often been called a disease of society. Relief has been li.-cened to a drug and cure pictured as a successful operation. But unem- ployment is a symptom of society of one or more separate diseases; it is like a neadacne, it may arise from a large number of causes.

"While the fact of unemployment is universal, eachf^ country seems to have a somewhat different alibi to explain the phenomenon. In Great Britain, for instance, the explanation given is the depression in foreign trade where the amount of une.moloyme nt happens to be the greatest, wiile actual increases in unemployment are found in certain lines of domestic production. The growth of mergers and the geographi- cal shift of industry from the midlands to the south of England are also emphasized. For Germany the reason put fcrti is the decline in foreign loans. Canada lays it primarily to crop conditions. Columbia in doutn America avers difficulty nas arisen from the suspension of public woncs. France or Belgium have little or no unemployment because they say that they nave a controlled labor supply, managed by treaty regulations with countries of surplus labor. These are ranaom samples of reasons or explanations given. The economists frankly say that unemployment is an inevitable acccmoaniment of the private operation of industry." Says Professor Taussig of Harvard: 'Every^ country is confronted with unemployment ... so long as its industry rests on private property, complex division of labor, free movement of labor and capital; on hopes and fears ^ and mistakes in the business world.'

1 and 2 Jonnsen, Julia E . . Stabi 1 i ty of Employment

Page 49

11

"...And trie failure to realize this common and uni- versal character of unemployment and the tendency tc see it purely as a national or group problem has resultea in the grsi.t conflict of remedies."

ou?er f i c i al ^Reasons _Gr i vcn For fluctuation of E rployment

Several years ago a competent Commission of investi- gation in Hew York otate sent out a questionnaire to employers to find out the causes of the fluctuations in employment.

"Tne tabulateo. replies show that the largest groupr/) of employers, 245 in number, gave the vague answer, 'increase or decrease of orders.' The next largest number, 168, stated, 'seasons.* Tne third largest group said, 'busy or dull times.' Thirty employers said, 'weather.' And the rest made equally enlight- ened analyses."

Figures shov/ing tne amount of employment and unem- ployment do not truly reveal conditions, but may be as misleading and as obscure as tie preceding figures of causes.

Seasonal Fluctuations in Employment

Aaxiy people buy irregularly through the year. Then Nature does not maintain even "production" throughout the year. To gather in summer and store for winter has been a practice for .Hundreds of year3 - pernaps even before the word unemployment was used; thus the process of paying respect to the decrees cf Nature by trusting that there would be uniform "production" through tne year. People became ant-like. They have accepted the fruits in their season and stored for the less bountiful seasons, fithout respect for the demands pcr her dependents Nature was not always ade- quate in the anount of produce she yielded. Never nave we been able to estinate what we are tc receive from tnis jireat source .

1---Jchnsen, Julia E. • .Stability of Employment, (deference Shelf). Pp. 50 and 56.

12

Obviously, the variation of the farm produce to "be Harvested each year, has caused a fluctuation in the number of workers needed to harvest the crops.

-Brief Summary; Causes, Pre-ffar Unemployment

"Seme occupations fluctuate wita the seasons, eitner'' because their materials come in at certain seasons early, or because the demand for their products is seasonal . ■

"Variations in employment due to these fluctuations, like the time-lag in the fitting of available workers into available jobs, are the less difficult elements in the oroblem to distinguish. Moreover, to distin- guish them is to indicate appropriate remedies; a system of employment excaanges to bring togetner va- cancies and workers and to eliminate unnecessary mcveaent in searca of work, some system of Vocational Guidance for new entrants to industry, the concentra- tion of casual jobs by a system of preference upon tie minimum number of workers wanter , ana tne dove- tailing of seasonal jobs. If these elements are not dealt with, it is not for want of Knowing how to deal wita them, but due to lack of will. Tne case is different with the fluctuations in tne activity of industry, wiich were tne chief causes of unemploy- ment . "

Cycles q f _ U ne rap 1 oymen t

"An equally important feature, snown indirectly by A) an employment index, is the cycle of social welfare. Largely as a result of fluctuations in the economic prosperity of wage-earners, there are found to be pronounced cycles of suicide, crime, prostitution, pauperism, marriages, migrations, ana other social problems. In other words the problem of cyclical employment stands in a position midway between tne eccnoaic and the social phases of the business cycle; it is a connecting link.

1 Clay, ilenry, ^.A.,..Tne Post-'tfar Unemoloyment

Problem. .Pages 4-6

2- --Lianchester Guardian Weekly, JIarch 15, 1929. P. 210.

gIRECT 5lA J OH CAUSES OF UNL.iPLOY II ITT * Seasonabil i ty In Industry

Seasonabili ty of many great industries is more about the great story of fluctuations that I just touched upon in speaking of Nature's seasons in a preceding paragraph..

The ultimate consumer makes his purchases irre- gularly during the year. Since trie producers no longer produce articles blindly and then attempt to sell them, they produce with a sensitive ear to the consumer's demand. Modern transportation makes it possible for the producer to keep his goods new and fresh as he can produce them just ahead of the demand. lith demand irregular, pro- duction becomes irregular with a resultant irre- gular employment for the wage-earner.

rro.Q one reliable table it is found that the largest percentage of variations are found in the ice cream, confectionery, millinery, fertilizer . ( chemi cal ) and women's clothing industries whicrr' snow a great irregularity of employment. frith few exceptions, trie industries snowing nigh seasonal variation produce consumers' goods, fashion and weather conditions seem to determine directly tne fluctuations in demand.

■When the seasonal variations in manufacturing^ are combined with tne large fluctuations in con- struction ana .lining, it seems probable that season- al fluctuations cause approximately six per cent of unemployment in these industries..."

1 Federal Reserve Bulletin for November 1929.

Pages 706-716

2 Douglas and Director. The Problem of Unem- ployment . Chapter 6-especially page 84

Helen Hall. Shall Be Stick To The American Dole. The Survey. January 1, 1931 . Page* 389-91 . ^General Reference.

14

The Business Cycle

As human beings nave their "uos and downs"', so does business. In business, we say we are having depression ( .vaen up) and prosperity (when down). Prosperity brings extensive production and corres- ponding emoloyment of all available wage-earners. De ression causes production to fall off, and causes a great increase in unemployment. Writing tne last statement in trie year 1932 it seems so superfluous! Just as tnere is competition among business men on tne up- trend to make profits, so tnere is a conpetition among business men to escape losses on tne downward trend.

In the section on Credit, I point out the part that bankers play at both ends of the cycle. Bankers precipitate the fall of industry by tneir acts-- they contract credit at the start of tne dcwnv/ard trend. TLey hope to ma£e safe tneir loans and there is rivalry :;mong banks (perhaps several financing one industry) to' escape losses. The chain of confi- dence is broken, wnieh causes bankers and business nen alike to stop dealing in the future. Tne condi- tion is realized and there is a snow-down to see where eacn one stands.

-lany argue that a business depression (the down- swing of the cycle) is largely psychological , - and pernaps rightly so. oince over three-fourths of business is one on credit (reference elsewhere'' given) or faith (call it wnat you will), loss of faith will impair credit. The process is psychologi- cal. Tne interdependence of business operations is made possible by a ciain cf ccnf idence-without money settlements until away into tne future. Loss of faith by one of tne intercependents causes a snow- down alaost instantly, and the act affects many be- cause tne creait privilege which has been passed on to one or more others h;.s to be retractea.

^lerle T.iorpe, editor of tne Nation's Business Maga- zine, has constantly attached tne problem of depres- sion and unemployment from the psychological angle. Certainly business will pick up, when those wno nave money no longer fear to put it into use for produc- tive ourposes; we all agree that this will help to gome extent « <--X least.

1 "In normal periods three-f ourt ns of nation's

business is done on ere it." Professors O'Neil and Goggin.

jdonetary causes of the business cycle are real and demand consideration; but as Professor Mitchell points cut, the state of mind, whether optimistic or pessimistic , precedes any act which results in tie extension or contraction of the use of money in trade. Bankers and men who invest money must have corresDcti' ing thoughts which result in acts or the noney would not be forthcoming.

Of course, the volume of bank crecit is not of an unlimited quantity. But suppose confidence and optimism prevail, how far can prosperity continue? Considering the cost element first, there are cer- tain factors .which affect the mind and the judgment of the money interests and producers. Further expansion of plants, operating at capacity, means new equipment at a higher price level, (marginal) units are produced at increasing costs.

A second check is brought about by the credit problem. Furth r expension means more bank credit; and tnere is a limit to loaning power of banks, as reserves coupled with legal and customary restrictions offer barriers.

This all shows tnere are limits to prosperity's possible demands upon monetary and banking insti- tutions. If this last step in expansion, which takes plaje at prosperity's peak, is at a pace wnicn is in narmony with demand, decline will not set in. It is because some producers nave over-stepped actual cemand, while hoping for a further increase in prices, that the damage has been done. The problem then resolves itself into a supply-demand problem. The quantity offered is greater than the demand. Prices fall. They nust. If panic did not ensue to make producers unload so rapidly, the de- cline would not be so rapid. But the "domino s" have begun to fall against each other.

"As orders (offers to buy) decline, and profits are threatened , there is the beginning of recognition that prosperity may not last forever. Business men become cautious in granting additional credit to tneir customers and press for the payment of out- standing obligations , Any weak members of the

1 Mitchell , W. Prof essor .Business Cycles and Unem- ployment. Pages 8-10 [Sane as (2)]

2 Louglas and Director. The Problem of Unemploy- ment.Page 173

series are caught and their fortunes affect the fortunes of the others. Once begun, the process of liquidation spreads over the entire economic macnine, because of the interdependence of enter- prises and industries." And, of course, unemploy- ment follows.

Conclusion

"The outstanding group of explanations of busi-;'' ness cycles runs in terms of monetary and banking institutions, especially tne latter."

■summary

Sven though I may point out the general causes of the ousiness cycles, and economists, who have made a life study of the problem, may analyze the problem completely, the business cycle phenomenon will continue to recur. All studies seem to fail to show the world how to prevent these spasmodic swirigs of tne business cycle. In summarizing, it can be said that in a large part they are cue to psychological factors, to over-confidence and unreasonable optimism-- then unaue pessimism, and a general fear of impending cisaster at another point in the cycle. And unemployment and underem- oloyment comes with the downward s\ving--a subse- quent disaster.

There is very much that can be done to straighten^ out the sharp drops of the depressions, oeveral authorities have offered some very gccd suggestions in solving the problem.

1 ibid .page 180(chapter 13)

2 Foster and Caterings .Chapter 27 and entire volume.

17

Production Over-Running Consumption

Trie automobile show in New York at the beginning of 1932 found Ford without a display of his lew- priced (mass-production) car. It was rumored by the press that Ford had 32,000, 1931 models of which to dispose. The fact rrnains that Ford production ceased in December 1931 and no new model appeared for display until Jarch 1932. He, him- self, confessed that 35,000 men were re-employed with tie resumption of production to produce his new models. 35,000 men were laid off after taat over-production period somewhere back in 1931.

Despite the fact that 65,000 men nave been employed constantly (more or less, accepting underemployment as employment), the 35,000 unemployed were the victims of production over-running consumption. The results of such inconsistent operation consti- tute an unhealthy and evil condition. The above exanple is cited because it is an outstanding il- lustration of over-production.

Academically speaking, "Production is carried on as an estimate of demand... but production as a whole, is carried on in anticipation of demand, not in direct response to it." rienry Ford undoubtedly over-estimated the demand for his procuct.

"Production is controlled by business men who are working for profit. If profits exoand , an expan- sion of production may be ex-pec ted; if they jontract, or change into losses, (there is) a con- traction of production."

Tne inherent tendency in modern industry is at one tine to over-estimate, and at another time to under- estimate. This factor is contributory in bringing about the business cycle. (The over-production pnenonomenon is discussed in this connection in another section.)

Over-production precedes the depression crisis; tha$ also has been pointed out. One pleasing 1---Clay, rienry.The Post-v/ar Unemployment Problem Page 7 .

feature about trie boom and tne slump is this! Prosperity breeds trie crisis that leads eventually to depression, and depression produces of itself trie conditions that restore prosperity.

depleted inventories of the depression under- production periods make way for new goods which will be produced in abundance with the upward swing. Production has to fellow this period of inactivity; tne demand becomes strengthened.

The late I/wig'nt iorrow, as reported by tne Survey^ Magazine, said this upward trend is begun with resumption of production and little is known about it until about sixty days after it has begun. I cannot refer exactly to the magazine . i ssue contain- ing the preceding statement, but similarly in another periodical, George E. lioberts says, "We never see the impelling forces f rt;m which revival springs until af terward . "

1 Nation's Business. April, 1931. Page 26.

The Slowness v7ith »Vhich Money is Circulating

Carter Glass is a grert money expert: He helped frame tie Federal Reserve System. Now he is work- ing on a bill for permanent improvement of tne Reserve System. The explanation of the revision desired and the desired result of increasing cur- rency follows:

"Tie federal Reserve Act requires a 40 per cent,^ gold reserve against the issuance of notes. Sixty per cent, nay be in eligible paper. At the present time, notes in round figures total $2,900,000,000. Tie gold reserve is roughly $2,000,000,000 and the eligible paper only #900,000,000. In other words the gold coverage instead of being 40 per cent is nearly 80 per cent.

"Through a combination of extraordinary circum- stances, there is a shortage of eligible paper and an excess of gold. Under present requirements, an increase in eligible paper can come about only by incre sed discounting on part of member banks, and these banks have not wanted to increase their indebt- edness at the Federal Reserve.

"The new bill proposes to increase the supply of eligible paper. By autiority of the Federal Reserve Board the Reserve ban cs would be allowed to use their assets, mostly government securities, as eli- gible paper. This increase in the availability cf eligible paper would im.aeaiately free gold which is now tied up as collateral for note issues. Roughly, tiere would be created the basis for a possible in-? . crease of $2,000,000,000 in currency." This bill ' ] was passed and is the sane to which I referred in tie introduction.

Tie Federal Reserve Ratio is nigi ana in a simple way it can oe explained that tiere is possible much more use of the currency based ( c.uthor ized ) upon this ligh reserve if the money would but be used by industry. Because the wheels of industry are slowed down or stopped by this depression, currency for extensive productions and for tne "pay envelopes," money is no t secured for use.

1 Correspondent of </all Street Journal in Literary

Digest of February 27, 1932. Def lati on , Under- def lation--Not Inflation. Page 10.

2 See reference Page 1 . (xiecons tructi on Finance

Corporation. )

20

Normally, money that is pair in wages flows freely to tne merchants and back to the producers for more production. If industry (used in broad sense as elsewhere throughout thesis) thought it wise to resume operations, currency would not remain inac- tive, ioney couIj start on its merry-go-round course and wi.th.out depression inhibitions money would flow freely tnrough consumers' hands.

With currency flowing twice as fast, twice as many people would nave tne noney to spend. Tne cycle of spending with swiftness is one of tne ear-marks of prosperity. Stagnant pools of money hidden away cause money to circulate at a snail's pace. This condition is unhealthy for business, doney may be used over and over. Live merchandise on tne store snelves turning over many times a year, while making only a few cents on each turn-over, soon bring in an appreciable profit to the merchant. The dollar invested in the goods is circulating freely. All industry is nappy.

In this depression era, with the dollar invested in "slow" nerchandise (once iuick selling not con- sidering naturally poor sellers) gets lonesome and homesick for broad travel. With a "traveling" dollar everyone is prosperously happy, olow moving currency is certainly a cause of depression, in that a decrease of one-half in the individual consumers' yearly amount of currency results in decreasing one-half (otner tnings being equal) his power to purchase producers' goods. Inversely production of commodities increased by the functioning of the circulating money as follows

"The additional money required for circulation of ^ tnis greater quantity of commodi ties .. .must be secured by some measure which accelerates the circulation of the same coins (medium of circulation)."

1 Foster, Catchings. Prof its. Chapter 27. "Volume of

JLcney." 1925. Pages 307-332.

2 idarx, Karl .Capital . Volume II ( Caoi tal i sti c Circulation)

1910.

21

Technological Unemployment

"Workers are not thrown permanently out of employ-^ lent by improvements in tecnnical production, and managerial efficiency, out they are instead ulti- mately either employed in other industires or con- tinued to be employed in tne industry in which the i.iprcvement took place. It takes time for the re- adjustment and during tnis p rio: many incivi duals suffer. <Ve shall not make much progress in dealing with the human results of technical change or in controlling it until we see fairly clearly that the ultimate benefits that flow to society in the form cf higher real incomes is obtained only at the cost of great and undeserved hardships to many."

Along this same line of thought I rememoer a compu- tation that the American Federation of Labor made and published in a labor newspaper about a year ago. In substance the figures showed that of tne income from mechanical improvements which we call tech- nological improvement, labor got one-seventh, ana capital got six-seventns of tne money that came as a result of the improvement. (dee Appendix , page 3.)

