SHARING T H E

PROFITS

MARY WHITON CALKINS, A.M.

BOSTON
GINN & COMPANY
1888

Entered according to Act of Congress, in the year 1888, by
M A R Y W H I T O N C A L K I N S , A.M.,
in the office of the Librarian of Congress at Washington.

TYPOGRAPHY BY j . S. CUSHING & Co.,
PRESSWORK

BY G I N N & C O . ,

BOSTON*

BOSTON.

PREFACE.
T H E following paper is little more than a compilation of facts
and figures, bearing on one of the most important problems of
social science.

It is an attempt to state, in the shortest and

clearest terms, the theory of profit-sharing, to explain its methods,
and to describe its results.
A personal visit to Paris and Guise in the summer of 1886, and
to Geneva in 1887, confirmed the previous conclusions from a
careful study of the literature of profit-sharing, and suggested a
short series of articles, printed in March, 1887, by the Boston
Herald, and two papers printed in October, 1887, by The Congregationalist.

These were enlarged and re-cast in substantially

their present form, for a short course of lectures before the class
in political economy of Wellesley College.
It is believed that the figures are recent and accurate, so far as
this result can be attained by information from the latest numbers
of French periodicals devoted to the subject, and by correspondence with employers in France, who practise profit-sharing.

It is

a pleasure to acknowledge the constant kindness of these gentlemen, especially of Monsieur Charles Robert, the president of the
society formed for the study of profit-sharing, and of Monsieur
Marquot, one of the present heads of the Mais on Ledaire.
Little reference is made to American experiments of profit-

PREFACE.

4

sharing, because they have not come under personal observation,
and because their results are more easily learned. Profit-sharing
has not been widely introduced into the United States, perhaps
because the more favorable situation of laboring men among us
makes their needs less pronounced than in the Old World, where
they are crushed by the burdens of military service and overtaxation. Yet the possibility of practising profit-sharing under
the conditions of American commercial life can not be doubted
with such names as Pillsbury and Nelson to stamp the plan a
practical success, and with such results as the distribution, by
Mr. Wanamaker, last April, of more than one hundred thousand
dollars among his employes.
A strike like that on the Chicago, Burlington and Quincy Railroad, which delayed the traffic of a continent, and involved an
incalculable loss, is a proof of the need for some reform, which
shall remove the very principle of the discord between capital
and labor. Profit-sharing is at least a serious attempt to meet
this necessity, and, as such, worth the attention of economists
and of business men.
NEWTON, July, 1888.

ANALYSIS OF CONTENTS.
PAGE

I. Theory of Profit-Sharing

9

1. Ethical Principles: —
A. Material values belong to their producers
B. Laborers are part-producers of wealth
. .
2. Economic Principles: —
A. Profit-sharing directly increases production
B. Profit-sharing indirectly increases production . . . . .
C. Profit-sharing regulates production

II. A c t u a l E x p e r i m e n t s

.

1. Summary of the Facts: —
A. The number of experiments . . . . . . . . . . . .
B. Their permanence
C. Their variety
D. Their importance
2. Testimony of the Facts to Economic Efficiency
I I I . M e t h o d s of P r o f i t - S h a r i n g
1. Admission of Participants: —
A. Unrestricted, e.g. in the Maison Leclaire
B. Restricted, e.g. in the Maison Chaix
2. Division of the Profits between Capitalist and Laborers: —
A. Rate of division undetermined
B. Rate of division fixed and announced : —
Note: Necessity of guaranty to laborers: —
a. Through book-keepers who are participants . . .
b. Through examination of the books, by all, or by a
committee of workmen
c. Through private examination of the books by ^
public accountant

9
10
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12

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6

SHARING THE

PROFITS.
PAGE

a. In the ratio of interest on capital to total annual wages.
b. In the ratio of total capital to total annual wages . .
c. Allotment of a fixed per cent., after subtracting preliminary payment to capital
d. Allotment of a fixed per cent, of total net profits . .
e. Allotment of a percentage on sales
Note: Position of the entrepreneur : —
His unusual services are recognized and rewarded.
3. Division of Profits among Workmen: —
A. In the ratio of individual wages to total wages . . . .
B. According to length of service
C. According to importance of service
D. As a premium on saving
E. By a combination of methods
4. Methods of Paying to Workmen their Share of Profits: —
A. Immediate payment
B. Deferred payment: —
a. To form a capital payable on retirement
b. To form a patrimony payable to heirs
c. To form life pensions
d. To acquire capital in the business
C. Combination of methods

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IV. R e l a t i o n of Profit-Sharing t o P u r e Co-operation .

