TOPICS OF THE DAY.
THE UNEMPLOYMENT PUZZLE.
T" plans of the Government for dealing with unemployment are at present very vague. It is impossible to praise or condemn with any confidence till we know what they are. Although we must confess that rumour as to the intentions of the Government excites considerable misgivings, one thing on the good side must be said. The Prime Minister, in his interview with the Labour Mayors at Gairloch, made it clear that he recognized that there is only one real cure for unemployment, and that is a revival of trade. So far, So good. He implied that his attention. will be given not to instituting makeshifts but to reaching the root of the matter. That, at all events, is a good principle to begin with, though, of course, it leaves plenty of room for misapplications of the principle. We are told that eyerybody who counts is to be brought into conference with a view to a revival of trade. Traders, manufacturers, bankers, trade unions will all be asked for their opinions and their help. When we even begin to reflect upon the large amount of money which would be required for any schemes undertaken by the State, and to ask where that money is to come from, the prospect becomes most dispiriting. As, however, in a situation like the present one there is great danger in a facile optimism, it is much better, while plans are still in the making, to face the facts squarely and to remember that past experience of such experiments as are now being freely proposed has a great deal to teach us. A desperate problem very often causes desperately foolish things to be done. So that even though cautionary words are depressing, they are none the less necessary. The central facts are that we have a National Debt of E8,000,000,000 ; that the whole country is taxed to the breaking-point, so that there is little or no money for the financing of industry ; and that the finances of municipalities are in as bad a way as the national finances. Ratepayers are trying to shift the wicked burdens placed Upon them by Councils consisting chiefly of Labour members and by Boards of Guardians inspired by those Councils. One can only hope that now that it is recognized that backs may be broken by the so-called minor taxation levied by our municipal rulers, more interest will be taken in local elections. The ratepayers themselves have the making of the beds on which they must lie. Yet we suppose it is not an exaggeration to say that on the average, all over the country, less than 10 per cent. trouble to vote at the elections of Guardians. As for the Income Tax in these times when innumerable steady and once pros- perous companies are failing to pay dividends, it has become in effect a Capital Levy. No wonder that we have heard nothing for months of the proposed Capital Levy. We have got it already under an old name, so it is not worth talking about. In this gloomy state of affairs let us first dismiss what cannot possibly be done with, a view to iecreasing trade- and decreasing unemployment: The Parliamentary Wm., mittee of the Trade Union Congress has issued a scheme. It proposes in effect that the Government should become a trading corporation. The Government are invited to raise, money, to buy goods; and to sell them in foreign markets. It can hardly be believed, that this suggestion is made seriously ; yet it seems to be. If experience has proved one thing much more clearly than anything else it is that Governments are disastrously bad traders. They have not the aptitude because they have not the knowledge of private traders. They are also without the strong personal incentive which drives the individual and directs his instincts. If private traders cannot capture foreign markets, it is certain that the Government would be unable to do so. The result would simply be that the large sums of money that would have to be raised would steadily disappear ; there would be a dead loss, and in the end every one would be worse off than before. Wages would in effect have been lowered all round as the cost of living would have been raised. It is of course conceivable that such a schema as this would create an appearance of prosperity at home for a few months, just as there was an appearance of prosperity throughout the war when the Government were directing all out under- takings. But a small boom of that kind would be thoroughly hollow. While manufacturers were producing freely' at home, and the money paid out in wages was being freely spent, the foreign markets would be more and more closed against us because our production, instead of becoming cheaper, would be becoming dearer. Our last state would be worse than our first. The painful benefits of creeping back to sound conditions through the adversity we are suffering now would all be lost, and we should have to begin again with even less hope of success.
It is scarcely credible that Labour should produce such a plan after the war had discredited every kind of State intervention in industry. The leaders of Labour surely must see, even thOugh many of them are unwilling to admit it, that they must now work with the tools that are in their hands. The demand to bring about the nationalization of industry by means of strikes and Direct Action failed badly. The coffers of the trade unions are depleted. If the Labour leaders are going to behave like men of good sense, and not like madmen, they must acknowledge that there is only one available method, and that is the method of private industrial capitalism which built up our national wealth in the past and still holds the field. If the Government were to raise more money in order to trade, that amount of money—a vast sum—would be withdrawn from industry as it is now con- ducted. Yet the one need of Our privately conducted industries is more capital. Industry is groaning and crying out for capital. We trust, therefore, that whatever the Government may do they will give a very plain answer to the reactionary proposals of Labour. Clumsily and stupidly though the Labour leaders have managed their affairs of late, they seem to have less aptitude for finance than for any other department of politics. Among all the spendthrifts of the country they are the worst. The truism seems utterly to have escaped them that when a country is nearly bankrupt, thrift and not expendi- ture is the obvious way to safety. Another suggestion which has been made, and which need only be mentioned to be dismissed, is that there should be a further inflation of the currency. The inflationists argue that if the printing presses got to work again prices would rise—as they undoubtedly would— and that manufacturers would thus be enabled to sell their existing stocks, which at present remain upon their hands because the public cannot afford to buy them and the manufacturers cannot afford to sell them at lower prices. So long as there is an abnormal inflation everybody is hit—the producer, the consumer, every woman who is responsible for the management of a• weekly household budget. The proposal is that the disease of high prices should be treated by intensifying it. It is quite true that it is desirable to bring about deflation very gradual le for the same reason that a sudden drop from a very high temperature is in itself a dangerous thing to a sick man. But deliberately to re-create inflation is a proposal which must be placed high in the catalogue of inanity.
