24 OCTOBER 1908, Page 4



" IT might have been a great deal worse." That, we fear, is the best which can be said about the Government's proposals for dealing with the unemployed. When we think of the things which they might have done, and which a Governmeht that passed the Old-Age Pensions Act must be held to be quite capable of doing, we have cause to be thankful. For example, the Government might have adopted the demands of the Right to Work Committee, and have takeu the first step towards complete Socialism. Instead, they have merely adopted a certain number of palliatives, which are to some extent guarded by provisions of a salutary character,— provisions which, if rumour is true, are due to the stubbornness, pluck, and public spirit of the President of the Local Government Board. According to the gossip of the lobbies, which we give for what it is worth, but which at any rate is consistent with the known views and character of Mr. Burns, it is he who has saved us from a really dangerous handling of the unemployed problem, and has acted as a drag upon colleagues inspired, some by political opportunism and some by sentimentality, but all ready, nay, eager, to meet the demands of the Socialists in what is termed "a generous spirit."

The essential part of the Government scheme was described with great ingenuity and plausibility by Mr. Asquith. If, however, we look at it closely, its para- doxical, and therefore dangerous, tendency soon becomes apparent. The mainspring of the Government policy is to encourage local bodies to raise loans for the immediate putting in hand of works of various kinds which are needed for the improvement of their areas. These loans are quite rightly not sanctioned if the work under- taken is of an artificial kind,—that is, if it is work made in order to give employment, and not work required for such bond-fide purposes as sewage, drainage, street improvements, the erection of baths, the laying out of recreation-grounds, provision of electric light, and so forth. The cost of such work must, of course, fall upon the localities which are to be benefited. That being so, it is necessary in the interests of sound finance that the local authorities should carry it out in the cheapest and best way. But if work of this kind is to be done economi- cally, experience shows that it cannot be done by the unemployed. It must be done by efficient labourers such as are regularly employed by contractors. Therefore prima facie the carrying out of such works leaves the unem- ployed problem untouched. To get over this difficulty the Government propose that the Central Unemployed Fund shall, as it were, put a carrot before the nose of the local authorities which will induce them to use unemployed labour rather than have recourse to ordinary contract labour. The Government are to tell the localities that they will contribute—we quote Mr. Asquith's own words —" a sum in respect of each set of works which, roughly, represents the difference between the value of contract labour and the value of the unemployed labour which the works are specially designed to meet. It is only in that way, by making good that difference out of the Central Fund, that you can provide a sufficient inducement in some cases, I will not say in all, for the work to be undertaken." In other words, the Government say to the local authorities :—‘ We know that if you use the unemployed the work will cost you more ; but we want the unemployed used. Therefore we will make up to you any loss which you may sustain by using inefficient rather than efficient labour. We will pay you, in effect, a bounty on the use of unemployed, and so ensure that the rates shall not be burdened by your choosing a bad rather than a good type of labour.'

Even put in this crude way this may sound to some people a reasonable proposition in a time of great stress. Look a little nearer, however, and see what it means. Its true meaning is well brought out by a letter from a correspondent which we publish in to-day's issue. He tells us that he has been asked by a philanthropic clergyman to purchase the kindling-wood for his fires from a particular yard, because the wood there is cut up by the unemployed. Our correspondent reflected, however, that if he bought wood cut up by the unemployed, he could not, since the number of fires lighted in a man's house is more or less a fixed quantity, buy the firewood which he was accustomed to buy from a regular vendor of that com- modity. But in practice this meant that though he might help to bring some unemployed into employ- ment by changing his wood-shop, he would necessarily assist in throwing out of employment those men who had split his firewood in the past. In fact, what he was being asked to do was to throw A, B, and C out of employment in order to bring D, E, and F into work. Analysed in detail, the only reason for doing this was as follows. D, E, and F were ticketed with the name of "unemployed," and so were alleged to have a special claim upon his sympathies, while A, B, and C because they were not so ticketed were apparently not worthy of consideration. A better example of Bastiat's analysis of the "things seen" and the "things unseen" could not be found. In order to mend. one damaged wing of the bird we are to tear the feathers out of the undamaged one.