29

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26

1. Profit-Sharing differs from Co-operation in retaining and rewarding Executive Talent
2. Profit-Sharing may grow toward Co-operation
A. Methods: —
a. By associating workmen in ownership of stock . . .
b. By associating workmen in administration of discipline.
c. By permitting workmen to elect the business manager.
B. Examples: —
a. Maison Leclaire
b. Familistere of Monsieur Godin
c. Magasin du Bon Marche
d. Papeterie Laroche -Joubert

30
35
36
36

V. R e l a t i o n of Profit-Sharing to I n d u s t r i a l Reforms .

38

I. Reforms with which Profit-Sharing is associated: —
A. Savings accounts for workmen

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30
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30
^

^8

ANALYSIS

OF

CONTENTS.

7
PAGE

B. Industrial education
C. Improved homes for working people
D. Distributive co-operation (so-called)
2. Example: Familistere at Guise

. . . .
. . .
.

39
40
43
41

VI. Objections to Profit-Sharing . . . . . . . . . .
1. Ethical: —
A. Wages are " a commutation" .
B. Injustice to workmen in unsuccessful firms
C. Injustice of "sharing profits without sharing losses" . .
2. Economic: —
A. Difficulty of keeping accounts
B. Interference of workmen in financial management . . .
C. Discontent of workmen in years of depression . . . .
D. Publicity of profit-sharing

48
49
49
50
51
53
53
56

SHARING T H E

PROFITS.

i.
T H E THEORY OF

PROFIT-SHARING.

" T H E R E is a very fashionable habit among men of waiving a
proposition on the ground that it is mere theory. One would
think . . . that if one could only succeed in inventing a practice
without a theory, affairs would roll along as smoothly as the
planets around the sun. Unfortunately, it cannot be done. There
is a bad theory at the bottom of every bad practice, and a good
theory at the bottom of every good practice, and the most that
can be said against a theory of human affairs is that it must seem
likely to meet an actual want, and then must be tested by faithful,
practical experiment." 1
The economic system, known as profit-sharing, which offers to
the laboring classes a recognized interest in the profits of business
enterprises has too long endured the reproach of being mere
theory. It meets actual needs, and has borne the test of " faithful,
practical experiment." Yet it does not disclaim the theory which
lies at the basis of all the experiments, and which must be known
and approved before one can allow to them more than accidental
importance.
The justification of profit-sharing as a method of rewarding
labor is twofold, ethical, and economic. A material value belongs
to those who have created it. This proposition, which is the
1

Oration by George W. Cable, Decoration Day, 1886, Pittsfield, Mass.

IO

SHARING

THE

PROFITS.

