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If the standard wage must provide for a family, what must be the size of
the family? Discussion on the subject generally assumes a "statistical"
family of man and wife and three children under age. This is criticised
on the ground that it does not meet the human needs of larger families
and is in excess for smaller ones. The reply to this is that a general
rate can only meet general needs. Calculation easily shows that the
minimum suited for three children is by no means extravagant if there
should be but two children or only one, while it gives the bachelor or
newly married couple some small chance of getting a little beforehand
with the world. On the other hand, it is impossible to cater on general
principles for the larger needs of individuals. The standard wage gives
an approximation to what is needed for the ordinary family, and the
balance must be made good by other provision, whether public or private
I will not here discuss. I conclude that for adult men the minimum is
reasonably fixed at a figure which would meet the "human needs" of a
family of five, and that for women it should be determined by the value
of their services relatively to that of men.[1]

[Footnote 1: I am assuming that this value is sufficient to cover the
needs of the independent woman worker. If not, these needs must also be
taken into account. As a fact both considerations are present to the
minds of the Trade Boards. A Board would not willingly fix a wage which
would either (_a_) diminish the opportunity of women to obtain
employment, or (_b_) enable them to undercut men, or (_c_) fail to
provide for them if living alone.]

How far have Trade Boards actually succeeded in fixing such a minimum?
Mr. Seebohm Rowntree has put forward two sets of figures based on
pre-war prices, and, of course, requiring adjustment for the changes
that have subsequently taken place. One of these figures was designed
for a subsistence wage, the other for a "human needs" wage. The latter
was a figure which Mr. Rowntree himself did not expect to see reached in
the near future. I have compared these figures with the actual minima
for unskilled workers fixed by the Boards during 1920 and 1921, and I
find that the rates fixed are intermediate between the two. The
subsistence rate is passed, but the higher rate not attained, except for
some classes of skilled workers. The Boards have in general proceeded
with moderation, but the more serious forms of underpayment have been
suppressed so far as inspection has been adequately enforced. The ratio
of the female to the male minimum averages 57.2 per cent., which may
seem unduly low, but it must be remembered that in the case of women's
wages a much greater leeway had to be made good, and there can be little
doubt that the increases secured for female workers considerably
exceeded those obtained for men.

THE QUESTION OF A SINGLE MINIMUM

Criticism of Trade Boards has fastened on their power to determine
higher rates of wages for skilled workers, one of the additional powers
that they secured under the Act of 1918. There are many who agree that a
bare minimum should be fixed by a statutory authority with legal powers,
but think that this should be the beginning and end of law's
interference. As to this, it must be said, first, that the wide margin
between a subsistence wage and a human needs wage, brought out by Mr.
Rowntree's calculations, shows that there can be no question at present
of a single minimum. To give the "human needs" figure legislative
sanction would at present be Utopian. Very few Trade Boards ventured so
far even when trade was booming. The Boards move in the region between
bare subsistence and "human needs," as trade conditions allow, and can
secure a better figure for some classes of their clients when they
cannot secure it for all. They therefore need all the elasticity which
the present law gives them.

On the other hand, it is contended with some force by the Cave Committee
that it is improper for appointed members to decide questions of
relatively high wages for skilled men or for the law to enforce such
wages by criminal proceedings, and the Committee accordingly propose to
differentiate between higher and lower minima both as regards the method
of determination and of enforcement. I have not time here to discuss the
details of their proposal, but I wish to say a word on the retention--if
in some altered shape--of the powers given by the Act of 1918. The Trade
Board system has been remarkable for the development of understanding
and co-operation between representatives of employers and workers.
Particularly in the work of the administrative committees, matters of
detail which might easily excite controversy and passion are habitually
handled with coolness and good sense in the common interest of the
trade. A number of the employers have not merely acquiesced in the
system, but have become its convinced supporters, and this attitude
would be more common if certain irritating causes of friction were
removed. The employer who desires to treat his workers well and maintain
good conditions is relieved from the competition of rivals who care
little for these things, and what he is chiefly concerned about is
simplicity of rules and rigid universality of enforcement. It is this
section of employers who have prevented the crippling of the Boards in a
time of general reaction. It is blindness to refuse to see in such
co-operation a possible basis of industrial peace, and those were right
who in 1918 saw in the mechanism of the Boards the possibility, not
merely of preventing industrial oppression and securing a minimum living
wage, but of advancing to a general regulation of industrial relations.
At that time it was thought that the whole of industry might be divided
between Trade Boards and Whitley Councils, the former for the less, the
latter for the more organised trades. In the result the Whitley Councils
have proved to be hampered if not paralysed by the lack of an
independent element and of compulsory powers.

