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rather than evenly year by year. The mere fact that, on the index number of unemployment beginning to rise, the government puts in hand slightly more building work than would otherwise have been the case, orders rather more printing, somewhat increases its shipbuilding, raises this year the amount of its orders for blankets and sail-cloth above the normal, and temporarily accelerates the rate at which the telegraph wires are being laid underground, and the telephone is being extended to every village, would not mean the taking on of any crowd of unemployed workmen anywhere.

What it would mean, in the first place, would be that various building firms and printing establishments all over the country would find themselves relieved from the necessity of turning off men; some shipbuilding yards would be able to abstain from the necessity of reducing hands; the mills producing blankets and sail-cloth would not need to go on short time; and the contractors for telegraph and telephone extensions would find themselves continuing in employment, and placing on the government work members of their staffs whom they would otherwise have had to dismiss. All this prevention of discontinuity in the employment and wages of tens of thousands of workmen all over the country, and, for that matter, also in the profits of hundreds of employers, would automatically result in preventing much other discontinuity elsewhere. Even the gramophone makers might find themselves continuously, instead of intermittently, employed!

And where employers, by reason of the enlarged government orders, had actually to engage additional men they would do so, not with a view of "employing the unemployed," not even of confining themselves to the men who were at the moment actually out of situations, but deliberately, in order to attract to their service, it might be from some other employer's service, exactly the kinds and grades of workmen, individually selected on their merits, as being the most skilful and the most regular workmen who could then and there be found, in exactly the due proportion one to another that the expansion of the particular business required.

There would in this way be no adverse psychological effect on the workmen, any more than on the foreman who selected them and supervised their efforts or in the employer who saw to it that the normal discipline of his establishment was maintained. Instead it would not even occur to any of them that there was anything “artificial" or abnormal in the government order for sail-cloth or other commodities.

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260. Insurance against Unemployment'

BY W. H. BEVERIDGE

There is needed some definite provision against the incalculable varieties of individual misfortune which attend the cyclical fluctuations in most trades. This is to be sought in some form of insurance against unemployment.

The term "insurance" in this connection cannot be used as a term of art. It must be taken to apply loosely to any process whereby each of a number of workmen sets aside something of his wages. while earning to obtain an allowance in case of unemployment. It need not be taken as excluding the possibility of grants to the insurance fund from other sources. Its essence is for the individual workman an average of earnings between good and bad times, and for the body of workmen a sharing of the risk to which they are all alike exposed.

In this looser sense insurance is already one of the most important methods of dealing with unemployment. It is found in the form of benefits paid by many trade unions to their unemployed members. These benefits are of two principal types—the stationary or unemployed benefit, strictly so called, and the allowance given to assist traveling in search of work.

In practice the benefits vary greatly from union to union, both in amount and in duration. Their range is from 6 shillings a week for four weeks in fifty-two to 14 shillings a week for twenty, and even for thirty weeks, in the calendar year. The conditions under which benefits are granted present the widest variety.

The system of trade union benefits probably does more than any existing agency to provide against distress through want of employment. It does it without injury to self-respect and at a cost which in comparison with the effect produced is extremely small. It has the outstanding merit of flexibility. By substituting collective for individual savings it shifts on to each trade, as a whole, part of the burden of the necessary margin of idleness.

The effectiveness of the system is to be judged by the fact that members of the unions paying any substantial unemployed benefit are hardly ever applicants for public charity. The allowance given is not, in itself, adequate. It has to get supplemented, and does get supplemented, by the earnings of wife and children, by assistance

"Adapted from Unemployment: A Problem of Industry, 223-227. Published by Longmans, Green & Co. (1908).

from fellow workmen and neighbors, by running into debt, by pawning, and in other ways. It serves, however, as a nucleus. It keeps the rent paid. In practice it prolongs almost indefinitely the resisting power of the unemployed.

The method of insurance is flexible, as no provision for relief by employment can be flexible. No temporary or accidental stoppage is too small for it. The machinery of assistance is always ready; so soon as a man becomes unemployed, from whatever cause, he has only to begin signing the vacant book in order to become entitled to an allowance. On the other hand, the severest depression of trade is hardly too great to be dealt with in this way. The relief once begun can be and practically is continued for the great bulk of men so long as proves necessary.

The method of insurance throws upon each trade as a whole the burden or part of the burden of its margin of idleness. Unionism substitutes the collective for the individual consciousness, and thus enables the risk of unemployment in all its forms to be appreciated as a normal incident of industry. The individual finds the risk very hard to appreciate and still harder to provide against. He may expect and allow for occasional loss of earnings through bad weather or ill luck or in passing from one job to the next. He may expect and allow for seasonal fluctuation. Cyclical fluctuation stands practically on a different footing. It comes at far greater and less regular intervals; it lasts, not for weeks, but for months or years. Moreover, it tends to strike always the older or weaker members of a trade. In the strength of his youth a man may pass unscathed through two or three depressions, to be thrown out by the next when he is forty years old or more.

