America conquers BritainChapter Two
A STATE OF ECONOMIC war exists between America and Britain now. The question is whether this economic war, and its resultant political conflict, will lead to armed war. Capitalists and officials, and the public opinion which controls or fails to control policies, can prevent a war of guns. They cannot stop the economic war. They can only mitigate its dangers.
For this economic war is not caused by popular misunderstandings, nor by capitalist machinations, nor by imperialistic governmental policies. These intensify, but do not create the conflict. Rather are they created by it. The conflict is the natural and inevitable result of economic conditions obtaining in the two countries and in the world. These basic national and international economic conditions have developed by a slow organic process. There is no chance of quick change. The World War did not change it ; but merely accelerated that process. Neither peace nor war in this generation can reverse its direction ; though they may affect its tempo. These economic conditions can no more be wiped out than the two countries themselves can be made to disappear. Therefore the economic war produced by those conditions is permanent in our time. Only the nature and the consequences of the conflict can be influenced in part by us. But, given intelligence, that might be sufficient to prevent armed war and worse economic conflicts which would result from armed war.
The possibility of changing popular attitudes and commercial and political policies, which will determine whether this economic war results in armed war, is limited. For those attitudes and policies are not accidental or arbitrary. They necessarily reflect economic interests. To the extent that conditions are common to both countries, the public sympathies and governmental policies are virtually the same. But, in the main, conditions are antitheticaltherefore the conflict. To reconcile such conflicting attitudes and policies, between the peoples and between their statesmen, the two peoples and governments must conclude that it is to their selfish national interest to prevent the economic strife from growing until it forces armed waror, as orators prefer to express it, they must decide to prevent such armed war for the sake of humanity and so rise from the national to the international point of view.
In any event the economic conditions continue. And those conditions of the 20th century are favourable to America and unfavourable to Britain.
DECLINE OF THE BRITISH EMPIRE
British conditions of over-population, insufficient food, and inadequate raw materials were not the handicap in the 19th century that they have been since. And Britains chief economic asset, coal, is not the advantage to-day that it was then.
In the last century Britain was able by superior skill and daring to create out of her limited resources and physical isolation what approximated world hegemony. In the century which brought the Industrial Revolution she became the first and strongest industrial nation. She became the worlds manufacturer, merchant, and banker. Partly isolated from warring Europe by the Channel, during her periods of relative peace following the Napoleonic wars she grew prosperous while others wasted their energies and substance in fighting. She had excess labour, waiting to be absorbed by the new industries. She had superior scientists and business men. She had, in her abundant and accessible coal deposits, the best fuel supply of that day and the prime requisite for industrial development. Lacking raw materials, she had the ingenuity to get them from foreign lands either by hook or crook. She had world markets, natural and unnatural, and she held them by force of arms if necessary.
Thus she exacted tribute from the rest of the world. She grew rich. She put her profits back into world investments, and into a navy to perpetuate her holdings and her power. Whenever a serious competitor arose, she eliminated that competitor by war. Germany was not the firstand may not be the last.
But even long before Britain fought andwith the help of most of the worlddefeated Germany, she was losing her dominant position. Her condition had remained the same, but the world had changed. Thus her position changed because the rest of the world was catching up. Most of the Western world was going through that same transformation from an agricultural to an industrial civilisation which she had anticipated. This process did not at first reduce her European markets, but rather changed the nature of them. She now provided most of the machinery and some of the capital for her neighbours to become her competitors, and profited indirectly and directly from their industrial development and growing wealth. But to feed her basic, and no longer unique, steel and textile industries, she was driven finally to compensate for the gradual loss of European markets by the creation of markets in the worlds undeveloped areas. Her dependence on colonial markets increased. As it increased, her European neighbours grew into competitors for those colonial markets. Her position of economic world dominance, which was at first natural, thus became unnatural.
To maintain her unnatural position, Britain had to resort increasingly to political and military force to retain her territorial and non-territorial economic empire. Her profits by this time were coming less from serving economic needs of others seeking such service, and more from exploitation of weaker peoples who had no choice. Or, as the British imperialists phrased it, she insisted on shouldering the white mans burden.
The first problem which grew out of this unnatural relationship was not so much incipient revolt by the exploited, as the rivalry of Britains European neighbours over the privilege of carrying this white mans burden. Colonial markets and raw materials, though not at first so necessary to the survival of the European competitors as to Britain, seemed more and more important to them. So, with a similar urge and a similar goal, the western European nations followed her first in industrial development and then in consequent political imperialism.
As the race of imperialism swept forward, it soon became clear that although Britain had the advantage of a long start some of her rivals had more natural advantages. Her rivals were more nearly self-supporting in food supplies and better equipped with industrial raw materials. Germanys coal in the Ruhr was equal to Englands and, when combined with Lorraine iron, placed Britain at a major disadvantage.
Moreover, two new sources of energy, the basis of industrial power, had appeared. Petroleum and hydro-electric power were both better than coal. Britain had no oil ; Germany and her European neighbours had a little. Britain had inadequate hydro-electric power ; her competitors had plenty. Nations once depended upon British coal began the hydro-electric development which is making them independent of her.
Britain still has coal. But she can build no new economic empire upon it. She cannot even maintain with it alone the empire which it chiefly created. It has become a liability. It is the main source of her unemployment. It prevents the modernisation of her industrial plant upon which her future in the international race depends.
These are the British economic conditions upon which her genius built world dominance in the 19th century Industrial Revolution. And these are the same conditions which place her in a weak position in the second industrial revolution which began to develop early in the 20th centurythe shift from the coal age to the oil and electric age.
Therefore she was losing ground even in the first decade of this century. Her proportion of the worlds trade had dropped from 21.6 per cent in 1871-75 to 15.3 per cent in 1913. Exports in her basic industries of coal, metals, and textiles, were still rising, but less rapidly than those of her competitors ; and she was not getting her share of trade in the newer industries.
International competition for markets and raw materials created an explosive international political situation. To add to her troubles there was serious revolt behind the lines. As competition forced her to press harder upon her exploited colonial peoples, they in turn were driven by a new spirit of discontent and defiance. As competition forced the British workers along at a faster pace, they too began to mutiny. Of those three parallel processes undermining British powerlabour unrest, colonial revolt, and the clash of rival imperialismsthe latter reached a crisis soonest.
So came the World War, the result primarily of economic conflict. It retarded development of some economic conditions and accelerated others, but it produced no basic change in such conditions in Britain or elsewhere.
Because she was losing economic power before, the natural result of the War was to speed the process by which she was going down in the scale and others were going up. It did so. Britain was compensated somewhat for those natural losses by unnatural gains ; that is, by temporary elimination of Germany as a competitor and by acquisition of new colonial raw materials and oil resources.
But her losses were far greater than her gains. Her gains were chiefly the result of arbitrary political and military settlements, which, insomuch as they violate natural economic relations, will not last and while they last will tend to defeat their purpose. She shares directly, and indirectly through the economic interdependence of nations, the destruction of wealth incident to war. The War also accelerated the processes of labour unrest and colonial revolt which earlier threatened her power. Moreover it hastened the industrialisation of countries formerly dependent upon her as a manufacturer and merchant, and raised new nationalistic tariffs and trade barriers against her. Finally, the War failed even to create the chief advantage which Britain expected. It failed to eliminate Germany as a competitor.
The net result of the War and the peace settlement, imposed by the victors to ruin Germany, has been to give her new life and a future potentially the brightest in Europe. The British victory has rid Germany of an archaic, oppressive, and inefficient political system. It has relieved her of an armament burden such as is now breaking Britains back. It has relieved her from paying more than a larger part of War costs and debts because neither Britain nor the other would-be victors can permit her to pay without ruining their own industries and increasing their own unemployment as victims of the enforced dumping of German goods. At the price of terrible suffering, starvation of babies, and elimination of a whole rentier class, Germanys enforced post-War financial deflation has destroyed the old. Out of the ruins has risen a modernised industrial plant and organisation better than any in Europe and incomparably better than Britains. Only a decade after the War, which Britain was supposed to have won and Germany was supposed to have lost, Germany is regaining her world market, rebuilding her merchant marine, repenetrating through cartels the industries of other countries, and in general becoming a more formidable competitor than before the War. The volume (though not the value) of German exports during the first half of 1929 was larger than Britains.