TRADE BOARDS HOLDING THE FIELD

The Trade Board holds the field as the best machinery for the
determination of industrial conditions. It is better than unfettered
competition, which leaves the weak at the mercy of the strong. It is
better than the contest of armed forces, in which the battle is decided
with no reference to equity, to permanent economic conditions, or to the
general good, by the main strength of one combination or the other in
the circumstances of the moment. It is better than a universal
State-determined wages-law which would take no account of fluctuating
industrial conditions, and better than official determinations which are
exposed to political influences and are apt to ignore the technicalities
which only the practical worker or employer understands. It is better
than arbitration, which acts intermittently and incalculably from
outside, and makes no call on the continuous co-operation of the trade
itself.

My hope is that as the true value of the Trade Board comes to be better
understood, its powers, far from being jealously curtailed, or confined
to the suppression of the worst form of underpayment, will be extended
to skilled employments, and organised industries, and be used not merely
to fulfil the duty of the community to its humblest members, but to
serve its still wider interest in the development of peaceful industrial
co-operation.

UNEMPLOYMENT

BY H.D. HENDERSON

M.A.; Fellow of Clare College, Cambridge; Lecturer in Economics;
Secretary to the Cotton Control Board from 1917-1919.

Mr. Henderson said:--From one point of view the existence of an
unemployment problem is an enigma and a paradox. In a world, where even
before the war the standard of living that prevailed among the mass of
the people was only what it was, even in those countries which we termed
wealthy, it seems at first sight an utterly astonishing anomaly that at
frequent intervals large numbers of competent and industrious
work-people should find no work to do. The irony of the situation cannot
be more tersely expressed than in the words, which a man is supposed to
have uttered as he watched a procession of unemployed men: "No work to
do. Set them to rebuild their own houses."

But, if we reflect just a shade more deeply, nothing should surprise us
less than unemployment. We have more reason for surprise that it is
usually upon so small a scale. The economic system under which we live
in the modern world is very peculiar and only our familiarity with it
keeps us from perceiving how peculiar it is. In one sense it is highly
organised; in another sense it is not organised at all. There is an
elaborate differentiation of functions--the "division of labour," to
give it its time-honoured name, under which innumerable men and women
perform each small specialised tasks, which fit into one another with
the complexity of a jig-saw puzzle, to form an integral whole. Some men
dig coal from the depths of the earth, others move that coal over land
by rail and over the seas in ships, others are working in factories, at
home and abroad, which consume that coal, or in shipyards which build
the ships; and it is obvious, not to multiply examples further, that the
numbers of men engaged on those various tasks must somehow be adjusted,
_in due proportions_ to one another. It is no use, for instance,
building more ships than are required to carry the stuff there is to
carry.

Adjustment, co-ordination, must somehow be secured. Well, how is it
secured? Who is it that ordains that, say, a million men shall work in
the coal-mines, and 600,000 on the railways, and 200,000 in the
shipyards, and so on? Who apportions the nation's labour power between
the innumerable different occupations, so as to secure that there are
not too many and not too few engaged in any one of them relatively to
the others? Is it the Prime Minister, or the Cabinet, or Parliament, or
the Civil Service? Is it the Trade Union Congress, or the Federation of
British Industries, or does any one suppose that it is some hidden cabal
of big business interests? No, there is no co-ordinator. There is no
human brain or organisation responsible for fitting together this vast
jig-saw puzzle; and, that being so, I say that what should really excite
our wonder is the fact that that puzzle should somehow get fitted
together, usually with so few gaps left unfilled and with so few pieces
left unplaced.

