The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 67

Breadlines in Britain

Most people think that until just recently unemployment was minimal—except during the 1930s. That may be correct if you only look back through the 1920s. But it isn't if you think back further. During the later 19th century, when England dominated the world economically and militarily, unemployment came and went like a yo-yo. As shown here, English unemployment hit 7 percent regularly and several times was at 10 and 11 percent—high even compared to the United States' recent past.

This 1929 chart came from A. C. Pigou's book, Industrial Fluctuations. Pigou was at Cambridge and was perhaps the preeminent English economist of his period, just before the so-called Keynesian revolution. His book charts a world little regarded and mostly forgotten today. But English economic history is significant to the present because England's late 19th-century position shared elements in common with today's world.

As the recent U.S. unemployment rate reached records for any period since the 1930s, it helps to remember commonalities with England and its cyclic unemployment. First, remember that England was the driving force in the Western world, as the United States is today. U.S. trade makes up half the free world's trade, as did England's then. Other countries base their central banks' monetary reserves on U.S. Treasury bills, as they did then with English consols.

Most important, note the huge swing in unemployment in Pigou's chart. As shown in Charts 47 and 49, English ...