No wonder the British now complain, Of all countries, we are left with the heaviest taxation, the most obsolete plan, and the least organised system of production and markets.
Not that the once dominant Britain has changed. But the world has changed. And she cannot changenot very much, at leastto meet the changed world situation. Therefore she is ceasing gradually to be the worlds manufacturer, merchant, and banker, by which she at first survived and then conquered ; she is ceasing to be the mistress of the seas by which she enforced her old prosperity. The world does not need her as of old. So the world will not suffer her as of old. Even her territorial Empire tends to break up. To retain the Empire she must remould it in a form dictated by its once voiceless members. Her troubles are internal ; they may prove vital.
RISE OF THE AMERICAN EMPIRE
The World War is no more responsible for Americas strength than for Britains weakness, except in the sense that it speeded certain processes already under way. Other processes, advantageous to us, were retarded by the War. The net effect for us was loss. Measured in absolute terms the loss was great. Relatively, however, the loss was much less to America, the younger and potentially stronger, than to Britain.
Our compensating gainif there is any such thing as gain from war for anybodywas less than Britains. Germany was not our commercial competitor and political rival as directly as Britains. Germany did not menace our territorial empire or our expanding economic empire. Her mines did not take our coal markets. Her merchant marine did not worry us. Her army was not at our door. Her navy was not aimed at us. Her Drang nach Osten did not pierce the lines of our imperial communications, nor interfere with our strategic areas. Had Germany won a war with Britain, the United States to-day would be challenging German world power instead of challenging British world powerthat is the principal difference.
Our Government had sense enough not to seek territorial or mandate conquests from the War, knowing that our growing invisible economic empire was more powerful, more profitable, and less vulnerable than Britains obsolete type of political empire. So we did not profit from the War by new land or subjects.
The British say the War made us rich. The rest of the world agrees. That is not true. It is not true, either directly or indirectly. We would have been richer to-day, especially in temporary paper wealth at the expense of Britain and the others, had we let them fight their own war. But we went in. The Treasury Department estimates our War expenditures, exclusive of loans, at $35,000 million net. Supporting the statement that America lost money by the War, Dr. Harvey E. Fisk in his Inter-Ally Debts estimates that in terms of purchasing power our national income fell from $34,400 million in 1913 to $31,000 million in 1923. There is no adequate measurement for the loss to us in the death and disability of the young men, the dislocation of industry, the moral loss to an adult population that conscripts its youth to fight and gives itself over to hatred ; nor for the Prussianisation of our army, our navy, and our political institutions, particularly the loss of civil liberties not yet regained.
In an international sense, and in terms of the present and future Anglo-American conflict, the War was very costly for us. Because it made us more nationalistic, more distrustful of international treaties and international organisation for peace, which might otherwise contribute more to the prevention of armed war as a result of Anglo-American rivalry. Because, moreover, the War has left us the most hated among nationsan unenviable and exposed position, either in the present economic war or in the possible resultant armed war.
The world hates us now, instead of Germany which is inaccurately charged alone with causing the World War, and instead of France or Britain which are inaccurately credited with winning it. That is because the world owes us for much of the wealth destroyed by the War, and for much of the wealth required for the victorious armies and navies of to-day to maintain the unnatural peace settlement. They call us Shylock. Those debts to us will never be paid, probably not even on the present basis of 30 to 80 per cent cancellation.1 Germany cannot pay the Allies. The Allies cannot pay us. In the end the American taxpayers will pay what is left and what can be paid in terms of tangible wealth for the remaining War costs. Americans will pay because some one must and they are the only ones able to do sothat is, so long as the less wealthy victors are determined to waste their substance in maintaining larger armies and navies for another war instead of paying for their last debauch.
Even if we do not collect our War and post-War debts, the idea is general that we profited largely in another way through stimulation of our industries and extension of our foreign trade. But that industrial and agricultural stimulation was one-sided in this country, as in others. We revamped our existing industries and created new ones for war purposes. Apart from the waste in such time-pressure reorganisation, the Armistice found us, as Britain, with war industries not fitted for peace-time needs. Our agriculture grew like a toadstool, and its surplus is now poisoning the economic health of the nation. Expansion of our exports was a matter of war stuffs and food stuffs, and those export markets were soon lost. The growth of our exports of raw materials, oil, and manufactured products from 1914 to to-day was virtually at the same rate as our normal growth regardless of the War.
We are in a better position than Britain because before the War, as since, our relative position in world trade tended upward while hers tended downward ; and because we have sufficient resources to compensate for depressed agricultural, coal, and textile industries, while she has not. Nevertheless we, like Britain, have suffered from post-War trade conditions, from contracted world markets, restricted purchasing power, depreciated currencies, new national industries protected by heightened tariff walls and trade barriers. Those obstacles have been real, though they have been surmounted in part by exceptional American effort and skill in reorganising home industries and in creating foreign markets.
But neither the War nor American genius is chiefly responsible for Americas position of power to-day. Of that power there can be no doubt. As one enthusiastic American banker describes it : No other nation ever before was at one and the same time the worlds greatest producer of goods, exporter, reservoir of capital, and dispenser of credit ; our place is one of dominant power. He exaggerates somewhat. We are not yet dominant in all things economic. But we are headed in that directiondespite British competition.
Our growing power is based on uniquely favourable conditions, which neither Britain nor any other nation has ever had, and upon the ability of a youthful, adaptable, and energetic people to make the most of their rich natural resources and peculiarly fortunate world position. Practically all students, domestic and foreign, agree that these major factorssuperior resources, favoured geographic position, and material skillexplain our great strength.
The significance of our present economic position, contrasted with that of Britain, is that it is based on natural conditions favourable not only to retention but increase of Americas present major position. Those basic conditions include an abundant food supply, unique raw material and energy resources for industry, the best industrial equipment and most modern technique ; the largest of home markets to absorb the output of mass production ; a regulated supply of labour combining skill and docility, and resulting in high productivity and a minimum of industrial strife ; and, finally, a huge reservoir of capital.
Among these factors perhaps the most important are natural resources. It is generally estimated that the United States controls about 40 per cent of the worlds mineral wealth. With less then seven per cent of the worlds population and only six per cent of the worlds area the United States is producing 39 per cent of the coal, 35 per cent of the hydro-electric power, practically all of the natural gas, and 71 per cent of the oil. It is producing, in addition to 60 per cent of the worlds wheat and cotton, 55 per cent of the timber, 38 per cent of the lead and phosphates, and 50 per cent or more of the copper, iron, and steel. In contrast the United Kingdom, with the single exception of coal, is seriously lacking in all major foods and raw materials. She must import about 80 per cent of her wheat and flour, 60 per cent of her meat, almost 35 per cent of her iron, 90 per cent of her timber and wool, and all of her cotton, copper, nickel, and oil.
American industrial efficiency is based increasingly on its utilisation of electric power. Its output in 1925 was 81,801 million units, compared with Britains 11,814 million, or an output per capita of population of 710 units compared with 282 units.2 In the period 1925-29, there has been a more rapid American increase. A comparison in 1928 by the National Industrial Conference Board of New York of eight major industries in the two countries states that the United States, which uses on an average one and one-half times as much horsepower per wage earner as in Great Britain, turns out, largely as a result of this greater use of power, from two and one-half to three times as much production per wage earner.3 Industries covered were steel, machinery, automobiles, electrical equipment, ship building, cotton goods, woollen goods, shoes. Another estimate translates the electric power used in the United States as equal to the physical equivalent of 150 slaves for each member of the population. The use of power here has increased almost four times as fast as the growth in population.
