DISCOVERY 



287 



during the abnormal trade conditions of two or three 

 years ago. 



(6) The interval which has elapsed since the last 

 spell of severe unemployment has been unusually long. 

 The last years of depression were 190S and 1909. If 

 it is admitted that juvenile workers are not seriously 

 affected by unemployment, it follows that no one who 

 was under 18 in 1909, or under 30 to-day, has had 

 practical experience of a serious spell of unemployment 

 before the present outbreak. Everj' outbreak of 

 unemployment is an unpleasant novel experience to a 

 group of young workers ; in 1908 the group was very 

 small, as the last previous j-ear of bad trade was 1905. 

 In 1908 a serious liability to unemployment was a new 

 experience only for youths and girls of 18, 19, and 20. 

 At the present moment the group of novices, so far as 

 unemployment is concerned, is some three or four 

 times as large as the corresponding group in 1908, for 

 it consists of all adult workers under 29 or 30 years of 

 age. Furthermore, the length of the spell of good 

 trade has caused the dread of unemployment to lose 

 much of its poignancy even for older workers, so that 

 the present severe outbreak must come as a most 

 disagreeable experience to older as well as to younger 

 workers. 



(c) Whilst the general public, in judging of the present 

 state of unemployment, is no doubt influenced by the 

 contrast with the favourable employment conditions 

 prevailing in recent years, and by the length of the 

 interval since the last slump, it is probably also 

 influenced by the new form in which unemployment 

 statistics are published. With the wide extension of 

 the unemplo}Tnent insurance scheme, it has become 

 possible to ascertain that x persons are unemployed in 

 this country at a particular time, instead of merely 

 learningthat y per i ,000 trade unionists are unemployed. 

 Most people are probably much more impressed by 

 the statement that 1,603,369 persons were unemployed 

 at the end of August, than by the statement that 165 

 per cent, of trade unionists were then out of work. 

 The new statistics have a tendency to magnify in the 

 minds of the public the extent of the present problem. 



2. The special conditions wiiich are influencing 

 unfavourabh' the present slump in trade are to be 

 attributed in a large measure to the war. Students of 

 economic history are well acquainted with the fact 

 that a war tends to be followed in the first instance by 

 a boom in trade, and then by a bad slump. A post- 

 war boom is itself an effect of war conditions, so that 

 the influences exercised on the present slump by the 

 preceding boom were caused indirectly by the war, 

 and might not unreasonably be grouped with the war 

 influences. We prefer, however, for the sake of clear- 

 ness, to class them sepjirately and to consider them 

 first. 



(i) (a) The post-war boom was a very feverish and 

 speculative affair. The amount of goods changing 

 hands was probably very modest compared with the 

 amount changing hands in a good pre-war year like 

 1912 or 1913. The business community and the 

 general public were very optimistic after the Armistice, 

 and no considerable flow of new orders was necessary 

 in order to place a tremendous strain upon industry 

 engaged at the time in trying to change over from war 

 output to peace output. In many trades producers 

 were unable to place even a moderate supply of goods 

 upon the market ; the limitation of supplies, in conjunc- 

 tion with the increased demand, caused prices to soar 

 rapidly to dizzy heights unknown in ordinary booms. 

 Buyers, realising how difficult it was to secure delivery, 

 frequently ordered two or three times as much as they 

 wanted in the hopes of obtaining something like the 

 amounts they really required. This practice also 

 helped to drive up prices. Fortunes were being made, 

 though mostly on paper ; industrial extensions and 

 developments of all kinds were planned ; the public, 

 its appetite whetted by the prospect of share bonuses 

 and substantial dividends, was prepared to finance 

 industry freely. People bought shares indiscriminately 

 in fresh concerns, in reconstructed companies, in new 

 amalgamations and . in well-established old firms. 

 The boom was much too fevered to last long ; it was 

 soon discovered that industrial expansion was on 

 anything but a sound basis ; the tide of trade turned, 

 and as the flow had been both great aiid rapid, not 

 unnaturally the ebb was also great and rapid. The 

 sharp reaction in prices caused all firms holding stocks 

 to be faced with heavy losses ; business houses which 

 had over-ordered during the boom now unexpectedly 

 found their whole orders being executed at prices well 

 in excess of current quotations ; they had either to 

 accept delivery and shoulder heavy losses, or cancel 

 orders and attempt to throw the losses back on to the 

 sellers. In either case, the effects were very depress- 

 ing on business enterprise, and employment suffered 

 accordingly. 



(6) Owing to the post-war boom being so short, a 

 considerable number of demobilised men never had 

 a chance of being properly absorbed into industry. 

 Consequently they very quickly found themselves out 

 of work when the tide of trade turned. 



(ii) (a) Though the least fundamental in character, 

 the war influence which has perhaps had the most 

 immediately depressing effect on industry has been 

 the great sales of war stores. At first, owing to the 

 scarcity of goods of all kinds and the inability of pro- 

 ducers to meet the public demand, the sale of war 

 stores acted as some check on the rise in prices without 

 harming producers ; but when the first rush of new 

 business was over, the large supplies of goods remaining 



