UNEMPLOYMENT: ITS CAUSES AND THEIR
J. C. M. EASON, B.A.
Read before the Society on Thursday, 11th February, 1926.
Is unemployment inevitable? If so, are there any remedies
which will mitigate its evil effect?
These are the questions which are on the lips of those who
are compelled to face one of the most vital of the many prob-
lems with which civilisation has to grapple.
The problem is not a new one; men have been found at all
times and in all countries standing idle in the market place
because there was no one to hire them. It is not a symptom
associated with any particular form of society, industry or
economic development. Countries which are wide apart as
regards their fiscal policies or their industrial conditions suffer
alike from this problem—countries which have been recently
opened up for development and old countries with established
civilisations are confronted with unemployment—though no
doubt in many varying degrees of intensity.
The factor which has made it particularly urgent and
pressing in these days is the world-wide dislocation of trade,
the inevitable sequence of the European war.
Within the area of the ,Saorstat we have had an additional
cause in the shape of civil disturbance during 1920-1923, which,
in so far as it led to a further dislocation of trade and a re-
moval of spending power, has superimposed many complica-
tions upon what in any event was bound to prove a sufficiently
The presence of an exceptionally large number of unem-
ployed makes it urgent. Whether the figure be taken at 30,000
or 60,000, and some say it is even higher than that, matters
it is still most serious.
230 Unemployment: Its Causes
The contrast between the prosperity of the war (and the
immediate post-war) years and the present severe depression
of trade has led to an unparalleled intensity of feeling on the
subject. Not only has this contrast deepened the feelings of
the public, but there is a much wider diffusion of knowledge
as to the real facts of the situation, and the present position of
the unemployed seems worse when measured by the higher
standard of comfort then attained.
Unemployment may arise from a supply of labour in ex-
cess of demand or the physical inability or unwillingness of
a worker to accept work when offered. In the early stages of
civilisation the simplicity of human wants and therefore the
ease with which they could be supplied restricted unemploy-
ment to a small dimension. The highly developed and compli-
cated demands which arise from the variety of tastes now
shown by the consuming public have accentuated all the diffi-
culties which were present even in the most early developments
of society. An all-powerful and all-wise Providence, knowing
exactly what each member of the public would want, or (which
is even perhaps still more important to remember) able to deter-
mine what each person would want, could overcome some of
these. If such a Power could at the same time control the
elements of nature and ensure harvests adequate to meet all
our requirements another frequent cause of unemployment
would be removed.
The demand for labour may be diminished as regards its
total quantity by such causes as pestilence, disease, war or civil
disturbances. And it will be noted that sometimes these visita-
tions of nature, etc., may occur in countries which are far re-
moved from that which is immediately affected—a famine in
India may cause unemployment in Lancashire. This is a posi-
tive reduction which arises from causes outside the industry
of the country, but whose effect upon it may be exceedingly
serious. Negatively fhere may arise a diminution of the de-
mand through an insufficient accumulation of wealth for in-
vestment purpqses—thus making it impossible to provide the
necessary capital for development and enterprise—and through
other reasons referred to in detail later on.
But in addition to those which affect all industries at the
same time there are certain causes peculiar to each industry
which are active at all times., even under the most stable con-
ditions. Their effect is (a) to vary the demand for a particular
kind of labour. The public form new tastes, they demand new
aptitudes and new enterprises on the part of the producer.
By /. C. M. Eason, B.A. 231
Changes in method of travelling or traction, now seen in the
competition between motors and the railways, lead to the
cessation of the demand for one class of labour and the
creation of a demand for another type; (b) to cause such de-
mand to be of an irregular character, although that irregularity
may be quite constant. Under the heading of irregularity must
be put all seasonal demands, and those changes which take
place in connection with trade booms, etc., movements which
may be spread over quite a long period, but which at the same
time manifest certain clear regularity.
From the standpoint of the worker these are all objective
causes, but he is open to the influence of what may be called
subjective causes in the shape of ill-health, accidents arising
from his occupation, his family circumstances, his defects
of character and ability, all of which must be carefully
considered and given their proper importance when reviewing
the general problem.
For each of these phases of unemployment appropriate
remedial measures have had to be designed. To meet a situa-
tion which has arisen from some cause affecting industry
as a whole and not a particular trade special action on a large
scale by the Government authorities and public bodies becomes
necessary. It is not possible to go into the details as to the
various kinds of relief work which can be set up, or the extent
to which public works of a useful character can be postponed
until they are necessary, or hastened forward earlier than would
otherwise be warranted. In practice the tendency has been to
spend money on public works when business is good and re-
strict expenditure when it is bad—the reverse of what should
take place. This method of dealing with unemployment is not
new; in fact, it is the oldest of all methods. Under certain
circumstances it is the only one available. Such schemes be-
come harmful, not helpful, if they withdraw from industry the
funds required to extend and develop it or if they retain in their
employment labour which is required elsewhere.