It would, indeed, be a miracle, if it were not for the fact that those
old economic laws, whose impersonal forces of supply and demand, whose
existence some people nowadays are inclined to dispute, or to regard as
being in extremely bad taste, really do work in a manner after all. They
are our co-ordinators, the only ones we have; and they do their work
with much friction and waste, only by correcting a maladjustment after
it has taken place, by slow and often cruel devices, of which one of the
most cruel is, precisely, unemployment and all the misery it entails.

THE CAUSES OF TRADE DEPRESSIONS

I do not propose to deal with such branches of the problem of
unemployment as casual labour or seasonal fluctuations. I confine myself
to what we all, I suppose, feel to be the really big problem, to
unemployment which is not special to particular industries or districts,
but which is common to them all, to a general depression of almost every
form of business and industrial activity. General trade depressions are
no new phenomenon, though the present depression is, of course, far
worse than any we have experienced in modern times. They used to occur
so regularly that long before the war people had come to speak of
cyclical fluctuations, or to use a phrase which is now common, the trade
cycle. That is a useful phrase, and a useful conception. It is well that
we should realise, when we speak of those normal pre-war conditions, to
which we hope some day to revert, that in a sense trade conditions never
were normal; that, at any particular moment you care to take, we were
either in full tide of a trade boom, with employment active and prices
rising, and order books congested; or else right on the crest of the
boom, when prices were no longer rising generally, though they had not
yet commenced to fall, when employment was still good, but when new
orders were no longer coming in; or else in the early stages of a
depression, with prices falling, and every one trying to unload stocks
and failing to do so, and works beginning to close down; or else right
in the trough of the depression where we are to-day; that we were at one
or other of the innumerable stages of the trade cycle, without any
prospect of remaining there for very long, but always, as it were, in
motion, going round and round and round.

What are the root causes which bring every period of active trade to an
inevitable end? There are two which are almost invariably present
towards the end of every boom. First, the general level of prices and
wages has usually become too high; it is straining against the limits of
the available supplies of currency and credit, and, unless inflation is
to be permitted, a restriction of credit is inevitable which will bring
on a trade depression. In those circumstances, a reduction of the
general level of prices and wages is an essential condition of a trade
revival. A reduction of prices _and wages_. That point has a
significance to which I will return.

The second cause is the distorted balance which grows up in every boom
between different branches of industrial activity. When trade is good,
we invariably build ships, produce machinery, erect factories, make
every variety of what are termed "constructional goods" upon a scale
which is altogether disproportionate to the scale upon which we are
making "consumable goods" like food and clothes. And that condition of
things could not possibly endure for very long. If it were to continue
indefinitely, it would lead in the end to our having, say, half a dozen
ships for every ton of wheat or cotton which there was to carry. You
have there a maladjustment, which must be corrected somehow; and the
longer the readjustment is postponed, the bigger the readjustment that
will ultimately be inevitable. Now that means, first on the negative
side, that, when you are confronted with a trade depression, it is
hopeless to try to cure it by looking for some device by which you can
give a general stimulus to all forms of industry. Devices of that nature
may be very useful in the later stages of a trade depression, when the
necessary readjustments both of the price-level and of the relative
outputs of different classes of commodities have already been effected,
and when trade remains depressed only because people have not yet
plucked up the necessary confidence to start things going again. But in
the early stages of a depression, an indiscriminating stimulus to
industry in general will serve only to perpetuate the maladjustments
which are the root of the trouble. It will only put off the evil day,
and make it worse when it comes. The problem is not one of getting
everybody back to work on their former jobs. It is one of getting them
set to work on the _right_ jobs; and that is a far more difficult
matter.