ethical foundation of the system, is almost self-evident. In the
commercial world, the creators of a definite value are many :
the men who supply the necessary money, the men who supply
the necessary intellect, and finally the men who supply the necessary physical factor, the muscular power; that is, the capitalists,
the business managers, and the laborers. The labor problem,
which is essentially a modern one, is a problem of division : in
what proportion shall capitalist, manager, and laborer share in the
value which they have united to create. By the usual answer to
this question, wages represent the laborer's share. But wages in
no sense adequately represent the sKare of the laborer in the value
produced. Their rate is settled by no principle of division, but
rather in strict accordance with the law of supply and demand.
Labor is bought and sold like machinery, or any other commodity;
it is treated as the property of the capitalist, bought by him, and
paid for, in the form of wages, which are high or low, according
as the supply of labor exceeds or falls below the demand.
This automatic adjustment is no equitable division of the actual
value produced, for wages never rise in the proportion in which
profits increase. If a commercial product belongs to several
classes, the reward of each is a fluctuating one, rising or falling
according as the price of this product rises or falls. The fluctuations of wages never represent the increase or loss in profits. No
business man raises his workmen's pay on account of exceptional
gains; and wages are generally a trifle higher in years of commercial prosperity, only because the demand for labor is greater.
The advocates of profit-sharing would not disturb the workings
of this law of supply and demand, and do not ask to readjust the
present wages system. They recognize that it is a necessary
element of business relations, since no laboring man is in a position to wait for the final realization of profits, in order to secure
his portion. They merely insist that in paying wages an employer
only buys from his workmen a part of their share — as yet undetermined— in the proceeds of his business. Therefore wages do

THEORY OF PROFIT-SHARING.

II

not represent the entire claim of the workman; inasmuch as he is
part-producer he is part-owner of the product, and has a right to
a definite interest in profits.
In accordance with these principles, the gross gains of a business firm will be applied first to the purchase of new buildings or
materials, the introduction of new machinery, the necessary repairs
and renewals; next, to pay interest on the capital involved; third,
to pay wages at market rates, including a salary, the wages of
superintendence, to the manager, or to the capitalist if he be himself the business director. And finally a fixed per cent, should
be subtracted to form a reserve fund in case of loss. What is
left, when these necessary expenses have been deducted, may be
called the net profits, and these are to be divided among all those
who have united to create them; that is, between the capitalist,
the manager, and the laborers.
But if the only argument for this economic system were the
demonstration of its justice, it might well despair of gaining
ground. Men's consciences are not easily enlisted against their
interests, and few would be induced to share profits, which they
have considered their peculiar possession, with workmen who could
claim them only as a moral right. But profit-sharing forwards the
interests of the employer no less than those of the employed. It
offers a keen incentive to the ambition, fidelity, and industry of the
laborer, and thus actually creates an entirely new source of profit.
This is the strongest economic justification, of profit-sharing,
that it is truly a new source of wealth. The demands of justice
for a re-division of the wealth already produced may be slighted,
but neither theorists nor practical thinkers can afford to neglect a
system which proposes to create wealth by coining the dormant
industry, economy, and intelligence of our working men into gold.
Besides increasing productiveness, profit-sharing exercises an
important function in regulating production. Mr. Giddingsl and
1

Quarterly Journal of Economics, April, 1887.

SHARING

12

THE

PROFITS.

Mr. Nelson* have very clearly demonstrated this regulating function. Over-production is an evil to be distinctly recognized, since
it closes factories, lowers wages, and is the direct cause of financial depression. It is an immediate result of the present method
of. distribution, for unusual profits enable employers to increase
production beyond the probable demands of society. A division
of profits, such as participation proposes, tends to reduce these
abnormal rates, thus to lessen the opportunities for over-production, and so to prevent the fluctuations which are the bane of
commercial life.
Profit-sharing indirectly increases productiveness by annihilating the most fertile causes of business losses, — strikes and disagreements. An implicit obedience, a careful use of tools, a
saving of time and materials, become the fixed habit of the
workmen. Each man keeps watch over himself and his fellows,
conscious that a loss to the firm entails a loss to himself. The
capitalist has no longer to struggle against combinations of
laborers. Combination remains, but becomes, as Stanley Jevons
expresses it, "vertical, not horizontal," a harmonious association
of an employer with his own workmen.
In fact, this system seems to realize, in practice, a sentiment
which has become the common property of speakers and writers
on the labor question, one of those " glittering generalities " which
has been bandied about till it has lost every vestige of its original
meaning: " T h e interests of capital and labor are one." In its
literal sense, under the ordinary conditions of business life, this
statement is flatly false, when applied to the division of wealth.2
The higher the wages, the lower are the profits of a business. It
is the interest of the laborer to promote his employer's welfare by
just such a degree of fidelity as will enable him to keep his
place. Beyond that point, his efforts add to the profits of the
concern, but he himself gains nothing from such increase of
1
2

North American Review, April, 1887.
Cf. Philosophy of Wealth, by John B. Clark, p. 181.

