CHAPTER V.

THE DEPRESSION OF 1901-2, AND ITS DISAPPEARANCE.

YET, as we all know, statements with regard to very recent conditions in Germany have been among the staple arguments addressed to the electorate by the opponents of change in our tariff. I prefer not to cite names here; it is notorious that statesmen of eminence and even of some reputation as economists have given utterance to very strong assertions on this point.

On examination it appears that the facts referred to all, or nearly all, belong to the years 1901-2; and it might be asked what we are to think of an economic argument which seeks to prove the failure of a policy pursued for five-and-twenty years by reference simply to two of these years without any attention to what has been happening in the rest of the period. But let us look more closely at the years themselves.

Now, I do not in the least deny that extremely distressing facts with regard to this or that place, class or person can only too readily be adduced. The same thing is unfortunately true of England; and which

country can show the worst examples of misery, I simply do not know. But such selections of facts are not argument: the only way of dealing with them which even approaches argument is to place them in their historical order. Do these facts-sad as they are-mean a growing degradation, or are they consistent with a general amelioration?

What I shall now show is what has been repeatedly indicated by statistics already quoted., viz., that the depression of 1901-2 was only a temporary one, and that it went nothing like far enough to neutralise or destroy the progress already effected.

We have the best sort of material for a judgment— the series of five substantial volumes issued by the Verein für Socialpolitik last year with the general title The Disturbances in the Economic Life of Germany in 1900 and Following Years.2 Each contains a number of elaborate monographs by experts on particular industries. Let us run rapidly through the four volumes concerned with industries.

I. (1) The Linen Industry.-The result of the depression was that there was now no longer a dearth of labour. The considerably higher rates of wages reached in the previous years of prosperity were not

1 See above, pp. 99, 103, 105, 113, 125, 130.

2 Die Störungen im deutschen Wirthschaftsleben während der Jahre 1900 f. (Schriften des Vereins für Socialpolitik, cv.-cix.),

usually reduced, and workpeople were not dismissed; but a policy of short time was resorted to.1

(2) The Cotton Industry.-Here the same is true. Rates were not reduced nor employees dismissed; but they had for the time less employment.2

(3) The Worsted Industry.-Here there was a marked depression in 1897-1898 (due among other causes to the introduction of the Dingley tariff in America), while other manufactures were getting well into their period of expansion; 1899 was on the whole satisfactory; 1900, a year of severe depression, involving a large reduction in the number of operatives; 1901, a year of convalescence and gradual return to full time. "1901 has proved the inner soundness and strength of the German worsted industry."

Rates of piece wages were not affected nor were workpeople generally dismissed. In many cases they were largely saved from the uncomfortable results of short time by their geographical situation. Most spinning-mills are more or less isolated, out in the country, and their managers did not dare to let their workpeople leave them, and so they had to pay them various extras or reckon six hours as full time. In 1901 they were again on full time.3

II. (1) Iron-mining and Iron-making in Lorraine-Luxemburg.—In the steel and rolling mills the

1 I., pp. 87, 112.

2 I.,

p. 138.

3 I., pp. 188, 231-33. See also above, p. 99.

numbers employed actually increased in 1900; in oremining and at the blast furnaces the reductions of the labour force, which were considerable, affected almost entirely the day labourers, and chiefly the Italians who had been drawn to the neighbourhood by the previous rapidly growing demand for labour. Many of these found employment at the neighbouring coal mines, where the demand continued. The wages of day labourers fell for the time 20 per cent.; those of miners proper and skilled labourers were only in a few cases reduced-at most only 5 to 7 per cent.; in some districts they even advanced slightly.1

(2) Mining and Metal Industries of Westphalia. -Here there was no very large dismissal of employees in the ironworks, though they were put on short time. Rates fell for a while 10 to 15 per cent. The labourers dismissed often found employment in connection with the coal mines either of Westphalia itself or of Luxemburg.2

(3a) Coal-mining in Silesia.-"Though the progress was not so impetuous as in 1899-1900, the mining industry of Upper Silesia was still in a position in 1900 to increase its output, to maintain prices, and to employ a considerably larger number of men. It did not in the least present the aspect of a crisis. The number of workpeople increased from 69,500 in 1900

1 Störungen, ii., pp. 49-51.

2

II., p. 107. Cf. p. 49.

to 78,000 in 1901; the wages paid increased by more than 10,000,000 marks. . . . In 1902 the demand weakened somewhat, but it remained strong enough to render possible a quiet, secure and steady progress of the business." 1

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(3b) Iron and Steel Industry in Silesia.-" In Upper Silesia there was never a time of unemployment; indeed the situation was one rather of dearth of labour. The working force-putting on one side the two years of extreme prosperity which attracted a great many foreign labourers-shows a steady increase. The satisfactory increase of wages was uninterrupted: wages went up steadily, untouched by the fluctuations of the market; for adult male workmen it rose about 18 per cent. since 1896."2

III. (1) The Machine Industry.-This was severely hit by the depression, which in this case continued through 1902. The number of workmen was cut down some 25 to 30 per cent.; and though there was but a slight fall in rates of wages, there was less employment at those rates for those that remained in service. But the pressure of hard times was not felt equally everywhere; thus the figures for a number of the larger works show a decline in the number employed from 2,875 to 2,842 only-and this last number is still more than 1,000 above that of 1895