It has been asserted ana ably substantiated that in spite of i nprovement in production (technological i apro vement ) of industry, the indestructibility cf the purchasing power of the previous consumers will ultimately re-employ any displaced workers. In this event the shoe pinches^ because there is likely to be a considerable intervening period of unemployment .

"...the production of gooes constitutes the oemand for gooas ant. tne increase in the duality of one commodity is of itself an increase in the denand for all other commodities. Improvements, it is argued, create opoor tuni ties in the same or in other lines for the employment of labor."

It is the p rioc of readjustment, causing temporary unemployment, with wiich we aust occupy our atten- tion. Of course, if we possess the preceding idea that labor nas but to find a new niche in the econ- omic system as a result of temporary unemployment, at least there is tne unemployment problem. But ^ouglas & Director .Chapter on Technological Unem- ployment .Pages 14 3-159.

what can be done to re-establ i sin what has been dis- placed? What happens in the meantime?

Some of the effects of technical progress are as follows :

1. "There will oe a transitional period of<0 unemployment, even in industries where mere workers will ultimately be employed.

2. "Laborers who are squeezed out from the numerically contracting industries are not immediately absorbed into the expanding in- dustires .

3. "The process by which the workers are re- absorbed involves a much larger nunber of separate shifts in wnich. some time is lost

at virtually every stage.

4. "The decline "in some of tne industries involves cnanges of wcrk and of residence wnicn most workers are generally reluctant to undertake.

4'eans of Reducing; The Losses of Temporary Unem- ployment

1. "The forecasting by competent organiza- tions of the industries and trades in which a displacement of labor is most likely to occur ana tne probable degree of displacement wnich may be expected.

2. "Tne planning ana scheduling by managers of tne teennical cnonge with a view to re- ducing tne displacement of labor.

3. "In industries which are affected by oublic interest, such as railroads, etc., mergers and consolidations might be permitted only on conc.ition that men whose services were otherwise satisfactory shoul not, be- cause of this fact, be dropped from the pay- roll .

] i\ id. page 21

23

4. "An efficient system of public employ- ment offices should be provided which will help to find a j ob for the displaced workers in other industries or occupations.

5. "In revamping our systems of vocational training so that juveniles who are being trained may be given some preparation which will fit tnem for alternative industries and displaced adults prepared for new lines of wor<.

6. "The payment of a dismissal wage for those who are forced out of employment by such changes is also distinctly useful.

7. "It would seem, therefore, to be relatively clear that seme general metned of protection should be aevisec which would draw its funds from a wider source tnan the immediate plant

or even tie given industry where the v/crkers were laid off. The only met. nod of meeting t.iese requirements would be some form of in- surance against unemployments. </hile this is still anathema to most American business men, it woulc seem inevitable consequences of in- dustrial progress a change and thus released for constructive effort."

The Case Against Technological Unemployment

Technical inoroveraent has been a wonderful thing; we owe many of our pleasant leisure hours to tech- nical progress. But in the story of this marvelous progressjkeep in mind the plct of the old fable of the donkey that accepted the load of sponges rather than take the burden of some of the other pacKs on his fable journey. How light was his load until in tie course of the journey the donkey was forced to swim across a deep, deep river? You know what befell the poor donkey.

Technological i aprovement has lightened the loads of the people; but there are so many rivers to ford in this depression countryl

1 ibid. page 21

24

In considering this topic the important thing to remember is that inventions cane slowly before 1900, and as men were displaced by improvements in one industry, most of them could find jobs in new ones.

In the word picture which follows, a miracle can be seen accomplisied by men with machines almost performed by machines without men.

"With dram-shattering gasps it is solemnly picking^ up pieces of steel, fitting them to a pattern, dropping the unit down for some attention .rais- ing it up, placing it on a little carriage of deli- cate steel rods ... carriage after carriage, which rush and stop, rush and stop, rush anc stop, in our c ir ect i on . . .

"As tie franes advance and stop, two batteries of steel dragons, with jaws like those of stone Aztec serpents, move f orward upon them, one from either side. Their round metal eyes glitter, their jaws are cistended to cavernous proportions, ihey nuzzle into their victim's vitals, select each a sought- fcr rivet, tnen slowly, relentlessly, even softy, the great jaws close. The final crunch of 40,000 pounds upon the rivet .head is effortless. Gently the jaws open; gently ana solemnly both batteries retreat. The frame moves on to another group of monsters, where the process is repeated with a second set of rivets. One hundrea rivets require about 100 dragons, ana only about six can operate comfortably at one 'station.1

"Sometines, if you please, the beast opens its mouth to bite, thinks better of it, retires, rears up into a more ferocious position, and then comes dreadful .y down. It is reported that Mr. Otto Kahn could not be budged from his entranced survey of tiis deliberate animal. "I have seen many ingenious machines," he said, "but this is tne first that ever I saw which started to do a job, stopped, spit on its hands, hitched up its overalls, and then went to work!'"

1 Chase, otuart .Danger at tie A.O. Smith Corpora- tion. Fortune , November 1930. Page 62

25

Conclusion

Is it possible to achieve a speed of technical progress which will ma.<e a "normal" economic process no longer economic?

There is rip doubt that one great major fundamental factor producing unemployment today is the increas- ing invention of labor-saving machines. Its effect, furthermore, is far-reaching and is causing us to snow greater concern than ever before.

For men to be thrown cut of their jobs by machines is not new in itself. Since the Industrial Revolu- tion, the invented machine has replaced the work of men. But more jobs were created for the displaced workers in the new industries wnich sprang up.

Tne invention of the automobile was not disastrous, in the above sense, because many new jobs were brougnt into existence. General Motors in a series of radio programs of last year, entitled the Chevrolet Chroni- cle, allowed its representatives to say that one worker out of every ten is directly or indirectly em- ployed because of the automobile, tfagon builders, for example, could become automobile builders.

A new condition in industry now exists, however. It is called technological unemployment which means unem- ployment that comes because power-driven machines are invented more rapidly than jcbs can be created. The term is just another name for discord in our economic life. Machine- improvement is like fire; it is a good servant but a poor master. Paradoxically , macnines waicn brougnt about snorter working days with equal pay, are bringing about workless days witnout pay.

Hill the macnine that creates wealth also create poverty? It possibly is creating for us, gradually, a permanent class of unemployed. Witnout careful planning of the nation's business, industry, and agri- culture, we shall have increasing tec nnclogical unem- ployme nt--I think it is safe to say.

1 /Zithers, hartley. Poverty and tfaste .Pp. 19 , 20 ,21 .

(See appendix page 101)

INLIR-'i JT A^JOd .CAUSES OF UN3: MPLQY.jENT

1&T

When the trumpet cf war has ceased to sound and peace treaties are signed, warriors return to normal activities again. But what really becomes of the organizations and the men when tne need for them no longer exists? "It was the reaction, or afte^mati, from a distorted and wartime expansion which is largely responsible for the present de- pression." This in substance is wnat Mr. Atwcod, writer for the Saturday Evening Post, saio in the December 26, 1931 issue.

After a war, thousands that had been mobilized for war purposes (front line and at dome) are poured rapidly into the labor aarie-t for peace-time pro- duction. Some who learned to be self -supporting in war-tiae scon found their productive efforts no longer needed.

far, viewed from another angle, shows a great tax burden placed upon the populance that is endeavor- ing to recover from the war. "Seventy per cent cf tne tax dollar goes for war." What a burden is placed upon the people who are constantly paying for past, present, and future wars I

It is an astounaing statement to ma -ce that the cost cf past, present ;and future wars cost so much. Seventy per cent cf the tax dollar of the United States mounts up to an enormous sum. Yet taking into consideration tne maintenance of a large army and navy with tne equipment of each, tne stated cost appears to be more reasonable. Considering further- more, the ultimate cost to the Government in pen- sions, war hospitals, army and navy salaries, and the army and navy schools, the outlay of tax money must cf necessity be stupendous.

This is not the whole story, however. Without dis- cussing the loss of productive power as a result of death and injuries of the participants, there remain the statistics of the other economic costs of destructive wars. Money spent for ammunition cannot be called capital (goods used to produce more

1 Literary Digest. June 27, 1931 . P . 9 . ( See Appendix

page 99.

27

goods); tae money spent for war purposes is entire- ly unproductive. A full and complete treatment of war and its consequences is a subject sufficient in scope for thesis treatment in intself. But there is s*till one consequence of war yet unmen- tioned.

•Var leads to over-expansion along those lines which have especial significance for war. Exceptionally high prices are paid for the products which are empaasized. This activity, in times, leads to excessive expansion and then, after the war, a collapse .

"J?ood will win trie war," was tae slogan during the last war. Agriculturalists produced wheat, and t len more wheat, which sold at high prices. After the war tae high price level could net be main- tained. Tae illusion was shattered ano. tae farmers were left "holding the bag." This fact is true not only figuratively, but also literally. The government stepped in and tried to peg the price of wheat with its revolving fund and, as Hill Kogers might say, "the government is still turned around."^ iven if the Government is helping the farmers "to acid tae bag," the fact is almost forgotten oy all taat tae evil began with war-time expansion. Production over-ran consumption as a result. It is nerein pointed out now this last conaition causes unemployment. In conclusion, it is safe to say tnat war has done very much to impoverish the nation and to cause unemployment.

1 (as perhaps fill Kogers might say.)

28

.Vorld Agricultural Crisis

There is an c ver- abundance of agricultural products. Reclamation projects carried out by the government appear to be hardly a logical economic procedure at this time. It would tend to increase the acreage of productive land. Public opinion is naturally against any move by congresses to appropriate money for tnis purpose.

The farmers themselves are not improving their mar- ginal land; they have not the heart or tne money to attack the marginal land problem (to fertilize, remove stumps, etc.).

Surplus crops are a very important phase of the present world agricultural crisis. Russia's use of J improved farm machinery and her subsequent dumping of produce on world markets has hindered materially our oroduce marketing.

From another angle the influx of people from the farms to tne cities oecause of the less need of work- men has intensified tne unemployment problem. Then vacated farmlands and buildings, run down through lacK of care have decreased the value of taxable property. Incirectly, less taxes mean less muni- cipal money to make work for tne unemployed.

Tne Poor Farmer

Gnain stores are featuring as "loss leaders" farm- ers' produce and are tnus in effect forcing a lower and still lower price upon the farmer; other sellers of farmers' produce must bring down prices to compete with chain stores. (Example: Atlantic and Pacific Tea Company. )

Chain stores are going into the producers' markets ana buying the producers' gooas. In Maine the "enains" are financing planting and as a result are really buying produce (potatoes) at their own prices. (In Gloucester, JLassachusett s , this chain store is likewise in the fish business.)

1 Friedrich, A.S . .Economic Behavior .Pages 460,462,464.

"The country as a whole has been profiting by price of farm products too low to remunerate the pro- ducer adequately." .low long this differential in favor of the non- agricultural classes will continue it is i-ripossible to say." Farmers are saying, 'Mow long, 0 Lord!"

l---Hoover!s Committee .Recent Economic Trends Page 601 .

30

Speculation

•....this process (deflation following inflation) is / net beyond the comprehension of the simplest minds. It fits in with the understandable laws of life, knowledge of which gives us all the stability and courage to carry cn."

The above is a short quotation and its only justi- fication is its simple clear statement of the status quo of the unemployment situation that makes its inclusion at tnis point pertinent.

0 au s e : Life is Uncertain

Neither At. Lorimer nor At. Goolidge lays very much( - blame on the economic system. People put their finger in the wheels of cnance and if tney got them j aimed, they have themselves to blame for the bleed- ing fingers. T.ne fact that this all is understand- able clears the phenomenon of its mystery and fatal- ism, so that the person may be able to find himself.

Reading between the lines of the unusual editorial of Itr. Lorimer, it is clear tnat there is a very definite limit to the cnances tnat one can taxe in this capitalistic economic system cf ours. Mr. Goolidge, as well speaks of the great uncertainties of life. j£r. Goolidge further states:

"No law, no regulation, no government supervision^ no skill in management, has ever been devised that could protect invested nroperty from temporary fluc- tuations and occasional loss.. They are the hazards of our finite existence. Only omnisience can guard against them. .. .The great fact of life is uncer- tainty.

"The best recipe for financial security is to live^ witnin our means. This is our ancient faitn. //e nave f qund nothing better."

1 Goolidge, Calvin. In Times Li.<e Tnese .American

xiagaz ine .February 1932.

2 ibid. Pages 11,13,110.

3- --oaturday Evening Post. January 23, 1932. Horace

Lorimer

4 ibid. page 1

5- --Bureau of Industrial Technology .Report by New

York Times .xidarch 22, 1926. (bee appendix page 101)

31

One has tc admit that botii cf these writers that I have mentioned are important men in the field of public t.nought. Yet neither of tnem sug ested that we revamp the economic syste-n. They both .larked back to tie days of yore. There was nothing radical in the reasoning of eit.ner of them. dr. Coolidge furtner in lis article showed that intro- spection was necessary to get back to nornalcy: Keep trie faith, humble one's self as Job did; don't thin'£ too higily of one's self; live within one's me a is I

Tien too, Professor Oarver of harvard in a radio address during tie last of January of this year sounded practically the saae <eynote tc the public, he advised pecole to spend rationally, he li :ened tie convalescence cf the peep]? from tnis depression to tie recovery cf a person wno has been ill. he advocated going slowly, feeling tne way along, was tie oest way to recovery, iuci tne same way tiat a person gradually works his way back to strength and nis usual activity.

do arcing ^qney as _a Cause_ of jjepressio_n

history shows that in ti .ies of depression something nas happened to tne natural flow of money in tie cnannels of trade. It is clearly understood tnat

"goods are not used to produce more goods" because tnere is present a fear that tiose goods will not be sold at a profit. .wloney is wlhheld. Tne money tiat. is withheld from trace not oily interferes with tie distribution of goods, but also interferes with the distribution of incone.

The "fixed charges" of the family remain practically tie sane. Tnere is tie rent, the fuel, the food, and tie cloti^s bill. .From the average family which las one or acre wage-earners, arises tne source of incre- ment of tne average s.iopkeeper. From the average family of America money cones to tie business man because le sells goods to the family wi03e fixed income remains tie sane whether tie god of prosperity rul^s or is dethroned* it i3 easy to see, lowever, that as

soon as tne inco.ne of tine great major group of tne populance of America (trie wage- earning group) is shut off, or is curtailed, there is an immediate effect upon this next group with whom the wage-earners spend their income. The grouo in America that nave the sufficient money over and above the amount for the "fixed cnarges" is not tne major group, but are of tne minority. It is the upper strata, the money-group, that aust nave the pangs of conscience as tneir Presi- dent nakes the accusation that...

"Everyone hoarding currency injures not only ' nis own prospects and those of his family, but is acting contrary to the common good. It is to tneir own interest that they should return it to circulation as well as patriotic service to the country as a whole .. .During tne great war our pecole gave their undivided energies to tne national purpose. Today we are engaged in a great war against depression... I therefore request our citizens to enlist..."

Of course the above dissertation on the matter of hoarding seems to place it as a naj or con- sideration in tne solution of the unemployment prool m. It is a major matter that, has given even the President of tne United States occa- sion to ma^e a general appeal to tne general public not to noard.

The word "hoarding" had gone almost from my vocabulary, as I have had no occasion to use tne word since the hoarding of sugar during the ./ar . do ne people use tnis term as "Betting against the Governnent."

"Recently tne greatest aggregation of natural^ optinists on eartn, tne American people, have been betting against tne United States; prompted not by reason but by fear--tne fear of losing money, which is the one fear that has always

1 Herald. Text of rioover's Appeal. Feb. 3,1932

2 Lefevre, Edwin .Setting Against tne United

States . Saturday Evening Post , November 7,1931. Pages 11 and 122.

kept nen from making it. The most progressive of all nations lias oeen standing still, which is not only un-American "but unprof i table . We nave been hiding cash for safety, even if trie hole under tne loose brick in the hearth and the old coffee pot on tne pantry shelf nas been replaced by safe-deoosit boxes. At a time w-ien unemployment was the national nightmare, one "billion American dollars stopped being "busy. Don't try to figure what this would mean in normal times. It is safe to say that tie //itndrawals of currency from circulation immobilized at least five million of credit to do nodern business with. It did not surprise ne when a banker who often indulges in philo- sophical speculations as to his own business re- marked: 'I wonder whether the modern credit sys- tem is not gradually being aban^ oned I ' "

In the conclusion of the article tne author states that tne principal reason for hoarding is f e ar .

Paralyzed Credit; Tne Reason

In a brief way I snail shew the course of events wiich finally result in paralyzed credit:

A rapid increase in production accompanied by <') a constant rise in prices causes a great demand for capital, or what temporarily e4ually serves the purpose--credi t . Tne speculative procu- cers bring tne bankers into the process because proaucers turn to them. If a loan is grantee, it is because they see t.ieir oooortunity to en- ricn themselves. Ban:o , too, are engaged in busi ness to make a net profit so credit is supplied to the speculators if tne risk is not too great. Speculative oroduction is financed by banks and their extensive cooperation in this respect carries the speculative oroduction beyond the point it could otherwise go.