Ginn & Co., 1887.

THEOR Y OF PROFIT-SHARING.

13

prosperity. Careless, unfaithful workmen and combinations to
obtain, by means lawful and unlawful, higher wages and shorter
hours are not an unnatural result of this abnormal state of affairs,
in which a man's foes are of his own household. Profit-sharing
claims to put an end to all these evils, by rewarding care, fidelity,
and energy with a part of what they have helped to produce.

II.
ACTUAL EXPERIMENTS.
T H E earliest advocates of profit-sharing adopted it as a working
principle, and developed it into a successful system, from a conviction of its theoretic validity. Students of profit-sharing to-day
have before them an easier task which needs to be as conscientiously undertaken and carried through: a careful examination of
the experiments by which profit-sharing has been tested. We
need to ask ourselves : Are these experiments sufficiently numerous, important, and varied to establish the practical possibility of
the system?
The completest history of the movement 1 enumerates more
than one hundred and thirty firms which now practise profit-sharing, and yet does not include all. An increasing number of these
are in the United States, but the greater part are on the continent
of Europe, and more than half of these in France. The system
has endured the test of age, for, by five of these French firms,2 it
has been successfully employed for forty years or longer. Evidently it is not unfavorably affected by peculiarly modern conditions, for it has been adopted during the troublous years since
1879, by more than thirty firms.
It is hardly possible to suggest a direction in which the principle has not been experimentally tested. All varieties of busi1
Participation aux Benefices, par Dr. V. Bohmert, traduit et mis ajottr
par Albert Trombert. Paris : A. Chaix et Cie., 1888.
2
Ancienne Maison Leclaire, Paris; Papeterie Larocke-Joubert, Angouleme ;
Chemin de fer d* Orleans; Deberny et Cie.t Fonderie de Caracteresf Paris;
Paul Dupont, Imprimeurt Paris.

ACTUAL

EXPERIMENTS.

IS

ness are organized on this basis : manufactures of pianos, furniture,
mathematical instruments, steam-engines, paper, chocolate, and
shoes; large shops, foundries, printing establishments, insurance
companies, railways, and farms.
Well-known business firms administered on this principle are
the Bon Marche, one of the largest shops in the world, with a
capital of nearly four million dollars and about two thousand
employe's ;* the paper mills of Monsieur Laroche-Joubert, with a
capital of nearly nine hundred thousand dollars; 2 the well-known
house-painters of the Maison Leclaire; the foundries of Monsieur Godin at Guise and Laeken which employ fourteen hundred
working people; 3 the publishing house of A. Chaix et Cie., which
prints the official railroad time-tables of France; the company of
the Suez Canal; and the Paris and Orleans Railroad Company,
which has paid more than seventy million francs, in profits, to its
fifteen thousand employes.4
Up to June, 1885, the sums paid to workmen, as shares of profits, by these firms and twenty-six others, with interest on accumulated funds, amounted to ninety-three million, eight hundred and
seventy-seven thousand, two hundred francs (f. 93,877,200),
about eighteen million dollars.5
Not merely these large industrial establishments with secure
financial standing, but small firms which employ only a few men,
have adopted this plan. Monsieur Masson,6 bookseller in Paris,
shares profits with only about twenty employes, and indicates his
approval of the system, after twelve years' trial, by doubling the
rate of profits. Monsieur Mozet/ a mason, starts with a band
of forty participants; Dr. Morgenstern,8 manufacturer of sheets
of tin, in Furth, Bavaria, is successful with nineteen. Instances of
this sort may be multiplied, and they show that profit-sharing is
applicable alike to large and to small enterprises.
1
5
6

Bohmert-Trombert, pp. 552, 557. 2 lb. p. 444. 3 lb. p. 600. ^ lb. p. 512.
Bulletin de la Participation aux Benefices, 1885, Tableau Synoptique.
Bohmert-Trombert, p. 590. 7 lb. p. 647. 8 lb. p. 584.

i6

SHARING

THE

PROFITS.