Both tendencies are inevitable. (1) The natural desire to
have something done to relieve distress calls for action by
Government, and the money is provided by the taxpayer—the
employer who should be extending his business activities. (2)
The natural reluctance of the worker to leave a job and sur-
render himself to the chances of the labour market to obtain a
232 Unemployment: Its Causes and their Remedies.
new one, even though it be a change from, temporary to per-
manent work, must be reckoned with. Above all the schemes
must take into consideration the type of labour disemployed.
To provide labouring, work for a skilled craftsman is to waste,
many years of careful training.
The purely modern remedy for unemployment, which, it
may be remarked, is really a remedy for its consequences rather
than for the evil
is State Insurance, on a contributory
covering all industry. Its wide scope ensures a measure
of stability which could not be attained by any scheme re-
stricted in its application. Its contributory basis establishes a
feeling of independence and self-respect. It is of course a
charge on industry, ,but experience will prove, and indeed I
think has already indicated, that in the long run it relieves in-
dustry from a burden which it would otherwise have to carry
in some more costly form.
As a means of dealing with cyclical or seasonal unemploy-
ment—normal unemployment—it has established itself per-
manently in all countries where it has been tried.
The labour exchanges which operate the scheme should
also in theory play a really useful part in overcoming the mal-
adjustment arising from want of fluidity in labour. In practice
they fail largely because of fixity of habits, personal ties, hous-
ing difficulties, etc., which prevent the free movement of the
There is, further, the unemployment which arises from
variations in the type of labour demanded. The remedy here
is not easy to discover. Modern progress makes new calls upon
the individual’s capacity. The response is determined by his
education, character and training, by Trade Union rules, with
their narrow and unyielding lines of demarcation of work, and
by a number of extraneous conditions.
The consideration of these hardly comes under the scope
of our paper this evening; they are of a very general character,
but with the pres’ent-day rapid developments in new and un-
expected directions they deserve consideration,
Following the order of causes detailed above, we come to
those which affect the individual and not the industry.
Insurance again comes to our assistance. Health and
accident schemes specially designed to tide over periods
of life, when earnings cannot be maintained, merely await
further useful development. There may be some differences of
opinion as to the comprehensiveness of such schemes and the
area within which the exigencies of economic circumstances,
would allow them to function usefully, but I think there is no
By J. C. M. Eason, B.A. 233
alternative to them as methods of meeting that portion of un-
employment which arises from individual circumstances and
not from those of the industry.
While, however, it is true that from one point of view the
individual circumstances can be isolated in this way and con-
sidered apart from the objective side of unemployment, the
real crux arises from the fact that in the last resort one is
dealing with a multitude of different individuals, and not a
collection of puppets who can be moved from place to place
or used from time to time regardless of their personalities.
Whether you are dealing with unemployment by relief
work or by insurance, the effect upon the individual determines
whether the scheme is sound or not. If a large number of in-
dividuals are affected by some definite and widespread general
depression over a prolonged period it becomes increasingly diffi-
cult to give employment relief without at the same time under-
mining the very qualities which it is vital should be maintained.
A man who at the beginning of the period could have taken up
his work after a short interval of unemployment is found after
a period of months to be a different man from every point of
view. His efficiency has been impaired; he has lost certain
aptitudes, or at least they are not preserved at the same pitch
of perfection as when he left off work. The very work offered
may be unsuitable for him and injure his peculiar skill. The
longer he is at such work the less inclination he may show to
return and look for a new job. These effects cannot be reduced
to statistics, and yet they are most important factors to be con-
sidered when arranging for
The man who is unemployed from purely seasonal and
temporary causes is in
stronger position. He has probably al-
ready reckoned with this factor as part of his normal life; its
effect upon his character is therefore largely discounted, and
provided a scheme is in force which will tide him over the
intervening period he will resume with a minimum of loss.
Even under the most favourable circumstances the per-
centage of the unemployed in any particular trade or occupa-
tion will not fall to zero. There will remain a reserve of at
least 2 per cent, to 5 per cent, if one is to judge by what took
place in the past.