."As regards relief works: for. the. unemployed, it should be remembered that in 'the past such works have always - proved to be uneconomic. The thing built or made-never corresponded in value, even. in a remote degree, to the expenditure. Many students- of public employment -have very reluctantly come to the conclusion that so far as the spending of money goes, it would be cheaper to give doles to men for doing nothing than to pretend that relief works are satisfactory. On the other hand, when unemployment has reached the danger point, and there are obviously many kinds of work which would be useful to the nation waiting to be done, it must be admitted that there is a case for proceeding with the work. Much building is still required, and the cost of building has fallen sharply since the country was relieved of the services of Dr. Addison. Unfortunately,. the chief enemies of the expan- sion of building. work—indeed, we might say the only enemies—have been the building trade unions them- selves. If the _unions had -consented- to accept and train new members; as the Government desired long ago, :the - effect.upon unemployment .would have been very appreci- able. As. it is, it would be waste of money_to Win on to building men who are quite unskilled, even if the unions consented. The widening of roads and the removal of blind corners are forms of labour that do not .require much skill. During the war the Volunteers, who had never _seriously used spades and mattocks in their- lives, built _very good trenches quite quickly. But these men were amateurs who put their hearts into the job because they were working patriotically. Nothing- could be more depressing than to watch some of the men who have already been put on to relief work. The writer has seen such men standing abOut talking and. smoking and doing nothing in particular through most of their not very long working hours. The attitude of these men seems to be that they are being- paid as a personal right, and that so long as they. fill in the time somehow, really not doing much more than putting in an appearance, the amount of work done does not matter. It may or may not have occurred to them that their wages are being paid out of the pockets of other men, including men in their own class . who do work well and honestly. The deliberate " slacking " is a form of robbery. It is a parasitic, impoverishing, and - demoralizing affair at the expense of the public. Surely it is not too much to hope that in all public relief work a certain standard of work should be required. The man who is offered work should be expected to earn his wages and should be dismissed if he does not try to earn them.
Among relief works the chief thing is to avoid any sort of fanciful or viewy scheme. One of Mr. Lloyd George's interviewers at Gairloch proposed that the congestion of London should be ended forthwith by creating industrial garden cities round about London. This is another example of the spendthrift lunacy of Labour. No doubt in many Northern centres, in Lan- cashire in particular, congestion is much less marked than in London because there are congeries of large towns of almost equal status. It is not there a case of the Capital first and the rest nowhere. But that distribution of the population 'has come about insensibly and almost accidentally by the natural growth round particular industries. It was not " planned." To construct such constellations round about London would require, to begin with, the uprooting of much of the business commerce and industry of London. The scheme, if it were possible —which, fortunately, it is not—would take a year or more to work out, and the cost of it would do nothing but delay the revival of trade. Of the many silly proposals which have been made, this would probably receive the highest marks in any competition as the silliest.
The bankers will know much better than we do what they ought to say to the suggestion that they should make advances to industry more freely. We would only point out certain facts which must be borne in mind, because they are material to any decision. One is as our City correspondent, Mr. Kiddy, pointed _ out recently, that the banks _ cannot be accused of having withheld accommodation in the two years which followed the Armistice. In 1919 they increased their commercial advances by about 1400,000,000, and in 19`.. O. by about LOO 000,000.. Moreover, in the first half -of 1924 nearly V200,000,000 was raised by new issues of capital to be directly employed in industry. Since the beginning of this year the loans of the clearing banks have declined only by about 5 per cent. of the amount at which they stood at the beginning of the year. Then as regards credits for trade, it will be remembered that two schemes are already in existence. The public is quite capable of grasping hopefully at some new pro- posal, forgetting that there are already schemes and that they have rather languished for want of 'support in foreign countries. We have more than once described the Ter Meulen international scheme, which is sanctioned by the League of Nations. It seeks to reanimate trade by issuing bonds, the security for the bonds being material assets in Countries which are financially weak. An importer, say, in Austria who held bonds would be able to pay the British manufacturer for his goods by means of 'these bonds. Sir Drummond Ii'raser is now in America dis- cussing the machinery, and-it is hoped that several foreign governments will ask- before long to have' it installed.. Next there is the British- Scheme of credits for British exporters. This scheme is likanaged by- the Overseas Trade Department and applies -toselected parts of the British Empire as well as to many selected foreign countries. The Government -guarantee may 'go as high as 85 per -cent. of the value of the goods. The Morning Post says that under this scheme £2,000,000 has already been guaranteed. This is a small sum in sunk a Connexion, and we fear it-must mean that traders find that the scheme does not help them very much. To sum up these general principles. A revival of trade is the only cure for unemployment. Wasteful expenditure of money, which impedes rather than helps trade, is in the long run sure to prolong rather than to reduce unem- ployment. The advisers of Labour continually talk as though the State had the purse of Fortunatus, and had only to say the word and produce the money in order to end unemployment there and then. " Would that it were so ! " must be the heartfelt thought of every humane person. In times such as these truisms are always forgotten, and we feel it necessary, therefore, to insist upon them without apology. Anybody who watches the struggles of a small shopkeeper on the brink of failure can see how he tries to save himself. He cuts down every unnecessary' expense, he sells his goods at a pro- gressively lower price in order to attract custom. He does this not because he likes it but because solvency is to him a matter of absolutely vital concern ; he must turn the corner ; and he knows that there is no other way. He willingly accepts a lean time in order to lay the basis of a better time later. What is true of the trade of an individual is just as true of the trade of a nation. If the trade unions would preach the doctrine that we can recover our foreign trade only by decreasing the cost of production, and that this means working much harder and accepting lower wages temporarily, they could make a certainty of victory. But will they V
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