On the positive side, what this really comes to is, that if you wish to
prevent depressions occurring you must prevent booms taking the form
they do. You must prevent prices rising so much, and so many
constructional goods being made during the period of active trade; and I
am not going to pretend that that is an easy thing to do. It's all very
well to say that the bankers, through their control of the credit
system, might endeavour to guide industry and keep it from straying out
of the proper channels. But the bankers would have to know much more
than they do about these matters, and, furthermore, the problem is not
merely a national one--it is a world-wide problem. It would be of little
use to prevent an excess of ships being built here, if that only meant
that still more ships were built, say, in the United States.

I do not say that even now the banks might not do something which would
help; still less do I wish to convey the impression that mankind must
always remain passive and submissive, impotent to control these forces
which so vitally affect his welfare. But I say that for any serious
attempt to master this problem, the necessary detailed knowledge has
still to be acquired, and the rudiments of organisation have still to be
built up; and the problem is not one at this stage for policies and
programmes. What you can do by means of policies and programmes lies, at
present, in the sphere of international politics. In that sphere,
though you cannot achieve all, you might achieve much. To reduce the
problem to its pre-war dimensions would be no small result; and that
represents a big enough objective, for the time being, for the
concentration of our hardest thinking and united efforts. But into that
sphere I am not going to enter. I pass to the problem of unemployment
relief.

THE SCALE OF RELIEF

The fundamental difficulty of the problem of relieving unemployment is a
very old one. It turns upon what used to be called, ninety years ago,
"the principle of less eligibility," the principle that the position of
the man who is unemployed and receiving support from the community
should be made upon the whole less eligible, less attractive than that
of the man who is working and living upon the wages that he earns. That
is a principle which has been exposed to much criticism and denunciation
in these modern days. We are told that it is the false and antiquated
doctrine of a hard-hearted and coarse-minded age, which thought that
unemployment was usually a man's own fault, which saw a malingerer in
every recipient of relief, which was obsessed by the bad psychology of
pains and penalties and looked instinctively for a deterrent as the cure
for every complex evil.

But, however that may be, this principle of less eligibility is one
which you cannot ignore. It is not merely or mainly a matter of the
effect on the character of the workmen who receive relief. The danger
that adequate relief will demoralise the recipient has, I agree, been
grossly exaggerated in the past. Prolonged unemployment is always in
itself demoralising. But, given that a man is unemployed, it will not
demoralise him more that he should receive adequate relief rather than
inadequate relief or no relief at all. On the contrary, on balance, it
will, I believe, demoralise him less. For nothing so unfits a man for
work as that he should go half-starved, or lack the means to maintain
the elementary decencies of life.

But there are other considerations which you have to take into account.
If you get a situation such that the man who loses his job becomes
thereby much better-off than the man who remains at work, I do not say
that the former man will necessarily be demoralised, but I do say that
the latter man will become disgruntled. I do not want to put that
consideration too high. At the present time there are many such
anomalies; in a great many occupations, the wages that the men at work
are receiving amount to much less than the money they would obtain if
they lost their jobs and were labelled unemployed. But they have stuck
to their jobs, they are carrying on, with a patience and good humour
that are beyond all praise. Yes, but that state of affairs is so
anomalous, so contrary to our elementary sense of fairness that, as a
permanent proposition it would prove intolerable. We cannot go on for
ever with a system under which in many trades men receive much more when
they are unemployed than when they are at work. On the other hand, the
attempt to avoid such anomalies leads us, so long as we have a uniform
scale of relief, against an alternative which is equally intolerable.
Wages vary greatly from trade to trade; and, if the scale of relief is
not to exceed the wages paid in _any_ occupation it must be very low
indeed. That is the root dilemma of the problem of unemployment
relief--how if your scale of relief is not to be too high for equity and
prudence it is not to be too low for humanity and decency. We have not,
as some people imagine, done anything in recent years to escape from it,
we have merely exchanged one horn of the dilemma for the other.