According to the Hoover Committee Report on Recent Economic Changes,4 the prime mover capacity in the United States is 800 million horsepower, or about four times as large as that of Britain. The Report makes the interesting observation that United States per capita wealth bears the same ratio to British per capita wealth as the United States per capita horsepower to British per capita horsepower.
The rate at which American industry is being electrified is characteristic of similar progress in the improvement of machines and management. We have at least a 10-year lead over Europe in industrial technique, according to the economist, Dr. David Friday.5 These technological improvements include new machines, better factory planning as to geographical location, interior serialisation, production control, improved material specifications and checking, and decreased labour turnover.6
Simplification as preached by Mr. Hoover, is saving American industry $600 million annually, according to the Department of Commerce. And standardisation of products is saving $750 million a year in the automobile industry alone, according to the American Engineering Standards Committee.7 Reduction in types of commodities produced range in many industries as high as 90 per cent.
Other factors in our industrial efficiency are : increased exchange of trade information by companies through trade organisations and associations ; improved company and government commercial intelligence services, statistics, and cost accounting ; and scientific research. In practically all of these fields British industry is far behind America. We believe that secrecy in business is one of the greatest factors of inefficiency in British economic life to-day, particularly in comparison with the United States, the Report of the Liberal Industrial Inquiry stated.8
American industry is spending $500 million annually on research, the Department of Commerce estimates. But the country of Faraday and Kelvin is much less interested in industrial research. As an instance of this indifference the Manchester Guardian Commercial cites the case of a new lead alloy discovered by the Non-Ferrous Metals Research Association with a strength weight for weight 40 per cent greater than lead, and of unquestionable quality : Yet the association has to acknowledge that it has failed, in spite of many efforts, to arouse interest in the new product among manufacturers.9 According to the final Balfour Committee Report : Before British industries, taken as a whole, can hope to reap from scientific research the full advantage which it appears to yield to some of their most formidable trade rivals, nothing less than a revolution is needed in their general outlook on science.10
Mergers have been another important factor in American industrial progress, with the British following far behind. This process accounted for the disappearance of about 5,000 mining and manufacturing concerns in the period 1919-27in public utilities in 1926 there were more than 1,000 consolidationsthe Hoover Committee Report shows. There has been a similar trend in marketing and banking. These consolidations in many cases have reduced costs and increased profits. They have hastened the system of mass production, which so many foreign observers believe to be the key to our prosperity. Many of the technological improvementssuch as standardisation, labour-saving machines, extensive scientific researchare uneconomic, if not impossible, except in the case of very large production units with large sales organisations and large credit facilities. Certainly it has been demonstrated that such large units usually can afford, because of mass output, to take a smaller profit on the individual product. Thus the most profitable American industries are geared to sell at a low price to many consumers, rather than at a high price to a few consumers.
The general trend in this country has been for large corporations to grow richer, and for small factories to grow poorer or go bankrupt. There are exceptions. And, perhaps, the popular tendency in this country as in others has been to exaggerate the financial advantage that mere size can give. In some industries, and in certain individual mergers lacking efficient management, results have been disastrous. Exceptional cases, however, do not obscure the fact that the most profitable and efficient American industries to-day are those almost exclusively dominated by large units, and that consolidations would improve the condition of such sick American industries as coal and textiles.
Mass production has given American industries a large advantage over British competitors. The British realise this, and are trying with only limited success to correct the disparity. The final Balfour Committee Report pointed out that it is abundantly clear from our survey that the first step to putting British industries in a position to compete successfully in overseas markets, is to subject their organisation and equipment to a thorough process of re-conditioning . . . [which] will undoubtedly involve a great deal of scrapping and replacement of plant, and enlargement of the industrial unit, both by growth and by re-grouping of units through consolidation or other forms of association, so as to obtain the full benefits of large-scale production, elimination of waste, standardisation, and simplification of practice, and all other measures of economy usually included under the comprehensive term of `rationalisation.11 But British industry is much less able than American industry to adapt itself to these modern requirements. Large British combinations have been attempted in the heavy industries, chemicals and shipping. Such adaptation lags in the coal and textile industries. Steel consolidations have been achieved only by writing off huge sums of capital. Within the period 1925-28, leading companies in heavy industry alone were forced to write off capital of more than $150 million. Many of their large consolidations, horizontal and vertical, have been unsuccessful.
In many cases the plight of British industry is so desperatedue chiefly to the change in world economic conditions, which are now as unfavourable to Britain as they were once favourableno amount of rationalisation can help. Often it merely makes the maladjustment worse. One of the most depressing statements in the final Balfour Committee Report is the following : It is plain from the information before us that some of the undertakings which have been most efficiently equipped in the absolute sense have been the least capable of competing under the conditions which have prevailed during the difficult post-War period.12
This comes close to a confession of the essential unsoundness of Britains position in the contemporary world, an unsoundness which neither British industry nor the London Government can appreciably change. Indeed facts pointing to this conclusion appear repeatedly in that official Report. For instance, in discussing the inability of many depressed British industries, including some of those on which our competitive position has hitherto largely depended, to find the necessary capital to carry out the re-equipment which is essential to the restoration of their health, it shows that the fault is not with the credit system or any other factor which might be forcibly corrected, but that : The tap root of the mischief is the continued unprofitableness of so many industrial concerns, which makes them unable either to give security to the banks or to offer an attractive investment to the public.13
The industrial credit situation in Britain is the opposite of that in the United States. While here profits have been ploughed back into industry and thus have compounded plant improvements and profits, most British industries since the War have lacked the profits required for modernisation and others have been more anxious to invest their profits abroad than to re-invest at home.
There is a yet more serious obstacle to putting British industry on a basis to compete adequately with American industry. We have a huge home market ; they have not. Ours is not only the largest home market of any nation but incomparably the richest. And this involves more than the obvious factors of population and superior per capita wealth. It means also a continental area without tariff walls and trade restrictions. It means a common currency, common language, common customs, common consumer demands. It means that which is important not only to production, but also to advertising and marketing. Thus the United States can have efficient mass production based upon the consuming capacity of its home market alone. But efficient British mass production depends on foreign trade ; it depends, indeed, upon a virtual monopoly of foreign markets such as no one nationmuch less Great Britainis apt to approximate in this era of intensified world competition.
The richness of the American home market, compared not only with Britain but with the rest of the world combined, is difficult to comprehend. With only seven per cent of the world population, the United States now consumes 42 per cent of the worlds iron production, 47 per cent of the copper, 69 per cent of the crude petroleum, 56 per cent of the crude rubber, 36 per cent of the coal, 53 per cent of the tin, 48 per cent of the coffee, 21 per cent of the sugar, 72 per cent of the silk, and upward of 80 per cent of the automobiles.14 How can British industry ever hope to compete in foreign markets against an American industry which can grow rich on this home market and then profitably sell a surplus abroad for a fraction of its production cost if necessary ?
Granting the wide disparity in their respective home markets, neither American nor British industry has progressed as far in marketing as in production efficiency. The Report of the Liberal Industrial Inquiry in its summary of conclusions stated : The heading under which there is perhaps most reason to doubt the efficiency of our [British] existing organisation is that of marketing. Doubts are cast on the suitability of our traditional merchanting system to the altered conditions of international competition in the modern age. It is held to be not without significance that those industries which are now finding it most difficult to hold their own are the old established industries in which the 19th century merchanting system has struck its deepest roots.15
American marketing methods are equally wasteful. Mr. Edward A. Filene, the Boston merchant, estimates on the basis of government statistics that there is $8,000 million of preventable marketing waste in the $40,000 million worth of goods purchased in American retail stores annually.16 Other estimates of the ratio of marketing cost to total sale price of an automobile, for instance, range as high as 40 per cent. Of the sale price of a familiar manufactured breakfast food 63 per cent is in the distribution charge. In the case of bread, the marketing cost is 54 per cent.17 This waste in distribution, though putting such a heavy burden on the consumer, has not been heavy enough to ruin the marketwhich is perhaps an even more astounding revelation of the purchasing power of the American public.
