EVERY attempt to solve the problem of unemployment by increasing the efficiency of production is not only doomed to failure, but must actually tend to aggravate the disease unless accompanied by an improved system of distribution.  It is not without reason that the working classes have regarded labour-saving devices with a certain amount of disfavour.

If we of the present day are the heirs of all past ages, the legacy has not been fairly distributed.  For instance, it was the belief of our legislators who first conceived the idea of granting patents to inventors that, whilst they were fairly entitled to the monopoly of their discoveries, such a monopoly could only be granted for a certain definite number of years, and that it would be against the public interests to continue the monopoly indefinitely.  Our financial system has opened a way by which such monopolies may be continued long after the patents have expired.

The Trust and the Combine are now recognized as far more powerful for protecting and maintaining a manufacturing and trading monopoly than all the patent laws that have ever been devised.  Patents are now regarded in commercial circles as of quite secondary importance, and the ambition of every iventor is to become associated with some strong fiancial group.  A few years prior to the war, at meeting of the leading German manufacturers in Berlin, they decided not to buy any more patents but to use any invention they might consider to be advantage to them and challenge the patentees to attack them.  They found by experience that it paid them better to fight an inventor than to purchase his patent rights.  The average inventor is either a poor man or a man of moderate means, and is not in a position to undertake the ruinous costs of fighting a patent action.  The result of all this is that the discoveries and inventions of the past, as well as of the present, are being controlled more and more by those who control the world’s credit, and the benefits which these discoveries and inventions were expected to confer upon mankind generally have been acquired on very much the same principle as the public lands of Great Britain were acquired by private landowners during the 17th and 18th centuries.


Now the credit of a nation depends upon what its people can furnish in the way of goods or services, and is proportional to its productive facilities and efficiency.  These, again, are dependent upon the mechanical and chemical discoveries and inventions, the commercial and financial methods employed, and even the moral qualities of the people themselves, all of which form a portion of the great national legacy handed down from the past.  This great asset forms the basis of our national wealth, and is the chief means of enabling our industries to turn out goods at the present rate, but it is entirely monopolized by those who control financial credit.  To what extent does the average citizen participate in the profits of this wonderful legacy ?

It is evident to anyone who has given much thought to the subject that our present system of distribution, which makes the existence of the vast masses of the people of all countries entirely dependent upon the demand for their services in productive operations, must, sooner or later, be displaced by something far more rational, in order that mankind may escape the inevitable catastrophe which must otherwise ensue—viz., the complete collapse of civilization.  It is quite certain that the need for labour must become less and less with the growth of inventions and the increase in industrial efficiency.  Indeed, the real problem we have to solve is not so much that of finding constant employment for our people as of supplying them with life’s necessities and comforts out of the abundance of the goods created.  Even to-day the labour of less than 10 per cent. of the population will readily suffice to maintain the entire inhabitants of this country in a high state of comfort.

Suppose discoveries and inventions during the next half-century result in the displacement of all manual labour by machinery.  Must the bulk of the world’s inhabitants then perish ?  I once asked a well-known economist what would happen if some modern genius should discover a way of training monkeys to undertake industrial operations.  Would the displacement of men by monkeys mean the survival of the ape as the fittest ?  He replied that he preferred not to cross a bridge before he reached it.  But the bridge is actually in sight.  The demand for labour is declining, and must continue to decline as productive efficiency increases.  At present the statesman’s only escape from the dilemma is warfare and wholesale destruction !  Are the fruits of human intelligence—inventions and discoveries—merely weapons for human destruction ?  Are our efficiency experts raising a Frankenstein that will some day destroy us ?  The answer is “Yes, unless the same intelligence is allowed to be employed in improving our methods of wealth distribution.”


Our present industrial plight is the result of limiting the field of invention to wealth production.  Imagine what might have been accomplished if the field of finance, instead of being carefully protected by barbed-wire legal entanglements, had been left free for exploration and experiment !  We are trying to distribute the world’s produce by the medieval methods of transportation.  We are coupling the motor-car to the bullock wagon, with the bullock in front.  Industry is always striving to satisfy the natural wants of mankind, whilst finance is perpetually holding it in check.  Industry says :  “ I can supply all the needs and desires of mankind provided I am given sufficient scope.”  Finance says :  “You shall only supply those which it pays me to supply.”

