Unemployment
a social problem which had its origin in the institution of the factory system of industry. While the commodities used for general consumption could be manufactured or prepared by hand workers, each possessing his own hand tools, each worker was at least sure of continual employment, whatever the remuneration for his labor might be. With the invention of steamdriven machinery, however, production was so enormously increased that the same amount of commodities could be produced by a much smaller number of workers. This brought about competition among the workers themselves, with the consequence that wages dropped, and though commodities were much cheapened by machinery production, a growing portion of the masses could acquire a much smaller amount of the commodities produced, which again tended to decrease the output of the factories. Working in cycles, it was found that every few years would come a period of overproduction, when the markets would be overstocked, and the factories would be compelled to cease production until the surplus should be consumed. The closing down of the factories, however, would cause unemployment and still further reduce the consuming power of the working classes. These two conditions, working together, would produce those acute periods of unemployment among the industrial classes which have at times threatened the stability of the capitalistic system itself.
Many remedies have been proposed, the most prominent of which have been social insurance (q. v.) and the proposal that governments should initiate large public works when the period of unemployment threatened. One of the worst periods of this kind experienced in this country was during 1893-1894, and again, to a lesser degree, in 1914. In the winter of 1920during 1921 another period of unemployment appeared; this, however, was not caused by overproduction, but by the readjustment of the prices of commodities, manufac tures in general hesitating to produce on a falling market.