The Senate Looks at Unemployment, II.
Ryan, John A.
578 THE COMMONWEAL October 9, x9z9 THE SENATE LOOKS AT UNEMPLOYMENT II. IMPORTANT FACTS WHICH IT FAILED TO SEE T IS a curious irony that the Committee failed utterly to suggest any...
...Moreover, an allowance of $5oo is often an insufficient provision for a man who may find employment only after several months, and then perhaps at a considerably lower rate of pay...
...for the second, stabilization...
...To be sure, a great part of the purchasing power expended upon this commodity would have been exchanged for other goods if the automobile had not been invented...
...Indeed, some authorities think that these improvements will increase rather than decrease...
...However, this picture has two vital defects...
...Dry and broken lies the ground Fingering little sheaves of sound-Tiny futile wastes of straw For winter mice of snow to gnaw...
...Here are the terms in which he formulated it while the Committee was listening to Henry S. Dennison : Assuming that the present hours of labor were to continue and fu11-time employment given to everybody, don't you think that the country would be overstocked in a very short time...
...This is an indubitable fact...
...that the park bench is destined to grow longer...
...insofar as it means anything practical, it is untrue...
...There is nothing new about these problems," says the report on Recent Economic Changes...
...In spite of the new occupations that have arisen, mostly as an incident of the general process of invention and mechanization, in hotels, garages, moving picture houses, advertising, selling, bootlegging, road construction, and in factories turning out automobiles, radios, phonographs, electric supplies, silk goods, cigarettes, et cetera, unemployment has increased and the average worker has been more than ever out of work...
...the total purchasing power in the hands of the working classes need not increase except with the increasing employment...
...None of them professed to be able to offer a remedy, except Mr...
...More than onehalf of those who succeeded in finding new jobs had been idle for more than three months, while of those still unemployed, about one-half had been out of work for the same length of time...
...Not the problem itself of finding employment for the disemployed, but the magnitude of it is the thing that is new...
...But there are no definite grounds upon which to base any such expectation...
...chronic" is much more suggestive and much more likely to convey the thought that "something ought to be done about it...
...Some 8o0 displaced workers were studied in three industrial centres...
...Of course, these hypothetical commodities would fall under the head of luxuries...
...e~ummer Cabin Through a crevice in the wall Summer squeezes into fall The brittle wind anoints the trees With strong embalming treacheries...
...The younger, the more accurate and capable, workers are taught and stimulated by incentive wage payment plans to produce and to earn more, while the older, the slower, and the less efficient workers are weeded out to swell the ranks of the unemployed...
...It amounted simply to an act of faith that since the men displaced by machines in years gone by had always found other employment eventually, the same thing will presumably happen in the present situaevery day with the present amount of machinery, we would have xo,ooo,ooo out of work instead of 4,ooo,ooo, because with the machine process individuals have become much more efficient than they ever were before...
...Industry is therefore concentrating its work in the hands of a smaller number of employees...
...As shown by the figures quoted above, the process of substitution and displacement has been considerably more rapid in recent years than in any former period...
...Hence the necessity of what the report calls "an accelerated rate of readjustment...
...but neither of these touches the third type...
...tion...
...This statement is not to be construed as a condemnation of all that sort of advertising, but merely to emphasize the fact that goods cannot be sold as fast as they can be produced...
...Now, then, how are you going to remedy that--by continuing to produce ? Although Mr...
...Professor Commons cited a striking example of displacement of men by machines in the clothing trade...
...Without any change in the present distribution of consuming power, all the workers might find employment supplying actual and potential wants if only the latter and the means of supplying them could be developed fast enough...
...Among the other witnesses at the hearings, only President Green of the American Federation of Labor, Mr...
...When two persons have a surplus of goods on their hands, only one may desire the products of the other, or neither may desire what the other has to offer...
...How great is the number of those unemployed at present ? No one knows...
...The proper end of advertising is to supply information, but probably not more than Io percent of the "information" currently thrust upon the public is genuine...
...The outstanding remedy for the first type is, of course, the "prosperity reserve...
...By far the greater part represents an attempt to persuade the consumers that Brown's product is better than that of Jones...
...Leiserson gives the reason why employers permit high wages to coexist with large numbers of men out of work...
...The fundamental cause of the evil is, of course, our old friend "overproduction," or, more precisely speak580 THE COMMONWEAL October 9, I929 ing, a general and constant capacity for overproduction...
...Scales of wages need not rise...
...Another large part of advertising is intended to arouse in the minds of the public a consciousness of needs that they do not now feel...
...But the effect upon employment differs only in degree between the one case and the other...