In the life of the individual excessive depression appears often as a unique disaster. In the life of a great organization, exceptional depression is but the downward phase of cyclical fluctuation--a phenomenon impressive and familiar, writ large in the records of recurrent increase of the unemployed percentage, recurrent pressure on the funds, recurrent decline or stagnation of membership. For such an organization the proviso of unemployed benefits becomes provision against an absolutely certain danger. Appreciation of this certainty reacts on wages. To keep its members together, the union helps them when unemployed; it must therefore hold out for wages sufficient to cover the heavier subscriptions involved. In the shape. of these higher wages it transfers to the trade as a whole the burden or part of the burden of unemployment.

Unfortunately the application of the system is at present very limited. Even a very large number of trade unions have no effective provisions against unemployment. Outside the trade unions. insurance is unknown.

261. An Appraisal of Unemployment Insurance

BY WILLIAM F. WILLOUGHBY

The experiments that have been made in Switzerland and elsewhere, while they are not sufficiently extensive to furnish conclusive evidence regarding the practicability of insurance against unemployment, are fully adequate to bring out the chief considerations that must be taken into account in any attempt to organize such a system.

An examination of the nature of the problem of unemployment shows that insurance principles are ill suited for its solution. Insurance presupposes that the risk involved shall possess two characteristics, it must be well defined, and it must be the consequence of a chance that can be estimated with some degree of certainty. The risk of unemployment conforms to neither of these conditions. It is not well defined, since there is no fixed criterion as to what work the unemployed should be required to accept. It does not depend upon calculable chance, because the personal element involved in seeking and retaining work, to say nothing of the uncertainty of the employer's action, enters so largely. Though lack of employment is often unavoidable on the part of the workingman, the latter's will and energy play such an important part in the matter that any attempt to distinguish unavoidable idleness is futile. Insurance concerns itself with a risk that can be calculated and provided for in advance; but this cannot be done in regard to lack of employment.

In no case where tried, has the attempt been made to calculate risks and to adjust contributions accordingly, or indeed to make the system self-supporting. Only nominal contributions have been required from members, while the great burden of expense has been borne by the government and by voluntary contributors. In reality, therefore, it is scarcely proper to speak of these institutions as insurance organizations. What has been created is really a more methodical system of granting relief to the unemployed.

The problem of lack of employment in the factory trades is quite different from that in the building trades or among ordinary

Adapted from Workingmen's Insurance, 375–378. Copyright by T. Y. Crowell & Co. (1898).

day laborers. It may be confidently stated that any attempt to introduce even a modified form of insurance against unemployment should follow strictly trade lines.

This, however, brings us to the consideration of the out-of-work benefit features of labor organizations. If unemployment insurance should follow trade lines, every argument would seem to indicate that such efforts should be made through existing organizations of workingmen. The great work done by these organizations in the way of aiding their members is well known. In the United States a large part of the expenditures of the trade unions likewise go for this purpose, though it is not possible to make any exact statement of the amount. This method of granting relief possesses manifest advantages. The work of unions is not charity but the highest order of mutual aid. Labor unions, moreover, are in a peculiarly favorable position to assist their members in obtaining work, and are able to guard themselves against imposition. Finally, as we have seen, unemployment is not a condition beyond the control of individuals, and does not happen with a regularity that can be calculated. Insurance proper affords little room for discretion in granting relief, while each case of unemployment should be considered upon its particular merits. Labor organizations can exercise this necessary discretion in a way that is utterly beyond the power of a municipal institution.

The logical conclusion is that in America, at least, provision against lack of employment can best be made for the established trades by the men themselves through their organizations; and that this provision cannot be made according to hard and fast insurance principles, but must allow for a certain elasticity or discretion in the granting of relief, according to the circumstances of each case and the amount of funds available for this purpose.

C. INDUSTRIAL ACCIDENT

262. The Machine Process and Industrial Accident9

BY E. H. DOWNEY

Work accidents in the United States, according to the best attainable estimates, annually cause more than 35,000 deaths and about 2,000,000 injuries, whereof probably 500,000 produce disability lasting more than one week. To employ a telling comparison frequently made, the industrial casualties of a single year in this country alone

'Adapted from History of Work Accident Indemnity in Iowa, 1-5. Published by the State Historical Society of Iowa (1912).

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