1 Poster and Catcnings .Prof its. Page 251

Banks often make possible the galloping production which soon o ver-reaches tne demand unless tne expansion is carefully watched. Tne urge is present and with the necessary funds, soon a larger inventory is in the ware- houses waiting for distribution. Jut if dis- tribution does not come at the exoected rate, ana if conditions look bad, tne bankers nay become panicky and begin calling in their loans. Sufficient pressure brought to bear by bankers at this point in the orocess will force pro- ducers to sell wnen tne market is pernaps unable to aosorb tne quantity offered. With forced selling the orices fall. Contracting credit hastens and intensifies this movement. It is at tiis stage that producers and merchants are usually ruined. Confidence has been dethroned; distrust reigns. Unemployment ensues. Similar business catastrophes disruot the confidence that is so necessary for tne giving of credit. 'Money is tight," people say. repression fol- lows .

.lard tines and good times are inevitable in a private capitalistic production system. The ban<s are in tne very scheme of tne rise or fall.

Tne boom i3 financed by tne oanks by extending credit. tfith tne contraction of creuit at times wnen industry needs more and extended creoit, tie oano refuse. T ley run to cover, recall loans, and depression becomes a reality. "Those that don't run to cover fail,'1

Now the trend of tnis discussion would make cne^ tnink tnat both slump and boom are intensified by credit. Paralyzed credit, as the layman knows "no credit," is a result of nisuse of bank credit at tne other end of the business cycle. Tne use of money, that primarily was secured through bank creoit and whicn eventually finances over- oroduction, brings about tne unnealtny economic

1 Chase, Stuart, The Nemesis of American Business

1931. Ttxir,e 94. <c-- -^onaldson , Lv . Criticism

condition tnat breeds depression. Ban.<s cannot be expected to extend credit again until "things look: oetter." If money is loaned and invested to borrowers before conditions warrant this ex- tension of credit, tne recipients lose, and banks are less lively to have loans repaid.

True enough, this crec it power whicn tne banks have and can extend wnen conditions and borrowers warrant, can work tne wonders of an "Aladdin Lamp" if usea rigitly. Yet bankers must nake sure that the lamp when "rubbed" will bring something to themselves.

Can we blame tne ban^s for not loaning tne "Alad- din Lamp" (extend credit) now (1932)? They might not get their "Lamp" back at all. After all, they are in the ban:< business for profits. But how wonderful it would be if nore credit could be granted now so that money could be used in 1 .-'us try to give joos.

"That permanent lay-off does exist, that it is^ snowing a marked increase in recent years (accentu- ated, no doubt, by tne industrial crisis) and that tais type of displacement is destinea to grow, all seen obvious to economist, business executive and educator ali<e. If one grants (Tnorndi<e's proof) tnat adults can learn satisfactorily, it is like- wise obvious tnat in the re-education of men and women displaced in industry may lie one effective weapon in combatting this type of unemployment, one remedial factor in a highly perplexing situa- tion."

Even so it is a difficult task of digging up the roots of an employee w no has them well planted. Ae thought he was established in a job for the rest of his life. Perhaps it is academically logi- cal for a person to transplant himself but this matter of studying for a job is often heart-breaking

1 Chase, Stuart-ana others .Unemployment and

Adult Education. Page 5.

* Illustration using "Aladdin Lamp" to mean money or money credit.

35

Tne Lack of Savings

No scne.me can force people to save and not to spenu. Coercion must give way to conviction and to persuasion. By educating trie people to conserve earnings, tne means of livelihood may be made more secure. After all, self -protect i on das its merits and if people can learn to protect themselves by insurance or by saving deposits, a great steo will nave been taken to eradicate the evils of unemploy- ment.

Gnrist said that we shoulc always nave tne poor

with us. In tnis free country of ours it is quite difficult to keep anyone from amusing himself, from throwing his money away, or from buying ex- cessively.

done distress, it has to be granted, is an after- aath of the failure of persons to save. Very often society comes to tne rescue, and is e-cnected to help--regardless of the manner the recipient of welfare aid may nave squandered lis money previously.

It seems reasonable to believe--granting that society is responsible to some degree to give as- sistance in a crisis--that society has the right to restrict (to some extent) the use to which people put tneir money in normal times.

It is a long and tedious process, at best, to teaci people to manage well and to spend an*, save visely. iJlany will be extravagant anci be guilty of mismanagement in spite of the execution of any conceivable device to get people to conserve. In a government tnat is a democracy what can be aone?

The government can, 1 think, nowever, set up a condition ivhich the recipient must fulfill to be eligible to receive financial assistance in tne period of distress that follows disaster* For example, tne government can say tnat anyone w 10 puts aside three per cent of his income for insurance against unemployment may receive aia be- cause he has met conditions.

37

"Overproduction"- - a Picture

38

At present if all could share in the wealth of the United States, there would be very few who would be forced to go without food and the other necessities of life. And i believe fortunate persons with wealth and large incomes are willing to share with others to an apprecia- ble extent if the unfortunate one's misfortune was not caused by the person's own carelessness. Cn the other nand , people are loath to lelp tnose who nave engaged in wanton extravagance and mis- management wnile tney taemselves have saved through sacrifice .

If people will maKe an effort to help themselves, help will seem to come at the crucial moment from tae outside. Persons who give, however, require the recipients to play life's game by their own careful rules, it appears.

4isfortune Comes to the Careless Person-Some

Believe

It is a co. anon belief that poor people and unem- ployed nersons get tnat way because taey made them- selves vulnerable by the uncertainties of life. It is the attitude of the ant toward the butterfly; wnile the ant tciled the butterfly flew about and did not prepare for winter. The attitude of the ant is different if the butterfly's provisions are wasaed away by flood or are taken by some other cala- mity. Prom tnis line of reasoning, a person who contributed to some form of unemployment fund wculr1 be classified as an ant.

1 Report of the Federal Trade Commission. 1926.

Pp. 1-4. This agrees with the report of the United States Commission cn Industrial Relations in 1916: the rich 2 per cent of the people of Anerica owned 60 per cent of the wealth; the niddle class 33 per cent owned 35 per cent of the wealt.n; the ncor 65 per cent owned 5 per cent of tae wealtn. Only 4, 171, Obi persons received suf- ficient income to play any income tax in 1925.

39

jjIRLCT MINOR ONUSES 02 U i'JEi JP L C Y*£Z NT Greater Efficiency In Management

A certain amount of unemployment comes as a result of improvement in management methods. With the coming of mergers and consolidations , there has been an elimination of duplicate office forces. Introduction of piece-rates has tended to speed up the workers' out-put and has localized the responsi- bility for slow and inefficient workmen. Centrali- zation of management control, furthermore, has de- creased the actual number of white-collar workers and even the lesser executives. General Motors is an outstanding example of centralized control of a large industry, the automotive industry.

The general effect of great mergers and consolida- tions has been to eliminate employees who under a combined are overlapping and superfluous, and to close down the less efficient plants, all of which is justifiable under the nane of efficiency, but which, nevertheless, throws workers out of employ- ment, that happens to the displaced workers , has been discussed under technological unemployment. Theoretical ly , tnese workers find new positions, in time, if future progress runs true to form as formerly. (See page 25)

Eastman Kodak Company is an example in point of a ^ combine that has bought other plants and closed them temporarily or permanently.

As a cause of mergers and consolidation, the desire for power and monopolistic control is undeniable. Of course, (the American federation of Labor interro- gates) if the net profits from such saving to the owners is used in such a way as to benefit the em- ployee displaced, the result is not so great an evil. But does the employee share proportionately in the great savings wnich mergers and consolidation mana- gerial methods bring in net profits to the owners? r3> dere again is another problematical unanswered query. (See last line page 98)

1- --3ut cl if f e , Prof essor .Economic lectures ( course )

"Economic Trends." Winter, 1931

2 Douglas and Director. The Problem of Unemployment

Page 133

3 See appendix page 101 -and 104.

( PREFACE TO THE IMMOBILITY OF LABOR )

Changed Outlook in Regard to Population

"I think the biggest ciiange made in economic () theory curing the last hundred years is to be found in the treatment of Population. In 1831, Mai thus was still alive, and quite unrepentent for the shock he had given the public thirty-three years earlier by his "Essay On the Principal of Population as it Affects the Future Improvement of oociety."

Mai thus advanced trie tneory, which is clearly re- membered by erery student of economics, that the natural limitation of fertile and. well situated land must necessarily mean that tne more numerous the people, tie more difficult it must be for tnem to feed themselves. "The economic history of the last hundred years has tended to bring about a very complete reversal of economists' views of the mat- ter , "--Prof essor E. Cannon goes on to say.

"Modern science has changed our outlook. All this empiasis on food is now out of date. We no longer look forward to a future in which an increasing population will be forced by tne operation of the law of diminisiing returns to devote a larger pro- portion of its whole labor force to tne production of food. ne know that even in the past, wit a a rapidly increasing population, tne returns to agri- cultural industry have increased so much that civi- lized mankind has been able to feed itself better and better, wnile giving a smaller ana even smaller proportion of its wnole labor force to the pro- duction of bare subsistence; and we can reasonably respect that the increase in the productiveness of agricultural industry will be at least as great in the future, so that under tne combined influence of tne 'narrow capacity of the individual stomach' and the stationary nunber of stomachs, not only a smaller and even smaller proportion, but a smaller and smaller abac ute nunber of workers will be able to raise food for the w.nole[ number of workers.]

"And while many of the working class have become property owners, many of the propertied class have

1 Economic Journal-December 1931. Volume XVI #164

(The Royal Economic Journal). The Changed Outlook In Regard to Population, 1931- Page 519

41

Deco ae the paid servants of public companies and other institutions, so that tne old sharp distinc- tion between tne wage-earner and tne capitalist is become a tning of tne past, and the division of income between property and labor is no longer a division between two classes composed of different individuals, but a division between two sources of income largely possessed by tne same individuals.

"Thus in Distribution, emphasis of land, capital, and labor is rapidly being replaced by emphasis on individual riches ana poverty, however arising. No longer do we tnink of relieving poverty by im- proving tne ter ns of the general bargain which theory conceives labor as making with capital; we are much more likely to meet with arguments that individual poverty is being caused by this general bargain being too much in favor of the wage-earners. It is no longer the lowness of standard earnings that worries the philanthropic economist, but the fact that so many peoole are unable to rank them- selves auong recipients of those wages. Emphasis is on Unemployment.

"Unemployment is not really a very modern phenom-^ enon. Tne crowds of beggars wno collected tneir daily cole in the jiicdle Ages from tne monasteries and from private wayfarers and householders were pernaps as large a proportion of tne population as tne nornal registered unemployed of today. The •distresses' of the period just preceding a nundred years ago seen to nave been accompanied by enormous unemployment, but we nave no reliable statistics, and tne loose statements, such as in Birmingham in 1817, one- third cf tne work-people were wholly une n- oloyed and all tne rest on half-time, do not nelp us nucb. But so far as I Know, it has never been con- tended that nistory snows unemoloyment to be greater w'nen population, and eve 1 population of working age, is rapidly increasing."

Immobility of Labor

We ought not to imagine that a stationary or declining population will rid us of tne trouble of unemployment. It will provide more rather tban less reason for pro- moting mobility of labor in place and occupation, and 1 Aristotle .Politics .Book VII. Chapter V. See app.101.

42

we siall have to take more care, rather than less, t ian at present to secure the arrangements which seem superficially desirable do not ninder tnat mobility. "After all, tne increase (population) must stop sometime, and watching the effect of tne stoppage will be a very interesting experience."

Inadequacy of Placement Agencies

0)

"The high possibilities which are latent in pub- lic employment work are therefore almost totally unrealized in the actual practice of the offices. The American Public has in fact started these offices and tnen has gone off and forgotten them (Placement Agencies). Meager financial support is partly re- sponsible for this comparative inefficiency but even with tde funds available, the offices should do better tnan they do.

"If a number of experiment stations cculc be estab- lished in various sections of the country, tney would do much to raise, by tie force of their exam- ple, the general level of practice by tne offices.

If one visits tne public employment offices of tne various states, a distinctly unfavorable general im- pression is received. With a f ew honorable exceptions, tne offices are generally located on dingy streets and are dirty and unattractive. Tine personnel is underpaid and as tne New York Advisory Committee de-' clared 'frequently inert and indifferent.1 It is generally untrained in placement woro ana keeps poor records. In most states tne men and women in service owe their aopointment and retention to poli- tical influence rather than to fitness, and many appear only irregularly for work. As a conse -uence of tnis, witn rare exceptions, the work of the office does not com. land the confidence either of employees or of the better class of wor'oen."

So a man unemployed may stay out of work decause of ^ tne inadequacy of these so-called placement agencies. There appears to be no appreciation of the possibili- ties of placement agencies by tne agents who meet the unemployed t nor by tne ones who established them.

1 Douglas and Director. The Problem of Unemployment.

Page3 341-2

2- --New York Advisory Committee on Unemploym-nt . The

New Yor!< State employment Service . Volume II. P. 62. (Tne local superintendent receives a salary of only #3000. )

43

INDIRECT MINOR CAUSES Excessive Optimism

"The penalty which our uncontrolled raacnine age''^ exacts is overproduction and loss of e conomic stability. "

Automobile production and distribution on in- stallment plan is a concrete example of applied excessive business optimism. But..."tfe are be- ginning to be frightened now. The professional optimists are fading from the front pages. The business temper is increasingly one of honest facing of facts: Automobile production for 1930 fell by a cool 33 per cent below 1929 and is now functioning at a fraction of its capacity." iilr. Chase gees on to say that this excessive optimism "went sour."

Buying on the installment plan is one form of excessive optimism. Furniture, automobiles, radios an(* clothing are just some of the items that are bought without due respect to the income of the purchaser. Factories and stores are built far in advance of present need, ^oney is invested and futures are mortgaged because people believe in the future - often too much.

Ifhy do people without a tremor spend in advance of tneir needs and actual incone? Because they believe witn optimism that "rainy days" are days of anotner era.

In 1928 and 1929 people were far removed from serious consideration of food, clothing and shelter. Even tne American Federation Labor members smiled to think that "a full dinner pail" had ever been their slogan.

Excessive optimism .<eeps people from facing reality; keeps people from saving and conserving while realizing life is j extremely uncertain.

1 Chase, .Stuart. Nemesis of American Business.

Pages 87 and 168.

INDIRECT .dliJGR PAUSES - continued Excessive Optimism -continued

The undef eatable souls of men imbued with the desire for power force them on constantly to new attain- ments. The belief in themselves coupled with great ambition has driven many to the top of the ladder of success. The fact that we have nu.ierous examples cf millionaires who have arisen from bankruptcy tc achieve a money success bespeaks of the great con- fidence and optimism that many men possess. "Hope springs eternal." The hope and faith to gain new heights in financial power has led many times to ever- oroduc tion and over-expansion of industry.

The possession of the admirable trait should not be condemned, perhaps but the unwillingness of pro- moters ana producers to accent limits, nc doubt, has entailed a great deal of suffering for ethers. Again too, much optimism has made people too confi- dent of the stability of tneir economic life. They nave not sufficient fear to ma.se them provi- dent. Imagine, a butterfly is an optimist; and I suspect an ant is somewhat of a pessimist.

Gold : Tne Shifting of Gold. Holdings

"It is true that gold accumulating in the hands of ^ France dees not become available for the purpose of financing the world's industries ana trade as fast as gold accumulating in England or with us. No doubt, France's absorption of so large a share of the world's gold is a disturbing factor, particu- larly so because it cramps the lending power of London, normally the most active and liberal inter- national banking center. It would be most aesirable, therefore, to devise ways and means tc relieve the stain on England's gold cnest; for the ownership of so excessive a portion of the world's gold places all too heavy responsi bil tiy on France and us, and the present situation would be substantially re- lieved if this resoonsibility were shared to a larger extent with Gr- at Britain."

l---rt'arburg , Paul M. (Chairman of Manhattan Company) Report to Directors .January 8, 1931.

45

Tariffs

Economic introspection has resulted in a selfish tariff policy. Bfith botn aomestic and foreign trade showing signs of decline, it seemed the sig- nal to build up new barriers against vorld trade. This aoes not appear to be a happy net hod of en- couraging our foreign customers to buy more of our orcducts. Nor does it make it easier for ether nations to pay their Governnental debts to the United States.

England, as ah example of a country which has ai- te npted tnis self-protection policy, hu.s merenants display England-made goods on a separate display section of their stores to induce its subjects to buy home goods.