We may fairly admit that these collected examples possess the
permanence, variety, and extent which are necessary to a fair test
of this theory. The question, then, which forces itself upon us,
is : Do these experiments make good the claim of profit-sharing
to economic efficiency? Experiments will not prove nor disprove
the inherent justice of the plan, but they may speak decisively of
the economic results. And, as a matter of fact, they bear practically concurrent testimony to the augmented productiveness of
profit-sharing firms, which is a direct increase of wealth, and to
an indirect increase, in the absence of strikes and the stability
of the working force.
The collection of all such testimony would form a history of
profit-sharing. Monsieur Leclaire was the pioneer of the movement. He started with no capital, save his hands and his brains,
and left behind him a fortune of two hundred and fifty thousand
dollars. " I maintain," he wrote, a t h a t if I had gone on in the
beaten track, I could not have arrived, even by fraudulent means,
at a position comparable with that which I have made for myself." 1 He noticed that each of his house painters saved and
gained for the firm, after the introduction of profit-sharing, nearly
one franc a day, in excess of his former productiveness.2
Monsieur Gaste, lithographer of Paris, declares that he recovers
the thirty-three per cent, of profits assigned to his workmen, simply
through their economical use of lithographic stones.3 A laborer on
the farm of Herr Bohm,4 in Brandenburg, Prussia, adds his testimony to the effect of profit-sharing on agricultural laborers : —
" In the morning the whole village is asleep, while we are feeding our horses. One bushel of fodder is used where before we
needed three."
A certain author received proof from the Chaix printing-press,
enclosed for the third time in the same envelope. When he re1
2
i

Sedley Taylor, Profit-Sharing, p. 24.
Patrons et Ouvriers de Paris, par A. Fougerosse, p. 219.
Bohmert-Trombert, pp. 296-298.

3

lb.

ACTUAL

EXPERIMENTS.

17

marked on the fact to the man who brought it to him, the prompt
reply was : " You see, sir, we have a share in profits." *
Billon and Isaac of Geneva, Switzerland, manufacturers of the
interior mechanism for music-boxes, have practised participation
since 1870. Monsieur Billon reaffirms to-day the opinions which
he published some years ago : 2 " We perceived at once the good
influence exerted on our workmen by the prospect of sharing in
profits. The work of superintendence became easy, and without
fear of offending any one, we could show ourselves particular
about details. . The feeling of security inspired by the attitude of
our workmen allowed us to devote ourselves exclusively to the
development of our business. . . .
In fact, the system of profitsharing is singularly favorable to the maintenance of a healthful
authority; for, since it is exerted in the interest of all, all are interested in respecting it and making it respected. . . .
As to
material results, they are such that even the very large part of
profits allotted to our workmen costs us nothing."
One of Monsieur Billon's workmen, Heinrich Dey, gave me a
laborer's view of the economic results of profit-sharing: " I have
worked for this firm," he said, " since 1869. Before the introduction of profit-sharing, three-quarters of the men, and many a time
I among them, left their work at the earliest possible moment,
worked as little as they could, and were constantly clamoring for
higher wages. Since that time everything is changed. We often
work a little over time, and we don't expect wages to be raised
in hard times. In those old days the floors and work-benches
were always covered with the oil. Now the oil is more carefully
used, and there is a constant effort to spare the floor, so that frequent cleanings and renewals may not eat up our profits. We
take good care of our tools, and carefully gather up the chippings
1
Enquete de la commission extra-parlementaire des associations ouvrieres.
(See App. p. 70.)
2
Participation des Ouvriers aux Benefices, p. 20 seq. (See App. p. 69.)

