Industrial Unemployment in Germany 1873-1913

Linda A. Heilman

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351747226
• Edition: 1
• Topic: Volkswirtschaftslehre
• Subtopic: Wirtschaftsgeschichte

Originally published in 1991 this book provides a multi-faceted analysis of German unemployment between 1873 and 1913. It can also be read as an example of social scientific historiography during the fourth quarter of the twentieth century. Finally, the study has value for the comparative perspective it lends to current economic, social, and political turmoil in Germany, Europe, and the United States. While the precise conditions in the USA differ today, there are clearly still lessons to be learned on both sides of the Atlantic from the economic, social, and political dislocation, which accompanied industrial unemployment in Germany between 1873 and 1913.

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PART ONE: METHODOLOGICAL PROBLEMS RELATING TO THE STUDY OF INDUSTRIAL UNEMPLOYMENT IN GERMANY

TERMINOLOGICAL SPECIFICATIONS

Germany’s unemployed were first recognized as a distinct group within the industrial labor force during the years between 1873 and 1913.¹ There was a tendency during the earlier part of the period to lump jobless workers together with members of the lowest social order who were dependent upon public or private charity for their subsistence. But as the twentieth century unfolded, social critics showed a growing willingness to segregate the unemployed from those who were indigent, vagrant, mendicant, disabled or itinerent. Their differentiation reflected a heightened awareness of the impersonal economic forces at work in industrial society and tended to deflect blame from the unemployed individuals who were increasingly viewed as victims of those forces.

The change in attitude was apparent in the terminology used to describe those without work.² During the first years of our period, the word Arbeitslosigkeit was virtually nonexistent in the admittedly scanty literature dealing with conditions in the labor market or among the working classes. By 1876 occasional references to unemployment were scattered through government reports but remained scarce enough to stand out among the far more common discussions of lay-offs and cutbacks. Despite a gradual increase in usage during the 1880’s, the term Arbeitslosigkeit did not appear with great frequency prior to 1890. By the end of our period, however, it was clearly established in the working vocabularies of the labor movement, the government and the public at large.

In addition to language, statistics tended to reflect the degree of differentiation accorded to the unemployed as a discrete element in German society. In the private sector, unions such as the printers kept separate records on unemployed members receiving compensation well before 1873. Documents on work shortages in Stuttgart go back to the 1860’s. But these examples were clearly exceptions to a rule which seemed to dictate that when counted at all, the unemployed were lumped together with criminals, beggars and recipients of poor relief. Limitations of primary sources dealing with unemployment during our period make it imperative that we consider data on begging, Arbeitsnachweise, sickness, poor relief, occupational distribution and population shifts. Without these indirect indicators which camouflaged information by failing to differentiate clearly between jobless and employed individuals, we would have no way of estimating the extent of unemployment in the 1870’s and 1880’s. On a national scale, the only unemployment count during our period took place as part of the 1895 census. Other data came from municipalities and occasionally from the individual states. Privately, statistics had more continuity but the unions’ data was not published in any systematic fashion prior to the appearance of the Reichsarbeitsblatt in 1903.

In defining unemployment, there seemed to be a concensus among authors addressing themselves to the subject throughout our period. To be counted as unemployed, an individual had to be financially in need of a job; he had to be willing to work and actively seeking socially sanctioned employment; he also had to be physically capable of work and unable to find a job. In addition, many analysts felt that the laborer had to have a previous post and be unable to find a suitable replacement for economic rather than personal reasons. Here we shall diverge slightly from the contemporary view by including workers entering the labor self-induced but not intentional, perhaps caused by poor productivity or occasional, although not chronic, intoxication and absenteeism. The reason why an individual was discharged from a previous position will be of less concern than his inability to procure another, although in both instances our primary interest rests with the underlying economic forces which affected the labor market.

In a useful discussion of concepts related to Unemployment in History³, John Garraty referred to search and precautionary sources of joblessness. The first term was used to define those occupied in collecting information about potential employment and the latter applied to individuals willing to turn down job offers or abandon an existing position in order to find preferable employment. Both concepts seemed to assume the existence of a buyers’ market in which the jobseeker retained the luxury of selecting from among various alternatives to arrive at the best possible situation. Although this might prove unrealistic in a tight labor market, every worker offering to sell his services had certain minimum expectations as he weighed the advantages of retaining his freedom against the disadvantages of lost income.