It has apparently not vet struck Mr. Asquith that the Government are asking the local authorities to do exactly what our correspondent was asked to do by those who appealed to him to buy wood split by the unemployed instead of getting it from the place with which he was accus- tomed to deal. The Government say in effect : "Don't go to the contractors to whom you would naturally go in the ordinary way of business -for your sewage-works, or for your baths, or for laving out your recreation-grounds. Don't even be persuaded to go to them on the ground that their men will do your work better and cheaper. Deal instead with the unemployed, and let the work be kept exclusively for them, and we will make good to you any loss which may fall upon the rates by your adopiing this plan." The result must of course be that the con- tractors who would in ordinary circumstances have got the work—this is no assumption, because ex hypothesi all the work undertaken is to be banci-fide work, i.e., work which would in any case have been put in band by the public bodies—will not get it. But such persons conduct their business to a very considerable extent on the expectation of being called upon from time to time to do necessary local public work. That being so, they will, in view of Mr. Asquith's scheme, be obliged to dismiss wholesale the men who have hitherto been in their employment, and who, but for the new preference shown to the unemployed, would have got the work. In fact, as Mr. Harold Cox has epigrammatically put it, the Government are offering a premium on inefficiency, and, we may add, on unemploy- ment. The royal road to labour in the future is to be ineffi- ciency and previous unemployment. A bounty is to be given to public employers to induce them to favour those who, as we have said above, have the sentimental ticket, "Pity the Unemployed," pinned on their backs, and to disregard those who have not won the right to call themselves by the new "pet name."

Here is one capital objection to the chief item in the Government's plan. If it stood alone, it would be objection enough. But it does not stand alone. We must not forget that the Government, by whipping up the municipalities to start all their works at once, and by encouraging men to think it right and natural that work done in periods of distress should be of an inefficient and dawdling kind, are preparing for themselves and the local authorities an immense difficulty in the future. The municipal works which are now being hurried on cannot last for ever. Local authorities cannot raise indefinite loans, nor can the Government give indefinite bounties for the use of inefficient rather than efficient labour. Ultimately the works will come to an end, even though they are conducted on the leisurely lines which go with the use of " unemployed " labour all the world over. This time next year a great deal of work will be finished, and the municipalities will be clamouring to get rid of the Pretorian bands of labour which they are now about to form. Then will come a tug-of-war between the awakened common-sense of the public and• the men who have got a " soft " job and want to stick to it. The local economists will be found declaring that the works are finished and that the men must be discharged, and the men will not like it. We shall, in effect, see on a small and. diffused scale what happened on a great and concentrated scale in Paris in 1848. To meet what was described, and, no doubt, in a sense rightly described, as "exceptional and temporary distress," the Provisional Government started a series of public works in Paris, and very soon had an army of half-a-million or so of men at work, or at any rate on pay. Ultimately, however, the Government, inspired by the grumblings of the taxpayers and ratepayers, became alarmed at the monster they had created, and to avoid national bankruptcy insisted that the public works must be closed. Not unnaturally the men on the works resisted being deprived of what they had been taught to regard as their natural right, and with the demand "to live working or die fighting" Paris entered upon a fortnight of street-fighting in which some twelve thousand men perished. We are not alarmists, and do not, of course, suggest that this is exactly what will happen here. But of this we are sure : even though in a less aggravated form, we shall find a year hence, or perhaps in less time, an immense difficulty in discharging men from the distress works. The private employer, if he has a soft heart, does not always find it easy to get rid of men in his employment after he no longer needs their services. A public body, which is supposed to have a bottomless purse and to be compounded of sweetness and sentiment, will find it doubly difficult.