...At the present time and during the recent past, the excess has taken the form of productive capacity rather than stocks of goods...
...Recent Economic Changes, which is the title of the report of the Committee appointed and headed by Mr...
...In the following paper he considers those aspects of the problem which appear especially baffling...
...Sam A. Lewisohn and Professor John R. Commoils had anything to say about technological unemployment...
...To be sure, traditional and theoretical economics assures us that general overproduction is impossible...
...The association of prosperity with great unemployment and the responsibility of the former for the latter, are no longer doubted by competent students...
...Only one member of the Committee, Senator Tyson of Tennessee, showed that he had envisaged the problem...
...As a general proposition, this is true...
...Likewise menacing is the spectre of eventual overproduction...
...But it is not necessarily an actual demand for any kind of goods now existing...
...A supply of any kind of goods, we are told, is a demand for other goods...
...Recent Economic Changes suggests an eventual remedy...
...About a year and a half ago, the New York Journal of Commerce declared: We are so accustomed to associate unemployment with prostrate industry, closed factories and universal profound depression that it is hard to revise our ideas and grasp the fact that we must also grapple with an unemployment problem that is the direct outcome of prosperity...
...The article raises serious social questions...
...Similar statements can truthfully be made concerning the producers of surplus coal and shoes and a great many other products that are turned out faster than they can be sold...
...One firm was able to reduce its force of cutters from 600 to 25o...
...After a rapid survey of the situation, Stuart Chase, in his recent book, Men and Machines, puts down this summary judgment: I am seriously afraid that accelerating unemployment is here...
...Owing to this divorce between the desire and the power to consume, it is quite possible that surpluses may exist simultaneously in most of the great industries...
...If other inventions as appealing as the automobile should appear next year, undoubtedly they would attract sufficient actual purchasing power to put all idle men and women to work...
...Writing at the beginning of the present year, Dr...
...It is manifested not only by idle men and idle productive instruments but in the greatly increased costs of selling goods, in the prevalence of "high-power salesmanship" and in the enormous outlay for advertising...
...All of those having an excess do, indeed, possess the power to obtain some of the other surplus products, but not all desire these surpluses, while those persons who feel a desire for the excessive stocks are without the purchasing power...
...Perhaps the last-mentioned phenomenon is the most conspicuous indication...
...More fundamental is the objection that this would be an undesirable kind of industrial society...
...Of the 350 thus rendered superfluous, 200 quit voluntarily and the remaining 15o received from the unemployment insurance fund of the industry $5oo each as a sort of "separation allowance...
...In the latter case we have seasonal or intermittent unemployment...
...Every supply of goods, is, of course a potential demand...
...At a later hearing Senator Tyson returned to this subject, saying: If we are to keep taking people into our industry and keep them employed we shall have to employ them for shorter periods each day...
...The outlook, he says, "would not be so discouraging" if we could assume that technological advances had been halted in industry...
...Hoover to study that subject, gives considerable attention to this new kind of unemployment...
...CHaaLES A. WaC~ER...
...all the workers would be employed in making goods to supply the new wants which had been developed in the possessors of surplus consuming power, that is, the rich and the well-to-do...
...The Committee observes correctly that "the causes or the types of unemployment might be divided into three classes: By JOHN A. RYAN Last week Father Ryan analyzed the findings of the $enate committee appointed to investigate the causes of unemployment...
...Obviously both these suggestions are futile...
...The textile business is very badly depressed...
...The latter may, indeed, want more clothing, but the former does not want more food...
...One might indeed raise the question whether such a condition can properly be called "prosperity...
...Most of the real information that purchasers need could be obtained from a classified telephone directory, from the classified notices in the newspapers and from trade journals...
...Up to the present the rate has not been adequately "accelerated...
...To it the Committee devotes only two or three short paragraphs and in these it exhibits no adequate comprehension of the phenomenon : Technological unemployment covers that vast field where, through one device or another and chiefly through a machine supplanting a human, skilled workers have found that their trade no longer exists and that thdr skill is no longer needed...
...The other and more disagreeable side of the picture is widespread idleness of both machines and men...
...nevertheless, a great part of the money would not have been spent at all, since its possessors did not desire any other kind of actually known goods...
...In view of the magnitude and persistence of this new kind of unemployment, it might well be called "chronic...
...Possibly, he would like to exchange his surplus for a high-priced automobile, but the producer of the automobile does not want more textile goods...
...William Leiserson forecast the promise of the American industry to its wage earners throughout I929 in this sentence: Those who are employed shall earn more than ever before...
...It is most pronounced in agriculture, coal mining, textiles, the boot and shoe industries and is becoming rather pronounced in the building trades...