Related to search and precautionary activities were other sources of joblessness attributable to under-employment plus frictional, cyclical, seasonal and structural varieties of unemployment.⁴ All of these concepts assume that there is an ideal condition in the labor market when the economy is in a state of full employment. The latter would seem to occur at least in theory when every individual seeking work is able to find a position which utilizes his skills and when every employer hiring labor is able to find employees capable of performing the desired tasks. In a real market setting, such perfect matching of employer and employee expectations is rarely if ever achieved. And economists, recognizing the utopian nature of the above paradigm, have resorted to labelling full employment as a jobless rate of anything less than a designated small percentage of the labor force. During the period 1873–1913 that percentage, reflecting society’s notion of an acceptable level of unemployment, would have been very low in comparison with today’s figures.

The difference between 100 percent employment and the currently acceptable estimate of how complete full employment has to be is usually attributed to frictional unemployment. The friction inevitably involved in any labor turnover due to impeded mobility, imperfect dissemination of information and problems affecting those entering the work force, produces time lags which contribute to unemployment. The twentieth-century capitalist concept of frictional unemployment is similar to the nineteenth-century notion popularized by Karl Marx who repeatedly referred to an industrial reserve army.⁵ There always had to be a pool of surplus labor—a group of men changing jobs or willing to accept new employment—from which to draw if the economy was to grow rather than stagnate. Thus even for those like Marx who championed the cause of the working classes, a goal of 100 percent employment was deemed to be undesirable, impractical and unattainable.

In addition to the frictional unemployment attendant upon labor turnover, notice must be taken of cyclical unemployment which was a primary source of joblessness during the downswing that characterized the first half of our period. Occasioned by a decline in the demand for goods and services, cyclical unemployment plagued the German, European and American markets at recurring intervals between 1873 and 1913. Compounding the longer cyclical swings depressing the labor market were annual fluctuations in the unemployment rate associated with seasonal changes in general and the arrival of winter in particular. Those engaged in agriculture or the building trades were especially susceptible to periodic climatic variations. Unlike other types of unemployment, onslaught of the seasonal variety was easy to predict. It was the most regularly recurring, had the longest recorded history, and was the most widely documented form of unemployment during the entire nineteenth century.

While seasonal shifts in employment predated the emergence of capitalist economies by hundreds of years, structural unemployment was closely linked to the ongoing process of industrialization. Industrial development entailed changes in the methods of production and in the structure of the labor market. Fluctuations in the supply of and demand for labor were caused by technological advances in sectors such as textiles, by the emergence of whole new industries such as the electrical and chemical conglomerates, by revolutions in transportation such as the introduction of railroads, by migration or an influx of foreign workers, and by discoveries of new sources of precious metals or raw materials. All of these factors had an impact on the German economy and affected the level of structural unemployment during our period.

Of the many forms of joblessness, hidden unemployment and underemployment are perhaps the most difficult to detect. The term hidden unemployment would apply to individuals who gave up looking for jobs and voluntarily withdrew from the labor market. They would no longer be counted among the unemployed because they were not actively seeking positions. Among those most susceptible to hidden unemployment were all women and men at either end of the chronological scale—those of an age to be just entering or leaving the work force. Their number at any given time would be extremely difficult to assess accurately although indirect indicators such as the incidence of migration might provide some clues.

The term underemployment would apply to anyone engaged in unproductive labor perhaps due to a lack of the proper equipment or training. A person trained to do highly skilled work who cannot find a job in his area of expertise and resorts to the performance of unskilled or menial tasks for subsistence is underemployed. Underemployment was a very important, albeit painful, part of the reality of life between 1873 and 1913 when it was relied on as an alternative to more drastic measures affecting the labor force. Rather than laying off some employees, for example, many bosses preferred to decrease the number of hours all workers were engaged. This option spread the hardship of cut-backs equally among many individuals rather than penalizing a few to preserve the status quo for a majority. In addition to those working part time, the underemployed included laborers who divided their efforts between working for others and working for themselves. The woman who did piecework in her home and allocated more time to household responsibilities when an employer’s demand for her services was low could be considered underemployed although she was never idle. The same would apply to the small farmer who split his time between tilling his own fields and working the holdings of a large landowner. During the nineteenth century and still today, work done for oneself, despite its utility, would not count as an economic factor in the employment picture.