Chain stores of New England advertise under the slogan, "Buy New England made goods I" A sectional policy of sectional protection has sprung up. An economic nationalism is a great factor in our de- pression thinking. Russia has sought to insure self-sufficiency which attempts began before the world slump of trade, and is continuing with tnis policy of self -pro tec tion through the world depres- sion period.

Tne world ever there is in fear of a limited market which causes most men anci women zo believe that even in noraal times tne opportunities for employ- ment are limited, and if some persons obtain work tney can do so only by depriving others of the chance to earn. Tne believers of a protective tariff say that when we buy foreign goods, we give employment to foreign labor and deprive native workers of that employment which would be their's if we instead pur- chased domestic products. Largely for this reason, tie great bulk of the people believe in tnis pro- tection argument. A barring of imports, they further argue, not only automatically decreases exports, as every student of international trade well knows, and nence creates unemployment in the exporting indus- tries, but it also means that a larger proportion of tne consumer's income i3 now spent on those goods which, because of their lower price, formerly were exported. Less money will remain to be spent on Other comaodities produced at nome and, consequently,

/

SSI

46

trie nu-tibers employed in these other lines of work will shrink.

Here again I have touched upon a broad subject that ceserves extensive treatment. The summary of tne principles involved will assist, however, in demonstrating a great fallacy: As a matter of fact, the employment of any group of workers is normally not purchased at the exoense of unemploy- aent of others. By producing goods and adding pur- chasing power, rather, these workers create oppor- tunities for employment in other lines.

Protective tariffs ultimately bring about condi- tions that cause unemployment . Such measures inter- fere with the normal beneficial prosperity pro- ducing channels of trade.

Old Age

"Mr. Davis, Ex-Secretary of Labor, tells us that ^ when he was working in the steel mills the dead line was fifty. Naen a man reacned that age, he was given, if he was lucky, a gold watch, a set of reso- lutions and a discharge. He was toe old for the steel mills. In tnose days there was no dead line in tne lighter industries. But today ne says, the dead line is spreading through executive offices and tne clerical trades as well as in tne mill ana the snoo. Tne limit furthermore is creeping downward-- from fifty to forty-five to forty, and even lower.

"Unemployment, of course, is no new phenomenon. But this situation is entirely new. Never until the last few years, and in no country, save America, nave age limits been set up - written or unwritten - in quantity lots; never nave olaer men, often skilled and competent, had so much trouble in finding new wori • "

The article advocates a careful nation-wide study of jobs, conducted primarily to determine what positions the older man is capable of filling as well, or better than tne man with more youth. Therc; should be, he continues nis thought, millions of such jobs

1- --Chase, Jtuart.Laid Off At For ty. Harper ' s Maga-

zine.August 1929.

2 Chase, Stuart • Nemesis of American Business . 1931

Page 145.

because of the growing automatic processes.

The United States Rubber Company is an example of a factory that stopped procuction permanently and dismissed its wage-earners. Tne company paid a dismissal wage of a week's pay for every year of service to all those who had been in service for ten years. No doubt, this was a step in the right direction if it represents a trend in manufacturers' thinking. Even so can tney vindicate themselves in general, so easily?

ft)

"The issue is obvious; we may choose between two interpretations of a problem the existence of which no cne denies. The manufacturers declare that old age dependency is an abnormal consequence, always individual; case work is tne required technique. Say pension advocates, in contradiction, the prob- lem arises from social causes; the wage-earner runs a normal risk of income-less ©Id age; insurance is the technique for dealing with such widespread risks; old age pensions will remove the necessity for expending large amounts in charitable aid. Thus the controversy becomes: Are the causes of old age deoendency personal or social?" In any event it is a serious problem.

Whether State Old Age pension schemes will come to the rescue of those who are forced to become unem- ployed at so young an age, or whether industry will bear tne lion's share, is of tne future.

According to one account organized laoor does not plan to come to tne rescue of tne unemployed be- cause of eld age or for other reasons.

"Organized labor does not yet see cne necessity for'"' establishing a general defense fund to give prompt assistance to those in need."

1 Diamond, Herbert A.Nh.a.t Do You JLean - Case Work.

Survey. July 15, 1930. Page 348.

2- --3tark, Louis. Labor's Unemployment Program

Survey .November 15, 1930. Page 206.

In essence tne speaker on this subject of gold said that undoubtedly the maldistribution of yel- low metal nas adaed to tile feeling of distrust and concern y/hich has influenced both bankers and in- vestors to keep their funds in costly idleness. Without going into detail, Mr. Laraont, Secretary of Commerce, gave the shifting of gola holdings as a cause of world degression, in nis address be- fore The Academy of Political Science, November 14, 1930, on "Hard Times." This seems good au- thority to offer to substantiate this alleged cause •

The Fall In The Price o_f Silver

As a contributing cause of unemployment, the fall in the price of silver, and thus in the purchasing power of ever one-third of the world's population as represented by India, China, Mexico and other silver-using countries, cannot be overlooked. Ecuador is tne only country in all South America to be still on the gola standard with a free market for foreign exchange .( Felo . 1932.} Since then she has dropped it.

Without tne purchasing pov/er of formerly, countries find their ability to trade with the Uniteo States-- tne loss is reciprocal. It all limits tne market for United States' gooas (from our point of view), and is conducive to depression and unemployment.

Effort to Uphold Commodity Prices

A great effort to uphold commodity prices artifi- cially (cottcn, ruboer, wheat, coffee, copoer are examples) caused an unhealthy condition, tfhen the prices gave way, the severity of the business col- lapse was accentuated. It is comnon knowledge that in all cases the attempts were unsatisfactory to all, and ultimately resulted in a market price un- comaonly low.

"On 44 counts trie United States government accused''7 the Sugar Institute of conspiracy, monopoly and coercion." These lawless oractices helped sugar refiners to "increase their margin of profit 30^"-- by taking it out of the public's pockets, it is

1 Time Magazine .February 22, 1932. Page 19.

2 Time Magazine .February 22, 1932. Page 19.

inferred. The extra price paid for this needed commodity helped to decrease more quickly the money cf the unemployed and underemployed. Whether the practice of upholding commodity prices is legal, is a concern of the United States Su- preme Court. Whether the practice is morally right, the reader may decide. The upheld price helped to accentuate tne unemployed person's food problem.

50

Grime

Grime in its consequence results in using money of the state that might make work for the unem- ployed .

"Approximately 15 per cent of the taxes of the largest cities (according to Professor Sutcliffe who was on committee to secure facts for bicker- sham Report), in Massachusetts, go for the ad- ministration of criminal justice." This expense^ coupled with the expense of caring for 23,000 insane, epileptic and feeble minded of the Common- wealth, constitutes very definite reasons for society's inability to carry out some unemployment schemes.

Merle Tnorpe, eaitor of Nation's Business speaking t irough tne medium of a news reel which appeared through the country in Marcn said, "One-sixth of tne money collected by tne Government is spent by tne ad ninistrators in salaries ana tne like. The amount and the thought is stupendous when we consider tnat so much money is used to run tne Government. If one cause of proauction is tne #16,000,000,000 dollars we nave invested in foreign loans, taink what a slice would come from that amount before it is eventually used again in industry in tie United States.

One of tne great costs of Government is tne cost of crime. Money used for the administration of criminal justice comes from tax money, and once used for this purpose cannot be used to assist the citizen in pre- paring for, entering upon, and succeeding in, an honest occupation. Money spent for crime cannot be used to build public roads or building to give work.

According tc Professor Rugg the cost of crime ap- ^ proximates twenty billion a year. Tne waste of man power r ue to crime totals some six billion and the cost of law enforcement is around four billion. Then too, this does not consider the capital destroyed by criminals .

1 Kline, George M, M.i)..The Care of The Mentally

111 .Bulletin, 1930. Page 6.

2- --Rugg, xiarola 0. Problems of American Culture.

1931. Page 292.

PART II

PROPOSED REMEDIES AND RELIEF lE^dURKS

Unemployment - A Problem of Industry

"The solution of the unemployment problem along^ sound economic • nd social lines is a task that A aerie an industry must solve. The problem is net one of giving temporary assistance in times cf national emergency but also of working out an industrial labor program that will at all times oorteet from suffering, tnose members of the working population who are willing to work but unable 10 find employment."

Business

As this is written, twenty-four bills, all looking to the same end, are pending before sixteen state legislatures in this country.

"Of all the palliatives ano remedies proposed cr^ applied, it cannot be said tnat any nolds promise cf curing disease. Government has found no way out of trie economic dilemaa which faces these efforts to allay the fear of unemployment."

"Unfortunately, ill-assorted anu antagonistic as^ tney are, unemployment ana business cannot be forcioly divorced. Tney are at opposite enos of trie economic season. *Vnen business goes up, unem- ployment declines, and waen unemployment rises, consumption languishes and business sinks to lower levels... It is the law of the jungle--the survival of the fittest1."

The government Responsibility

There is only one sort of maladjustment of economic fore s adequate in nature and magnitude to explain the actual phenomena (trade depression), as a normal

1- - -National Conference Board, Inc.V/orld Economic

Condi tions .Page 126

2 Reference dhelf .Planning for Econonic stability.

Volume VII #9. James G. Hodgson

3 Hobs on, J .A. The Economics of Unemployment, pp.147.

tendency to apply to the production of capital- goods a proportion of the aggregate or eduction power that exceeds the proportion needed, in accordance with existing acts of industry, to sup- ply the consumptive goods which are purchased and consumed.

For these periodic movements of cver-accumulation of capital over production, congestion of the machinery of industries, stoppages and unemploy- ment, with their slow unloading of excessive stocks, there can "be no real remedy except a re- moval of the surplus elements in large incomes^ which brought about the disproportion between saving and spending.

The better distribution of income here envisaged, though involving a reduced proportion of saved income to spend, would not involve a less amount of saving.

The roots of irregularity and fluctuation of in- dustry lie in the defects of distribution and of

demand, not in the miscalculations of business men or the aberations of the monetary system, which are but exaggerated reflections of tne real facts of industry-- tie whole of this linked up by a tax sys- tem whereby society secures for beneficial public services tne idle elements of income 7/hich Co not nourish or evoke productive effort. This mixed policy adapted to trie varying conditions in the world of industry will best acnieve tne better and -nore equal distribution and utilization of incomes taat are required."

The ailment is a business ailment, and the remedy, if one is to be found, must be a business remedy.

"Business stability is still a nebulous phrase. It cannot without undue stretching be nade to fit tne American ideal, which is based upon growth, development, orogress--all of them oti' r names for cnange. Even in its restricted sense, t ue constant balance of production and censuption, it might not 1 oee appendix page 101. 6ee also footnote page 39

53

be altogether desirable. Only by the arbitrary regulation and control of one or the other would it be practical at a cost which tne public would probably be reluctant to pay (to realize it as a com ion cause ) . "

tfnat Can tne .Federal Reserve System L>o to otabilize?

'•Tne Federal Reserve oyster, like all other .none- ' tary systems, is essentially a system for financing production. Admirable as it is for the our oose of providing sound money for responsible producers of goods, it has nothing to do directly with pro- viding consumers with enough money to buy the goods." It was set up for a specific purpose ana it is ac- compli sning that purpose.

Tne Presiaent's otand on Unemployment

"JLr. Hoover has said » 'There is to my mind no 1 economic failure so terrible in its import as that of a country possessing a surplus of every necessity of life with numbers, willing and anxious to work, deprived of the necessities. It simoly cannot be if our moral ana economic system is to survive.'" That is tne President's attitude toward the problem, and the acts of this nead of the nation during the last few months would seem to indicate (the national credit corporation, createa ) that ne believes in cutting tie wheels of industry into motion and thus to solve the problem of un employ aent . He has waged verbal war on the hoarders of money, and ne has sought to tnaw out the frozen assets of the ban.-cs.

A Jcheme for tne Return of Prosperity

Anyone who has seriously considered the economic status of the United otates in times of both depres- sion and prosperity must be conscious tnat at times between the extreme of tne two conditions that there exists a harmony of earning activity that everyone seems to enjoy. It seems that then tnere is a healtny condition of busin- ss that ma:es everyone

1 Foster and Gatchings .The Road To Plenty. Page 189

2 Johnsen, Julia B. Stability of iimnloyment .The

Reference Snelf. Volume Vii .No .2. Page 10

optimistic. There is prevalent a feeling that savors not of the hysteria cf soenaing and soecu- lation that came in 1928. Neither is there preva- lent that fear and discouragement that is being felt in this year of 1932.

The average person is content with that happy :nediura tnat comes between tne two extrenes. There is neither tae uncertainty of Depression of hard times, nor tne rampant desire to get ricn quicK 'nys te ria".

JY.ny can't that nappy meaium oe preserved?

If business conaitions are left alone we have tne cycles cf both prosperity and tnen sure enough de- pression. In the state of tne former, people over- reach t:ie:aselves . They buy today and pay tomorrow. In tne former state, the reverse is true; people underreach themselves in spending. Showing these cycles by clotting a curve, the two conditions har- monized are very satisfactory. The meaning is satisfactory. §hat can be done to be consistently economically ha^py? That is tne question. The average person is content with steady progress. He does not wish to go soaring to tne mountain tops today and sliding down into the valleys tomorrow.

Progress can come only when the^e is the riglt f'low cf money to consumers. Because of the fact tnat prcauction has been felt to be the only problem of industry, has resulted in leaving to cnance the steady flow of aoney to consumers. And the flow has not always been steady. Tne rignt flow cf money nas cone at tines but never fcr very long at a time. Tne reason notiing has been acne in a masterful way to substitute intelligent control for cnance, is because it nas been assuaed that nothing need be done. The fallacious assumption that pro- auction itself inuuees the right flow of money to consumers .

as tne layman nas guessed, money is at tne bottom of tne problem of the failure of tne nation to

1 Adapted from Tne Road To Plenty. Poster and

C ate nings . (pp. 54-58 here.)

progress constantly year in and year out without tne disastrous fluctuation of incomes, and conse- quently tie outgo of money from the .lands cr the average person.

Rigit no;/ we grant that ouilding of public build- ings, ana speeding up the construction of new in- dustrial plants would be a desirable thing. it woulc enploy tne unemployed. .Vould it not seem reasonable that at other times this procedure would be less appreciated? If it be true that t.nis construction activity be desirable, is it not rea- sonable to assume that at otner times (during prosperity) tnis activity of construction might be baa for business as it is gooa for business at tne present time (1932)? Borrowing automobile phrase- ology it means putting the foot on tne bra'.-ce at tines, ana tnen putting the foot on the accelera- tor at other times.

The V/ay .Out of Unemployment - Governmental Responsibility

Essentially this is tne stand that Hobson (who is quoted in another section of this thesis) ta^es in hi 3 treatise on the cure of unemployment from the distribution end of cur economic scheme of things. Jloney, it appears, is put into circulation at tines when it should be withheld and Vnen at ether tines it is put into circulation (borrowed from the ban^s for industrial ourooses, an tnen eventu- ally comes to the consumer through the nay envelope) toe slowly with resulting unemployment.

The Power of the Control of Money for Productive Pur poses

T lis discussion at once brings tc the mind of the reader tne question of who should control this scheme of olacing the right amount of money in circulation at the most opportune tins to iron out these fluctuations, ana to keep tne flow of noney fairly constant. Certainly I would not argue

1 Gnase , Stuart. The Trageoy of Jaste.1925.

Pages 60, 143, 264-270.

t.iat the government should interfere in business. The belief that tie Government should keep out' of business as much as possible, is universal. Tne Government could help a great deal, however, simply by recognizing and practicing tne princi- ple that t.ie~e are times when by its own financial operation it can put money into tne consumers' hands when business is falling off, and less money when inflation begins.

Our Government is tne largest consumer in the world, and as such inevitably helps or ninders the flow of money to the consumer. Tne question is mot whether tie Government shall influence busi- ness, but how intelligently. At least it should try to exert its influence on the rignt side. This woula, of course, necessitate careful and long range planning. This idea is not new. Tne Ameri- can Federation of Labor has taken this stand and has expressed itself through the press 'from time to ti me .

An eye on tne consumers' incomes will show when it is necessary to begin activity by the government to spend -money to get it into the hands of tne con- suner. I do not mean that tne government mist make work necessarily, but in spending the money it should naturally at the rigit time when it is most needed. That is at tie time the consumers' incomes are falling off. The Government expenditures will act as a stabilizing factor. Even a kitten, for example, can keep two two hundred pound men teeter- ing at his wish on a plank teeter by exerting its weight one way or tne other at tie proper time.

tfien the consumer buys goods from his savings this deficit can be made up from the construction of new capital facilities anr public works at the right rate and would give busiiess all the stimulus that it needs. A sufficient increase in the volume of ncney spent by consumers stops a decline in the price-level of consumers' goods. On tne ether hand a rapid rise in the price-level woulc be stopped.

57

if a large enough part of the consumers' incomes, flowing into loans and taxes, did net flow hack to censuners until a later period of time.

