|
Ratio of Profits to Pref. & Ord. Capital |
Average Dividend on Preference Capital |
Average Dividend on Ordinary Capital |
| 1909 |
7.4 |
4.3 |
6.3 |
| 1910 |
8.2 |
4.5 |
7.0 |
| 1911 |
9.0 |
4.0 |
8.5 |
| 1912 |
10.2 |
5.2 |
8.5 |
| 1913 |
11.7 |
5.1 |
10.2 |
| 1920 |
15,2 |
5.0 |
12.6 |
| 1921 |
10.3 |
5.2 |
10,2 |
| 1922 |
7.0 |
5.2 |
8.4 |
| 1923 |
9.8 |
5.3 |
9.3 |
| 1924 |
10.3 |
5.4 |
9.8 |
| 1925 |
10.9 |
5.5 |
10.3 |
| 1926 |
11.3 |
5.4 |
11.1 |
| 1927 |
10.5 |
5.3 |
10.8 |
| 1928 |
11.1 |
5.4 |
10.6 |
| 1929 |
10.5 |
5.5 |
10.5 |
| 1930 |
9.8 |
5.7 |
9.5 |
| 1931 |
7.2 |
5.2 |
7.2 |
| 1932 |
5.8 |
4.2 |
5.9 |
The Economist: Commercial History and Review of 1932, February 18th, 1932.
The Prudent Pru
Some companies have managed to do extraordinarily well. Woolworth’s paid 70 per cent. this year and held a dinner to celebrate it. Other companies in a comparable position have been more reticent. The Prudential Assurance Co., Ltd., have just declared a dividend of 37½ per cent, tax free on their “B” shares. The original shareholder paid 4s. for these shares, and can now sell at about 55s. The “A” shares are even more interesting. Starting with 40 per cent. tax free in 1919 the dividend rose steadily year by year until it reached 94⅙ per cent. in 1928 and 1929. Then came the slump and the dividend fell to 91⅓ per cent. in 1930 and 1931, and right down to 84¼ per cent. in 1932. But hard times cannot last for ever, and this year the shareholders were able to pick up again with 92 per cent. tax free plus a special bonus of 7⅙ per cent. These shares cost originally £l, and now stand at about £26. Another insurance company, the Pearl Assurance Co., Ltd., paid a modest 50 per cent. tax free for 1932.
The Daily Telegraph (January 6th, 1933) reported the Advertising Association Research and Publicity Department as authority for the statement that 80 firms which are prominent users of advertisement showed average profits exceeding 38 per cent. on their ordinary shares in 1932. This figure is, however, probably inflated by the inclusion of a few firms which paid a very high rate of profit.
Then Lewis’s, Ltd., of Liverpool, paid 275 per cent. on their deferred ordinary shares, the same as last year. Half-a-dozen newspapers which reported on Lewis’s profits and on the Prudential’s profits managed to convey that they had done well without disclosing actually what the rates of dividend are.
As the Pru. advertises extensively in the Press, including the “Labour” and “Left-wing Labour” papers, the advertising revenue probably has what is known as a sweetening effect on the editors and their staffs. As a sub-editor on a well-known sensational weekly was heard to remark, “We are allowed to attack anyone and everyone—except our advertisers.”
The Ebb and Flow of Unemployment
Owing to the scrappy way in which newspapers treat social questions, it is not easy for the reader who has no other sources of information to get a full and clear view of what is going on even when the question is one which is always being written about, e.g., unemployment.
A very common misconception is that unemployment, owing to the displacement of workers by machines and to other factors, has been steadily growing since the end of the war. This view is particularly popular with those who hold that the present crisis is essentially different from pre-war crises, and that capitalism will never recover from it. Actually the changes in the numbers of unemployed have followed the same kind of course as in pre-war crises.
The years since 1918 can be divided into a number of well-defined periods.
In 1919 and 1920 there was some “demobilisation” unemployment, followed by a period in 1920, when unemployment was at a very low level, lower than in the years before the war.
Then, in 1921, came the sudden crisis which sent unemployment up to the 2½ million level.
During 1922 and 1923 unemployment declined to a level of about 10 per cent. or 11 per cent.
From 1923 to 1929 (apart from a short period in 1926 due to the General Strike) unemployment was not increasing, but remaining fairly stable at about 10 per cent. or 1,100,000. Actually, in July, 1929, there was less unemployment than in July, 1923, in spite of a very big increase in the total number of insured workers. In other words, there were many more workers in work than there were six years earlier.
