experiments in unemployment insurance, that is, in the form of establishment funds. From specific information which I have recently gathered from several large employers of labor it is apparent that these systems are usually wholly the employer's undertaking although a committee of workmen may be used as an aid in their administration. The employers pay the cost, from money set aside by the directors out of the profits. But it is felt in these instances that the burden of unemployment ought to be jointly shared by the employer and the employee, and the fund is therefore not a guarantee of the full wage rate. In one establishment employees with dependents, when out of work, receive 80 per cent of wages; those without dependents receive 60 per cent. One employer's opinion, which one must wish were more widely shared by "captains of industry," is as follows:

The employer's relation to unemployment is not yet clearly determined. The notion that he has any element of responsibility for unemployment which requires consideration upon his part, though accepted by forward-looking thinkers on the subject, has not yet lost its novelty. Limitations upon this responsibility begin to suggest themselves on the most casual thought; for the employer, himself, is obviously often in the grip of conditions that operate beyond the range of his control or of his most searching vision. Nevertheless, although the moral responsibility for unemployment cannot invariably be laid at the door of the employer, it is the employer who can both reduce the amount of unemployment among his employees by proper management, and can mitigate the hardship of such unemployment as cannot be avoided by making reservations for contingencies beyond his control.

By its efforts to prevent seasonal unemployment, which is that phase of unemployment which is largely controllable by the employer, by carefully distinguishing operating expenses from the cost of unemployment relief, and by budgetting unemployment relief and working with its employees in testing out relief methods, this company is endeavoring to develop a scientific method of solving the greatest evil of present working conditions. In this endeavor this company has kept two fundamental principles constantly in mind. The first is, that the highest goal is always the prevention, not the relief of unemployment. The second is, that what will do most to prevent relief from having a tendency to pauperize the employees and check their efforts to safeguard their future, and what will do most to make the giving of relief a stimulus to the employer to prevent unemployment is the proper distribution of the expense of unemployment between the employer, the employee and the public.

It is significant that official government representatives and

representative employers and workers from forty countries, meeting at Washington in 1919 in the first official international labor conference under the League of Nations, had no difficulty in agreeing to recommend that each country establish “an effective system of unemployment insurance." It is interesting to note that Italy and Austria are putting national unemployment insurance into effect this year. There is reason to anticipate that within a short time the principal industrial countries of the world (except the United States?) will have established unemployment insurance.

INSURANCE AGAINST UNEMPLOYMENT1

If there were any hope of an early adoption by American industry, legislation and high finance of effective methods of regularizing employment and preventing cyclical or occasional periods of general panic and trade depression, it might be argued that insurance against that risk is not necessary. If wages were so high that practically every wage-earner could lay by a sum sufficient to provide for his own risk of unemployment, and if thrift were a universal national virtue, likewise would unemployment insurance be unnecessary; each could invest his savings in a form appealing to him as most attractive, and if he were injudicious in its choice he would have only himself to blame.

But obviously there would be no need to discuss a preparedness or relief program if such a state of things existed. The principal fact we must understand [and which some find it difficult to understand especially now, after the exaggerated descriptions of working class prosperity with which the press and the popular magazines have regaled us during the last three years-Editor] is that large numbers of work-people in the United States do not enjoy an income sufficient to enable individual provision for hard times. Moreover, the movement for regularization of employment, since it involves an educational process, develops only slowly; and trade depressions are likely for some time to play a large part in the economic life of the country. The New York committee therefore gave careful study to different methods of unemployment insurance.

1 Survey. 45 supplement x-xi. February 5, 1921.

The first argument against it encountered was that unemployment is not an altogether unavoidable risk. One employer or a group of industrial interests may make more adequate preparation to avoid frequent fluctuations in the demand for labor than others. Some employer may neglect all precautions and deal with labor as with bank balances which can be increased and reduced at will as the exigencies of the business demand. The risk of unemployment for the employees in these plants is unequal. But so are all risks. One captain is a more skillful seamen than another, one wife a more intelligent housekeeper than another; yet insurance premiums do not vary with the differences in the risk of shipwreck or death from digestive diseases. A rough approximation to an average is sufficient to render to each policy holder the service of a definite provision against a future possible need without serious injustice. Thousands voluntarily pool their risks in this way without complaint; and the averaging of their contributions is no more resented by them than is an equal tax rate among persons receiving an unequal amount of service from the taxing authority.