That purchasing power has permitted the rapid growth in American production. With the 1923-25 average taken as 100, our industrial output rose from 83 in 1919 to 110 in 1928, according to the Federal Reserve Board index.18 In the period 1924-28 while American production was increasing from 100 to 110, the British Board of Trade index showed that their increase was from 100 to 105.2. Equally significant, British production declined 1.6 in 1928 compared with 1927, while American production increased four points. From 1924 to 1928 the output of British mines fell off 10.8.19
Of importance in relation to the competitive power of American as against British industry is the fact that the output of the individual American worker is rapidly increasing and that of the British worker is not. Taking the per capita output of 1899 as 100, the Hoover Committee Report showed that per capita output rose from 104.5 in 1919 to 149.5 in 1927.20 While American industrial production increased 29 per cent in the period 1919-25 the number of wage earners decreased seven per cent the Report found.21 Doubtless the horsepower increase of 22 per cent in that period in industry is largely responsible. But whatever the reasons, and they are varied, the increased productivity of labour gives to our industry an immense advantage over British trade rivals. Mr. G.D. Rokeling in the London Economist recently estimated on the basis of Board of Trade statistics that 114 British workers produced in 1924 only 19 per cent more than 100 workers in 1907.22 The London Times quoted the Board of Trade Journal as follows : On the figures at present available, the Journal says it does not appear possible to make any statement more definite than that a small quantitative increase of net output per head took place in 1924 as compared with 1907.23 Assistant Secretary of Commerce Klein has estimated that in the machinery-manufacturing industry, for example, the individual American worker in 1928 produced a value of $5,200 compared with the English workers $1,500.24 Contrasting the purchasing power of wages in the two countries, the Report of the Liberal Industrial Inquiry found that in the United States real wages were at least 30 per cent greater in 1925 than 1919, while real wages in Britain are little if any higher than before the War.25 The average increase in real wages in the United States in the period 1922-27 was 2.1 per cent annually, according to the Hoover Committee Report.26 British economists are in the habit of emphasising that the real wage of the British worker is not so low as it seems because his standard of living is enhanced by the Governments social expenditure for education, sanitation, sickness, accidents, old age, and unemployment, an aggregate which they believe to be much larger in their country than in any other.
But whether these governmental social expenditures add more to the British workers standard of living than similar American expenditures by Federal and State governments and the huge benefactions of private foundations is probably questionable, especially if the non-comparable British unemployment dole is excluded. Free social services, according to the Hoover Committee Report constituted 2.4 per cent of the national income of the United States in 1915 and had risen in 1926 to 3.4 per cent.27 Such expenditure by 48 States, and cities with populations of more than 30,000, rose from $859 million in 1915 to $2,860 million in 1926. Private philanthropies here in 1928 alone approximated $2,330 million, according to the John Price Jones Corporation, fund raising consultants.28
So many factors which do not admit of accurate statistical analysis enter into all such estimates that no comparison of real wages can be more than an approximation. Taken for what it is worth, President Hoover, after stating that American real wages in 1928 were over 50 per cent greater than before the War, has made the following interesting comparison between American and British real wages : Moreover our real wages and our standards of living are the highest in the world. And I am again speaking of the real buying power of wages. To compare ours with foreign wages we must find a common denominator, because translations of foreign currencies mean but little. If we say that five per cent of butter and 95 per cent of flour form the basis of that useful mixture called `bread and butter then the weekly earnings in each country would buy at retail in those countries the following total of this useful compound : railway engineersUnited States 717, United Kingdom 367 ; carpentersU.S. 731, U.K. 262 ; electriciansU.S. 778, U.K. 267 ; coal minersU.S. 558, U.K. 267 ; weaversU.S. 323, U.K. 136 ; day labourU.S. 259, U.K. 160.29 Real wages, measured by food and rent purchasing power in October 1928, were 100 in Philadelphia compared with 53 in London, according to the National Industrial Conference Board index based on League of Nations statistics. Granting that those figures are only approximations, they indicate in a general way not only the greater prosperity of the American worker as such, but the difference in purchasing power per capita between the two populations.
Americas superiority over Britain in national wealth and income, or in capital resources upon which the improvement and expansion of production and markets so largely depend, also is difficult to measure accurately. U.S. Census estimates in 1922 placed our total national wealth at $320,000 million. Taking the annual rate of increase shown for the period 1904-22 of 7.2 per centwhich is somewhat less than the annual income estimates given belowour total national wealth in 1929 may be estimated at more than $481,000 million. Britains national wealth is estimated at about $120,000 million.
According to Hoover Committee Report estimates, the total accrued social income of the United States was apparently four and one-half times that of the United Kingdom in 1924, or $79,400 million compared with $17,700 million. It estimates our national income in 1928 at $89,000 million. Contrasting the rate of change in the period 1913-27, Mr. Evans Clark finds on the basis of estimates of the National Bureau of Economic Research and the Bankers Trust Company, that our total income increased 66 per cent and Great Britains only four per cent ; the per capita income in this country increased 26 per cent compared with a five per cent increase there.30
Taking a longer period of measurement, 1907-24, Mr. A.W. Flux in his address on The National Income to the Royal Statistical Society in 1928 arrived at figures even more discouraging for Britain : The real income per head of the total population or of the nominally occupied population appears thus to have decreased by a small percentage, and if numbers actually at work are taken instead of numbers nominally occupied, the result appears to differ little from that calculated on total populationnamely, a decrease of three per cent.31 The Report of the Liberal Industrial Inquirystarting from earlier estimates of the Colwyn Committee, Professor Bowley, and Sir Josiah Stampobserved in 1928 : The general conclusion of such computations is that our national income is now (or was in 1924) about the same, in terms of real value, as it was before the War ; but, as the population has increased by nearly seven per cent, it is appreciably lower per head. . . . The Colwyn Committee estimated that the total national savings were in 1924 about 500 million pounds, as against, say, 375 million pounds before the War. Allowing for the fall in the value of money, savings on the pre-War scale would have amounted in 1924 to 650 million pounds. Thus there was a decline in the real value of savings of about one quarter.32 The spread between American and British income up to 1924, as shown by the Hoover Committee Report quotation given above, has since increased. While British per capita income has not increased since 1924, in the United States it jumped from $697 in 1924 to $745 in 1928.33
Another way to measure Americas financial superiority is to compare the national debts and rapidity of retirement. Britains national debt in 1928 was more than $37,000 million, an amount larger than in 1919. In 10 years more than half of Britains colossal tax collection has gone to carry the debt, without reducing it. In the same period the Washington Government cut its debt nearly $10,000 million, leaving a balance of only $17,000 million. In America the relation of the amount of interest on the national debt to the gross national income is less than 1-to-80 ; but in Britain it is 1-to-17.34 One reason for Britains slow debt retirement is her heavy current militarynaval expenditures, amounting in the year 1928-29 to $551 million. Obviously she is less able financially to carry that burden than the United States to carry its similar armament load of $684 million (1928-29).