The years 1923 to 1929, which newspapers at the time habitually referred to as years of “depression” were, in fact, years of expanding production and trade, and increasing profits; Then, late in 1929, began the “crisis,” with unemployment soaring up to 2½ or 3 millions, and a percentage (23 per cent.) only reached before for a short period in 1921.
The present “crisis” will eventually give place to a new period of expansion, but the fact that there were never fewer than 1,100,000 unemployed in the “boom” year 1929, shows what may be expected by the workers when prosperity returns for the capitalists. At its best, capitalism in England holds out little prospect of reducing unemployment much below 1 in 10 of the workers. That will be “normal” unemployment.
The Displacement of Workers
Closely linked up with the question of unemployment is the displacement of workers either by labour-saving machinery and methods, or by the rise of new industries and the decline of old ones. That process goes on steadily, but it does not mean (as the “Technocrats” have thought) that the number of workers employed gets steadily smaller. This can be illustrated from the course of events in this country during the years 1923 to 1932, about which the Ministry of Labour has made a special inquiry. (See Labour Gazette, November and December, 1932.)
In the first place the total population of the United Kingdom increased by 1,800,000 during those nine years, and the number of insured workers, aged 16 to 64, increased by about 15 per cent., or 1,670,000; from 11,140,000 in 1923, to 12,810,000 in 1932.
The next thing to notice is that in July, 1929, the year of maximum production just before the crisis, the number of insured workers actually in work was more than 10 per cent. greater than it was six years earlier, and it had been increasing more or less steadily in the intervening years. So that, in spite of machinery and the decline of certain big industries, there were 11 men and women actually in work, in 1929, for every 10 who were working in 1923.
How can this be explained? Some facts and figures will make the position clear.
Between 1923 and 1932 a number of industries were declining or were installing labour-saving machinery, or both, and consequently the number of workers employed was being reduced. Nearly 300.000 men were pushed out of coal mining between 1923 and 1929, and another 300,000 by 1932.
The number of non-permanent workers on the railways decreased by 60,000 in nine years, and insured workers in Government employment decreased by 46,000. Including the miners, there were about 400,000 fewer workers actually at work in the declining industries in 1929 than in 1923, and a further decline of about 1,000,000 due to the crisis between 1929 and 1932.
But while these industries were reducing their number of workers, the expanding industries were taking on far more men up to 1929 than were being displaced elsewhere. While mining was shrinking, electrical generation and the manufacture of electrical machinery was rapidly growing. Artificial silk was replacing cotton. Motor transport was replacing railway transport. While the staffs of the Central Government were being reduced, the Local Authorities were taking on more men.
Dividing all industries and transport services into the declining group and the expanding group, we find that while the declining group got rid of about 400,000 workers between 1923 and 1929, the expanding group of industries and services increased the number of workers actually in their employment by 1,400,000—a net increase of 1,000,000 for insured trades as a whole.
Since 1929 the crisis has thrown another one million men out of employment in the declining trades, but the expanding group have still managed to increase, although only very slowly. As remarked above, for the whole group of insured trades, the number in work in 1932 and now is still about the same as in 1923, in spite of the heavy fall in employment since 1929, and, after making all due allowance for any increase since 1923 in the number of unemployed not on the register.
It is interesting to notice that while mining and many manufacturing trades have been badly hit, the distributive trades have increased enormously, from 1,100,000 workers in 1923, to 1,700,000 in 1932.
The National Income
Mr. Colin Clarke, M.A., has made estimates of the amount and distribution of the National Income in the years 1924—1931. (“The National Income.” Pub. MacMillan, 1932. 8s. 6d.)
He shows (p. 72) that the National Income (including net income from Overseas) increased from £3,586 millions in 1924, to £4,006 millions in 1929, these being years of expanding production and trade.
He estimates that the wage earners receive about two-fifths of the total national income (39.9 per cent, in 1929).
On the assumption that the average family consists of, roughly, man, wife and two children, he estimates that the national income, if equally divided, would have been sufficient in 1929 to provide £349 per family, or £6 14s. per week. (P. 78.) If an amount were deducted to provide for the existing rate of new capital, and excluding income from overseas, the figure would be about £310 per family in 1929, or just under £6 a week.
H.