Related to but distinct from labor done for personal consumption was the saleable output of independent or self-employed individuals. According to Richard Herbst writing at the end of our period,⁶ members of all socio-economic classes were to be counted among the unemployed if they were dependent upon jobs for their income and unable to find work. Whether a member of the middle class, the skilled or unskilled work force, anyone obliged to offer his services in the labor market was susceptible to unemployment. Artists, creative and professional people, although occasionally limited by licensing procedures, could work even if the market for their output failed to yield satisfactory compensation. Owners of businesses could not be unemployed although lack of demand for their products could force them to relinquish their independence and seek employment elsewhere.⁷ In a free enterprise system such as Germany’s either employers or employees were free to terminate the implied contract of employment. But only the laborer who was dependent upon a salary and an opportunity to work which could be withdrawn at the discretion of others was susceptible to unemployment. Entrepreneurs, artisans and independent craftsmen could not become unemployed unless they chose to work for someone other than themselves.⁸

Technically any employee from the highest civil servant to the lowest factory worker held his post at the pleasure of an employer and could find himself looking for a new job. The scope of the following inquiry, however, will be limited to unemployment among the industrial labor force. Those involved in the management of industry, although a group including many titular employees, will not receive special attention here. When they were counted among the jobless at all, their susceptibility to unemployment was not a cause for particular anxiety. Our concern with the middle and upper middle classes in Germany will be minimal except as their actions impacted unemployment among the working classes. Within the workers’ ranks, the unionized elite, which never amounted to more than one third of the industrial labor force during our period, will be singled out for special consideration because the data on their situation is so much more complete. The unorganized working proletariat which was probably most suspectible to vicissitudes of the labor market will of course be included. But for reasons which we shall turn to later, it remains far more difficult to obtain an accurate reading on their employment prospects.

The term industrial labor force will be defined rather broadly to include all non-agricultural workers. The changing relationship between agriculture and industry along with its impact on the labor market will be discussed in some detail in the third section of this study. The complex agrarian labor problem which unfolded after the emancipation of the peasantry was aggravated by the simultaneous processes of industrialization and urbanization. Agriculture, as the largest consumer of German manpower during most of our period, played an important part in determining the aggregate level of unemployment. At first it might seem preferable to deal with the entire labor force when speaking of unemployment because there were no hard and fast distinctions between industrial and agricultural workers. At different points in time, the same individual might fall into either or even both job categories. Industrial workers who returned to the countryside during slack periods and farming families who participated in cottage industries were predictably commonplace during an era of rapid economic transition.

While such examples tend to make the distinction between industrial and other workers seem arbitrary or spurious, dealing with the nuances of the agrarian labor situation would make an already unwieldy subject totally unmanageable. Those whose primary source of employment lay in German industry will be included in our study but those more dependent upon agrarian pursuits will receive only cursory treatment here. Factory hands temporarily returning to rural areas to wait out the slow season will concern us more than the men or women who supplemented their farm incomes through secondary employment in weaving or food processing. Underemployment due to the loss of secondary occupations will be of less interest than unemployment due to lay-offs from jobs which provided the bulk of a household’s livelihood.

PERIODIZATION, ECONOMIC FLUCTUATIONS AND HISTORICAL CHANGE

To commemorate the fiftieth anniversary of the last Great Depression, the Wall Street Journal ran a front-page article dealing with Kondratiev waves on October 12, 1979. Although the article indicated that there were still severe reservations among academicians about the validity of cyclical theories, it pointed out renewed interest in explanatory models which viewed cycles as the prime movers in producing economic change. Recent interest has been sparked at least in part by the recognition that if Kondratiev was correct, we shall embark upon another long slump sometime within the next decade.

Quite apart from their value as a tool for forecasting the future, long waves and business cycles have been used by historians to shed light on economic developments of the past. Perhaps the most outstanding contribution to German history in this area has been made by Hans Rosenberg whose Grosse Depression und Bismarckszeit appeared in 1967. Despite the multitude of novel and compelling interpretations advanced in Rosenberg’s book, a number of historians and economists have questioned his characterization of the trend period between 1873 and 1896 as a great depression.⁹ Rosenberg himself acknowledged that the period did not constitute a single uninterrupted cyclical depression as evidenced by continued industrial development and the upward ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• PREFACE TO THE RE-ISSUE OF 2017
• Industrial Unemployment in Germany 1873–1913
• PART ONE: METHODOLOGICAL PROBLEMS RELATING TO THE STUDY OF INDUSTRIAL UNEMPLOYMENT IN GERMANY
• PART TWO: QUANTITATIVE DATA, THE SOURCE OF DISPARITIES BETWEEN THE PERCEPTION AND REALTY OF INDUSTRIAL UNEMPLOYMENT
• PART THREE: DETERMINANTS OF AGGREGATE UNEMPLOYMENT LEVELS
• PART FOUR: MEASURES TO ALLEVIATE INDUSTRIAL UNEMPLOYMENT
• INSURANCE
• CONCLUSION
• EPILOGUE
• APPENDIX: UNEMPLOYMENT IN THE PRINTERS UNION
• NOTES
• BIBLIOGRAPHY