In both countries capital complains that heavy taxation burdens industry. But in Britain almost 20 per cent of the national income passes through the hands of the State in taxes, compared with 10 per cent in the United States (including local taxes). Though Britain taxes her rich men relatively much more drastically than the United States, the British workers carry a far heavier tax burden than their American fellows and one so heavy as to curtail seriously the living standards and purchasing power of the British population. In the case of the working man with a large family the rates may consume nearly 10 per cent of his income, if his children are to be housed with the barest minimum of decency, the Report of the Liberal Industrial Inquiry points out. In the case of the rich man they will usually amount to less than one per cent of income.35
Uneven distribution of wealth, according to the British expert, Dr. Henry Clay, is worse in Britain than in any other country. This is an important industrial, as well as human factor. It tends to lower the morale and productivity of labour and at the same time reduces the purchasing power of labour and the home market. American multi-millionairesthat is, those making tax returns on annual incomes above $500,000number seven per one million of population, or just double the British ratio. But incomes of $50,000 to $75,000 are comparatively more numerous in Britain. Dr. Clays study, based on estate duty statistics for 1920-21, showed that one-third of one per cent of property owners held 38 per cent of total British property, and that less than two per cent of the owners held 64 per cent of the total wealth.36
For the United States estimates of the Federal Trade Commission Report in 1926, on statistics of 1922, indicated that one per cent of estate holders owned 59 per cent of the total wealth ; this compares with the 1916 estimate of the U.S. Commission of Industrial Relations that one per cent of the population owned 60 per cent of the wealth.
Concerning income distribution, study of the period 1918-26 in the Hoover Committee Report based on Dr. Kings estimates, seems to show that there is no rapid change in this country, the ratio having remained fairly constant with about 10 per cent of the population receiving about 33 per cent of the income.
Of earned income, the Report says : If we take enterprisers labour income at nine and a half billion dollars in 1925, all labour income represents nearly 69 per cent of total realised income, and property income represents about 31 per cent. . . . `Earned income includes employes labour income and enterprisers profits. In both the United Kingdom and the United States in 1924, `earned income was about three-fourths of the total `social accrued income. In both countries the proportion is larger in 1924 than before the War, the proportion for the United Kingdom in 1911 being about two-thirds, and for the United States in 1914 about 73 per cent, as against 76 per cent in 1924.37
ROBOTS AND RADICALS
In evaluating Americas industrial advantages over Britain, foreign observers usually contrast the relative industrial peace in this country with the British unrest. Much economic waste in the capitalist system results from strikes, deliberate labour sabotage. Lowered production morale and decreased labour efficiency are part of the capital-labour conflict. Thus the relatively docile temper of American labour under the present economic system is one of the chief assets of American capital, both in the matter of even-flowing high production, and in competition for domestic and foreign markets. The super-mechanised state of American industry, the speeding-up processes of scientific management upon which present mass production and profits are based, require a capacity and willingness on the part of the worker to transform himself into a human machine or robot which the more class conscious British worker has not yet shown.
The reasons American labour has adapted itself more readily to the robot ideal are varied and paradoxical in view of the frontier heritage and traditional individualism of Americans. In this country labour organisation has not developed parallel with organisation of capital. Getting a much later start than British labour, most of the unions here have been smaller and less aggressive. Geographical isolation of the country has separated the American labour movement from more radical British and European developments. Absence of fixed social castes and economic classes operated to make every industrial worker, in his own mind at least, a prospective millionaire. Although few became rich many shared more liberally than formerly in the surplus which capital set aside for producers. Especially during the last decade, as we have seen, the real wages of labour, or at least of the organised labour aristocracy, have increased rapidly enough to prevent social unrest. American capital has had a much bigger melon to cut than ever before and, while keeping much more for itself than ever before, it has wisely also enlarged labours slice. In the period immediately following the War, under the burden of deflation and vicious anti-labour tactics by employers, there was a brief flame of protest. Unions took the offensive. Left-wing groups gained more power. But before this movement gathered headway, the country was passing out of the period of industrial depression and into prosperity. That prosperity has converted a vast majority of the workerstemporarily at leastto the efficacy, even the nobility, of the capitalist system as it operates here.
Membership in trade unions declined from more than five millions in 1920 to about four millions to-day. And the majority of that union membership, represented by the American Federation of Labour, is hardly less enthusiastic about the present economic system than are employers. The Socialist Party, partly due to the labour popularity of the defeated Democratic candidate, Mr. Smith, polled in the 1928 national election only 266,000 votes of a total 36,800,000. The Workers (Communist) Party vote was 48,000.
A vivid and not altogether inaccurate picture of the American-British contrast can be seen by placing the victorious Hoover platform of 1928 against the victorious MacDonald platform of 1929. One is capitalist, the other is socialist, and they are about equally representative of the popular will in their respective countries. Mr. MacDonald, for all the moderateness of his socialism, is no more moderate than Mr. Norman Thomas and would have run little better than the latter in the American election. Though British labour in its political and industrial philosophy seems most conservative to Moscow, it is as far from American labour on one side as from Communism on the other. Nor has Mondism and the present swing of British labour toward closer co-operation with capital, created in that country anything approximating the submissiveness of its American fellow workers.
British capital, with such a maladjusted industrial plant and under such unfavourable world economic conditions, is not likely to provide radical British labour with a sufficient share of profits to maintain permanent industrial peace. The fall of British union membership to five millions, the lowest figure in 12 years, is not comparable to similar union losses in America. While in this country that reduction is one index of the low state of labour solidarity, in Britain it represents little more than a normal transference of labour action from the industrial field, following the disastrous 1926 general strike, to the political field. With British labour victorious in the 1929 national election, it cannot properly be compared with American organised labour which not only has lost in the industrial field but which is almost completely lacking in national political power.
Perhaps the best proof of the near-perfection of the spirit of American labour for the purposes of an unrestrained capitalist system is its submission to legal injustices and physical violence without effective protest. The anti-labour injunction flourishes in all parts of this country. There is terrorism and murder by sheriffs and company police especially in the coal and iron and the textile industries, and constant violation by officials and employers of the workers constitutional civil liberties. If American workers capitalist morale has not been shaken by such conditions, it appears unlikely that social unrest soon will cripple American production as such unrest has and does retard revival of British capitalist production.
The significance of social unrest is not limited to the immediate loss in industrial output resulting from strikes. As the final Balfour Committee Report states : Much more important than this relatively trifling loss is the inflammation of animosities and the poisoning of class relations which often result from or are incidental to industrial warfare, together with the blow inflicted by a serious and long continued stoppage on business good will and on the reputation of British trade for certainty of delivery.38
Aside from the obvious example of the large coal and textile strikes, there is abundant evidence that British industrial strife weakens British trade in the competition with America for world markets. In a typical trade report the British Bank of South America, for instance, complains that alleged superiority of British goods as a selling factor abroad is now offset by the lack of confidence on the part of overseas buyers ingendered in incessant strikes in this country and by the consequent uncertainty of securing delivery of the goods ordered.39
For British capital to observe that one reason it is suffering from American competition is, from the capitalist point of view, the inferiority of British labour, is not enough. The diagnosis is much simpler than the remedy. The question is, in the words of a London journal : Will British labour, with its long traditions of organisation and collective bargaining, submit itself to the discipline and regimentation which appear to be indispensable to the American system ?40
It is useless to seek the answer to this question, and the other questions raised in the foregoing pages, without the constant realisation that British industry is sick with organic disease and that cures ordinarily beneficial for milder functional industrial ills in the United States and elsewhere cannot cure British industry. The tell-tale symptom that Britains industrial disease is organic, rather than functional, is the extent and nature of British unemployment. Other industrial nations always have had, and doubtless will continue to have under the capitalist system, permanent minor unemployment and periodic major unemployment, but no other country to-daymuch less the United Stateshas such a hopeless unemployment problem as Britain. In the decade before the War British industrial unemployment ranged from three to eight per cent of the employable industrial population. In the period 1920-28 it ranged from eight to 17 per cent, that is, from one to two million.41
Realising that other factors make the situation more serious there than here, the Balfour Committee Report, nevertheless, was of the opinion that on a numerical basis alone British employment compares favourably with American : The absence of any firm basis of insurance statistics in the United States makes the figures very difficult to compare with those of Great Britain, but, so far as any conclusion can be safely deduced from the very partial data available, it would seem to be that the volume of industrial employment in the United States has of late years fluctuated more violently and rapidly than in Great Britain, and also that the average percentage of unemployed persons in American industry has been at least as high as in this country.42 It goes on to estimate the average of American industrial unemployment in the post-War period at from 12 to 15 per cent.
