profit can afford to dispense with the irregular and unreliable gains of a speculative business which often involve disorganization and irregularity of production.

e) Careful study of market conditions and adjustment of the business to take advantage of them: A broad market provides more regular business than a narrow one. Foreign trade supplements domestic trade, and orders often arrive from southern and far western markets when the eastern market is slack. A diversity of customers will usually provide a more regular demand than concentration on one or two large buyers. The retail trade will often take a manufacturer's goods just when the wholesale season has stopped.

f) Developing new lines and complementary industries: A diversity of products will often help to regularize a business. Many manufacturers study their plant, the nature of their material, and the character of the market to see whether they cannot add new lines to supplement those they have and fill in business in the slack seasons.

g) Overcoming weather conditions: Special refrigerating, heating, moistening, drying, or other apparatus proves effective in many industries in enabling operations to be continued even in unfavorable weather.

(3) Co-operation with other employers.-Employers could by collective action do much to diminish the extent of unemployment and to abolish trade abuses which lead to it. For instance, they could cooperate to:

a) Arrange for interchange of workers: A number of employers in the same or in related industries could arrange to take their labor from a central source and to transfer workers between establishments according to the respective fluctuations in business. This would prevent the wasteful system of maintaining a separate reserve of labor for each plant. The best agency for effecting this transfer is, of course, the public labor exchange.

b) Provide diversity of industries: Through chambers of commerce or similar organizations an effort should be made to provide communities with diversified industries whose slack seasons come at different times, so as to facilitate dovetailing of employments.

c) Prevent development of plant and machinery far beyond normal demand: An installation of equipment, the capacity of which is far in excess of orders normally to be expected, is not only a financial burden, but it is a continual inducement toward rush orders and irregular operation.

d) Prevent disorganization of production due to cut-throat competition: Agreements can in some cases be made to restrict extreme styles and other excessively competitive factors which serve to disorganize production.

(4) Co-operation with other efforts to regularize employment.Employers should co-operate with all other efforts put forth in the community to regularize employment, especially with the public employment exchanges. Employers should make a special point of securing as much of their help as possible from these exchanges.

2.

REGULARIZATION BY THE WORKERS

The workers themselves have a special opportunity and responsibility in the campaign against unemployment. As measures against unemployment individually and through their organizations they should:

(1) Support the general program here outlined.-Parts especially recommending themselves for support by the workers are:

a) Establishment of the principle of elasticity of working time rather than elasticity of working force. Double pay should be enforced for overtime, however, thus compelling the employer to spread out production more evenly through the year.

b) Encouragement of public employment exchanges as the recognized agency for securing employment and for registering unemployment statistics.

c) Systematic distribution of public work and provision of emergency work.

d) Public unemployment insurance.

e) Foundation of a thorough system of economic education and industrial training.

(2) Place less insistence on strong demarcations between the trades.— This would make possible the keeping of reserves for the industry as a whole rather than as at present for each separate trade, for each shop, and even for each separate operation within the shop. It would also permit a more comprehensive program of industrial education.

3. REGULARIZATION BY CONSUMERS

Consumers should arrange their orders and purchases to assist in the regularization of production and employment. The principle of "shop early," which has proven useful in diminishing the Christmas rush, should be extended. Employers could do much more toward

regularizing their output if consumers were more responsive to solicitations to buy in the slack season.

IV. UNEMPLOYMENT INSURANCE

The final link, which unites into a practical program the four main methods for the prevention of unemployment, is insurance. Just as workmen's compensation has already resulted in the nationwide movement for "safety first," and just as health insurance will furnish the working basis for a similar movement for the conservation of the national health, so the "co-operative pressure" exerted by unemployment insurance can and should be utilized for the prevention of unemployment. For although much regularization of industry can be accomplished through the voluntary efforts of enlightened employers, there is also needed that powerful element of social compulsion which can be exerted through the constant financial pressure of a carefully adjusted system of insurance. The adjustment of insurance rates to the employment experience of the various industries, and then the further adjustment of costs to fit the practices of individual trades and establishments even within given industries, is well within the range of possibility.