Utopian -Plan hut Step taken in tnis -Jirection - Reconstruction finance Corporation

The execution of this scheme would necessitate constant increase in the volune of money in circu- lation. Skeptics would say tnat there is a limit to this oroceoure, and eventually it would mean abandonment of tne geld standard or the present gold ratio.

Tne faith tnat will be built up after this schene is in operation for some time will cause the country to expect the continuance of prosperity and of a fairly stable orice level, and tnen ne can safely provide for a larger volume of noney by re- ducing tne linimun gold ratio.

A synoptic view must be ta^en of tne factors enter- ing into tne fluctuation of price levels. A fall- ing price level is caused by lower unit costs ac- companied by increasing voluae of traae ; real wages, production, and employment, need to be stabilized. Tnis condition described is a sign cf economic ne al t n .

No doubt tne trend of retail prices in the United States will show quite well whether the consumers' buying is increasing or decreasing. latching this condition is one of the best indexes to the situa- tion. But t.nere is the need of a vast organization which will be gigantic ana far-reacning enough to fell the very economic neart beat of every part of tne body of tne nation. The Government, pernaps, is tne agency to which we must turn for this assist- ance.

w Money rates provide a barometer for tine short cycle swings of business sucn as we nave passed through in the four cycles from 1919 to 1931. V/hen a captain at sea finds tne barcneter falling rapidly 1 almonds, Alvin,T. Business is afraid of tne

Truth. Nation1 s Business .Volume 19 #4 . (U.S.

Gnamber of Com aerce )Page 124

and far, he immediately prepares for a storm. He does not stop with the mate or otner officers to find out whether it is possible for tne barometer to cause a storm."

Responsibility Is Partially Individual

At. oimonds states tnat the captains of industry are loatn to warn the public with unpleasant pre- dictions, as tne president of the American Tele- phone Company lately remarked, "No responsible fin- ancier •vill make unpleasant predictions public because he knov/s tnat it will earn for him t:ie dislike of tne business wcrld."

The Govern.ieit must ta:e tie responsibility tnen if one crisis is to be met because the above shews the attitude and tne unwillingness of others who know to warn tne people of wnat is to come. And tne public must be .varned.

The author of mis article quotes Albert E. <Viggan, chairman of tne governing board cf tie largest Panic of trie United .States as saying, "Nothing is to be gained in tne long run by over stressing favorable factors and overlooking tne unfavorable ones."

Yes, tne government is tne agency to which we must look to ascertain tie status of cur econonic condi- tion from time to time. Only tne Government will impartially give tie information and control the steps that are taken to protect the nation.

"I believe tnat any fair-minded, intelligent student of tne situation ia 1J29 would be obliged now to acknowled ge the imnense value of a statement made in tie soring of tnat year by an autner i tative source or, better, by a large nuaber of authorita- tive sources t.lat, if money rates continued to in- crease mucin beyond tie point that tney 'nad then reacned business depression and a crash in the stock market were inevitable. I believe that any intelligent appraiser of the situation w^uld now agree t.lat suci a statement would new have prevented incalculable loss and the greater part cf the suf- f er Ing and unemployment of 1930." 1 ibid. Page 24 (see reference page 57.)

The Problem .Just be Attacked Frqm_tne Consumers' An^le

"Consumers never stop buying because they fear a slump in the mar vet for producer's goods; but pro- ducers periodically stop buying because tney fear

a slump in the market for consumers goods All

profits are accumulated in retail prices. Conse- quently, nothing but adequate retail buying can '<eep industry going all the way d own the line. That is why the using-up of consumers' goods suffi- ciently stimulates the demana for producers' goods. That is why the reverse is not true. All of which follows naturally from the fact that tne using-up cf producers' goods is only one neans toward that end. . .Tne rig.it flow of money to consumers is all that is needed to keep business prosperous."

in tne final analysis it is a matter of keeping the consumers1 purchasing power better adjusted to cur- rent output.

-Jet nods for ttne stabilization of Employment

(St)

"The throe newest and most significant developments in the stabilization of employment, now distinctively American, are (mentioned) here. .First, is the placing of emphasis on reduction of employment through better management technique within industry. Second, is the increase cf interest in mechanics of controlling or modifying the business cycle. Third, is tne developing of a doublo-edge type cf unemploy- ment insurance in orcer to attack tne evil through both relief and preventi on-- incentive insurance tnat penalizes tne careless employer at tne same time that it rewards tne efficient."

Insurance

Of course there nas been no theory for the solution of the Unemployment problem put into universal prac ti ce . Those who would propouno theories must

1 Foster, William Trufant anc Caterings, tfaddill.

The Koad To Plenty. Page 170

2 Peldnan, German. Dartmouth College .American Labor

Legislation Revi ew. 16 . 47-o5 .March 1926

be willing to have them submitted to all the ravages of adverse criticism. Anyone w 10 is quali- fied to talk should be listened to--es pecially if ie talks about a great nation- ( alas , even world- wide) question, for which no absolutely practicable answer has been given.

One economist, who is perhaps as qualified to speak as any other authority; a member of the advisory comnittee, United dtates Unemployment Conference, 1921; he is on the staff of the National Bureau of Economic Research. He says:

(0

"European experiments have demonstrated the feasi- bility of establishing and administering unemploy- ment insurance plans for all incus try. 7/here these systems lave failea, the defects are remedial. Both tie Englisn and tie German schemes have the weakness of relying too much for their administra- tion upon agencies of the government. In both plans, al30, but in tie Englisn more tnan in tie German, tie fundanental mistake was made in not strictly limiting tie liability of tie unemploynent fund and in tius protecting its solvency, dteps are alreaoy taicen in Germany to maxe the unemployment funci self- supporting, ana in England tne trend of opinion is in the same direction. It should be said, however, that as long as unemployment continues at its present level, the difficulties ox placing these scne.nes upon a sound, normal basis will be great.

"The practicability of unemployment insurance has - also been confirmed by tie experience of a few isolated plans of voluntary insurance in the United Jtates. Tie most important of tnese is that plan* established in 1923 in the men's clothing industry of Cnicago by agreement between the manufacturers of tie Amalgamated Clotling Workers of America. By the terms of this agreement the manufacturers and the employees each contribute weekly l£ per cent of the wages into an unemoloyment fund. Out of this fund benefits are distributed twice a year to all menders of the union working in tie Chicago industry. In 1928 the fund was increased tc 4g per

1 Unemployment .<Yolman, Leo. /ale Re vi ew. ATinter 1931

2 ibid. preceding page (center of issue)

/

cent of the pay roll, by an additional contribution from the employer; and similar funds were set up in the cities of Rochester and New York. Since its inception, there nas been contributed into the Chicago fund more than $6,000,000, of which more tnan $5,000,000 has been paid cut in benefits....

"There would seem to be no sound reason why unem- ployment insurance, essentially so simple in its adnini s tration ana so free from danger, cannot be universally adopted in American industry.

Conclusion

"The unemoloyment problem cannot be solved oy panaceas. The goal of an oroered and controlled industry in this country lies far before us. A practical solution of unemployment, now and in the tnown future, should not depend uoon the nasty phil- anthropic measures adopted in times of the crisis. Extensive planning of public works vita great fore- sight, the general division of wcr^, and above all, universal unemployment insurance, managed jointly by industry and employees, constitute tne elements of a program tested by experience and calculated not tc do violence to the institutions of a democratic government. "

But then as JLr. Atwood says:

"Everyone tcnows now costly tne British system has proved and how it nas developed abuses, or anom- alies. Tnen, too, there is a suspicion that the British system may even have nelped to perpetrate tie very evils it was intendea to remedy.

But even insurance at its theoretical oest is not expected to prevent unemployment; it, too, is only a sort of palliative or partial money recompense, while the real evil--lacx of work- -remains • It is true, of c'urse, that quite a number of corporations have so planned, regularized and stabilized their operations that fluctuations in employment have been greatly reduced, Aany more nay learn to do

1 Atwood, Albert <V.^hat iJoout The Dole. Saturday

Evening Post .No vember 7, 1931. Page 16

62

so in the future, out this is of no present nelp.

Vesicles, trie re is sucn a bewildering variety of enterprises, sucn a wide range in size and capacity, t.iat anytiing like stabilization for all of them, even if theoretically conceivable, is not imaediately practicable. Thousands of snail concerns, and some not so small, which, in the aggregate, employ nany people, fail eacn year, or are so weak or inefficient that tney cannot oe expected to oeal nelpfully with the unemployment problem. Nor can even the strong- est and most enlightened companies always live up to tneir own best ideals in periods of acute dis- tress . "

RELIBg OF UHEMPLOYMENT

The Industrial Emphasis of Employment of 1931

The Merchant Association of New York and the Taylor Society both are advocates of the spreading of em- ployment. "...All employers should Distribute available .vork by shortening work periods ratner than by employing a limited number full time."

It is to my mind just another instance wnerein the group is to share the responsibility of keep- ing its me nbers employed at a sacrifice of the otner menbers of the group. There have been noble examples set by unmarried men offering to go with- out their chance to wor< their alloted time for the week to allow a married man with a family to work a more complete veek.

Mobility of labor may oe a necessary factor in fur- nishing sufficient labor to those industries that are seasonal and to the agricultural regions, but does it not break up the unity of the group of em- ployes that nave come to feel friendly and unified by long wording together on the job? From the above quotation it seems that this necessary sacrifice in spreading work: can only be e :oected of a grouo that has long snared each others working lives.

The matter of spreading work s^en from another angle snows that: "-lours can be reduced and work spread out in seme incustries and occupations, and not in others. There is no national formula or panacea in reducing hours; the problem is not sr simple as all that."

Shorte_r _j(qr <i ng J^eeK ^or Ijay - Not a Solution

"There are many arguments in favor of snorter ^ working time, both economical ana ethical. There are indus tires wnose long worcing hours nave been a nation oisgrace. A growing number of industrials regard as uneconomical tne opening of factories for only a few hour1? on Saturday and have decided to

1 President's Emergency Committee for Unemploy- ment .Emergency and Permanent Policies. Spreading <Vork in Industrial Employment. U.S. Government Print of A'ash. 1931 .Page 1

2- --Lormier, George Horace .Editorial .Hysterical

Economics .The Saturday Evening Post. Page 20 January 30, 1932.

54

stick to the five-day week, if possible, even wien business improves. But there is something strangely naive and cversimple in the idea that everyone can be given enough employment in periods of low activity merely by reducing days per week and lours per day to sone fixed nunber, like five cr six respectively.

'\^e can :ct add a power-house operator, a college professor, a grocery clerK, a garage mechanic, a dairy far aer, a hotel waitress and a nose-and- tnroat specialist to find a sum ana tnen divide by seven. There is no average and, therefore, no way of dividing up all jobs among ill of the workers ... .Tne trained cannot be displaced by tne untrained merely to make wages for the unemployed"

ffhat Can Be .Done To Protect People jpvom The/Qselyes- op e qui at ,i on

In the section on speculation (see page30) earlier in tne thesis, I offered authority for the fact that recovery from this depression -nust be in a very sane manner. There must be faith. Of course, in times of a crisis tnere is a distinct cause - if it can ^° discovered - to bring about such a dis- asterj but rignt after the crisis waat can be done to keen soul anc b dy together until on" can recoup tne losses? It is all very well to keep the faith, but what can be done if the particular crisis has resulted in une Tiployment? <Ve are supposing all the while that tne individual is repentent and is tr :ing to get Pack ^n a firm footing. There must be temporary relief.

if tne permanent cure is to readjust surely one's economic standing, - if that be the cure,- it see as tnat there remains but tne :uestion of relief. (Of course, it is understood tnat it is important to educate tne people tnat they must not "overreach" themselves (this is At. Lorimer's ternclogy) to jeopardize tneir future by net living within their means, by speculation ana tne like. Relief can be administered in a variety of ways. Herein is a brief aiscussion of charity, the dole, and made- work. All means of relief are debatable as to their source and as to their administration.

65

Loss of Faith

[iven if there, isn't food for all, here is food for thought:]

"One of the serious results that come from the experience through which our country has been passing for the past two years is loss of faith. Because some have put their trust in things wnicn taey nave found do not always endure, tney draw tie nasty ana un/.'ar ranted conclusion tnat it is useless to hare faith in anything; They pro- pose to abandon all standards, seek out the easiest course, ana live merely for the present, cn the theory tnat they may as well eat, arink, and be merry, for tomorrow they die, ..It is easy in these circumstances, for the individual to conclude tnat these disasters aave arisen through no fault of his own, tnat it must be the fault of someone, and he is inclinea to blame something he loosely calls society. Sometimes a feeling of injustice results in a tnreat cf de- fiance against constituted authority."

Calvin Cooliage sounds li<e a shepherd counseling lost sheep as he pours forth lis ideas on depres- sion in this article in the American Magazine. 3@ even closes lis rissertaticn upon the loss of faith with a quotation from the Bible. (I referred to the article earlier in tie thesis.)

Turning to another source, again we hear the words of one who would not have us lose faith. The article is accompanied by decorations which pic- ture ' a large Dear as "fear" and atffr 1 abeled as "Vague Humors." There is a smaller oear in the picture which is labeled as "The Actual Facts of Depression." All together it says, I suppose, "Tie facts cf depression are not nearly so bad as tie rumors of depression."

"There is altogether too much cf a tendency to y take a helpless view of the situation, by saying

1- -Coolidge, Calvin. American Magazine . In Times Like

Tiese. Pages 11, 12, 13.

2- -Lorimer, George H»What Everyone Snows* Saturday

vening Post. Page 22. January 1932. Page 19.

66

that it is too complicated to understand or control . "

And forthwith the author goes on to rationalize that the people "overreached" themselves in the more prosperous days, and new it is "but a ques- tion of withstanding the "underreach" until the ■oenculum swings back to normalcy.

Trie problem of unemployment has two phases; the relief, and tne cure. It goes without saying that with the aire need of the country at the present time, relief measures must be considered, agreed upon, and executed.

For tie present I will discuss tne evident Diffi- culties in considering the former phase of unem- ployment, i.e. relief. I shall treat it in the light of a real personal problem - not theoretical.

oince the lack of work is the cause of unemploy- ment, as anyone will say without thinking, the first obstacle which confronts one is iow to se- cure work for tie unemployed. Tnen if work cannot be founc, in what ways is it possible for the would- be wage-earner to secure money without work? In tne final analysis, the only ways are as follows: First, by a loan; secondly, by charity; and thirdly, by tne dole.

■loney ,/ithout Work: - Borrowing tfoneg

According to the definitions tnat have been dis- cussed at tne beginning of tne thesis, an unem- ployed person is one who wishes to work, who is deoendent upon work, and who cannot find work that is reasonably suited to lis caoacity. This means, of course, that a person with a surplus saved for a rainy day is just as really unenoloyed as the person who lives from hand to mouth. Tne person who nas tne surplus, however, with extended unem- ployment is soon reauced to poverty. His resources scon become aepleteci, if ne is the average wage- earner, because ne has investec, or in seme way used this extra money tnat previously was more tnan

enougiit for His needs. If the investment were in a none, tne loan value on real estate is so low in tines of depression, that his equity would not entitle aim tc very nueh of a loan. He is in the sellers'*- market among thousands of others who •lave sougnt tiis way out in the tine of emergency.

In the sane way, tie resale of tie "betterments" of life, --as a radio, of dooks, of tie automobile, nave little market value. These second articles af 'ord aim little net collateral value, upon which to secure a loan.

Mere discussion of tnese troubles that a person las in an emergency snow t.iat eventually the costs of fooa, clotning, an snelter scon reduce even tie nan who _ias savec to dire poverty.

Charity

Without work, and after the borrowing power nas been used, the typical unemployed person das to acceot cnarity.

"At its worst, charity is bound to destroy the self-respect of the recipients. //hat those who aesire but cannot secure work obviously need, ac- cording to this school of thought, is insurance, or reserves, against unemoloyment , so that they will at least have a partial assurance or stability of income, whatever happens. This is asserted to be in the interests of norale and a more self- respecting and American way of meeting the oroblem of the unemployed than that of throwing them on chari ty. "

Pride interferes with the person who may b" driven to this "second stage" which has to be submerged, other things being equal, unless the unemployed person will lie down and die. iven so, a person will not allow the dear ones who are dependent upon lim to suffer tiis fate. Yes, sooner or later charity gust be accepted if there is no work. Atwood, albert V.Wftat About the jjole? Saturday Evening Post .November 7, 1931. Page 16.

68

Trie Dole as a Way tc Secure :»loney witiiout ^/ork

This means of securing money without work causes trie pride to suffer less than to be the recipient cf charity. Dole money is received by the think- ing man as a payment of an obligation that society ewes him because of its inadequacy to supply work.

A thesis could be written upon the oole alone. Its ramifications are too many tc go into exten- sively nere. It will perhaps suffice for the pur- ocses cf this work tc give some of tie major criti- cisms of it.

Clothing ana Food Gifts - A Dele?

