[ Pobierz całość w formacie PDF ]
ital goods industries.
The index of non-durable manufacturing production fell from
94 to 66 from August, 1929, to March, 1933 a decline of 30 per-
cent; the index of durable manufactures fell from 140 to 32, in the
same period, a decline of 77 percent. Factory employment fell by
42 percent; pig iron production decreased by an astounding 85
percent; the value of construction contracts fell from July, 1929, by
an amazing 90 percent, and the value of building permits by 94
percent. On the other hand, department store sales fell by less than
50 percent over the period. Taking durable goods industries (e.g.,
building, roads, metals, iron and steel, lumber, railroad, etc.) Col.
Leonard P. Ayres estimated that their total employment fell from 10
million in 1929 to 4 million in 1932 1933, while employment in
consumer goods industries (e.g., food, farming, textiles, electricity,
fuel, etc.) only fell from 15 million to 13 million in the same
period.13 Stock prices (industrials) fell by 76 percent during the
depression, wholesale prices fell by 30 percent, and the total
money supply declined by one-sixth.
What of wage rates? We saw that the Hoover policies managed
to keep wage rates very high during the first two years of the
depression. By 1932, however, with profits wiped out, the pressure
became too great, and wage rates fell considerably. Total fall over
the 1929 1933 period, however, was only 23 percent less than
the decline in wholesale prices. Therefore, real wage rates, for the
workers still remaining employed, actually increased. An excellent
inquiry into the wage-employment problem during the depression
has been conducted by Mr. Sol Shaviro, in an unpublished essay.14
13
Leonard P. Ayres, The Chief Cause of This and Other Depressions (Cleveland,
Ohio: Cleveland Trust, 1935), pp. 26ff.
14
Sol Shaviro, Wages and Payroll in the Depression, 1929 1933, (Unpub.
M.A. thesis, Columbia University, 1947).
332 America s Great Depression
Shaviro shows that in 25 leading manufacturing industries, the fol-
lowing was the record of monetary, and real, average hourly earn-
ings during these years.
We thus see that money wage rates held up almost to the pros-
perity-par until the latter half of 1931, while real wage rates actu-
ally increased by over 10 percent. Only then did a monetary wage
decline set in, but still without a very appreciable reduction in real
wage rates from the 1931 peak. It should here be noted that, in
contrast to Keynesian warnings, prices fell far less sharply after
wage rates began to drop, than before. From July, 1929, to June,
1931, wholesale prices fell from 96.5 to 72.1, or at a rate of fall of
1 per month, while from June, 1931, to February, 1933, prices fell
to 59.8, or at a rate of .65 per month.15
TABLE 10
AVERAGE HOURLY EARNINGS IN
25 MANUFACTURING INDUSTRIES
(100 = 1929)
Monetary Real
June, 1929 100.0 100.7
December, 1929 100.0 99.8
June, 1930 100.0 102.7
December, 1930 98.1 105.3
June, 1931 96.1 111.0
December, 1931 91.5 110.1
June, 1932 83.9 108.2
December, 1932 79.1 105.7
March, 1933 77.1 108.3
Shaviro points out that businessmen, particularly the large
employers, were taken in by the doctrine that they should pursue
an enlightened high-wage policy, a doctrine not only fed to them
by the veiled threats of the President, but also by economists and
15
See C.A. Phillips, T.F. McManus, and R.W. Nelson, Banking and the Business
Cycle (New York: Macmillan, 1937), pp. 231 32.
The Close of the Hoover Term 333
labor leaders, on the grounds of keeping up purchasing power to
combat the depression. The drop in wage rates had been more
extensive and far more prompt in the far milder 1921 depression;
in fact, even money wage rates rose slightly until September, 1930.16
More wage cuts took place in smaller than in larger firms, since the
smaller firms were less enlightened, and furthermore, were not
as fully in the public (and governmental) view. Furthermore, exec-
utive, and then other, salaries were generally reduced considerably
more than wage rates. In fact, one reason that the eventual wage
declines proved ineffective was the pseudo-humanitarian morality
that governed the cuts when finally made: thus, reductions were
automatically graduated in proportion to the income brackets of
the workers, the higher brackets suffering greater declines. And
reductions were often softened for workers with dependents. In
short, instead of trying to adjust wage rates to marginal productiv-
ities, as was desperately needed, the firms allocated the loss in
income on the most just and equitable [sic] basis . . . [actuated by
the] desire to make the burden of reduced income fall as lightly as
possible on those least able to suffer the loss. In short, each man
was penalized according to his ability and subsidized according to
the need for which he had voluntarily assumed the responsibility
(his dependents).
It was typical that executive salaries were the ones cut most
promptly and severely, even though the great unemployment
problem was not among the executives but among rank-and-file
workers. As a result of this tragically wrong-headed policy, the
wage cuts certainly stirred up little worker resentment, but also did
little to help unemployment. In sum, management s attitude
looked not for what reduction can most easily be made, but rather
how can necessary payroll economies be accomplished with the
least hardship for all concerned. This policy only aggravated the
16
[ Pobierz całość w formacie PDF ]