Unemployment in Britain Between the Wars

Stephen Constantine

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9781138167735
• eBook ISBN: 9781317881056
• Topic: History
• Subtopic: 20th Century History
• Index: History

Drawing on a range of contemporary evidence, Stephen Constantine studies the nature and causes of unemployment in Britain during the 1920s and 1930s, and analyzes the failure of successive inter-war governments to make a constructive response.

Part One:

The Background

1 The Unemployment Problem

For many years historians have been struggling to modify a deeply entrenched view which regards the interwar period, and especially the 1930s, as essentially a time of persistent depression, gloom and failure. In contrast they have properly emphasized the real achievements of these two decades. Far from being uniformly years of suffering, there was much that justified celebration. Greatly helped by a fall in the cost of living in the 1920s and early 1930s, average real wage earnings between the wars went up, until by 1938 they were perhaps one-third higher than in 1913 (2). The expansion of the chemical, motor car, electrical and other consumer goods industries and of the retailing trade provided better-paid jobs for more workers. Moreover, parents were limiting the size of their families and with fewer mouths to feed incomes went further. On average, hours of work were also down. As a result more and more people were left with higher real earnings and greater leisure.

The consequence was a conspicuous improvement in the living standards of the majority of people in Britain. For some it brought real affluence, perhaps the opportunity to own a sparkling mass-produced motor car, an Austin or a Morris, or a chance to buy a semi-detached house with a garden and modern conveniences in one of the new estates being laid out in the suburbs. For many more people it meant at least some additional domestic comforts. Better equipped, newly built council houses were available for rent; modern furniture, radios, labour-saving household equipment such as electric cookers and other consumer goods could be bought. There was more cash left over for entertainments. Audiences packed the cinemas and dance halls with regular enthusiasm, and more people were taking annual holidays, many in the holiday camps which sprang up on the coast in places like Skegness and Pwllheli. Most strikingly, social investigators found a marked drop in the number of people condemned to live in poverty. Dire need still regrettably existed, but it was much less prominent between the wars than it had been in the supposedly golden days of Edwardian England.

Another valuable result of higher incomes was an increase in the consumption of better food: more vegetables, fruit and dairy products for example. Together with improved medical and social services, this brought about an impressive advance in the health of the nation as a whole. Death rates fell, life expectancy increased. The killer diseases of the nineteenth century such as tuberculosis, typhoid, scarlet fever and diphtheria were in retreat by 1939. These were years of progress when, in spite of the depression, economic growth was above prewar levels and material living standards improved (2, 7, 8, 11, 28).

And yet these realities have on the whole failed to prevent a bitter and gloomy image of the interwar years from surviving to this day. These years are still characterised as a period of mass unemployment when, particularly in the North and in Wales, once prosperous industries and the workers who served them were suffering. There remain sharp pictures of out-of-work men clustered at dusty street corners, and of the abandoned shipyards at Jarrow on the Tyne [doc. 1]. Nor, as this study is intended to show, are these impressions entirely misleading. Unemployment did blight the lives of many people, and the issue became an unavoidable topic of public discussion and an inescapable worry for government ministers. Interwar Britain was, then, a land of contrasts [doc. 2]. Indeed, set against the average rise in living standards and the prosperous regions of the country, the wasted years of the unemployed and the decay of the depressed areas stand out more starkly. Unemployment was as much a feature of the 1920s and 1930s as busy new factories, modern housing estates and cinemas built like fantasy palaces.

The problem of unemployment was not new to British society. It had been a recurrent blight in the nineteenth and early twentieth centuries, and the bitterness and distress it caused lay behind many of the social and political disturbances of those years. What was unprecedented about the interwar unemployment problem was its extent, its duration and its effects.