"Indeed, the aoility of states and cities, of towns ana villages, of industries, and of volun- teer agencies ana organizations of every descrip- tion tc meet tne problem in tne only way that any- body ,<nows how to me,!t it is a very real test of the vitality of Anerican institutions and cnarac- ter. Rather than orate about what shoula or snould not be aone , let us see what has been done. But first it must be plain that we can get at the facts only by clearing the ground of a deal cf overstate- ment and irrelevant matter.

"To begin witn, a great amount of unemployment and distress wnich always exists, even in tie most pros- perous times and without attracting much notice, is now big news, and is, therefore, counted in as part cf tne emergency as a matter of course. This is not saia to gloss over misfortune or suffering, but merely to get at the essentials of a situation. For one thing, aany authorities consider that some form of ohysical incapacity is the "principal and most constant cause of poverty everywhere and at all times." whether this be so or not, it is ob- vious that tne deatn of a breaawinner, accident, sickness, f eeble-mindedness and old age have always been closely associated net only with poverty but with unemployment.

Tiie Family1 s ..^elf are _Is Important

"But of course physical incapacity did not cone (') into the world for tne first time this fall, nor will it end when the present emergency is eased. Long before tinis period of slack employment oc- curred, one of the most important social activi- ties in almost every community was family-welfare ;ork, ouilt largely arouno matters of health, widowhood , dependent childhood, and the like, and it will continue to be so as far into the future as any human being can see."

Trie Dole, and the Governmental Attitude toward the Lole

The dole issue was raised by the insurgent bloc in Congress, and all but a f ew were not in favor of the federal government's assuming direct responsi oility for the relief of the unemployed. The ad- ninis trat ion is opposed to the cole and according to dr. rloover tne "municipalities, counties, and i ' states snoulo use their own resources and credit

before seeding such assistance from the federal Treasury. M

The Welfare Organization and the Attitude of the ..{an- on- the- Street

Welfare organizations give relief to the deserving and the undeserving as the good Lord allows the rain to fall on the just and the unjust. It is difficult for the welfare organizations to dis- criminate as they are organized to give relief to the needy. They have learned from long expedience that the ooor but proud individuals will not ac- cent assistance unless it can be given quietly without prying into their lives that all the while they have the right to hold as personal.

Then tec, the welfare organisations have ta<en the oositicn that no matter what the cause of the necessity for relief^ there is no reason why the innocent woman and chile should suffer.

1 iDid

2 World's fork for December, 1931 ; Congress

Keeta Again. Page 32

Trie man on the street who pays Lie taxes - and the more the relief the higher the taxes - realizes tnat tae more he gives through taxes or through voluntary relief, the less it means for his own wife and his own children.

The labyrinth of it all leads but from one rami- fication to another of tie problem and the opinions as for tie cure and tne relief of the situation are very divergent. But after all a man, woman, or ehild cannot be left to starve, no matter what brougit about the resultant condition of starvation

Tie point left to quibble about, however, is I supoose , who should sup >ly the food.

No matter whether the cause be lack of birth con- trol, mismanagement, or laziness, the condition exists. tfe are sure of that, Government statistics ■rove it.

Conclusion

Depressions are likely to happen again. Society can do sonetiing to help the oerscns who suffer most, but in the past it has attempted this after the curse of unemployment struck. So inadequate has been the attempt to alleviate the unemployment situation and its consequent and subsequent suffer- ing that tie most sane plan is "to lock the barn before the horse is stolen."

These old proverbs as "an ounce of prevention is wortn a pound cf cure" seem trite-but now true.

oociety can never quite ma<ce up to the victims the damage that has oeen done to their souls--not men's alone, but women's and children's souls-- by doing nothing before the crisis.

The causes that nroduce the condition are manifold; the renedies must be a combination of executed plans to counteract the many-symptom-economic- disease of our competitive system. It has been aemonstrated that no one force or power, govern- mental or industrial, can cope with a problem for 1 See appendix page 103.

wnich it alone is only partially responsible.

People must be taught, enveigled^ and forced as much as possible to protect themselves. As to the means of securing individual and collective cooperation to stamp out the evils of unemploy- ment, various reasonable ways are advocated. Un dcubtedly, all advocated plans nave their merits Unemployment Insurance, which in effect will secure contributions from Government, industry and tae individual, seems feasible. Government planned expeno.i tures at strategically needed points in the process is obviously another greet steo in the right direction.

PART III

72

SOCIAL SIGNIFICANCE

The Social and the Individual Jignificance

Tae unemployment question from an economic point of view merits extensive consideration, but the question from the social and the indi- vidual point of view is perhaps even more important. Idleness demoralizes. <York drives away those "Hell-dogs that beleaguer the soul." It is useless to argue that work is unimportant, and when work is necessary to obtain money to buy food to keep alive, work seems all important. The man who works and receives wages can lay aside a. oortion to establish himself in a home and can establish himself in his own self respect. Ae can see that he is making progress, and life is indeed intolerable if the individual cannot day by day see himself progress in lis own eyes ana in tne eyes of his neighbors and friends. There is a certain rivalry in the accumulation of things tnat people live by. This must some- times include the necessary things of life and some of the luxuries , --if tine peo-ole about the person think that certain material possessions are necessary. This matter of "keeping up with the Joneses" na<es people struggle for life, endeavor- ing tc do just this, to live as well as other peoole live .

Incidence Rests Upon Children - From The _ganily Angle

JVnen unemployment comes, however, this standard of living that has been set up as necessary, has to Change and that change is downward, of course. This change of living may not be so difficult to the man or his wife, but when it means that the children at school have to wear clothing that is inferior cloth- ing, the problem becomes serious. Chilcren in the schools are very critical of what their friends and olay nates are wearing. The fact that a change in the <ind of clothing is noticed at school and will invoice criticism shows that keeping up the standard of the group is even taught to chilcren, consciously, or unconsciously. Children learn to aesire certain

73

things "because others have tnem. The desire is never out-grown. What a task it is to explain to the children that some of the thin.qs that they have had, t ley will now have to do without.

The schools teach that all things will come to him who tries. To explain that there is no work, and that father cannot find work no matter how hard he tries, is to teach fatalism. The •■teacher" begins to believe in fatalism; is it not true that this state of unemployment is nothing but fatalism?

Q)

An explanation of: "An important economic aspect7 of r egulari zation is the reauction of unemployment. .From tne social point of view tiis is the paramount objective. To a large extent the business and the social motives for reducing unemployment are paral- lel. .. If tne social attitude respecting tne reduc- tion of unemployment is 10 predominate ... regulari- zation is likely to be greatly accelerated. Unem- ployment is coming to be more ana more thought of as a preventable evil. Far sighted business leaders recognizing the growth of this point of view will make a determined and unceasing effort to achieve an even greater degree of regulariz;;tion. Tney will do this "both to satisfy the motive profit and to keep abreast of the growing conscience of society respecting unemployment."

The significance of Unemployment to the Family

"...whether unemployment is controllable or un- controllable its ultimate burden falls u-oon men, (women and children) least able to bear it and frequently upon tnose in no way responsible for its incidence," (oee Aopendix for Children Affected)

The Unemployed ian Tninks

The person 7/ho believes that there is work just arounc the corner for aim soon finas in this era cf unemployment that that is a false belief. Idleness falls upon him. The effort to search for worK is futile so he ceases to exert himself use- lessly . Tne mind, in tne meantime , continues to be

1 Smith, Edwin o. Reducing seasonal Unemployment ..p. 282

2 Calkins , Clinch. ->ome FoIks Want Work. Page 161

active, but not normally active. There is a readjustment in tne thinking tnat ne now reasons something like this: " tfork is necessary tc earn money; there is no work. Is there anyway that I can get money without work? Perhaps I can borrow so ne . No, I shall wait until the last minute... I have waited seme time for work; my savings are gone. I shall borrov; some money until I get mcney. No, they say I have no collateral to of- fer. I am not a good risk. Yes.. no vork, no lonoy. But crooks have money. But I can't be a crook. I guess I'll wait a while and see what turns up. ?

iJontns pass, and things go from bad to worse, .ie does not liK:e to meet any of tne olc friends any mere.

"They think if I try hara enough I shall find work. No, I shall see what some of the other men say tnat are out of work. Hmmm, they say . nat one needs is a "racket." Tney say that all business is a racket. Tne business man has a pull and gets away with it, that is all. I guess until I find something to do I'll join some of the boys in some of the beer- times tney nave. It will help me to forget, anyway."

No day Out

M"I didn't realize that all cf life was such a racket before. The boys at tne little spree said last nignt if tne politicians weren't so crooked, and so busy feathering tneir own nests, that they would get jobs for some of us unemployed. I always thought if a fellow did his best at his work that things would come out all rignt in the end. But they said a person is a fool to work when there are sc many who earn a living without any work at all. They said that I could see what happened to ne by working away helping to make someone else rich without looking out for myself. I guess what I need is a racket too."

75

"Gosh, I wish I knew where to get some money to buy seme bread to take hone to the wife and the tcid- dies. Let me see, all I have left after tnat snow snoveling job is six cents. I nate to go home, and face the family; I thought I surely would find something to do today. I wish I had just two per cent cf the mcney that lady had that I shoveled the snow for today. She seemed tc look at me so patronizingly today; I would have resented that patronizing "you-poor-beggar" look two months ago."

You can picture the following months of the man's life as he tries to keep up the courage cf the family. You can see aim tie proud happy working man of a year ago as he now has to accept charity. IP hat a blow to his price. Sometimes he doesn't seem tc care any more.

Tne Total Effect on trie Nation of Unemployed Families

"An idle nation like an idle man inevitably drifts'' toward degradation. " Tnere is a great tendency toward various forms of dissipation on the part of tnose 7/ho nave been thrown out of work: it has an extra appeal to those who nave so much idleness on their hanus."

(X)

"Tne problem is intricate. Figures are uncertain. But tne effects of unemployment are inescapable. To underline them seems unnecessary - physical suffering, broken spirits, defeated plans, abandoned enterprises, thwarted childhood, and a future left bleak: and empty. A'nere can we take no Id to meet tie need which tnese family records make so clear?"

The Human Side cf Unemployment

The physical vitality of a .-/orkless worker because of insufficient cr improper f cods is weakened. •Vith a reduction of industrial initiative, accom- panied by a lessening cf self-respect, he suffers.

The comfortable living which the fanily formerly

1 Gary, E .H. Article . Harper ' s 1931. Pages 7G-2

2 Calkins, Clinch. Some Folk Won't «ork. Pages

158-16l(See nis book for cases.)

enjoyed is replaced by a struggle for bare existence which eventually means assistance from friends or relief organizations--or both.

But, "All 'den Are Created Equal"

President Hoover in his speech in eulogy of Wash- ington s -;o.<e (over the radio, nation-wide hock-up, i'ejruary 22) reiterated what he had said in nis book "American Individualism" "America is the land of equal individual ooportuni ty. "

Yet we all know that that "equal opoortunity" statement is but the assertion of a Utopian thought. Life has taught us that only a f ew are orivileged to really live that encouraging challenge that America, or any other country, offers an equal opportunity, to all. The very fact that Massachu- f' setts is bearing the burden of some 23,000 feeble- minded, insane, and epileptic, bears mute testimony to the fact, that thousands uc not have any oppor- tunity at all.

The Helplessness of Jan ./ho .las Nothing tc Offer Except Labor

In a stuuy of economics, we learn that economic activity is for trie purpose of satisfying human wants. The ni story of the struggle of man to satis- fy tnese numan wants pictures man going forth tc get what ne wanteo. At first it was relatively simole; ne nad but tc go forth and take what Nature had provided for him. As other men came to contest another's right to taKe what was so graciously sup- plied by Nature, there was a c ntest wnich was largely in tie favor of tne man wno got there first, mlore or less peace-loving individuals left unmo- lested the individual's possession which came gradu- ally to be held secure i from the first by the very priority of his presence in the neighborhood of those tiings that suoplied nu nan wants.

Squatter's privileges ana rights were recognized in tie contest by individuals and by nations that settled America. But in this later period in tne

1 Kline, Gecrge II. The Mentally 111. Page 6,1930.

2 See appendix, page 101.

77

history of civilization almost all property see as to nave been ciscovered, clai.ned, and possessed, a'ld held by various rignts tnat now seem to be largely legal.

.Because nan wished to develop ana conserve what le oossessed, he tolerated the presence of other individuals cn lis property if tney would assist him in ais efforts to entrench himself in his own possessions. The history of the feudal sys- tem well illustrates tais stage in the evolution of t ie economic rig its of man. As I say, this all is history that anyone can trace if fete wishes to turn to the annuals of the evolution of economic ana social progress of man.

But today, what new lands can man go to in search of b o un ties of Nature that alreaay are net pos- sessed? Man is left to the mercy of those who oossess prosperity. Unless these who have property wish to do something with it, or to it, the ones who are willing to supply tie labor are helpless. Ho longer can man go forth and take what tie sees t iat is good to suoply his human wants--it has already been ta.-cen. ./here can an unemployed man go, if he has not land,capital (goods used to # produce more goods) or money? Nowhere'. The

unemployed man is helpless, so helpless, rie is entirely at the mercy of those who have already "possessed the land J"

A baby crying for fooa with no loving hands to feed it incites the most life-hardened soul to action. Yet with millions crying in silence for help in this perio:, of national (and international) une nployment , help is very very slow in ccming-- although some of the unemployed are as helpless as a new-born baby. Perhaps the unemployed are more helpless than babies are; the latter can get food and pity; millions of the unemployed cannot even get a job.

If it dion't require a job to earn money to secure food, clothing and shelter, a job wouldn't matter

so much. By working at a job a person is able to

*A1 ternati ves : 'An unemployed man without money, land, or capital cannot go to Uncle Sa.i's "Attic, " to Bolivia, or to the dry uncultivated Rocky Mountain area. By tne way, what bounties of Nature are to be possessed in the Hock I es?

See page 3 .( "Nowhere " restricted to U. Si)

78

feed, clothe, and shelter himself and his family. .Vith no job, money for these fundamentals of life has to come from loans or from gifts. dince a very few of tie people of tne United dtates do not nave to work: f or a living, it means L.ne re- mainder--tie great majority nave to work to exist, -after all, tne matter of living narrows down to this--working at a job for existence. A person cannot live on loans and gifts, he needs a job.

Family Point of View Not Meant to be Pessimi st ic-Yet

The outlook on tne matter is not meant to be pessi- mistic. Yet a block away in a neighborhood there exist these two divergent heme conditons: In one, the none of money, the ■ og food costs more tnan tne food costs that two mal-nourished children censuae in tne poor home. In the poor none the f at inr is out of work, and tc this home the sacri- fice of one party at tne richer home would give suf- ficient food for the unemployed man's family for a week.

Tne people wno have, must shut up their eyes to conditions as tney exist in their own neighborhood. It brings up the worlc olu problem of sharing with t lose wno have not, by tnose who nave. ii/nen the situation of unemployment aoes not call for gifts of money but just for the man who has money to put it to work to make work for the unemployed, it does not seem too much to ask of those vho have capital.

If all people, who are able to nelp out tne situa- tion of unemployment by giving jobs or by putting tneir money to work to give work, would realize tnat it was a duty and a privilege to help, the problem woulo be more tnt.n half solved. This is an ideal oppo-tunity to discuss the hoarding of money; it is entirely apropos. But this practice that keeps money from the channels of trade is discussed in anotner place.

After all, perhaps if tie people were enlightened to see the conditons as th^y actually exist, assistance one way and another would come pouring in.

80

THE SOCIAL SIGNIFICANCE AS .I.-fc NATION .S.iOUL^ SKE IT

A United states citizen suffering at the hands of

another nation is cause enough for calling out

armed forces to rescue the unfortunate citizen.

Yet within the boundaries of the nation itself

there are thousands of citizens who are really suf- °s

fering hardships at the hand of the enemy of the

no me and the f ireside--unemployment.

In times of war we mobilize forces of arnea men and equipment with tne stirring of dru.is, and with the thought of patriotism in our hearts--we sacri- fice all for the honor of the country. The United States has never lost a war, sine las always come off victorious. She has avenged the wrong and fought for the right. tfe have never dodged the issue when the safety of the country was at stake.

The blowing up of the battlesnio Maine was the last straw that plunged tne nation into war with Spain, .v'e were even //illing to go to war to protect a peoole of another country, the Cubans, from the cru- elty cf Spain. It is but to relate a matter of history to state that we went to war with Mexico ^ because we would allow her to impair contracts of United States citizens, or aolest tne lives of citizens of the united States. Then, too, we wanted no re land.

Into tne #orld «Var the United States went to war again. ;Ve were determined that the principle of rig it should prevail, ulight could not na^e right. .«re fought; we triumphed.

