Fall of France, 9: Manpower, Part 4

So Britain suffered terribly from unemployment in the interwar period, especially in the Third World. You can construe a story about why a Conservative Prime Minister would prefer to see able-bodied men lining up for the dole than learning how to drive a Matador in preparation for standing on the Dyle Line. The army wasn't recruiting to the numbers, so the problem had to be that wages weren't high enough. But if you raise army wages, it puts inflationary pressure on wages in general. Employers will have to pay more. Can't have that!

That does, however sound a little fever swampy. And, after all, there's an equal and opposite alternate whereby the army trains up Matador drivers who, after their separation, flood the labour market and push wages down. Truck driving is one of those underappreciated skill sets that comes under pressure when the economy is bad.

Or when it's snowing in the passes. But that's my point, more or less. It happens high up and out of sight, where you'd imagine that the sort of people who are rich and established enough to make these kinds of decisions aren't likely to be found. I think that there's a deep vein of bullion to be mined out of this conjunction of economic depression, skills of the hand, and national defence. Throw in identity, and maybe I can tie in the Fall of the Roman Empire. But if I do, I'll do it where I've already set myself a lower bar of self-expression, and hot link it here. In the meantime, I'm going to mine that vein. I'll be rich as Frobisher in no time.




If I've learned anything in my 46 years, it is that unemployment has nothing to do with all that economics blah blah. All they deliver is official numbers, and, as we are existentially obligated to add, "they don't include people who've given up looking." That makes it sound even worse, but if you've got a job, you realise that it's mostly the unemployed's fault. They'd have a job  if they didn't keep blowing it, or they didn't prefer sponging off UI and family. And we can move beyond being bloody bastards about it mainly by focussing on the "root causes," by which I mean whatever the hobbyhorse of the day might be. If you happen to be unemployed, it usually turns out to be the government's fault.

But they did start keeping unemployment numbers in interwar Britain and paying UI out of the Exchequer (as late as 1932!) for a reason. The First World War really did mark a transition from a low to a high unemployment regime in the United Kingdom, especially in "outer Britain:" Scotland, south Wales, the Northeast (especially the industrial areas between the Humber and the Tyne, and Liverpool. And if you think that I'd done being darkly cynical, take a boo at where the opposition seats cluster in the general election of 1935 --although where we balance cause and effect is open to question. Indeed, any monocausal explanation of interwar unemployment would lead us to a single lever of government policy that could be pulled to bring about full employment. Although in fact such a lever did exist. Mobilisation for war took care of things pretty quickly. The fact that I could easily problematise the process (drafting the underclass? Not necessarily a good idea) suggests a paradox. The existence of one means for eliminating unemployment indicates that the problem was not beyond remediation, in effect getting rid of the "social" explanation; but at the same time this is a driving-nails-with-steam-shovels solution that tells us that the problem really was complex and intractable to the kinds of interventions that Government was willing to support.

One explanation for high unemployment is that it is "structural." In this argument, apparently strongly grounded in the evidence, Britain is undergoing a difficult transition from traditional "staple industries" to the "new industries." The former are coal, textiles and iron and steel, while the latter are chemical, automotive/aviation, and electrical engineering. The old staples industries were predominantly based in the areas of current high unemployment, and, not surprisingly, regional unemployment tracks to sectoral well. There's lots of unemployed coal miners, as well as textile, shipbuilding, and iron and steel workers. The argument is that these were strongly competitive, world-beating industries in the pre-war era, but that very competitiveness stripped them of the surplus capital required for reinvestment in the postwar, when they were run down, while foreign competition was on the rise. At the time, it was argued that these firms needed to cut labour to keep costs down and painfully, incrementally, invest in productivity gains before they could regain their competitive position. The alternative would be to attract external investment. The general impression I get from interwar Economist leaders is that that isn't going to be happening. Today, we'd tend to explain that as ruthless, far-sighted capitalists writing off doomed, "rustbelt" industries and piling into winning sectors such as electrical engineering --remember how it's benefitting from infrastructure investment? At the time, there was very much an inclination to point to rearmament as potentially starving these firms. There's only so much capital to go around! Eighty years on might be a moment for some long run hindsight, though.

Another way in which it is structural is that unemployment is sticky because people stick close to home. You can't beat an Economist leader  for self-assured smarm: what is this paradox of high unemployment with rapidly rising wages? (Which is dooming the staples industry by making its exports uncompetitive.) Well, look where the jobs have gone: London. Why? Because between 1931 and 1936, the population of Greater London  has increased annually at a rate of 9 per thousand compared with 4 per thousand for the country overall. (And even less in what the Economist is careful to mention are "Special Areas." Hey! That's exactly how we used to say the word "special" in high school!) The people are going there. Are the people following the jobs, or are jobs following the people? Probably the former. 85% of new factories have been set up in Greater London over some period that the Leader thinks is a useful indicator, although I forgot to note what it is. It's not a good thing: huge infrastructure investments are required around London to keep up with population expansion. It would be better for public health and efficiency if everyone were living in new towns of garden suburbs next to industrial parks, preferably in wetlands reclaimed by the heroic power of Science!, yet already in 1935, 24% of net factory and non-factory industrial production of 1,576 millions in 1935 came from London. The unemployment situation will only really be solved when Northerners get off their keisters and on the road down to London. I think Samuel Johnson said that once.... But apparently he was a Jacobite, so he might have been speaking in code. Heck, if we look at what is required electorally to put Labour into office, maybe we're still speaking the same code! (Unless the Tynesiders and Welsh who come down to London just switch to voting Conservative.) Short my snarky interjections, this is from “Why London,”The Economist, 18 Feb 1939. 332—333.