That estimate appears excessive in view of later American research in what is admittedly a most inadequate field of data. Data accepted by the Hoover Committee Report in 1929 indicated that the minimum range of American industrial unemployment was from 15.3 per cent in 1921 (4.25 million) to 6.3 per cent (2.0 million) in 1927.43 But the average for the five years 1923-27 was only 6.1 per cent. That minimum average would be raised by some to a maximum of nine per cent. Inclusion of 1928 and 1929 would not materially change the figure in either case. In contrast, the British average for 1923-1928 was nearer 12 or 13 per cent. Even with other conditions in the two countries equal, that spread between the American 6-9 per cent and British 12 per cent of unemployment would make the difference between relative prosperity and severe depression.
Other conditions, however, are not equal. Practically all are favourable to the United States. First, the higher real wage and larger savings of the American worker, noted above, enables him to mitigate somewhat the distress of unemployment. Second, there is an interchange of labour between industry and agriculture here, and not in Britain, which in part takes up the slack. Third, larger profits and capital reserves of individual industries and of American industry as a whole, permit raising of the work age and lowering the school age, decreasing the number of per capita working hours, and otherwise automatically providing more jobs ; expedients which are not so easy in Britain.
Perhaps of more importance is the generally admitted superior mobility of American capital, business management, and labour. Official and semi-official reports on British economic conditions recognise the lack of such mobility as a fundamental handicap in that country. Neither the British industrialist, merchant, nor worker adapts himself easily to changes. The British are thus handicapped in the creation and conduct of new industries, and in the transfer of surplus labour from old industries to newa capacity essential in this super-machine age in which the price of industrial efficiency is increasing technological unemployment.
This factor reveals not only that American unemployment is a much less serious phenomenon, than is the British, but also that the latter probably will tend to grow worse rather than better. Our industrial unemployment to-day is largely technological ; it exists, paradoxically, because of efficiency and prosperity and despite larger domestic and foreign markets. Britains unemployment is due chiefly to changed world conditions and contracting markets ; she has yet to feel the full force of technological unemployment. So, under the pressure of American competition, as she modernises her plant and methods she will create a new type of unemployment, which she is peculiarly unable to correct because of her lack of mobility.
The price of industrial efficiency on the American scale is, as we have seen, to increase in six years the quantity of output 29 per cent and at the same time reduce the number of workers seven per cent.
To a surprising degree, though far from completely of course, the United States is correcting this technological unemployment problem by creating new machine industries and stimulating new markets for them at home and abroad. Possibilities of this corrective process are limited in this country of industrial mobility only by the exhaustion of scientific research and of domestic and foreign markets. American leadership in production and marketing is greatest precisely in those industries in which there is most room for expansion in world consumption, and in which British and other foreign industries hitherto have been least able to compete ; namely, in the automotive, rubber goods, aviation, radio, motion picture, and electrical industries.
Even in Britain, where these new industries are so much smaller than here, they have provided the only increase in employment. Those increases cannot be sufficient to her needs, however, until she is able to supplant her American competitor in world markets. And, as shown, in addition to all her other handicaps in the development of new industries, Britain lacks the large home market which makes possible Americas dominance as an exporter.
Thus any consideration of British unemployment must circle back eventually to the old heavies, the industries which made her the worlds commercial empire, and upon which other nations no longer depend because they are generating their own industrial energy, fabricating their own steel, and weaving their own cloth. No economic depression in this generation can reduce America to Britains present state, because we are dependent on no one industry or group of industries. Britain is dependent now, as in the past, on coal, steel and textiles. Hence, although America suffers with Britain to-day from the world market depression in coal and textiles, we hardly feel what is almost a death blow to the British.
In terms of unemployment the British economic problem is thus permanent. That 20 per cent of British unemployment is in the coal industry is not so significant in itself is the fact that there is a permanent surplus of almost 250,000 miners. This is in addition to a permanent surplus of 100,000 in ship building, iron, steel, and heavy engineering trades, and an unestimated permanent surplus in textiles. Attempted British remedies have been in the nature of salve for a malignant growth. Public relief works at an expenditure of $5 million gave direct employment for one year to no more than 2,000 men in road construction.44 Expenditure of $520 million gave directly the equivalent of one years work to only 350,000 men, according to an estimate in 1929 of the Unemployment Grants Committee on the 1924-28 project. Employment of 100,000 men for one year under the housing plan cost $375 million. By spending $6.5 million in six years the Ministry of Agriculture provided the equivalent of one years work for only 11,200 men.
None of the palliatives yet devised can appreciably remedy the unemployment situation. Meanwhile any increased industrial efficiency will tend to make the unemployment problem worse.
Still the Britishor some of them at leastdo not despair. They are, perhaps, in the position of men on a ship in distress. They must be so intent on keeping the pumps going that they have neither the time nor the courage to consider the structural weaknesses developed by the ship in the storm. Thus the distinguished economist, Mr. John Maynard Keynes, famous for his pessimistic but accurate prophecy of the world economic consequences of the Versailles peace, is optimistic as he watches the pumps reduce by inches the water in the badly strained British ship.
Between 1924 and 1928, [British] money and wages remained practically unchanged, while return to the gold standard at pre-War parity had the effect of increasing real wages by a further eight per cent. It follows that employers have been faced with the task of improving their efficiency by 16 per cent, as compared with 1924, before they could recover their pre-War position. Now it is not over-optimistic, I think, to suppose that efficiency is being increased at 1.5 per cent per annum on an average in the whole field of industry, which, if it is the case, is a considerable achievement. This means that to-day efficiency has reduced the adverse lead from 16 per cent to about 10 per cent.45
But probably Mr. Keynes would admit that neither increased industrial efficiency nor any other technological or political panacea is solving the problem from which most other British economic problems flow. That is over-population.
Over-population is a relative term. But if it can be applied accurately to any nation it can be applied to Britain to-day. The United Kingdom has a greater density of population for her area than any major nation, and is surpassed among all nations only by Belgium and Holland. For every square mile she has 482 persons to feed and support, compared with Japans 405, Germanys 346, Italys 341, Frances 192, and the United Statess 40.46 Even those comparative figures do not indicate the extent of Britains handicap, which is increased by the inadequacy of her agriculture, and by the preponderantly industrial character of her population. About 80 per cent of the population of England and Wales is urban, compared with 52 per cent in the United States.
Some consolation is derived from the fact that birth control and other factors have checked the rapidity of population growth. Without discussing the causes Mr. Robert R. Kuczynski in his book, The Balance of Births and Deaths, states that, despite a lengthening of the average life span the tendency in Britain and other western and northern European countries is toward diminution of population. He reaches the following unorthodox conclusion regarding England, which in 1927 had 655,000 births and 485,000 deaths : It may seem at first sight that an excess of 170,000 births is a proof of considerable vitality.... Yet, incredible as it may sound, those 655,000 births of 1927 mean that on the average each woman during her lifetime gives birth to but two children, and that if the population is to hold its own, not one of the children thus born may die before obtaining parenthood. This means that The population of England is bound to die out. And this state of affairs is by no means confined to England. Conditions are about the same in Germany, and only slightly better in France.
Though the death rate in England has fallen by one-third in less than half a century, the birth rate has fallen until it is below that of any country other than Sweden. The 1927 rate was 16.6, the lowest recorded since civil registration was required in England, lower even than the War years. There was a negligible increase of 6,000 in 1928.
Speculation, however, on the relief which may be obtained by Britain ultimately from that process does not materially lessen her difficulty during the next two critical decades. Even if British population becomes stationary by, say, 1945 that will not get rid of the excess in the present 45 million population, which most economists estimate at a minimum of one million. As a matter of fact the present rate of growth, though little more than half the pre-War rate, is still one million every four years, based on the 1921-27 average.