This dissertation on the United States and the principles and reasons for which she has gone to war, are related to but shew the attitude of this nation in the past and at the present time. This nation in which we live has fought wars and pre- pared for the future wars to the extent that it <3^ has cost the Government ninety per cent of all her federal taxes to pay for her past, present, and future wars. It has cost tne United States seventy oer cent of all the .money she has collected from her citizens in taxes to pay for the wars. In spite of the gigantic cost tne united States has always pro tec ted i ts citizens from foreign enemies.

1 See note - appendix page 103.

2- --Schlesenger , A.M. .Political and Social history of

the United States. Page 104.

3 (Previously given r ef erence .Page 26) See page 99.

Does an eneny have to be foreign before the United States will protect its citizens? Spain and Mexico together never caused the suffering to the citizens of the United States that this condition of unem- ployment nas caused its citizens. fife went to war at one time to save the Union. It is time to go to war on unemployment to save tie nation. And tie eradication of this enemy will not even take half of tne tax mcnoy t.iat has been spent on other wars wiich we fougnt against--enemies that carried anotner nation's flag!

nationalization of tne Jroup Not Affected : Tne Employed- attitude

There is a great hue and cry tnat if people had only saved in tne era of prosperity that tney would noi be suffering now in this period of adversity. Yet anyone Knows that it is of no use to lock tne stable after tne horse nas been stolen. That is exactly what we expect tne persons caugnt in this unemployment situation to do, or something just as nonsensical, to look back and see just how foolish tney #ere not to save for this economic crisis. This rationalization does not invalidate the fact that tnere must be adequate relief for the present concii ticn.

This expectation to nave the poor unemployed see tie folly of tieir ways, may be of aid in oreoaring for the next emergency, but it will hardly help in the present one. Incidentally, it is in keeping with the application of psychology to teaci them to ore pare for tne next unemployment period by insuring in the present for tne future adversity. (That process ooes not necessarily mean that the people must adopt an Unemployment Insurance scheme of some sort.) It is a pertinent time to .each tie necessity of saving, however. (partially, at least) because they nave not laid by, aa tie ants do, for the time when the need is greater. The lesson can oe be3t learned when the cense iuence is being endured.

If «Ve /^ad oayedl

After all,. the logic of tne reasoning of the person with tne job ana the position is fallacious if ne

82

doris not take into consideration the fact that a great many of tne unemployed are unemployed through no conscious fault of their own. Sickness, des- truction or failure of the "business in which tney were employed, and tne ultimate results of which, may have wiped out even that substantial saving of ten per cent tnat even tne great economist Profes- sor Carver of Harvard has advocatea. In a Survey article it states, 'If everyone saved at least 10 per cent of his earnings a period cf unemployment would nave no terror; we would go on living in our usual manner until things picked up againl 1

^H£^Is_£-t_Fault?

Perhaps tne disciple cf tie ten-per-cent-saving- Dlan, for example, invested his savings for years in a ousiness by tie way of buying stoccs, and tiat ousiness las failed and has by tne legal rignt of tne United States Government gone through bank- ruptcy. Tne person's savings are wiped- out. The person becomes unemployed. In spite of tne per- son's tnriftiness, he nas nothing to fall back on in his state cf unemployment despite cf his good faith and his following the advice of the best econo- mist of tne world to save to orotect himself.

Is The Government Responsible For Its Tolerance

Attacking tne problem in the lignt of the fact tnat tne Government tolerated a legal system wherein or -The reby a person acting in good faitn may be deprived even of tne principal of his investment in the case of a business failure, it does seem tnat the Government is concerned. As to whether tie Government is liaole to any great extent is probably more a moral problem than a legal problem. Reformers of our economic system interested in this unemployment problem do hold the governnent responsi- ble in that the Government must do something to en- aole tne victins to reinstate themselves economi- cally.

tfhat tne Government shoul do to assist the person 7/io has acted in good faith but who has lost nis savings because of the vicissitudes of industry

83

under our economic system, is problematical.

0)

Some say doles nust be supplied by tie govern- ment to enable the unemployed to keep his body and soul together until he can find work. Otners contend tnat work should be supplied by the Gov- ern nent even though it be made-work.

The Scope of this thesis Necessarily Limited

In the beginning I defined unemployment and in substance said that a person was unemployed when he v/as willing and ready to work, who habitually depended upon work, ana coula fine no work that was reasonably in 'lis line. This definition is in essence in agreement with the accepted defini- tion of the term "unemployed."

#ith this definition in aind I have triec tc dis- cuss tie problem peeping in mind this group that because of tne condition of industry are out of work. I have in mind, of course, this unfortunate group of deserving persons. I have not acquiesced to hold tne conception in nine that tne tern "unemployed" meant tne bum, the loafer, or the riff- raff. Neither do I concede tne tern tc mean the group tnat nave been nabitually unemployed because of confinement in feeble-minded institutions, be- cause of great pnysical aefects, or, oecause tney nave net, or wish not to work:.

The man on tne street, nowever, will often cite tne ca3e of tne bum v/nom he has known for years who will not 7/crk. To tie man on the street, I fear, tne term "unemployed 11 means a person be- cause of some lack of intellect, or because of lack of ambition, is by virtue of his own choice or carelessness, unemployed.

Employment tne Concern of All

Selfish persons may feel tnat unemployment is notning to them, but they are sadly mistaken. Em- ployment is the beginning cf the :eroetual circle tnat ma'^es prosperity: Employment will give buying

1 Survey. Page 442 of the 1931 series. Some

People ^on't Save .Diamond , H.M.

84

power; ouying power will give co nsu. notion; con- sumption will bring fcrtn prL,aucticn; ana pro- duction in turn gives employment .

jows deeds of .Discontent - Undermine s Gi t i zensni g_

"Other disastrous effects follow in the waice of ^ unemployment. Unemployment fans the flame of radicalism. It fills the mouth of the agita:.or ana demagog with effective arguments. It sows t.ie seeds of discontent. It undermines citizen- ship. "

Losses^ Because ^of idleness - ^o National Producers

"After several mcnths, the manufacturer decides ^ to resune operations; but no finds tnat inis old, well-trained force is sarly depleted and demora- lized. One manufacturer told me that he laid off a force of expert machinists for a mont.i, anri that when he resumed work ne discovered he dad a crowd of professional checker players. It was several mo.ntns before his men were able to correct their habits of idleness and deliver the customary volume of production."

;

"He cannot nave these periods of une aploy nent and 7 maint.in peace and tranquility in t.nis country. If we are to maintain the present social oraer tnat squares with advancing civilization, ine managers of industry must nelp; if tney are to live ana oe protected tney must help us find a cure for unemployment.

"It is a reflection on our civilization that we nave 5,000,000 in this country seeking and willing to work ana yet have no work to do. It is inde- fensible, morally wrong, socially aisgraeef ul . "

1 Literary .Digest .70:9-10. September 10, 1921

2 Johnsen, Julia 2. Reference Shelf .stability

of Employment .Page 140

3. --Green, i/illiam.New York Times .0c tober 16, 1930 Page 16

85

Gove rn le nt Not Tq__Accept Responsibility;

In business practices a sun cf money is laid aside for trie depreciation of machinery. This in ac- counting terns is, "Reserve for depreciation." as the machine ceases to be useful and there appears tie ultimate need for a new one, the cost cf the new ana cost cf junking tae old (along with the depreciation) is charged against tne profits cf t ae ye ar .

HThen a man is "junked," however, there is no -mount charged (unless dismissal wage) against the profits of the business. Tne "fruits"- or earn- ings of tne man machine are "ploughed back" into tne business--Or paid as dividends to the capi- talist. The "junked machine" (the old worker) is paid for not by the business, but eventually by society at large.

Society pays for the depreciated, deteriorated human machine.

Then when tne human machines- -to carry illustration furtner--are idle, industry does not "carry" the proportionate cost of the fixed cnsge as it does /'hen a machine is idle.

In Effect, Deprived of Constitutional Rignts

The distress tnat is incident to unemployment is of social significance in the sense that insecurity and uncertainty tnat comes to tne unemployed, and tieir families, strikes at tne very foundation of society. Tne devastating fear tnat comes to the one wnose livelihood is in jeopardy arises from doubt of the security and tne rights that are guar- anteed Dy tne Constitution itself.

Tne Constitution guarantees three great rights and liberties to every American citizen: personal security; personal liberty; and tne rignt to hold property. After f or'-closures , ana bank failures, and the loss of tne position or the job, it is very hard to believe that there is any guarantee of pe sonal security and tne right to hold property in a country that avowedly does not tolerate impair- ment of contracts.

86

In effect, with the simultaneous failure of the ban is in which the person had nis savings, and the loss of his oosition, there is left little security for the personal wants, ana left but little right to the savings that were his property.

The Vision Is Clouded

In tne unemployment crisis, the irrational muttering of the suffering unemployed bear little weight. There is not the moral or physical strength to pretest to any great extent. The employed, on the other hand, must be more concerned with their own job to be troubled too much with the lot of the other person. The privileged few who are away from the fear of the marginal group, that have to be concerned with the three great physical ele- ments of life (food, clothing, and shelter) are so far removed from the problem they cannot visua- lize it all as a matter of life and death.

That is, the group that is the victim of the situa- tion is not especially fitted to make known its predicament; most are too proud for that. There is tne group that is trying to hold the job and keep employed; it can hardly plead another's case. Its own position is so uncertain. The last group is the group that does not nave to give any serious attention to earning a living. It is entirely out of touch with the problem; it has never oeen tneir or oo 1 eia .

fhat group then can champion the cause of the some eight million that are unemployed? Congressmen are too busy, no doubt, in their attempt to make secure their political position for the coming election. The congressmen may be sincere in their desire to help, but they are often too busy being politici ans .

Leaders Just iiise To tne occasion

Unemployment is one of the ugly thorns in the side of the nation. The nation has unemployment on its conscience, and as certainly as our forefathers felt

t

tie need of freeing the country from English rule, as the later patriots felt tne need of freeing the slaves, so this generation is confronted with alleviating unemployment. The conn it ion of unem- ployment gnaws at tne very heart of the nation.

Depression and tine Citizens/ Minds

But after all; "The important thing in this de- (>> pression is not tne temporary losses to business or the hardships to labor which it brings in its train; it is tne consequences b'f these things upon men's minds. It is one thing for men to lose their jobs; another for tnem to lose their faith."

Crucial ^Turning Point In Cur Civilization

In that light, this depression is aore than a passing circumstance in our history; it is a cru- cial turning point in industrial civilization, not only for tne United states, but for tne world. Because of tne circumstances in which it takes olace - Tar more universal in their scope and far different in their character from any in tne depres- sion of our past - it presents the first and per- haps the final challenge to the economic ana the political systems under which tne western world has lived for more than a century and a half. It is not too much to say the philosophy of indivi- dual and crganizec private initiative upon which our business sys tern is fcunoed and operated, under tie leadership of business men, and economists, and engineers who have replaced the kings and the states aen of the past, is definitely on trial today, mere decisively tnan it has every been before, ^no because of the dominant position of the United States in the world economic af- fairs ana tne leacersnip it nas assumed in wcrld progress, tnis philosophy is meeting its crucial test nere for all tne worlc.

It is up to tne United otates tc prove tnat we can solve tne problem to snow tnat outrigit com- munism JLa not tne solution.

1 Business </eek:.Page 40. October 29, 1930.

A J8 arm rig

"International expert opinion is becoming ( ^ stronger and stronger in its conviction that the world is on tne threshold of far-reaching changes in industrial and social organisation) changes # ind::ed, that may eventually represent a world revolution as important as any which 'las yet taken place."

"It nay as well be rememoered tnat society is W g ing to provide an opportunity for :nan to sus- tain himself, or it is going to nave to sustain nan. society is going tc provide opportunity for nan to pay his own way or is going tc pay it for nim."

Present breakdown i

"Now loafing may be justifiaole. It is then leisure., or time to think, or a contribution to tie joy of living. i3ut leafing enforced upon able-bodied men becomes unemployment. At this stage it is tine greatest of human v/astes. It threatens economic prosperity, individual nd national security; causes intense human suffering and if it connot be cured , constitutes a major breakdown of capitalistic society."

1 btatis 118:166-7 . August 1, 1 331 .Volume CAVII.

London 1931-oy statist Office.

2 United Jtates . oenate .Committee on Education

ana Labor .bearing on 6. Res. 219 Page 7.1329.

V

CONSTRUCTIVE VALUE Cj1 THIS T.C3I3

This thesis furnishes as a feature a classified list of many of the known causes of unemployment. In this respect it differs from any book or thesis tnat has come to my attention. Tnis material is brought up to date by the inclusion of pertinent discussion of some present day writers.

The evaluation of the causes logically demonstrates the fact that the present depression, with its subsequent unemployment, is not caused, directly or indirectly, by any one of the three great agen- cies. No one of the three great agencies - in- dustry, individual, or Government - is responsible for unemployment, alone. To the contrary, the thesis snows tnat tie Government, industry and the individual are jointly and severally responsi- ble for unemployment. I hope the listing of the causes with the discussion will show the propor- tionate responsibility of all three.

This localization of responsibility should be constructive in showing what the Government, in- dustry and the individual have dene, or failed to dc , to bring about unemployment.

Public opinion, I believe, needs enlightment gs to tne various causes of tne great social evil, - unemployment. Public opinion is a powerful force which v/ill compel Government, industry and the citizen, to do what is best for the common good. Toleration of an unemployment condition is largely a result of unenl ightme nt as to its causes.

I nope this thesis will be of value in that it will set the readers to work out a more elaborate classification of the responsibilities (the causes) of unemployment.

Remedies and relief are discussed in light of their social significance, I have not advocated any particular relief or cure exceot that social s.nd family morale must "be protected in giving either relief or in effecting a cure.

The section that I have devoted to a considera- tion of the Social Significance, I offer to moti- vate persons to consider the problem of unemploy- ment. I oelieve when people are convinced, and then persuadea to act, that the unemployment problem will be satisfactorily solved. With, that belief in mind, I humbly donate this thesis to our comnon cause.

91

INCLUSION

Y/hy should there be millions out of work? Is it because the country is poor? Are there insuf- ficient natural resources to keep industry going? Does it lack capital to finance industry and aachines to produce?

To all these questions the answer is, NoS

The United States is the wealthiest country in tne world! It nas an estimated national wealti of ^329,700,000,000. (oee Aopendix page 102)

Tnen why do we nave so much unemployment and distress?

Taere is no national ccorainated plan. Joint adequate Control of factors w.iich produce Unem- ployment Conditions^ is needed. I dogmatically express these views here. And I nave not reasoned fallaciously - "post hoc propter hoc" - when I say with cooperation of individual, industry and Government, these hectic scenes and pictures could become beautiful!

T IE END

92

BIBLIOGRAPHY

Berridge, Professor - 1923. Cycles of Unemployment .Page 4.

3uehler, L. C. -"Compulsory Unemoloyment Insurance." The deference 3nelf . Volume VII. Page 12. 1931.

Brapdeis , Louis u. , Justice - "The Right To

fork," Page 161. (Contained in following reference.)

Cal <ins , Clinch. - "Seme Polk:s ffon't fork*" Pages 156 and 157. 1930.

Clay , Henry - "Tae Post-War Jne.mployment Problem." Cnapter I. Page 47.1929.

Lquglas , Paul H. and Lirector, Aaron. - "The

Problem cf Unemployment." New York, 1931.

Caapters 6 ana 13. Pa;^es, 3, 17, 84, 125, 141,

158, 173, 120, 341 and 342. Pages 143 to 158, inclusive.

Pel oman, German - "American Labor Legislation Review." Dartmouth College. March 1926. Pages 47-56.

Poster , Ifilliam P. and Catchings, Afaddill. "The uoad To Plenty." 1928. Adaptations from Caapters 5 to 16. Pages 170 and 189.

Robson , J. ^. - "Tne .Economics of Unemployment." Pages 147, 148, 149, 150 and 161. 1923.

Hodgson, James 0. - "Planning for Economic Stability." Volume VII ^9. Reference Shelf. Pages 69, 73 and 74. 1929.

Roover 1 s Committee - "Recent Economic Trends." Page 601. 1929.

93

Jo.insen , Julia £• - "stability of Employment." The Reference Shelf. Volume VII #2. Pages 10, 49, 50 and 140. 1931.

Mi tcnelis , Professor - "Business Cycles and Unemployment." (Date unknown.) Pages 8, 9, 10.

National Industrial Conference Board, Inc. - "iVcrld Economic Conditions." 1930. Page 126.

Rowntree , B. S. -"Unemployment." 1911. Page 301.

o.ni th , ^dv/in ^. - "Reducing Seasonal Unemploy- ment." 1931. Page 28. ~ 232

outcl if f e , Professor - "Economic lectures course. "Economic Trends." 1931.

Tov/ne , E. T., Pn.D. - "oocial Problems." 1326. Page 157.

Y/arburg , Paul A, (Chairman of Manhattan Company) "Report to Directors. " January 8, 1931.