SHARING

18

THE

PROFITS.

of metal which fall. These are little things, but at the end of a
year they amount to a great deal."
Monsieur Marquot, one of the present directors of the Maison
Leclaire, stated recently that a painter who does poor work is never
employed more than two days, because he is at once reported by
the others. 1 The effect on production of such a sifting of the
working force cannot be overestimated.
In 1878 there was a general strike of house-painters, throughout
Paris, for higher wages. Monsieur Marquot described to me the
effect of their system in that crisis. Their laborers continued
steadily at work. During six weeks, on account of extra orders,
they worked fourteen hours a day, and often two nights a week, at
the ordinary rates. They neither asked nor received any increase
of wages.2
In a similar general strike among printers, only thirty out of five
hundred printers left the ateliers of the Chaix printing-house, and
all belonged to the class of new hands not yet admitted to the
advantages of participation. 3
Monsieur Laroche-Joubert summarizes the experience of many
firms, in his affirmation before the state commission, which, in
1883, investigated the condition of co-operative and participating
enterprises. He says : 4 "Thanks to the stimulant of co-operation,
we have never had a movement toward a strike among our working
people, so that the production of our factories has increased; the
perfection of our goods is greater; our prices are lower; our
losses are less considerable; finally, our working force is far more
stable, so that it includes an increasing number of families, whose
members are all attached to the house. . . . Without participation, the enthusiasm of our workmen would not have been great
enough for us to attempt the enterprise, which has been so successful, of developing our primary industry by adding other kindred ones."
1
3

Enquete, p. 58. 2 Cf. also Enquete, p. 58.
Patrons et Ouvriers de Paris y Fougerosse, p. 219.

4

Enquete, p. 43.

ACTUAL

EXPERIMENTS.

19

The Paris firms which have longest used this method of remunerating labor passed through the crucial test of the siege and
the commune. " I lived through the siege," writes Monsieur
Goffinon, the head of one of them, u in the midst of my workmen.
I lived through the commune until April 16, 1871, and I give you
two conclusive proofs that profit-sharing will stand the test of loss
and hard times : not one of my participating workmen who was
alive after the commune failed to answer to our roll-call; and
those who remained in Paris after my own departure protected
our industrial enterprise from the attacks of Socialists, regarding it
as a property common to themselves and m e . " 1
1

Patrons et Ouvriers de Paris, par A. Fougerosse, p. 219.

III.
METHODS OF

PROFIT-SHARING.

W E must concede that at least the possibility of the economic
value which has been claimed for profit-sharing is proved by the
experience of the firms which have tested the theory. The
methods of its application become, then, of paramount importance ; there is need of studying carefully the conditions of admission to the advantages of profit-sharing, the rates of division
of profits and the manner of payment.
The Maison Leclaire and the Maison Chaix illustrate the extremes of the practice in the admission of participants. In the
former, every man employed, even if he have worked no more
than one day for the house, receives his proportion of profits. So
I have seen on the books of the firm the entry of a name to which
one franc, seventy centimes, or thirty-five cents, were accredited
.on the basis of one day's work.
J n the Maison Chaix about one-third of the workmen (four
hundred out of twelve hundred in 1884) are participants. The
requisites of admission are a continuous service of the house for
three years, proved efficiency in work, and a written demand
• addressed to Monsieur Chaix. 1
(Very few firms are so liberal in their extension of the advantages of profit-sharing as the Maison Leclaire, A definite period
of service—varying from the five years demanded by the Bon
Marche to the three months required by Billon and Isaac —
forms the usual condition, and proofs of capability and interest
are often exacted.
1

Sedley Taylor, p. 51.

METHODS

OF PROFIT-SHARING.