Attempts to compare the extent of unemployment between the wars with the level before 1914 are hampered by the absence of satisfactory statistics, particularly for the earlier period (18). Not until the 1920 Unemployment Insurance Act began to operate were reasonably accurate figures made available. Except for domestic servants, agricultural labourers and civil servants, this Act provided unemployment insurance cover for most manual workers and other employees earning less than £250 a year (67). Henceforth it was possible to calculate the number of insured people out of work and the rate of unemployment (expressed as a percentage of the insured labour force). Before the war we have to rely on figures which are far less comprehensive but which give us some idea of the extent of unemployment among that small proportion of the workforce organised in trade unions. The figures therefore tend to cover mainly skilled and semi-skilled workers. What they show is that in the period 1881 to 1913 unemployment among these workers in the United Kingdom was on average about 4.8 per cent (expressed as a percentage of trade unionists). The rate fluctuated a good deal but at its maximum in 1886 it was about 10 per cent (17).

In spite of the inadequacies of these figures for comparative purposes it is probably true that the extent of unemployment was seriously higher between the wars. Following a short sharp economic boom in 1919–20, depression settled like a dark cloud over the United Kingdom. There were fluctuations in the density of this cloud but it never lifted before the outbreak of the Second World War. Between 1921 and 1939 unemployment averaged 14 per cent of the insured workforce. Records show an early peak of 16.9 per cent in 1921 and a later one of 22.1 per cent in 1932. Once the depression began there were never less than one million workers cut of a job. There were over two million insured workers registered as unemployed in December 1921, and in January 1933, the worst month of all, there were 2,979,000 (17,19). If we add those unemployed workers who for one reason or another did not register as unemployed we reach an estimated total of 3,750,000 in September 1932. Taking into account the families of the unemployed, six or seven million people in the United Kingdom were living on the dole in the worst months of the depression in the early 1930s(12).

What made unemployment such a scourge between the wars was not just its extent but also its duration. In the thirty years or so before 1914 workers might be hit by a run of three or four years of high unemployment. In the bad years 1884–7 unemployment remained over 7 per cent. There were other periods - 1892–5, 1903–5, 1908–10 – when unemployment climbed to over 5 or 6 per cent. But between these clusters of grim years there were times of improved trade and better employment prospects when rates of unemployment fell to 2 or 3 per cent. In the 1920s and 1930s, however, the depression seemed to be far less a temporary dislocation. Only in 1927 did the rate of unemployment slip temporarily below 10 per cent. Unemployment remained a permanent burden in British society between the wars (17,19).

The effect on the individual worker might be serious. For most people a period of unemployment was usually short. In September 1929 nearly 90 per cent of those who applied for unemployment benefits and allowances in Britain had been unemployed for less than six months. But since a surprisingly large number of insured workers changed jobs at least once a year, with consistently high levels of unemployment the chances of repeated bouts of unemployment between jobs were higher and the effect of these on savings, living standards and morale could be grave. Moreover, the tendency for workers to suffer from long-term unemployment, lasting for twelve months or more, eventually developed as one of the most worrying features of the 1930s. In September 1929 less than 5 per cent of those applying for unemployment relief in Britain, about 45,000, had been unemployed for twelve months or more, but by August 1932, near the bottom of the depression, there were over 400,000, making 16.4 per cent of the total. Such recovery as then took place left many of these workers still without a job: the long-term unemployed numbered over 330,000 and formed 25 per cent of the total number of unemployed workers in August 1936. As late as August 1939 there were 244,000 long-term unemployed, nearly 23 per cent of the total. For many workers in the 1930s there was little prospect of ever finding a job again (17, 50).

Even before 1914 unemployment had become a public issue. Economists and social scientists had begun to examine more seriously the causes of industrial unemployment and had identified some of its social consequences. The labour movement had helped make the provision of work and the relief of distress a political issue. Politicians of all parties had offered panaceas of varying degrees of value, and there had been some government action (60, 65). But the severity of the interwar depression had more far-reaching consequences. Unemployment reflected fundamental changes in the nation’s economic structure. It affected living standards and the quality of life for many workers in Britain. It aroused considerable concern about the damage it was doing to the physical and mental wellbeing of its victims. It forced a major reexamination of many well-established ideas and assumptions about the role of the state as an economic manager and as a provider of welfare services. And it profoundly altered the demands and expectations of the British people. To a considerable extent, the failures of interwar Britain rather than the real achievements had the greater effect on government policy and popular aspirations.

