to its development. In that country, the system has been adopted not so much for the purpose of dealing with the exceptional economic conditions of the war years and of those immediately following, but of endeavouring to reduce infant mortality and to increase the birth rate. During the last four years, there has been a rapid extension of the system in France, and at the end of May 1924 about 2,700,000 workers were covered by it. In Belgium, a rapid development began in the autumn of 1922, and the experience gained in France was largely utilised. At the end of 1923, about 250,000 workers in private industry, or about 18 per cent. of the total, were employed in establishments where family allowances were paid, while the system was also applied in the State administrations.2

In Holland, although the development has been less rapid than in France and Belgium, the number of workers covered by family allowance schemes has increased during the post-war years. The system is also applied to a considerable extent in the Serb-CroatSlovene Kingdom. In Europe as a whole it has been estimated that not far short of eight million workers are employed in establishments paying family allowances, and in addition most of the Governments have adopted the system for their own civilian employees.3

It may be mentioned that in Australia during the post-war period, proposals for the general application of the family allowance system as a development of the living wage policy have not been adopted, although the system is in force as regards Commonwealth employees.

The regulations governing the payment of family allowances in the various countries differ considerably. The allowances themselves are of various kinds and may include regular allowances for the wife, regular allowances for some or all dependent children, and special allowances paid on the birth of a child, or during the nursing period. In the case of the allowances paid regularly, some regulations provide for married workers to receive allowances in respect of the wife and each dependent child; others provide for their payment in respect of the children only. Sometimes, the wage is regarded as being adequate for the main

1 La Journée Industrielle, May 27, 1924.

2 Revue du Travail, November 1923, p. 2332.

66

3 See article on Family Allowances and Clearing Funds in France" by Paul H. Douglas, in The Quarterly Journal of Economics, February 1924, p. 250.

4 In some cases allowances are paid in respect of invalid or of aged dependents. 5 The allowances for children are usually paid in respect of those under thirteen or fourteen years of age.

tenance of a family of average size (e.g. a man with wife and two dependent children), and allowances are paid only in respect of children in excess of the average number. Frequently for children there is an ascending scale of allowances, i.e. with higher amounts for each succeeding child, while according to other regulations, the scale is uniform or descending.

Objects of Family Allowances

Among those who advocate the principle of payment according to needs, some are actuated by the humanitarian desire of promoting the welfare of workers with large families, and others by the motive of increasing the population of the nation from the point of view either of industrial or of military power. These two objects are somewhat conflicting, since the promotion of the welfare in the present generation of those with large families, by the adoption of a system which results in an increase in the population, may have a harmful effect on that welfare in the future. If the assumption is made that the payment of family allowances will have an appreciable effect in increasing the population, it follows that, apart from exceptional cases, the system should be applied only in countries which are under-populated.

There are many, however, who consider this assumption unfounded. They point out that the highest birth rate coincides with the lowest standard of living, and hold the view that in the case of those with the lowest incomes the hopelessness of a proper discharge of parental obligation breeds a recklessness in incurring them." They believe that the improvement in the economic position of such families which would result from the payment of family allowances would better the condition of the children actually born, and the raising of the status of women, through the recognition of their value to the community as mothers, might be expected to lead to a reduction of the birth rate of the lowest classes of the population. They argue also that the system of family allowances would tend to increase the birth rate in the more thrifty artisan and lower middle classes, and that an improvement in the quality of the population might be expected. Professor Edgeworth points out, however, that such a conclusion is based on a calculation of motives, the operation of which is uncertain, so that the system offers no security for the improvement of the race.1

No satisfactory evidence is yet forthcoming in the countries 1 ECONOMIC JOURNAL, December 1922, p. 454.

where family allowances are paid as to their effect on the birth rate. In France, where the system is supported largely as a means of increasing the population, the data available do not, according to M. Bonvoisin, Director of the Family Allowance Committee, allow of any definite conclusions being formed on this point. There appears, however, to be ample evidence to prove that the payment of family allowances, together with the work done by the home visitors appointed by many of the organisations which make such payments, has had a marked effect in reducing infantile mortality and in improving the health of the children.

The effect on the birth rate will depend to a large extent on the amounts paid in allowances and the systems of payment adopted. In the countries in which family allowances are paid the amounts and systems vary considerably in different industries and districts, but it is only in exceptional cases that the allowances are equivalent to the cost of maintenance of the dependents in respect of whom they are paid.1 As regards the systems of payment, there may be a greater tendency for population to increase where there is an ascending scale of allowances than where the scale is uniform or descending. In France, during the last two years there has been, especially amongst those who support the family allowance system as a means of increasing the birth rate, a movement in favour of the policy of paying allowances only, or at a higher rate, in respect of large families. Some organisations in fact pay no allowances in respect of the first child or the first two children, but pay, in respect of other children, relatively high amounts.