BIBLIOG-RAP-IY continued

Congressional Record - Appendix - January 20, 1932 Pages" "2454. Index -^January 18-29. Page 47. House Representatives Bill #7360.

Congre s si qnal Dige s t - Reconstruction Finance Corpora- tion. .February 1932. Page 55.

Pre sid^e nt ' s .Conf erence - on Unemployment 1921. Busi- ness Cycles and Unemployment Pp. 27-29.

Bullock:, Charles J. - Selected Reading in Economics. 1907. Pages 693-4-5.

Q'Neil ^and^Gqggin , Professors - Lectures

■vlarx, Karl - Capitalistic Circulation. Capital. Volume Il7 Page 397.

N i t he r 3 , _ jar 1 1 ey_ - Poverty and //aste. Pages 11, 20, 21.

Priedrich, A. E. - Economic Behavior. Pages 460, 462, 464. 1931.

94

BIJLIGGRAPHY continued

New York Times - Bureau of Industrial Technology March 22, 1926.

Chase, Stuart - The Nemesis of American Business. 1931. Page's 87, 88 94 -and 145.

Federal .Trade ^Commissi on - 1926. Pages 1-4

Aristotle - Politics. Book VII. Chapter V.

Rugff, Harold 0. - Problems of American Culture. 1931. Page 292.

.Vorld Tomorrow - May 1927.

Chase^ Stuart - The Tragedy of Waste. 1925. Pages 607~~143, 264-270.

Foster and Patchings - Profits. Pages 251, 307-332.

Schlesenger, A, A. - Political and Social History of trie United States. 1926. Page 104.

Green > William - The Purpose of trie Labor Movement. February 26, 1930. Page 11.

New York Advisory Committee qn Unemployment . T he

New York State Employment "service . Volume II. Page 62.

President's Conference on Unemployment. Seotember 26 to October 13, 1921. General reference. Specifically page 47.

^2^S££^JLua£d^n J^klv_. March 15, 1929. Page 210.

95

BULLETINS

Federal Aeserye bulletin for November, 1929. Pages 706-716.

je d e r al _R esgrve Bulletin for November, 1929.

Kline, George A. - "The Mentally 111." Page 6.

President's Emergency Committee for Unemploy- ment . "Emergency and Permanent Policies." "Spreading Hovk. in Industrial Employment." United States Print of fashing ton. 1931. Page 1 .

Se b r i_ng , Edgar D« - Taylor Society. Bulletin 9. august, 1924. Page 177.

Gtatist - 118: 166-7. August 1, 1931. Volume GaVII. London 1931 by Statist Office.

United States Senate -"Committee on Education and Labor." bearing on S. Res. 219. 1929. Page 7.

Survey (Magazine ) - Hall, Helen. January 1, 1931. Page 389-91.

Adult Education - Chase, Stuart. Page 5. Pamphlet, 1931.

96

BIBLIOGRAPHY continued

News paper s_ ana wlagazines

Amer 1 can - Coolidge, Calvin - "In Times LiKe These." February, 1932. Pages 11, 12, 13, 110.

Business - October 29, 1930. Page 40.

Collier ' s - November 7, 1931. Editorial. Colune 2.

The Economic Journal - December, 1931. Voluae aLI #164. ""pine Royal Economic Journal )- "Tne Changed Outlook In Regard to Population, 1831-1931." by Professor E. Cannon. Pages 519 and 529, 530, 531.

Harper ' s - Gary, E. H. - Article (1931) Pages 70-72.

riar per j s - Chase, Stuart. "Laid Off At Forty." August, 1929.

Herald , .Boston - Text of Hoover's Appeal:

February 3, 1932. January 7, 1931 (Col. flood's Relief Unemp.

Federal is t : - Douglas, Paul H. "Swathmore Study of Unemployment!! August, 1930.

Literary ^igest - June 27, 1931 .P. "flar . "

Literary Digest - September 10, 1921. (See Inaex) 70:9-10

Literary Digest - Correspondent of flail Street Journal. "inflation, Uncef lation--Not Inflation." Page 10.

Fortune - Chase, otuart - "Danger at tne A. 0. Smitn Corporation."

Nation's Business - Editorial, ^pril, 1931. Pa^e 14.

97

Nat i on 1 9 Bus ine 33 - Si mo rids, i-^lvin, T. - "Busi- ness is afraid of tie Truth." Volume 19, ^4, Pages 24, 26 and 124.

New jfork Times - Green, William, October 16, 1930. Page 16.

Saturday Evening Post - Atwood, Albert W. - "What About the 13ole?" November 7, 1931. Page 16.

■Saturday ^Evening Pest - Lefevre, Sc win - "Betting Against tde United States." November 7, 1931. Pages 11 and 122.

Jurvey - Stark, Louis - "Labor's Unemployment Program." November 15, 1930. Page 206.

Saturday Evening Post - Atwood, albert 7/. -

"What About the Lcle?" November 7, 1931. Page 16.

Saturday Evening Pest - Loriner, George Horace - Editorial, "Hysterical Economics." January 30, 1932. Page 20.

Saturday Evening Post - Lorimer, George Horace - ".t/nat everyone Snows?" Page 22, January 1932

purvey - Jianond, Herbert &. - "What Lo You Wtean."- Gase v/ork. July 15, 1930. Page 348. See Bulletin

§ °.c.VrX " diamond, Herbert - "Some People tfon't Save." (1931 series) Page 442.

Ti_^e - February 22, 1932. Pages 19 and 49.

Time - February 29, 1932. Pages 3-7.

World's Work - "Gcngress nieets Again." Decenber, 1931. Page 32.

Yale Review - dolman, Leo - "Unemployment." Winter, 1931. Ghapter center of book.

APPENDIX "Labor's Snare"

Census Bureau's Statistics

Again Show How Workers9 I Buying Power Is Limited

During the Ten Years From 1919 to 1929 Bosses of Manu- facturing Industries Added $7.70 to "Value" of Goods For Every Additional Dollar Put in Labor's Pay Envelope

Once more the official figures of the United States Census Bureau refute the charge that American workers are profiteer- ing, and that their "high wages" are responsible for the ex- cessive prices of various commodities. »

The Census Bureau has given out the results of its census I of all manufacturing industries for 1929 with comparative J tables for 1927 and 1919. Here are a few of tho Bureau's findings:

During the 10 years from 1919 to 1929 the number of workers engaged } In manufacturing in this country decreased by 449,775.

Wages paid in 1929 showed an Increase of $809,229,749 over 1919.

The increase in the total value "added by manufacture" was $6,286,- 762,484.

Put in another way, the employer was able to add $7.70 to the value of his goods for every dollar he gave to his employes in the form of increased wages. I

Another interesting fact is that the increase In the cost of raw mate- ' rials in 1929 amounted to only $124,928,718 above the figures for 1919.

Leaves Interpretation of Figures to Others

Thus the "value added by manufacture" Increased $5,352,604,017, more than the increases in raw materials and wages combined I

The Bureau does not attempt to "interpret" these figures. It leaves that to others.

From a labor point of view, the great outstanding fact is that In one year — 1929 — the men and women who worked In the manufacturing establishments of this country added to the value of the things they han- dled $6,286,762,484, and that their share was $809,229,749.

As LABOR has pointed out, this process has been going on for an in- definite period, but certainly for all the time covered by the work of the Census Bureau.

For example: In 1914, at the beginning of the World War, the average wage In American manufacturing establishments was $589, the "value added by manufacture" per worker was $1,407.

Workers Got $573 for Creating $1,349 Five years later, in 1919, owing largely to the World War, wages had gone up to $1,162, but "value added by manufacture" had increased to $2,756. In other words, the workers had received $573 more for creating $1,349 of additional value.

Eight yearB later, in 1927, the average wage was $1,299, and "value added by manufacture" had gon up to $3,303. The worker was receiving $137 more wages than in 1919, but his production had increased $547 in value. -

Finally, in 1929, the average wage was $1,318, and "value added by manufacture" was $3,636. Here we And that the workers' wages had in- creased $19 in two years and the value of his output had gone up $333.

In these figures is to be found the secret of the recurring depressions which dislocate American business and impoverish millions of workers. The difficulty is as plain as a pikestaff— the value of the things the worker creates is Increasing out of proportion to his buying power.

+ ,

99

APPaHDIX "v/ar"

"Everybody, of course, understands that France and Russia constitute the principal problem in the matter of reducing land forces. France is to-day credited with an Army of 607,533, Russia one of 562,000, and Italy one of 364,570. The British Empire's first line is placed at 344,450, and the total effective land force of the United States is given as 139,957. Germany's 1 first-line land force is held down bv the Versailles Treaty to 100,000.

I "In addition to the fears and threats arising from excessive | armament, there is, as President Hoover has emphasized, the 'burden upon the economic recuperation of the world.' The people may well ponder the better use that could be made of some of the billions now going into an armament "it is hoped may never be used."

— Fitzpatrick in the St. Louis "Post-Dispatch

"Uncle Sam calls f or a showdown. " Incorporated in an article cn Secretary of state, Stimson's report in giving "full particulars regarding the armaments of the United States, land, sea and air. The statement by St. Louis "Post Lispatch." "70 cents of every tax dollar goes for war."

2 New Republic 1929 as reported by Professor Sut-

cliffe's lecture. Public Control of Business. 19-31. See page 30.

Text of President Hoover's A ppeal

- /? fi'' /r pa ? ?d "

WASHINGTON, Feb. 3 (AD— The text of President Hoover's appeal to the country, in which he urged all citizens to stop hoarding money, follows:

The Reconstruction Finance Corporation under the leadership of Gen. Dawes, Chairman Meyer and its directors, is now initiating a definite campaign for reconstruction and recovery.

I am gratified that the very act of creating the corporation has already shown results in the dissipation of fear and the restoration of public confidence, as indicated by the fact that recently we have had on balance no increase in the hoarding of currency in the country.

There is now a patriotic opportunity for our citizens unitedly to join in this campaign against depression. Given such patriotic co-operation we can secure a definite upward movement and in- crease in employment.

That service is to secure the return of hoarded money back into the channels of industry. During the past year and with an accelerated rate during the last few months a total of over a billion three hundred millions of money has .been hoarded. That sum is still outstanding.

I am convinced that citizens hoarding currency or money do not realize its serious effect on our country. It diminishes the credit facilities by many billions. Every dollar hoarded means a destruc- tion of from $5 to $10 of credit. Credit is the blood-stream of our economic life.

Restriction or destruction of credit cripples the revival and expansion of agriculture, industry, commerce and employment. Every dollar returned from hoarding to circulation means putting men to work. It means help to agriculture and to business.

Every one hoarding currency injures not only his own prospects and those of his family, but is acting contrary to the common good. It is to their own interest that they should return it to circulation as well as a patriotic service to the country as a whole.

A prime need today is the extension and liberalization of credit facilities to farmers and small business men. The credit institutions are greatly crippled in furnishing these needed credits, unless the hoarded money is returned.

Therefore, I urge all those persons to put their dollars to work —either by conservative investment, or by deposit in sound institu- tions in order that it may thus return into the channels of economic life.

During the great war our people gave their undivided energies to the national purpose. Today we are engaged in a war against depression. If our people will give now the same service and the same confidence to our government and our institutions, the same unity and solidarity of courageous action which they gave during the great war, we can overcome this situation.

I therefore request our citizens -to enlist with us in the fight -

, . i* ' J

(Contintifd on Face Eieht)

101

APPENDIX I

"Poverty and 7/aste," pp. 19, 20, 21. Living the simple life and giving away or sharing one's surplus with otners even if practiced on a large scale could not threw workers permanently out of employment but would transfer them to otner more socialy necessary and useful industries. dee P. 28.1896 rfitners, hartley

II

••Tne automobile bill of the American people is more than $14,000,000,000 according to a report by the Bureau of Industrial Technology," or an average of #117 for eac.-i man, woman. and child. This includes cost of acrs, insurance, garaging, interest, taxes etc. See Page 31. New York Times, .larch 22, 1926.

Ill

Aristotle clearly advocates family limitation: "It is necessary to take care that the increase of the people siould not exceed a certain number in order to avoic. poverty and its concomitants, sedition and other evils." "Politics,1* Book VII, Chapter V. See page 41.

IV

Suppose that this worker comes up to the door of a mill belonging to the first of these ten billion dollar corporations. It has assets of two and a half billion dollars. Luring the last twenty- five years it has earned net profits of $2,345,000,000; distributed cash dividends of $1,340,000,000. It has earned on its preferred stock 180 per cent and on tie co anon stock, w.iica confessedly originally repre- sented notaing but "water," 131 per cent. It aas just paid a special share dividend to its absentee stock- holders of 40 per cent, holding still an undivided surplus of $553,000,000. Yet one-taird of all its employees, or some 85,000 workers, receive less than $1200, if they work the whole year. For long years this vast corporation was able to work a considerable proportion of its employees a twelve-hour day, and a seven-day week:, and has successfully prevented all the efforts of its 200,000 workers to organize to improve tneir conditions. And yet how else can they improve them? iielples3, dependent or out of wor<, what freedom, what e.jual rignts, wnat caance have they? See pp.52 and 76 The ,Vorl.: Tomorrow. Wlay 1927. Page 198.

102

APPENDIX I

The rich five per cent of the families in this country appropriate thirty per cent of the national income. "This immediately operates to slam the door on any hope of the wage earners of the country averaging enougn to go round in terms of the sub- sistence level budget. For millions of people in America tne annual income is, and has long been, in the words of Dr. ff. F. Ogburn, not a living but a dying wage." - see page 55

Chase, Stuart. "The Tragedy of tfaste." 1925. Pages 60, 143, 264-270.

II

health - average For Family; .

In 1930, the total national wealth of tne United States was #329,700,000,000, according to a report just made public by the Nation Industrial Conference Board. If it nad been equally divided among all the families of tne United States, each family would have had $10,961. The total national income for 1930 was 71 billion dollars. If this had seen equally distributed, each f ami ley would have had $2,366. (See page 91.)

103

ApPEj^IX I

ShOvVS TiIaT GOVERNMENT IS AwaRE 0? NEES_FGR_ .RELIEF

"Trie President's Committee has brougnt to a growing list of private employers the outstanding plans adopted by other employers to regularize employment and ameliorate the effects of unemployment .They are now incorporated in two pamphlets: An Outline of Industrial Policies and Practices in Time of Re- duced Operations and Employment, and A Survey of Unemployment Relief in Industry. Tnese pa.mpnlets have already been distributed to 70,000 persons and firms and they are available, without charge, on request to the Committee in the Jepartment cf Com- merce Building, Washington , D. C. They cover methods cf soreading employ nent, methods cf increasing work available, analysis of payroll and survey of personnel as basis for lay-off procedure, metnods cf assistance to persons laid off and permanent policies for stabi- lization of earnings and employment.

In addition to the above tie Committee called on ten leaders cf industry and of labor to make radio addresses telling of tne results obtained by tne ap- plication of employnent stabilization and employment maintenance in tneir plants ana in tne labor unions." Survey, February 15, 1931. Page 453. (See page 70)

• . II

INSTANCE: AdMu FORCig TO RESCUE JJNITEI) S TaTES CITIZEN EnOi ?0Rr,IGN COUNTRY

In .Vilson's Administration while J. Uaniels was Secre- tary of tne Uavy, Congressman William C. Adams on asked tnat a gun boat be sent to rescue his friends {dr. Knoppe, Mr. and Mrs* Putner) who were being attacked by Mexicans in a coastal mining town of Mexico . Sec- retary 1/aniels sent the gun boat and rescued the Put- ners and. JLv . Knoppe. [Ex. Pres. D. A. R .Chapter . ^uincy, i£assachuse tts--Ref erence Librarian ^uincy Li- brary-can corroborate ^nis«] (See page 80)

104

APPiiiulX I

gggECT OF gAGE REgUCTTQS PJ PjgjCgASJIS

"Over in Lanville, Virginia, not so very far from here, a large corporation employing many thousands of aen, decided to impose a reduction of wages uoon their employees. They advised them that a reduction of ten per cent would be imposed. That was about three or four weeks ago. That meant a reduction in tne ccnsuning and purchasing power of these thousands of workers amounting to more than ten per cent. Sup- pose all trie mills and factories in trie United States would impose a reduction of ten or twenty per cent upon the vcrkers! rlow could these textile mills exnect to sell to these workers, whose purchasing oower was destroyed, the manufactured products of their industry? The workers at Danville have re- sented this reduction in wages. They resent it f cr two reasons. First, they are firmly convinced that it is indefensible and unjustifiable. If there must be reductions in the cost of production, tnen manage- lent ought to develop a scientific technique that would result in a reduction in production costs without assailing the wages of the workers. If man- agement is not resourceful enough to find a way to recuce costs without reducing wages, taen management is not living up to the standard set or to its oppor- tunity or requirements."

"The rurpose of the Labor .Movement." William Green, printed address: February 26, 1930. (See page 39)

V

BOSTON UNIVERSITY

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