Of the panaceas offered for unemployment resulting from overpopulation, many are temporary expedients which have cost $3,000 million in the last 10 years without appreciable results. Such are the sundry schemes for part-time employment on public works, discussed above. Another scheme is to settle excess factory workers on farms in England. Mr. George Lansbury, before becoming a member of the Labour Ministry, proposed that the Government spend $500 million for that purpose. But there seems to be no major relief possible in that direction. In its 1928 report the Industrial Transference Board stated that $50 million would settle no more than 5,000 or 7,000 families on smallholdings in England. In view of the cost, of adverse agricultural conditions, and the experience required of persons making a success of farming in England, the Board could only hesitate to suggest at the present time the initiation of extensive schemes of land settlement on ordinary agricultural small-holdings.
The need rather is to get the surplus population out of the United Kingdom. With the national income in purchasing power only roughly what it was in 1914 and the population seven per cent larger, emigration is the obvious way out. But that path, like all other suggestions for relief, is beset by many barriers.
The United States is one barrier. Among the obstacles which hinder industrial emigration from Great Britain an important place must be given to the exclusive policy of the countries which in the past have been the main recipients of British emigrants, and . . . no schemes of Empire Settlement, as at present understood, can afford an alternative outlet to British industrial emigration comparable with the outlet closed by the United States, according to the final Balfour Committee Report.47
There is no prospect that the United States ever again will provide a large-scale outlet for Britains excess population. The American trend is to tighten its restrictive immigration policy. Under the present law permitted immigration is only about one-sixth that of the annual average for the eight pre-War years. This exclusion policy is designed to keep the size of the American industrial labour supply within manageable limits and to reduce the excess practically to technological unemployment, which can be cared for at least in part by development of new industries and by the falling birth rate of the country. Complete suspension of immigration for 10 years is urged by the American Federation of Labour. Though the total of national wealth doubtless could be increased by letting down the immigration bars, voluntary restriction of immigration under the present law and voluntary reduction of birth rate are important factors in raising the standard of living of the average American citizen.
Britain is encouraged by changes in the American immigration law of 1922, which in 1929 almost doubled the 34,000 quota for Britain and Northern Ireland. The change, however, was made over the opposition of President Hoover, the U.S. Chamber of Commerce, organized labour, and most of the press. Probably the British quota will be reduced again to about the same figure which obtained in the period 1922-28.
With the United States closed to any large emigration flow, and British citizens unwilling to go in numbers to such new countries as the South American republics where English is not spoken, the problem of British emigration has become one of Empire Settlement. While the United Kingdom has 482 inhabitants per square mile, the Union of South Africa has only 16.2, New Zealand 14, Australia 2.1, and Canada 2.6. The average density of population of these four Dominions is thus only 8.7. The average annual rate of growth of Canada in the period 1921-27 was only 140,000 and in Australia only 133,000. The population density of the British Empire as a whole is only 33 per square mile, or somewhat less than that of the United States.
Empire Settlement if successful would dispose of many difficulties with one sweep. Besides finding an outlet for surplus home population, it would provide the under-populated colonies with citizens. More, it would provide the Dominions with the right kind of citizens, that is, loyal Britons who would keep their new country faithful as a unit of the Empire in peace and in war. The scheme is perfect in theory. But it has not worked well. It is a matter of regret, and indeed astonishment, to find how disappointingly slow has been the rate of settlement of British people in Australia and Canada, notwithstanding the passing in 1922 of the Empire Settlement Act for the express purpose of stimulating it, the Industrial Transference Board reported in 1928. It lamented that, while British emigration lagged under the stimulation of subsidy and patriotic effort, in 1927, 82,000 Continental Europeans settled in Canada. In the same year approximately 22,000 non-British persons arrived in Australia. Despite all the money, effort, and talk expended British emigration declined in 1928.
Reasons for this failure are fairly obvious. A typical statement of the situation is the 1928 report of the Oversea Settlement Committee, which listed among others the following factors adverse to British settlement in the Dominions : The industrial character and urban preference of the British unemployed ; the effect of British social insurance and unemployment benefits, tending to anchor the surplus population at home ; the Dominions need for agricultural workers, but relative inability to absorb more industrially ; opposition of Dominion organised labour to a British influx, tending to increase Dominion unemployment and reduce wages. Another difficulty not usually stressed in this and other official reports, which recommend further government subsidy of Empire Settlement, is that ordinary British emigration has tended to decline and thus neutralise the small gain from subsidised passages to the Dominions.
But, whatever the causes, Britains unemployed are not enthusiastic over the prospect of becoming pioneers in the Dominions ; and the Dominions underneath their patriotic demonstrations are not enthusiastic over receiving British miners, metal, engineering, and textile workers who are not pioneer farmers, who have grown accustomed to living on part-time work and the dole, and who have socialist sympathies. Hence the paradox that such under-populated British Dominions as the Union of South Africa, Australia, and New Zealand are absorbing only an insignificant number of Britains surplus, and that Canada is doing little better. Bearing on the attitude of the British unemployed, the Industrial Transference Board professed to find a demoralisation due to idleness : To loaf for one, two, three, or more years destroys the will to work. The London Times recounts the experience of a Government emigration agent in a campaign in the distressed mining areas of South Wales, who failed to recruit a single volunteer among the boys between 14 and 19 years of age in what ought to have been a most fertile field, which that newspaper describes as alarming and discouraging.48
In 1928 agricultural workers formed the largest group of male emigrants, or 21.7 per cent of the total ; though those 12,478 were less than in the two preceding years. The next largest group, commercial, financial, and insurance, numbered less than 1,000 males, another decrease. There were even fewer from the trades in which unemployment is greatest.
This whole problem is illuminated by the experience of the special Empire Settlement scheme in the summer of 1928. From 30,000 applicants, the Government picked 8,449 unemployed men and subsidised their passage from Liverpool to Canada. Elaborate arrangements were made with Canadian authorities for their absorption in the harvest fields. But of the total only 2,720 remainedsome temporarily,and 5,729 returned to Britain and the unemployment dole. Extreme charges were made by the returning men against Canadian officials and farmers. Two British Labour members of Parliament, Mr. David Kirkwood and Mr. Tom Johnston, who were in Canada at the time, joined in the criticism of alleged mistreatment and alleged temporary imprisonment of many of the men who were returning. But Mr. MacDonald and Lord Lovat, chairman of the Oversea Settlement Committee, who were also then in the Dominion, were not inclined to blame the Canadians for the failure of the plan to transform miners into harvesters wholesale. Canadian farmers were no less critical of the emigrants than the latter were of them. To the farmers most of these miners seemed unfit for farm work, or worse, unwilling to work. The net result of the experiment has been to make western Canadian communities more suspicious of British industrial immigrants, and to make scores of British communities to which the harvesters returned more hostile to the idea of oversea settlement. So the latest joint schemes of the British and Canadian governments, including special ocean passage rates of $10 for adults and free transportation for children, together with arrangements for obtaining and developing farms with a minimum of capital, are not producing hopeful results.
In western Canada the conviction is growing that European peasants are better immigrants than British miners and factory workers. And, although the Canadian Government takes the position that the annual rate of 50,000 British immigrants is as many as Canada can absorb, the immigration from non-British countries has continued at a higher rate than from the United Kingdom. The London Government is exerting strong pressure to change this. It remains to be seen whether the Ottawa Governments reluctant and temporary decision to restrict non-preferred European immigration 30 per cent in favor of the British, or any other artificial expedient, can materially affect the barriers to British industrial migration to Canadian farms. The natural trend in western Canada has been in the opposite direction.