The character of this reserve is worth con-
sideration. When restriction in trade takes place and an em-
ployer has to consider whose services he has to dispense with
he will select those who are least productive—he must do so
if his business is to survive; those who are least productive,
are those who are deficient in education, training and general
character; the man who has been an irregular timekeeper, who
234 Unemployment: Its
and their Remedies.
perhaps has absented himself without reason, whose work has
been deficient, is the first to go. These “ins and outs” of the in-
dustrial world create the real problem of Unemployment Insur-
because these are the very men who are least able to with-
stand periods of unemployment, physically, mentally and
financially. Remuneration during a period of unemployment
must not exceed the average rate of earnings, otherwise there
would be an inducement to the individual to be more frequently
unemployed. These men’s average is low. Therefore the
standard weekly payment is low.
It has been suggested that some distinction could be drawn
as regards unemployment insurance payments which would pro-
vide a higher weekly sum for the superior skilled man who is
momentarily displaced. One answer to that suggestion is that
such a man will
by reason of his own superior habits of
thrift and prudence, put himself in a better position to stand the
stress of unemployment than those others of whom we are
speaking. No matter what our sympathies might dictate, our
reason will insist that individuals must be brought to realise that
they are, to a certain extent, masters of their own fate. Any
other course would be demoralising, and in fact I think anyone
with experience of workers as a whole would maintain that such
is their view. There is a strong spirit of independence. But the
most distressing phenomenon of unemployment in recent years
has been the extraordinarily large number of men unable to get
work, of none of whom could it be said that they were in the
slightest degree incompetent or unworthy of being retained.
They have been unemployed for long periods, and insurance
which normally might be expected in their case to tide over
the interval having failed completely, supplementary action has
become necessary. This is the justification for the ” dole.”
These are the principal remedial measures which help to
cure unemployment when it has arisen. Are there any positive
steps which could be taken to prevent it? Here one finds a
difficulty which is in no sense new.
Unemployment arises from an imperfection in the relation
of supply to demand. In the last resort unemployment can
be attributed to ignorance : that is to say, it is to be assumed
that the manufacturer who makes or the farmer who produces
more than is required at a price which will yield him a profit
would have refrained from making so much if he could have
known that he could not effect sales. But of course in addition
to want of that knowledge, which in many cases would have
By J. C. M. Eason, B.A. 235
prevented certain plans of manufacture being carried out on a
scale larger than was necessary, there are difficulties which
arise on the speculative side of human nature.
Certain ideas must be put to the test before it is known or
can be proved what they are worth. The speculative character
of even the simplest operation of buying and selling is not ap-
preciated fully. Success, except in some few exceptional and
outstanding instances, is achieved as the result of a multitude of
wise decisions by many people. Failure, which leads to unem-
ployment, is the result of foolish or wrong decisions. Periods
of boom and depression are the result of mental processes ap-
plied to financial problems and dependent on moods of opti-
mism and pessimism.
It is generally accepted that a larger diffusion of informa-
tion in the form of statistics and a greater co-ordination of
statistics would prevent these. That hope has been often ex-
pressed. In the early 19th century Carlyle wrote : ” Bubble
periods with their panics and commercial crises will again be-
come infrequent, and steady modest industry will take the place
of gambling speculation.” The hope was vain. It may be
questioned whether the wider dissemination of facts regarding
industry, the effect of weather on crops, etc., and the better col-
lection and reproduction of statistics have done anything more
than keep pace with the more complicated processes now neces-
sary to carry on our industries^ which have made the adjust-
ments more difficult to accomplish. We must conclude that
the difficulties we are faced with largely arise from funda-
mental defects in human character and intelligence rather than
from the structure of industry
There are other influences., however, which tend to create
unemployment, the effect of which upon the industry of the
country is of vital importance. The instability of Governments,
by which I do not mean a simple change of control from one
party to another, but fundamental changes such as have been
taking place all over Europe, including this country, during re-
cent years, discourage the building up of industries which
would provide the necessary employment.
Again, high taxation, local and national, is a serious factor,
because it withdraws from investment in industry funds which,,
while they lie in the hands of the individual, must tend to come
into use, become remunerative, and yield some return. If
wealth is not being accumulated by those who have been in the
habit of saving, enterprise will not be given its main stimulus,
and little development will take place.
A sound policy as regards wages is also of very great im-
236 Unemployment: Its Causes and their Remedies.
portance. The narrower the margin of profit, the less the in-
ducement for enterprise. In the Statist of January 9th a re-
ference is made to a study of unemployment in Great Britain
by a Professor
of the University of Paris : ” An extra-
ordinarily close correspondence between changes in the level
of real wages and changes in unemployment is shown. When
prices fall more rapidly than money wages unemployment in-
creases. When money wages tend to fall relatively to price
movement the unemployment curve shows a corresponding
The conclusion that follows is the necessity for a more
rapid adjustment than now takes place. That depends oh
forces in industry which are difficult to measure and to con-
trol and which require a very detailed examination for which
there is now no time. If it involves labour disputes it tends to
still greater uncertainty and loss of trade.