And yet the structural explanation does not well fit the data, it is argued. Persistent unemployment in the stales industries in the Special Areas even at periods of labour shortage in the 1930s suggest that the labour reallocation process is not working. With the war to discount the Andy Capp explanation, we are left, the Keynesians say, with a demand-driven deflationary cycle as the explanation for persistent high unemployment. (My guru in this.) This is an argument with which I have become vaguely familiar in my other guise as a Weltburgher. (Look: German has a word for "procrastinating by surfing the Internet!" It's such an expressive language.) Why it should be regional and sectoral is not as clear to me as it is to the Keynesians, and before you know it, the Andy Capp explanation is back. For some reason, Liverpudlians were willing to sit around waiting for the mills to go back on full time in the 1930s, but flocked to work in munitions factories in the 1940s --even when that required relocation.


Looking at Engineering's traditional "league tables" of British industrial exports, I'm willing to throw out an explanation, which is that we are missing a transition within the industry. Textile piece exports are falling steadily, a market irretrievably lost. But textile machinery exports are rising steadily. If we are leaving these industries to self-help, we'd expect them to invest and innovate in the line of least resistance. Is this really going to lead to a brute force attempt to leverage back into over-capacity sectors. In the nature of capitalism, it might be difficult to write a genealogy that links a cotton-spinning firm of 1911 with a company that specialises in PVC covers for high-performance cables in 2011, but this describes typical Liverpool industrial enterprises a century and there is a human connection. The people who worked in that cotton-spinning firm trained the people who trained the people who run the cable plant. A person who went on the dole in Liverpool in 1935 rather than move to London had an excellent chance of placing a grandchild in that plant. Without getting all Rational Markets Hypothesis here, would that choice have paid off? Would it necessarily have been a bad use of UI benefits to subsidise it? This is either an open question, or something the economists settled for me long ago, without actually telling me.
  
To take a less diffuse example, Firth Brown and Vickers consolidated their steelmaking sides in a joint subsidiary called  English Steel. They then closed various mills around the country devoted to making comparatively low-grade hull plates and old-fashioned dreadnought armour, collected up the specialised manufacturing equipment, brought it together at a big plant in Sheffield, and re-opened in 1935 as a manufacturer of specialty products. Those included the armour for the new King George V-class battleships, made to the Admiralty's "New Cemented Armour" specification, probably actually a carbonitrided product, although I'm treading on the toes of people who know far more about these things than I! Did the people who waited for that mill (I want to say the Openshaw works, but that was in Manchester. I could look it up, but I've got all of 7 minutes to finish this post) to reopen make a bad decision? Certainly not from the point of view of British national security --begging for the moment the question of whether building battleships actually contributed to national security.




So what happens if you use the Army to soak up the excess? It's what "Herr Hitler" did in Germany, The Economist tells me repeatedly. The Statement Relating to Defence (Cmd. 5944) (also known as "1938's excuse for going into overdraft on the Defence Contributions Loan") tells us that the strength of the armed forces has risen steadily. The Navy, which reached its trough in 1932 at  89,214 has risen this year to 111,810. The authorisation for 1938—9 is 119,000, and whether or not that is actually achieved, there has already been a 36% increase over . The RAF which was under 30,000 in the same year, is looking at being over 100,000 strong, and took in 31,000 recruits in the last year. And yet it will still need  20,000 next year. The army took in 37,323 recruits during 1938. This was 12,753 more than in the previous year and an interwar record. Better pay and conditions must have helped, as well as the creation of the new Warrant Officer III rating. The minister emphasises the way that WOIIIs will lead platoons into battle, and also that this is the first year in which all commissions on offer by the army were taken up. (Here we are beginning to touch on one of those paradoxes that drive economists crazy: the existence of persistent labour shortages within an overall dismal employment picture.) Rounding out the Army's problems (and these numbers are bad news in disguise, because the Army is still not taking in as many men as it actually needs), the Minister notes that 77,142 recruits joined the TA, compared with 45,320 only the year before. An entry of 100,000 will be required next year; and in fact the introduction of conscription will pretty much take care of that, as should not be entirely surprising these days. I think that its telling that the Minister ends with what seems in his mind to be a carefully chosen bright spot. The new army schools at Chatham and Arborfield supplement the existing one at Jersey and cumulatively will have 4000 boys under instruction next year. RAF training is likewise expanding, and so is the Navy's, as it is still short of skilled shipwrights.

One of the reasons that the Army isn't meeting its recruitment targets is that it is still turning some volunteers away. (That's not in this particular statement, though.) When we consider that the average annual cohort is in the order of 250,000 men and that the total population of males in the 14--45 bracket in 1939 is only a little over 14 million, we can see that the Army is actually a huge player in the overall manpower game. The problem is that the Army wants the skilled labour. What happens to the internal redevelopment of industry in the Special Areas if you cream off all the skilled labour that is on hand to do the work --if only by holding down the wage premium they could otherwise charge? I suspect that it would be a bad thing.

Was that what Neville Chamberlain was thinking as he twisted and prevaricated to keep the army small, while increasing the size of the Navy and Air Force? After all, the latter two train their men. The army, especially the Territorials and Special Reserve, sponge them off industry! I don't know if that is what he was thinking, but I suspect that this kind of logic was the bread-and-butter of the son of the Lord Mayor of Birmingham.

When the historian dons his social critic's cap, he is apt to point to interwar Britain as a case where more technocratic leadership might have helped. I've suggested before that if there was one thing that there was no shortage of in interwar Britain, it was political technocrats. Is the real problem that we historians aren't technocratic enough to recognise what's actually going on?

Well, I hope so. I want to finish a book on the subject, and I might even work on it if I didn't have to go to work in half an hour. (That's a pathetic plea for forgiveness for the many typos you will find above.)