To be regarded as secondary to this function of regularization is the important provision of unemployment insurance for the maintenance, through out-of-work benefits, of those reserves of labor which may still be necessary to meet the unprevented fluctuations of industry. The financial burden of this maintenance should properly fall on the industry (employers and workers as a whole) and upon the consuming public, rather than upon the fraction of the workers who are in no way responsible for industrial fluctuations and who are as essential, even in their periods of unemployment, to the well-being of industry as are the reserves of an army. Furthermore, it is as important for industry as for the workers themselves that their character and physique be preserved during periods of unemployment so that they may, when called for, return to industry with unimpaired efficiency, and may be preserved from dropping into the ranks of the unemployable where they will constitute a much more serious problem.

I.

ORGANIZATION OF OUT-OF-WORK BENEFITS BY TRADE UNIONS

This method has proven successful to some extent in Europe and has been used to a limited degree in the United States.

2.

PUBLIC SUBSIDIES TO TRADE UNION OUT-OF-WORK BENEFITS

As the "Ghent System," invented by Dr. Varlez, the international secretary of the Association on Unemployment, this method of administering unemployment insurance has become well known throughout Western Europe.

3. PUBLIC UNEMPLOYMENT INSURANCE

In this employers, workers, and the state should become joint contributors. Such a system should be carried on in close connection with the labor exchanges, for the exchanges furnish, particularly when their knowledge of opportunities for private employment is supplemented by an intelligent adjustment of public works, the best possible "work test" for the unemployed applicant for insurance benefits. Possible abuses of the insurance system may thus be thwarted. During the process both employers and workers learn to make use of the exchanges as centers of information and thereby help to organize the labor market. And of crowning importance in the movement toward regularization of industry is the careful development of this form of insurance with its continuous pressure toward the prevention of unemployment.

V. OTHER HELPFUL MEASURES

In addition to the foregoing measures, which are directly aimed at the prevention of unemployment, the following policies, initiated primarily for a variety of other social purposes, would also prove helpful:

1. Industrial training, both of young people and of adults, should be encouraged. Every advance in his skill strengthens the hold of the worker upon his job, and a wider industrial training makes possible for him adaptation to various kinds of work. Children, especially, should not be permitted to go to work without sufficient industrial training to prevent their being used as casual labor, and should be discouraged from entering "blind-alley" employments which destroy rather than develop industrial ability. For those who go to work early, the system of continuation schools, now found in many states, should be still further developed. The idea, also, that industrial training and education are not feasible for the adult worker should be abandoned.

2. An agricultural revival should be promoted to make rural life more attractive and to keep people on the land.

3. A constructive immigration policy, concerned with both industrial and agricultural aspects of the problem, should be developed for the proper distribution of America's enormous immigration.

4. Reducing the number of young workers by excluding child labor up to sixteen years of age and restricting the hours of young people under eighteen would lessen the number of the unskilled.

5. Reduction of excessive working hours, especially in occupations where the time of attendance and not the speed of the worker is the essential factor (such as ticket chopping and 'bus driving) would increase to a certain extent the demand for labor.

6. Constructive care of the unemployable, who are themselves largely the product of unemployment, must be devised, with the aim of restoring them, whenever possible, to normal working life. The problem of these persons is distinct from that of the capable unemployed, and should not be confused with it. For the different groups appropriate treatment is required, including (1) adequate health insurance for the sick, (2) old-age pensions for the aged, (3) industrial or agricultural training for the inefficient, (4) segregation for the feebleminded, and (5) penal farm colonies for the "won't works" and semi-criminal.

230. SOCIAL INSURANCE

Social insurance sets to itself the task of meeting the problem of the economic insecurity of labor.

Now what are the contingencies causing this economic insecurity against which provision must be made in some way? On examination we find that a man's ability to support himself, and to make due provision for those dependent upon him, is lessened or cut off: (1) by his meeting with an accident incapacitating him, temporarily or permanently, partially or completely, for labor; (2) by his falling sick; (3) by his becoming permanently disabled for labor as the result of old age or failing powers; (4) by his death, leaving a widow, children, or others without adequate means for their support; and (5) by his inability to secure remunerative work.

To meet each of these contingencies resort has been had to the principles of insurance. Social insurance is thus a term that has been coined to serve as a collective designation of: (1) insurance against accidents; (2) insurance against sickness; (3) insurance against old

I

Adapted by permission from W. F. Willoughby, "The Problem of Social Insurance: An Analysis," American Labor Legislation Review, III (1913), 159–60.