In any satisfactory system the scale of relief must vary from occupation
to occupation, in accordance with the normal standard of wages ruling in
each case. But it is very difficult, in fact I think it would always be
impracticable to do that under any system of relief, administered by the
State, either the Central Government or the local authorities. It must
be done on an industrial basis; each industry settling its own scale,
finding its own money, and managing its own scheme. That is an idea
which has received much ventilation in the last few years. But the
really telling arguments in favour of it do not seem to me to have
received sufficient stress.

Foremost among them I place the consideration I have just indicated:
that in this way, and in this way alone, it becomes possible for
work-people who receive high wages when they are at work, and where
habits of expenditure and standards of family living are built up on
that basis, to receive when unemployed, adequate relief without that
leading to anomalies which in the long run would prove intolerable. But
there are many other arguments.

A MODEL SCHEME FROM LANCASHIRE

About five years ago I had the opportunity of witnessing at very close
quarters the working of an unemployment scheme on an industrial basis.
The great Lancashire cotton industry was faced during the war with a
very serious unemployment problem, owing to the difficulty of
transporting sufficient cotton from America. It met that situation with
a scheme of unemployment relief, devised and administered by one of
those war Control Boards, which in this case was essentially a
representative joint committee of employers and employed. The money was
raised, every penny of it, from the employers in the industry itself;
the Cotton Control Board laid down certain rules and regulations as to
the scale of benefits, and the conditions entitling a worker to receive
it; and the task of applying those rules and paying the money out was
entrusted to the trade unions.

Well, I was in a good position to watch that experiment. I do not think
I am a particularly credulous person, or one prone to indulge in easy
enthusiasms, and I certainly don't believe in painting a fairy picture
in glowing colours by way of being encouraging. But I say deliberately
that there has never been an unemployment scheme in this country or in
any other country which has worked with so little abuse, with so few
anomalies, with so little demoralisation to any one, and at the same
time which has met so adequately the needs of a formidable situation, or
given such general satisfaction all round as that Cotton Control Board
scheme.

I cannot describe as fully as I should like to do the various features
which made that scheme attractive, and made it a success. I will take
just one by way of illustration. It is technically possible in the
cotton trade to work the mills with relays of workers, so that if a mill
has 100 work-people, and can only employ 80 work-people each week, the
whole 100 can work each for four weeks out of the five, and "play off,"
as it is called, in regular sequence for the fifth week. And that was
what was done for a long time. It was called the "rota" system; and the
"rota" week of "playing off" became a very popular institution. Under
that system, benefits which would have been far from princely as the
sole source of income week after week--they never amounted to more than
30/- for a man and 18/- for a woman--assumed a much more liberal aspect.
For they came only as the occasional variants of full wages; and they
were accompanied not by the depressing circumstances of long-continued
unemployment, but by what is psychologically an entirely different and
positively exhilarating thing, a full week's holiday. That meant that
the available resources--and one of the difficulties of any scheme of
unemployment relief is that the resources available are always
limited--did much more to prevent misery and distress, and went much
further towards fulfilling all the objects of an unemployment scheme
than would have been possible otherwise.

That system was possible in the cotton trade; in other trades it might
be impossible for technical reasons, or, where possible, it might in
certain circumstances be highly undesirable. The point I wish to stress
is that under an industrial scheme you have an immense flexibility, you
can adapt all the details to the special conditions of the particular
industry, and by that means you can secure results immeasurably superior
to anything that is possible under a universal State system. Moreover,
if certain features of the scheme should prove in practice
unsatisfactory, they can be altered with comparatively little
difficulty. You don't need to be so desperately afraid of the
possibility of making a mistake as you must when it is a case of a great
national scheme, which can only be altered by Act of Parliament.

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