Before we leave the subject we must meet the criticism that is sure to be made on our article in the form of the remark :—" It is all very well to be critical, but what would you do ? Governments may have been stupid in the past, but it is no good to cry over spilt milk. There is unemployment staring you in the face, and something has got to be done." Our first reply would be : "Deal with the unemployed through the machinery of the Poor Law." In the Poor Law we have provided a most elaborate piece of machinery for prevent- ing men dying of starvation, and for meeting the difficulty of unemployment. And our Poor Law, though by no means perfect, has at any rate long experience and a long tradition behind it, and an expert administration. Why, then, should it not be made use of, and why should we set upalong,side of the old law a new system of dealing with men who cannot support themselves independently, but must seek aid from the State? One of the reasons why the notion of working on the old lines is so strenuously resisted by the Labour Party and the Radicals is that men Jose their votes when they accept State-aid through the Poor Law, and do not lose them when they accept it under some unemployed scheme. In most cases the ordinary working man is not very much concerned about this point ; but the political organiser is determined not to risk the loss of a large number of votes. Yet in reality nothing is more reasonable than to disfranchise those who cannot live without State-aid. We do not regard it as a crime to be so poor as to be unable to live on one's own resources ; but it is no good blinking the fact that the man who is in that position is not independent, but dependent,—a dependent of the State. But the vote goes, and rightly goes, to the independent man. If not, we reach the paradoxical position of men voting them- selves money out of the resources of the State. Those who have to ask for the money of the State should not also distribute it. Possibly it will be said that to deal with unemployment through the Poor Law would put an intolerable burden upon the rates. If that is so, there would be no doubt a strong case for a subvention by the Government wherever a very large amount of extra poor relief had to be given.

While we would make the Poor Law the instrument for dealing with unemployment, we fully recognise that this is in no sense to solve the problem. What is essential is to cut off at the source those influ- ences which are creating unemployment. And here let us ask a very plain and simple question, but one which undoubtedly goes to the root of the whole matter. Why are men unemployed ? The answer is the answer given by the labourers in the vineyard when they were asked why they stood all the day idle "Because no man bath hired us.' Clearly, then, what is wanted is more hirers. If there were more employers there would be less unemployed. The next question is : "What is the way to get more hirers and employers,—i.e., capitalists?" In effect, the employer and the capitalist are one. It is the law of its being that capital shall seek for wages for itself, the wages of capital being of course interest. But capital earns its wages and makes its profit in the last resort by hiring men to work for it. The more capital available, then, the greater the number of hirers of labour. To get rid of unemployment, we want to encourage the growth of capital in every shape and form. Governments, therefore, that wish to stop unemployment should do their best - to foster capital and encourage its accumulation. How can they do this ? They cannot do it directly ; there is no short cut to the increase of capital. But though Governments cannot make capital directly, they can do a great deal to prevent the shrinkage of it, for capital is by its nature liable to sudden and rapid diminution. Just as the prospect of profit will create capital and set it working, so the dread of loss will diminish capital and its employment with almost miraculous suddenness. Once create the impression that capital is going to be penalised or its remuneration stopped, and it perishes of inanition. Now, unfortunately, the present Government, with their talk about robbing " hen-roosts " and their general truckling to the Socialists, have created the impression that they are the enemies of capital, and that capital will not receive help from them, but is bound to suffer injury. The result is that capital is shrinking, and that hirers and employers are growing fewer. We admit that there is no real ground for this panic, and that capital is very foolish to be frightened ; but it is no remedy to call timid men foolish. We have got to deal with the fact that they are timid. Undoubtedly all over the country capital has been drawing in its horns and refusing to do its normal work of hiring labour, and this is specially true of the smaller employers. The feeling is growing that the prudent thing just now is to keep one's capital together as much as possible, and not to embark it upon speculations in which it may be lost. "Wait and see what is going to happen, and whether we may not be going to be let in for some big burden on capital," is the word that is being passed round the country. To give reassurances on this head would do far more for the unemployed problem than any of the palliatives proposed by the Government.