21

It is important to notice that even Monsieur Leclaire began by
associating with himself forty-four of the workmen longest in his
employ, and advanced only by degrees to the plan, which, in 1870,
admitted all workmen to a share of profits. Many practical authorities on the subject, recognizing that the confidence and cooperation of the workmen are the only guaranties of success in
such an undertaking, look upon this gradual admission of participants as essential to wise organization. Others — among them
Monsieur Billon* — object to this " hesitating and incomplete
manner. . . . Either a workman is bad — then he should be
dismissed; or he is profitable to the house, and in this case he
should be admitted . . . to enjoy the same advantages as his
fellows."
With the number of participants decided, the next problem
involves the division of profits between capitalist and laborers.
The right of the laborer to any share of profits is a moral, not a
legal one, and is obtained only when conferred by the employer.
Therefore the method of division need not be determined by any
definite contract or promise, but may be decided from year to
year by the employer. This is actually the case in about thirty
business houses, including the Bon Marche, and many of the
profit-sharing firms of the United States.
But this practice tends to degrade profit-sharing into a system
of private benevolence rather than of business principles. If the
workman has a right to a share of profits, then that right is
capable of a mathematical expression, and it is just that he should
know it. Most employers recognize this fact by announcing the
method of division, reserving to themselves the right to modify it,
as their experience may suggest, but pledging themselves to hold
to it until such change is made.
To give to profit-sharing the character of a definite agreement
demands the adoption of some plan by which workmen may be
Participation,

p. 72.

22

SHARING THE

PROFITS.

secure of receiving their stipulated share of profits, without having
any pretentions to the financial control of a business.
In practice there is often no definite provision for this necessity,
which, indeed, is often little felt, since the natural tendency of
profit-sharing is to induce a feeling of confidence on the part of
the workmen, since, also, the employer, who, of his own will, introduces profit-sharing, is not likely to evade the regulations which
he himself has made. Yet this basis of mutual confidence is
not suitable to the formal relation of a contract between master
and man, which requires a guaranty of fair dealing toward the
workmen.
In a sense this guaranty is always given by the fact that accountants and book-keepers are themselves participants, and therefore
interested in the strict adherence to the agreement. But the
right of the workmen to the evidences of an honorable division of
the profits is often more directly recognized. Two or three firms,
notably the large and successful enterprises of Messieurs LarocheJoubert and Godin, accord to any employe at the end of the
year, the right of examining books and inventories. Others allow
this privilege to one or more representatives, chosen by the workmen, a provision which is obviously just, when the workmen are
to any extent stockholders.
The exceptional constitution of the Maison Leclaire enables it
to associate with this committee, the president of the Mutual Aid
Society, Monsieur Charles Robert. He has no pecuniary interest
in the business, and enjoys the full confidence of employers and
employes. To him the accounts of the year are submitted, and
he answers to the workmen for the fairness of the result. This
reference to a disinterested person is also obtained by a provision
which has lately been introduced into the regulations of several
firms, and which satisfies the conditions more perfectly than any
other. At the end of the year a public accountant is chosen
by the employes. He examines the books under seal of secrecy,
and certifies under oath to the fairness of the division of profits.

METHODS

OF PROFIT-SHARING.

23

In this division, so regulated, there is every variety of method.
Monsieur Godin, Monsieur Bord, a Paris manufacturer of pianos,
and some others divide the gains between the employers and
employed in the ratio of the interest of capital to the annual sum
of wages.
The N. O. Nelson Manufacturing Company of St. Louis and
some continental firms make the division in the ratio of total
capital to annual wages.
Sometimes a minimum per cent, of profit on capital is secured,
a fixed part of the remainder is allotted to labor, and no division is
made till the preliminary payment has been made to the capitalists. Such is the case in the Paris and Orleans Railway Company,
which pays a dividend of twenty million francs, before subtracting
the fifteen per cent, for labor.
In most cases a definite per cent, of net profits is assigned to
employes. Thus the firm of Billon and Isaac pays fifty per cent.;
Monsieur Chaix, fifteen per cent.; others, ten. The rates vary
from two to seventy-five per cent.
The determination of this rate in which profits shall be divided
is one of the most important steps in the wise regulation of a plan
of profit-sharing. To secure theoretical justice, strict account must
be made of the labor element in the industry to which it is applied.
In certain forms of business, such as mining and house-painting,
the function of labor is most important, the duties of superintendence most difficult. In these cases the increased productiveness
and the savings of the workmen may be very great, and their per
cent, of profits should be correspondingly large. In other classes
of business, as in most manufactures, the importance of machinery
and of business management is very great, and the effect of labor
in raising or lowering the profits is less perceptible, and therefore
a smaller per cent, of these profits should be assigned.
Monsieur Billon has pointed out 1 that this rate of profits may
vary greatly, and yet represent the same actual gain. " I n the
1

Participation,

p. 49 sea.