In considering the attitude of Labour towards unemploy-
ment, it may be remarked that a more important matter even
than the wages policy is its attitude as regards demar-
cation in the unions and the various regulative devices which
it insists upon in order to protect itself from influences
which it conceives to be against its interests. Some of these in
the long run achieve their object and overcome opposition, but
in the meantime much damage may be caused. When all
workers contribute no narrow view should be taken by any
section which would tend to aggravate unemployment. The
acceptance of a mutual basis of contribution creates a recipro-
cal obligation to make the burden as light as possible. We are
not in any case concerned with the matter to-day beyond noting
that if such regulative devices are applied in an unwise manner
a state of mind may be created which is harmful to enterprise
We now pass from this analysis of causes and remedies to
consider what lessons it has for us in regard to unemployment
as it presents itself to-day. How many are unemployed
are they? In a matter which requires a knowledge of the in-
dividuals and their occupations we can obtain little informa-
tion, and such facts as are available require adjustment, calcu-
lation and qualification before they can be used.
At the same time certain points do stand out clearly.
Firstly, there is a general diminution in the demand for labour
affecting all industry. The external cause is bad trade in Eng-
land affecting our productive activities. The internal causes
are dislocation of normal business resulting from civil war and
the removal of a large population from our midst who kept the
distributive agencies busily employed supplying their wants.
By J. C. M. Eason, B.A. 237
Moreover, the effect of two successive bad harvests has
been to reduce the purchasing power of those who remain.
To meet the situation so created the Government has sub-
sidised the unemployment fund by upwards of £1,250,000.
Money has been voted for relief works which will not merely
help the immediate needs of the moments but ultimately tend
to increase the productive capacity of the country.
The main hopes for improvement lie in the greater poli-
tical stability, which will tend to security and confidence on the
part of investors; and the improved condition of English trade
leading to an increased demand, which gives the farmer his
opportunity for capturing the market.
Such unemployment as is due to seasonal and fluctuating
demand of a normal character cannot be measured, for figures
are not published showing how many are unemployed and in
what trades they are occupied. So far as it exists it must
be met by insurance schemes, and we note that enquiry is
proceeding at the moment as regards Health and Workmen’s
Compensation Schemes with a view to their greater efficiency.
The success with which industry will overcome the diffi-
culties created by the every varying demands of the public de-
pends on the enterprise of those conducting its businesses,
whether manufacturing or distributing, and the adaptability of
ihe available labour. Both depend to a very large degree on
education—commercial, economic, technical, agricultural, and
general. These are problems which affect a manufacturing
country in the highest degree. In the Saorstat the manufac-
turing piocesses are concerned with the more universal per-
manent wants of society, and so we largely escape, but not
entirely, and the past history of our industries suggest, I think,
that we have suffered from adhering too long to old processes
in the face of a clearly changing demand.
On the distributing side of our business activities we find
people who have money are spending it in new ways, and are
demanding new services—the cinema, the dancing hall, motor-
ing, etc. The direct effect of this is obvious. The indirect effect,
that is to say, the ultimate effect on employment in the country
created by the wider diffusion of spending power and its dif-
ferent use, is less easy to trace, and deserves a special enquiry.
The old-fashioned economists maintained that ” a demand for
commodities is not a demand for labour/7 that ” an individual
increases the capital of a country not by spending his wealth
on his own enjoyment but by devoting it to reproductive em-
ployment.” This has a bearing on the problem, but it cannot be
more than referred to in this paper.
238 Unemployment: Its Causes and their Remedies.
What are we to say in conclusion? Our two questions
have been partially answered, with much imperfection I fear
and in too brief a manner. Some unemployment is inevitable.
There are remedies, but each phase of unemployment must be
met by appropriate measures.
The potentialities to create employment are here. But he
was a wise man who said ; ” If there is to be a millenium man
must make it.” May we not adopt the saying and write : If
the Saorstat is to be prosperous its citizens alone can make it so.
The springs which feed the fountain of national prosperity
and well-being He in the minds and hearts of the individual. To
the extent that they are tainted the product will be impure.
Government action cannot precede individual knowledge
and understanding of the problem. Reason, not passion; argu-
ment, not force; generosity, not selfishness; national interest,
not class prejudice, must prevail if we are to solve the most
complicated and the most fundamental of all industrial