2 Economic Causes

Total national figures of the number of unemployed workers in the United Kingdom in each year disguise the variety of problems which account for unemployment. Before the First World War and especially between the wars social scientists began to classify the types of unemployment which together accounted for high national totals. They defined them as personal, frictional, seasonal, cyclical and structural unemployment. It is not easy to distinguish the predominant factor in the case of each individual worker, and one cause of unemployment undoubtedly affected the severity of others. But the concepts involved do help clarify the economic problems from which Britain suffered between the wars.

To begin with there were those unfortunate people who were unemployed primarily for personal reasons; because of physical or mental handicaps they were only marginally members of the labour force. Most of them were not unemployable, for in times of economic boom their services might be required, but in normal years, and especially in times of depression, they were often the first people to be laid off and the last to be re-employed. Quite a lot of the long-term unemployed, out of work for twelve months or more, were found to be suffering from some form of disability in the 1930s although few of them were incapable of any work (50).

Frictional unemployment tended to be short-term. In any year, irrespective of economic boom and slump and for a variety of reasons, thousands of workers changed jobs. Many of them found new employment fairly rapidly, but while looking for new openings they usually registered temporarily as unemployed. In addition a number of workers such as dock workers were employed only on a casual basis and might find themselves without work for two or three working days each week. Seasonal unemployment was also normally short-term. Even in an industrial society activity in certain trades varied with the time of year. Building workers, for example, often found themselves unemployed in winter. Total unemployment figures were therefore usually higher in the winter months than in the summer.

Cyclical unemployment

Between the wars people were much more concerned with cyclical unemployment. This not only affected more workers but might leave them without a job for many months. During the nineteenth century businessmen had been aware of a fairly regular cycle of economic boom followed by economic slump. In periods of boom British exports overseas rose, investment in new factories at home increased, industrial output went up, wages might rise and the labour force was fully employed. But then followed the downturn. The value of exports fell, investment slackened off, output dropped and wages might fall. The only thing that rose was cyclical unemployment. Peaks of higher unemployment and social distress were repeated at intervals of about eight to ten years. Explanations of the trade cycle are complex, but one thing is clear. The British business cycle was not due to factors operating solely within Britain. From the last quarter of the nineteenth century the pattern of boom closely followed fluctuations in the business activity of other nations overseas, especially France, Germany and the United States. Because of the type of economic structure that had evolved in Britain by the end of the century, the level of prosperity at home had become crucially susceptible to booms and slumps overseas.

By 1914 Britain had such a specialised industrial economy that she needed to import over half of her food supplies and about seven-eighths of the raw materials needed by industry. To pay tor these imports she relied mostly on the sale of her own products abroad. In the decade before the First World War the output of more than one British worker in every four was exported(14). Moreover those exports were made up of a limited range of products: 38 per cent were textiles, mainly cotton goods, 14 per cent iron and steel, 10 per cent coal and 10 per cent engineering products including ships (9, 10). These were the staple export industries, relying heavily on their overseas sales. Early in the century about 33 per cent of the coal mined in Britain, 22 per cent of the ships built, 79 per cent of the cotton goods manufactured and 50 per cent of the iron and steel produced were exported (2, 6). Inevitably a slump in the United States, in Europe or elsewhere reduced demand in those markets for these products and seriously affected Britain’s prosperity. Since the cotton, coal, shipbuilding and iron and steel industries together employed about two million workers before the First World War, a downturn in the business cycle overseas had a profound effect on the level of employment in Britain. Moreover repercussions were felt in other industries as a result. Depression and unemployment in the staple export industries reduced incomes at home and hence the demand for the products of other British industries catering more for the home market. Consequently depression in overseas markets spread via depression in Britain’s export industries to other sectors of the economy and unemployment became more widespread.

In the years between the wars this prewar trade cycle continued to operate. As before, the fairly regular pattern of boom and slump was repeated. Once again the staple export industries were sensitive to fluctuations in levels of demand overseas. Once again depression in those industries was transmitted to other sectors of the domestic economy. The alarming new features of the cycle in these years were the severity of the depressions and the limited extent of the subsequent recoveries.

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Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• INTRODUCTION TO THE SERIES
• Acknowledgements
• Part One The Background
• Part Two: The Effects of Economic Depression
• Part Three Assessment
• Part Four: Documents
• reference
• Index