Supply Chain Automation and Job Loss: The Fears of 1927

As I’ve noted from time to time, blasts of concerns over how automation would reduce the number of jobs have been erupting for more than 200 years. As one example, in “Supply Chain Automation and Job Loss: The Fears of 1964“, I wrote about what were called the “automation jobless” in a 1961 news story and how John F. Kennedy advocated and Lyndon Johnson signed into law a National Commission on Technology, Automation, and Economic Progress. The Commission eventually released its report in February 1966 when the unemployment rate was 3.8%.

Here’s an example of concerns about automation replacing labor from a speech given in 1927 by the US Secretary of Labor James J. Davis called “The Problem of the Worker Displaced by Machinery, which was published in the Monthly Labor Review of September 1927 (25: 3, pp. 32-37, available through JSTOR).  Before offering an extended quotation from Davis, here are a few quick bits of background.
  • When Davis delivered this speech in 1927, the extremely severe recession of 1920-21 was six years in the past, but between 1921 and 1927 the economy had had two milder recessions.
  • The unemployment rate in 1927 was 3.9%, according to the Historical Statistics of the United States,
  • At several points in his speech, Davis expresses deep concerns over immigration, and how much worse the job loss due to automation would have been if immigration had not been limited earlier in the 1920’s. Both then and now, economic stress and concerns about economic transition seem to be accompanied by heightened concern over immigration.
  • Lewis ends up with what many economists have traditionally viewed as the “right” answer to concerns about automation and jobs: that is, find ways to help workers who are dislocated in the process of technological innovation, but by no means try to slow the course of automation itself.
  • As a bit of trivia, Davis is the only person to serve as Secretary of Labor under three different presidents: Harding, Coolidge, and Hoover.

Here’s what Davis had to say in his 1927 talk.

“Every day sees the perfection of some new mechanical miracle that enables one man to do better and more quickly what many men used to do. In the past six years especially, our progress in the lavish use of power and in harnessing that power to high-speed productive machinery has been tremendous. Nothing like it has ever been seen on earth. But what is all this machinery doing for us? What is it doing to us? I think the time is ripe for us to pause and inquire.

“Take for example the revolution that has come in the glass industry. For a long time it was thought impossible to turn out machines capable of replacing human skill in the making of glass. Now practically all forms of glassware are being made by machinery, some of the machines being extraordinarily efficient. Thus, in the case of one type of bottle, automatic machinery produces forty-one times as much per worker as the old hand processes, and the machine production requires no skilled glass blowers. In other words, one man now does what 41 men formerly did. What are we doing with the men displaced?

“The glass industry is only one of many industries that have been revolutionized in this manner. I began my working life as an iron puddler, and sweated and toiled before the furnace. In the iron and steel industry, too, it was long thought that no machinery could ever take the place of the human touch; yet last week I witnessed the inauguration of a new mechanical sheet-rolling process with six times the capacity of the former method.

“Like the bottle machine, this new mechanical wonder in steel will abolish jobs. It dispenses with men, many of whom have put in years acquiring their skill, and take a natural pride in that skill. We must, I think, soon begin to think a little less of our wonderful machines and a little more of our wonderful American workers, the alternative being that we may have discontent on our hands. This amazing industrial organization that we have built up in our country must not be allowed to get in its own way. If we are to go on prospering, we must give some thought to this matter.

“Understand me, I am not an alarmist. If you take the long view, there is nothing in sight to give us grave concern. I am no more concerned over the men once needed to blow bottles than I am over the seamstresses that we once were afraid would starve when the sewing machine came in. We know that thousands more seamstresses than before earn a living that would be impossible without the sewing machine. In the end, every device that lightens human toil and increases production is a boon to humanity. It is only the period of adjustment, when machines turn workers out of their old jobs into new ones, that we must learn to handle them so as to reduce distress to the minimum.

“Today when new machines are coming in more rapidly than ever, that period of adjustment becomes a more serious matter. Twenty years ago we thought we had reached the peak in mass production. Now we know that we had hardly begun. … In the long run new types of industries have always absorbed the workers displaced by machinery, but of late we have been developing new machinery at a faster rate than we have been developing new industries. Inventive genius needs to turn itself in this direction.

“I tremble to think what a state we might be in as a result of this development of machinery without the bars we have lately set up against wholesale immigration: If we had gone on admitting the tide of aliens that formerly poured in here at the rate of a million or more a year, and this at a time when new machinery was constantly eating into the number of jobs, we might have had on our hands something much more serious than the quiet industrial revolution now in progress.

“Fortunately we were wise in time, and the industrial situation before us is, as I say, a cause only for thought, not alarm. Nevertheless I submit that it does call for thought. There seems to be no limit to our national efficiency. At the same time we must ask ourselves, is automatic machinery, driven by limitless power going to leave on our hands a state of chronic and increasing unemployment? Is the machine that turns out wealth also to create poverty? Is it giving us a permanent jobless class? Is prosperity going to double back on itself and bring us social distress? …

“We saved ourselves from the millions of aliens who would have poured in here when business was especially slack and unemployment high. In the old days we used to admit these aliens by the shipload, regardless of the state of the times. I remember that in my own days in the mill when a new machine was put into operation or a new plant was to be opened, aliens were always brought in to man it. When we older hands were through there was no place for us to go. No one had a thought for the man turned out of a job. He went his way forgotten.

“With a certain amount of unemployment even now to trouble us, think of the nation-wide distress in 1920-21 with the bars down and aliens flooding in, and nowhere near enough jobs to go round. Our duty, as we saw it, was to care as best we could for the workers already here, native or foreign born. Restrictive immigration enabled us to do so, and thus work out of a situation bad enough as it was. Now, just as we were wise in season in this matter of immigration, so we must be wise in sparing our people to-day as much as possible from the curse of unemployment as a result of the ceaseless invention of machinery. It is a thought to be entertained, whatever the pride we naturally take in our progress in other directions.

“Please understand me, there must be no limits to that progress. We must not in any way restrict new means of pouring out wealth. Labor must not loaf on the job or cut down output. Capital must not, after building up its great industrial organization shut down its mills. That way lies dry rot. We must ever go on, fearlessly scrapping old methods and old machines as fast as we find them obsolete. But we can not afford the human and business waste of scrapping men. In former times the man suddenly displaced by a machine was left to his fate. The new invention we need is a way of caring for this fellow made temporarily jobless. In this enlightened day we want him to go on earning, buying, consuming, adding his bit to the national wealth in the form of product and wages. When a man loses a job, we all lose something. Our national efficiency is not what it should be unless we stop that loss.

“As I look into the future, far beyond this occasional distress of the present, I see a world made better by the very machines invented today. I see the machine becoming the real slave of man that it was meant to be…..  We are going to be masters of a far different and better life.”

I’ll add my obligatory reminder here that just because past concerns about automation replacing workers have turned out to be overblown certainly doesn’t prove that current concerns will also prove out to be overblown. But it is an historical fact that for the last two centuries, automation and technology has played a dramatic role in reshaping jobs, and also helped to lower the average work-week, without leading to a jobless dystopia.


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