One of the things our statesmen have to learn is that there exists a vast and unsatisfied demand for British-made goods within the British Isles, and until this demand is satisfied it is unnecessary to explore the earth for fresh markets in which to sell these same goods.  For a nation to sit still and starve because foreigners are unable to buy its products—the use of which would bring health and prosperity to its people—is the very acme of stupidity.  A visitor from Mars would surely view with amazement the spectacle of a Leicester or Northampton shoe manufacturer incurring the expense of sending travellers to the North Pole and the Far East, and advertising in foreign journals, whilst hundreds of thousands of English people are going about half-shod and millions more are striving to make one pair of shoes do the work of two pairs.  Similarly, he would wonder at the shabby costumes of myriads of women who throng our manufacturing towns, whilst the Lancashire and Yorkshire mills were either closed down or running on half-time.  He would naturally inquire, why this eagerness on the part of the British merchant and manufacturer to satisfy the needs and desires of the Hindoo, the Jap, the Chinaman, the Hottentot, the Zulu, in fact, any and every foreigner, whether civilized or barbarian, whilst ignoring the needs of millions of his own countrymen ?  He would then learn that this desire was not founded upon any particular love for the foreigner, nor the neglect of his own countryman upon any dislike of the British as such, but is due merely to the fact that the foreigner is able to offer something in return and the other is not.


This “something,” he would learn, is anything that enables him to satisfy his banker, and might be merely an inexpensive piece of paper issued by the Government or a piece of yellow metal accidentally discovered in some remote region.  Yet what would puzzle our visitor most of all would be to learn that the power to convert the natural demand of these millions at home into an effective demand which would enable them to buy all the goods they require, and would start the mills and factories running full time as effectively as a similar demand from foreign lands, rests entirely with the Government, who at present are engaged, not in increasing but in diminishing the public’s power of buying.  His admiration for a people who can so easily create all the good things of life would be changed to one of astonishment that we have no proper method of distributing these things for our own benefit and enjoyment.

Now the first thing one realizes after a close examination of the subject is, that the costs of the production of any manufactured goods are much in excess of the purchasing power distributed in the process of manufacture.  For costs cover not only wages, salaries, and dividends, but other charges, such as depreciation of plant, interest, etc., and since prices must at least cover costs, it follows that the total money that is distributed in every productive undertaking is quite insufficient to buy the total products.  How then do we manage to dispose of the great bulk of our commodities ?  The answer is, partly in our home markets and largely abroad.  The home market is only able to absorb the quantity it does by the creation of additional credit from time to time over that distributed in the course of production.  Those who seek to reduce the costs of production by reducing the amount of purchasing power so distributed, viz., by lowering wages and salaries, are working entirely at the wrong end.  If the aim is to render production and distribution regular, continuous and automatic, anything which lessens the power of the public to buy goods will defeat that object by reducing the speed and efficiency of the whole system.

It must not be forgotten that the consumption of goods is essential to reproduction and should be regarded quite as important a part of the economic system as production itself.  Other things being equal, high wages are far more beneficial to a country than low wages.  America’s rapid growth in wealth and population is very largely due to the high rates of wages paid, and it is due mainly to her protective tariff that her working classes have been enabled to enjoy a much higher level of comfort than that prevailing in any other industrial country.  It has enabled her to develop her home markets to such an extent as to make her almost independent of foreign trade.  On the other hand, our free trade system has exposed our workmen to the direct competition of the lowest paid and cheapest labour in the world, and has, in conjunction with our international gold monetary system, assisted in making us so dependent on foreigners, that Mr. Kellaway, of the overseas trade department, recently stated that “our home trade could not support one half of our population alive !”  He added, “ Unless we can sell in foreign markets we are on the straight road to national suicide !”

Paradoxical as it may appear, the extravagant measures of governments have often saved their people from wholesale bankruptcy.  The United States Pension Bill, which distributed over one thousand millions of dollars annually among the survivors and the dependents of those who fought in their Civil War, did more to revive American trade (which had been so badly injured by the silver deflation policy of 1893-97) than anything else.  If instead of burdening taxpayers with extra rates and taxes to support our pensioners and unemployed, the Government were to issue fresh currency, this would tend temporarily to relieve the present industrial depression—although not permanently.  The real and permanent remedy for our troubles will be shown in the next articles.