Another objection is that a large proportion of wage-earners are too poor to make any provision of this kind and that, even if they could do so without injury to their immediate standards of living, their maintenance during involuntary idleness should be made a burden upon the industry which, through faulty management, excessive speculation and other avoidable action, was responsible therefor. There is no valid answer to this argument, except to admit that, under present conditions, insurance cannot become a universally applicable remedy of distress arising from unemployment. Nevertheless, compared with other proposed means of providing against unemployment, it has advantages which give it an outstanding importance. It is the only expedient that combines regular preparatory provision with a definite scheme of benefit thoroughly understood before the risk is incurred, with complete absence of charitable aid and with the application of a rigid test to claims.

Of existing provision by trade unions, no complete account is available. Practically in every country where unemployment insurance by the trade unions has been developed to a considerable extent, this has largely been brought about by financial incentives held out to the unions by state or city. Voluntary insurance by an industrial group does not exclude the possibility

of public subsidies with so much public control as is necessary to insure the use and distribution of these subsidies in accordance with their purpose.

1

UNEMPLOYMENT SUBSIDIES 1

I have not yet been able to obtain the official version of the decisions of the conference but the text of the resolution in question is, I believe, approximately as follows:

The conference although recognising the practical difficulties which might in some cases arise from the immediate putting into operation of these principles, nevertheless considers that the governments should abolish at the earliest possible moment all measures contrary to economic laws and having a purely artificial effect, tending to hide from the people the real economic situation of a country. Among such measures should be included (a) the artificial reduction in the price of bread and other foodstuffs, of coal and other raw material, obtained by fixing the sale price to the public lower than the cost price, together with the continuance of unemployment donations which tend to the demoralisation of the worker instead of encouraging readiness to work.

Of course I do not know what evidence the Finance Commission of the conference had before them when they framed this resolution nor how far the commission itself contained experts on the subject of unemployment. It seems to me, however, that the resolution as drafted is of so sweeping a character as to be incapable of justification.

In the first place, no distinction appears to be drawn between the contributory and non-contributory schemes for relieving unemployment. That some form of contributory scheme is sound and necessary is now becoming generally recognised. The Washington Conference adopted a recommendation by sixty-six votes to three, to the effect that each state member of the International Labour Organisation should take steps "to establish an effective system of unemployment insurance, either through a government system or through a system of government subventions to associations whose rules provide for the payment

1 From article, Brussels International Financial Conference and Unemployment Subsidies, by Albert Thomas, Director International Labour Office. International Labour Office. Bulletin. n.s. 10 14-19. November 10,

of benefits to their unemployed members." Systems of contributory insurance have now been adopted or are at present under discussion in a considerable number of European countries. In Great Britain the Unemployment Insurance Act (1920), which comes into force on November 8th, provides for compulsory contributory insurance against unemployment in all industrial occupations, this act being an extension of the Act of 1911, which applied contributory insurance to a number of specified trades. Similar measures have recently been adopted in Italy and Austria, and are under consideration in Germany and Switzerland, whilst the governments of Belgium, Holland and the Scandinavian countries are extending their systems of subsidies to the Caisses de Chômage, which also exist in France and Spain. In many instances these systems of unemployment insurance are worked through the agency of the trade unions, who themselves contribute a proportion of the benefit from their funds. Trade union administration has been found to give the best possible guarantees that no worker receives a payment while out of employment, unless no work is available for him. Not only is it contrary to the interests of the trade unions that their funds should be dissipated unnecessarily, but the personal knowledge possessed by the trade union officials of the individual circumstances of their members, enables them to exercise strict control.

It cannot be doubted that the fear of unemployment is one of the most powerful motives affecting the worker, and that it is apt to have a marked effect on his production, because he fears that if he produces too much, there may not be sufficient work to maintain him and his comrades in employment. Although this view may in the long run be economically unsound, there can be no question as to its psychological effect. It is coming to be more and more recognised that the maximum of production is not likely to be obtained, unless the worker is given some effective guarantee against unemployment. It would, therefore, be very difficult to maintain that money expended by the state in subsidising schemes for contributory insurance is money wasted.. A return to the old system which left the worker at the mercy of the vicissitudes of industry, is becoming more and more impossible under the conditions of the present day. The workers regard the fact of unemployment as one of the most vital defects of the present industrial order, and it is