An object of the family allowance system which has been given little publicity by the employers, but which is of considerable importance, is that of effecting an economy in wages. This may result, for example, from the application of the system after a period in which there has been a rise in the cost of living. The workers demand increases in money wages in order that their real wages may be maintained. Instead, however, of agreeing to a uniform increase, the employers, by the introduction of the system, enable those with large families to maintain their standard of living, while unmarried workers and those with small families lose the surplus they previously enjoyed. In this way, unless there has been a reduction in the national dividend, the proportion distributed to the group of workers concerned is less than before. Where such is the result, the employers paying family allowances evidently have an advantage in competition over those who have not secured an equivalent economy. As the family allowance system spreads

1 Indications are given in a later section as to the amounts generally paid.

within a country, this advantage is reduced so far as the home market is concerned, although the country which applies the system in such a way that it effects an economy in wages, has an advantage in competition with countries where it is not applied.

Some methods of application of the system tend to result in a greater stability in the personnel of the establishments in which it has been adopted. In many cases the regulations governing the payment of the allowances stipulate that workers shall become entitled to such payments only after they have served a given period with the same employer. Moreover, if allowances are paid by some employers only, workers with large families will prefer to stay with those employers.1 Again, the family allowance system may serve to some extent as a bonus for regular attendance, as, for example, where the payments cease in case of sickness or absence from work without sufficient cause. Some employers, particularly in France, regard the payment of allowances as a means of improving industrial relations.

One further object may be mentioned, namely that the introduction of the family allowance system may enable the principle of equal pay for equal work as between men and women to be established. It is claimed that one of the greatest barriers in the way of this equality is that under the system of wage payment, until recent years almost universal, the wages of adult male workers are fixed partly in relation to the knowledge that they may have families to maintain, whereas those of women are influenced by the fact that women are regarded as generally being without dependents. The barrier would be removed if in addition to the wage, adequate allowances for dependents were provided. This reason for the introduction of the family allowance system has received considerable prominence in Great Britain, but appears to have received little or no attention in countries in which the family allowance system has been applied.

2

Methods of Providing Family Allowances

The two chief sources of the sums necessary for the payment of family allowances are the employers and the State. Provision

1 Many employers regard workers with families as the most regular and conscientious of their workers.

It was discussed, for example, by Miss Rathbone, in her article on the "Remuneration of Women's Services" (ECONOMIC JOURNAL, March 1917), and in her recent book, The Disinherited Family, and by Mrs. Sidney Webb in her Minority Report to the War Cabinet Committee on Women in Industry (Cmd. 135 for the year 1919). Professor Edgeworth criticised the means (family allowances) in relation to the end (equal pay for men and women) in his article in the ECONOMIC JOURNAL, December 1922, p. 431.

by the employers, which is in practice by far the more important method, may be voluntary, or compulsory. Where provided voluntarily, the payment of the allowances may be made in accordance with collective agreements, or solely on the initiative of the employers. In Germany, Austria, Poland, Czechoslovakia and Holland, and during the war and the years immediately following it in the Scandinavian countries and Switzerland, the system was based mainly on collective agreements, whereas in France and Belgium the employers have in most cases introduced the system on their own initiative, and have paid little or no regard to the views of the workers' organisations.

Wherever family allowances are paid by the employers direct to their workpeople, whether on their own initiative or according to collective agreements, the danger arises that as they are able to reduce the total amount paid in allowances by increasing the proportion of unmarried workers and of married workers with small families, they may discriminate against the very workers that the payments were designed to help. This danger, which is particularly great during periods of industrial depression, may be removed partly or wholly by the adoption of the equalisation fund (caisse de compensation) system, by which the allowances are paid from a fund fed by contributions of a number of employers in a given industry or district. The contributions to the fund are based on some factor not proportionate to the number of children of the workers, the most usual factors being the total wage bill of each employer, or the total number of his workers.1 Where the equalisation fund system has been adopted, it appears to have been successful in avoiding discrimination against workers with large families. In the initial stages of the voluntary adoption of the equalisation fund system, the industrial type open only to employers in a given industry or group of allied industries appears to be the more common, and it has the advantage that the regulations may be drawn up to suit the special needs of each industry. For example, in industries like mining, where the majority of workers are men, different regulations and rates of contribution may be required from those suitable for an industry where many women are employed, e.g. the textile industry. Some funds organised on a district basis and open to all employers irrespective of the industry to which they belong, provide for this difficulty by setting up separate sections within the fund for industries which differ

1 There still remains an advantage to the whole group of employers associated in the fund to engage workers with few or no dependents, but the larger the group, the smaller this danger becomes.