...They are probably a small proportion of the total number of workers who are thrown out of employment by mechanical and technical progress...
...The woolen business is very badly depressed...
...Twenty-five years ago the automobile was generally unknown...
...The substitution of machines for men and the displacement of workers by improved productive processes has been going on steadily since the beginning of the industrial revolution...
...The coal business is very badly depressed...
...Whether the approximately correct number is 3,ooo,ooo or z,ooo,ooo, which was the estimate of a well-informed business man, it is sufficiently great to form a very urgent problem...
...Since then, hundreds of thousands of workers have found the means of a livelihood in this industry...
...The advertisers may be able to stimulate new wants that will take care of some of the displaced men, but who is to stimulate the purchasing power that will absorb the commodities new and old ? The outlook would not be so discouraging if we could be certain that the invention of new machines and improved methods would soon come to an end or suffer a considerable slowing down...
...the per capita increase in factories was 25 percent between 192o and 1927...
...However, there is no law against guessing...
...Through a crack I read the stir Like a thin barometer: The sediment of summer lies Sunken under liquid skies...
...but fewer shall be called to work and more shall be unemployed...
...An investigation recently made by the Institute of Economics of the Brookings Institution revealed the fact that the newer industries are not absorbing the jobless as fast as is usually believed...
...Insofar as that formula is true, it has no practical meaning...
...For example, the owner of a textile mill does not care to exchange his surplus product for the surplus produced by a farmer...
...I believe if we had seventy hours of work each week as we had several generations ago and people worked cyclical, seasonal and technological...
...The pig-iron industry is now depressed very badly...
...An affirmative answer would seem to be justified if the term be defined as a condition of industry in which the total production is above the average of any preceding period, and in which the incomes of a very large proportion of the wage earners are likewise above preceding averages...
...Dennison is one of the most enlightened, humane and progressive employers in the United States, his answer to these questions was wholly inadequate...
...The people of our age, even the wealthy, would not be benefited by new luxuries, and the masses ought not to be required to provide superfluous goods for the few, while they themselves are unable to obtain a reasonable amount of necessaries and comforts...
...They have discovered that it is cheaper to pay higher wages to a smaller number of efficient workers than lower wages to a larger number of less efficient...
...Hence we have a vast overcapacity to produce and a constant danger that this capacity will be converted into action...
...Wants are almost insatiable...
...Lewisohn, who mentioned stabilization and public labor exchanges...
...It states: Unemployment can arise as a result of industrial efficiency as well as inefficiency...
...This situation may be general throughout the greater part of industry...
...No one is in possession of facts which would justify any estimate that would rise above the dignity of a guess...
...Following are some of the striking indications of the vast increase which has taken place in productive efficiency since the year I919: the average per capita production in all industries increased 39 percent between October 9, x929 THE COMMONWEAL 579 1919 and 1925...
...This word has not, indeed, the scientific implications of "technological," but it has a much greater practical value...
...Technological" tends to "take the curse off" the evil condition which it describes...
...Therefore, I would put the number at about 3,ooo,ooo...
...This is a serious aspect of unemployment...
...It is probable that no system of voluntary unemployment insurance could take care of all the displaced workers at such a cost...
...and regardless of one's attitude toward them, there are economists in the country who will not allow their solution to be neglected.--The Editors...
...there are new wants which will make way endlessly for newer wants, as fast as they are satisfied...
...It constitutes a power to call for some other kind of goods...
...According to the Industrial Review of the Year (July, I928--July, 1929) issued by the Federal Council of Churches, "there were 2,3oo,ooo fewer persons employed in farming, manufacturing, railroading and mining in 1928 than in 192o...
...in the former case, what has come to be known as "technological unemployment" resulting from the introduction of new machinery and processes...
...Everybody knows that there is overproduction...
...There is much evidence to show that this prediction has been in steady process of fulfiUment during the present year and there are not a few indications that it will continue to be fulfilled for a considerable period after January I, 193o...
...but the number of workers in the factories was 1,25o,ooo less in 1928 than in 1923, while the number employed on railroads decreased 15o,ooo...
...As a matter of fact, the skilled workers who are displaced by new and improved machinery and other forms of efficiency merely constitute a spectacular form of the evil...
...IMPORTANT FACTS WHICH IT FAILED TO SEE T IS a curious irony that the Committee failed utterly to suggest any specific method for dealing with the precise kind of unemployment which provoked its appointment...
...578 THE COMMONWEAL October 9, x9z9 THE SENATE LOOKS AT UNEMPLOYMENT II...
...In the first place, it is quite unlikely that the requisite new commodities will be invented...
Vol. 10 • October 1929 • No. 23