The Toronto Globe recently published a population study under the headline, Heritage in Great West is Passing to Aliens, So Statistics Reveal.49 That study showed that Canadian immigration in 1927-28 consisted of about 50,000 British, 25,000 Americans, and 75,000 from other countries. The Province of Manitoba, formerly almost solidly British, in the 1926 census had a rural population of 175,000 British stock and 171,000 foreign stock ; Saskatchewan, 252,000 British and 313,000 foreign. Thus in the western provinces the farm population is now almost in balance as between British and foreign stock, or in some cases the foreigners dominate. In the east the French Canadians are overflowing Quebec into neighbouring provinces. Such conditions are not favourable to any Canadian Government which insists on co-operating with the London Government in the artificial stimulation and subsidy of British industrial migration. That this system is highly expensive, as well as economically unnatural, is indicated by the statement of Premier King that his Government is spending about $17 on every assisted British settler compared with only 11 cents on every foreign settler.
No such artificial stimulus is needed to create a population flow between Canada and the United States. But then, the bulk of American immigrants to Canada are farmers, and most of the Canadians seeking prosperity in the United States are industrial workers. The paradox of enforced Canadian absorption of excess British industrial workers is complete when one realises that in the midst of the British migration schemes the Ottawa Government has been petitioning the Washington Government to permit several thousand Canadian workers to cross the border daily to work in Detroit and other American cities, returning at night to their Canadian homes. Or, put in another way, while the Vancouver city council was warning the subsidised British miner-harvesters not to expect employment in that city, Vancouver contractors were importing American labour for public work and hop-picking.50
Behind the natural resentment of many Canadians against making their country suffer for British unemployment ills, is the frequently expressed fear that proposed British immigration will breed hatred instead of friendship between the mother and daughter countries and increase social radicalism in the latter. Typical of this point of view was a speech in the Canadian Parliament, February 27, 1928, by Mr. H. Bourassa. As summarised by the Journal of the Parliaments of the Empire, he said : Instead of offering abnormal inducements to foreign immigrants, whether they came from the British Isles or from Continental Europe, they should offer advantages, at least equal if not superior, to the farmers of Quebec and Ontario as well as to the Maritime Provinces, who had a taste for the West. They should make a serious attempt to bring back some of their Canadians, especially those who had not been out of the country too long [in the United States, presumably]. . . . The efforts of all good Canadians should not be directed to making Canada an easy cure for the social evils of England, and a safety valve for the possessing classes of that great country. From a social point of view, let them beware before they open their doors to any one who might come from England with a heartful of hatred against all British institutions. Of course, if they wished to hasten the day of secession, if they wanted to precipitate Canada into a crisis with Great Britain, let them bring as many people as they could of that kind to Canada.51
In South Africa, controlled by the (Dutch) Nationalist Party, there is even less enthusiasm than in Canada for the particular type of immigrants which Great Britain must get rid of.
Opposition to such British immigration at this time is open in Australia. In the spring of 1929 the Australian Workers Union, the strongest labour organisation in that country, sent a delegation to the British Isles to warn British labour not to migrate to Australia where unemployment existed. The British Economic Mission reported in the same year that Australia was not then a suitable place for emigrants. Official statistics show that in the period 1923-27 Australian unemployment ranged from about seven to nine per cent. In that period there was a net immigration increase of 40,000, which most authorities agree must be reduced. Although Australian sentiment is coloured by fear of an alleged Yellow Peril, and is thus theoretically sympathetic with British immigration to preserve the British character of Dominion population, economic exigencies are such that Australia cannot for many years to come serve as an outlet for excess British industrial population. Meanwhile the British proportion of the Australian population is being diluted. It fell from 81.4 per cent in 1925 to 75.5 per cent in 1927, with compensating gains by other Europeans.
In New Zealand the situation is no better. That Dominion has suspended its system of assisted British immigration. All efforts so far have been unsuccessful in meeting the local unemployment problem. At the most New Zealand cannot absorb more than a maximum of 7,000 immigrants annually.52
So what is to become of the million and more British workers who are permanently unemployed ? Being surplus population, they are a drain upon the rest of Britain. They should migrate. But, for one reason or another, they do not want to leave home, they are not fitted to be pioneers on colonial farms, and there is no enthusiastic welcome awaiting them anywhere. Most countries now have industrial unemployment. No other country wants Britains unemployed. In a small way doubtless the London Government at great expense will be able to get rid of a few thousand each year. But it is improbable that such subsidised emigration will compensate for the growth in population during the next decade, much less diminish the surplus.
Unable to support her population with the present volume of industrial production and unable to get rid of her surplus workers, Britain therefore is thrown back to the task of increasing her foreign trade to provide jobs for them.
1 Cf., Chapter VII.
2 Report of the Liberal Industrial Inquiry, Britains Industrial Future, p. 308. 1928.
3 Press release, Aug. 6, 1928.
4 Report of the Committee on Recent Economic Changes, of the Presidents Conference on Unemployment, Herbert Hoover, Chairman ; including the Reports of a Special Staff of the National Bureau of Economic Research, Inc. 1929. The foregoing study, commonly called the Hoover Committee Report, consists of a brief interpretative summary by the committee, followed by two volumes of basic survey or special reports by N.B.E.R. economists such as Edwin F. Gay, Leo Wohnan, Edwin G. Nourse, W.R. Burgess, and Wesley C. Mitchell. References, to the above, throughout the present book are to the basic survey. The first reference, to which this note applies, is p. 91.
5 Washington News, Aug. 24, 1928.
6 Cf., Hoover Committee Report, supra, pp. 350, 513. Also G.E. Barnett, Machinery and Labour, 1927.
7 Hoover Committee Report, supra, p. 119.
8 P. 121.
9 Jan. 31, 1929.
10 Final Report of the Committee on Industry and Trade, presented by the President of the Board of Trade to Parliament, March 1929, Cmd. 3282 ; commonly referred to by the name of the committee chairman, Sir Arthur Balfour : p. 218.
11 P. 297 ff.
12 P. 181.
13 P. 289.
14 Secretary of the Treasury Mellon, radio address, Oct. 29, 1928.
15 P. 463.
16 New York Wall Street Journal, Nov. 29, 1928.
17 Cf., Abraham Epstein, Is American Capital Intelligent ?, New York American Mercury, January 1929.
18 Federal Reserve Bulletin, May 1929.
19 New York Wall Street Journal, March 15, 1929.
20 P. 446.
21 P. 53 ff.
22 New York Wall Street Journal, Nov. 9, 1928.
23 London Times Weekly, Sept. 27, 1928.
24 Washington address, May 10, 1929.
25 P. 39.
26 P. 633.
27 P. 19.
28 United Press, Dec. 31, 1928.
29 Newark address, Sept. 17, 1928.
30 New York Times, Nov. 27, 1927.
31 Manchester Guardian Commercial, Nov. 22, 1928.
32 Pp. 14-19.
33 Hoover Committee Report, supra, pp. 889, 757.
34 , P. 764.s
35 Pp. 436-437.
36 Cf., Report of the Liberal Industrial Inquiry, supra, p. 242 ff.
37 P. 768.
38 P. 113.
39 Boston Living Age, June 1, 1927.
40 London New Statesman, March 26, 1927.
41 Balfour Committee Report, supra, p. 130.
42 P. 134.
43 P. 879.
44 New York Times, Feb. 27, 1929.
45 Presidential address, National Mutual Life Assurance Society, as quoted by the Boston Christian Science Monitor, Jan. 31, 1929.
46 Commerce Yearbook1928, Vol. II, pp. 678-679.
47 P. 237 ff.
48 Jan. 17, 1929, weekly edition.
49 Quoted by Baltimore Sun, Oct. 2, 1928.
50 Labour Department Report, Oct. 4, 1928.
51 April 1928, p. 383 ff.
52 For discussion of New Zealands immigration obstacles, cf., statement by Prime Minister Coates, Journal of the Parliaments of the Empire, April 1928, p. 458.