UNEMPLOYMENT, a social problem which had its origin in the institution of the factory system of industry. While the commodities used for general con sumption could be manufactured or pre pared 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 steam driven 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 cheap ened by machinery production, a growing portion of the masses could acquire a much smaller amount of the commodi ties produced, which again tended to de crease the output of the factories. Work ing in cycles, it was found that every few years would come a period of overpro duction, when the markets would be over stocked, and the factories would be com pelled to cease production until the sur plus should be consumed. The closing
down of the factories, however, would cause unemployment and still further reduce the consuming power of the work ing classes. These two conditions, work ing together, would produce those acute periods of unemployment among the in dustrial 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 1920 1921 another period of unemployment ap peared; 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.