SHARING

24

THE

PROFITS.

firm Leclaire, the talent of the workmen counts for much, the
price of materials for little; therefore the firm has found it practicable to accord seventy-five per cent, of profits to their workmen.
" On the contrary, the Compagnie Generate d' Assurances de
Paris only gives five per cent, of profits to its employes. The
explanation is self-evident, for here the importance of labor (la
role de la main d'oeuvre) is very little compared with the immense
sums which the employes handle (ont a manier).
" In our industry, where labor has a value equal to that of the
materials, fifty per cent, is found the most just proportion.
" In appearance, these three houses treat their employes very
differently.
But nevertheless their employes obtain about the
same profit, since their annual share variesY between eighteen and
twenty per cent, of their salary."
The plan of dividing profits in the fixed ratio of total wages to
total interest seems to satisfy these requirements, which have been
formulated by Monsieur Godin in the words : 2 " Every element of
production should share in the profits in the proportion of the
services rendered." If strict account be made of fixed capital
existing in the form- of buildings and machinery, then interest
(including an appropriation for renewal of the plant) does truly
represent the services of capital, as the sum of wages stands for
the service rendered by the laborers.
In this connection it is important to define the rights of the
entrepreneur, or business manager, in the distribution of profits.
He is the necessary connection between lifeless capital and undirected labor. His intelligence and foresight may bring success, as
his neglect or inefficiency may bring ruin to his business. How
shall he be rewarded for the exceptional character of the services
which he renders?
It is to be noticed that he introduces no new element into
1
2

During certain years taken as the basis of comparison.
Le Familistere, par S. Deynaud, p. 4.

METHODS

OF PROFIT-SHARING.

2$

production. As Monsieur Godin says/ "Capacity m action {mise
en ceuvre) is really labor: it is an administrative labor or a labor
of direction or a labor of invention." The entrepreneur should,
therefore, receive a salary large enough to indicate the importance
of his position, which will serve as a basis for his share of profits.
To this may be added a distinct part of the profits assigned to
labor, which will be larger or smaller according to the demands
made upon his executive skill.
The division among the workmen themselves, when the whole
amount assigned to labor has been decided, is usually proportional to the wages or salary received by each. In some houses
the division is based on the importance of the positions held by
the different employes. The firm Laroche-Joubert 2 adopts this
method in the case of its foremen and superior workmen.
In others, the length of service is taken into account, or even
constitutes in itself the basis of division. For instance, Monsieur
Godin divides his workmen into three classes, who have served
respectively five years, three years, and one year.3 As a basis for
the division of profits, the wages of workmen in the first class are
calculated at twice their actual value, of those in the second class
at one and a half times their value, of those in the third class at
their real amount.
Two firms, one of them the factory, of M. Laroche-Joubert, 4
make a special assignment of profits to workmen who have saved
a definite sum from their earnings. The foundry at Ilsede, Prussia,5 awards a share of profits only to those who have their savings deposits. In this way, an average of ten per cent, interest, in
addition to the ordinary five per cent, interest, was paid for seven
years, to those among the six thousand workmen who had savings
accounts. The deposits had reached, in 1884, the sum of five
hundred and sixteen thousand, seven hundred and eleven marks
1
2
3

Enquete, p. 248.
Also eight others. Bohmert-Trombert, Table alphabetique.
Bohmert-Trombert, p. 604. 4 lb. p. 441. 5 lb. p. 335."

26

SHARING

THE

PROFITS.

(M. 516,711), about one hundred and twenty-nine thousand,
two hundred dollars ($129,200).
There is perhaps no greater diversity of practice among profitsharers than in the method of paying the workman his share.
About thirty pay the whole, in money, at the end of each financial
year. This number includes most establishments in the United
States and some firms of importance on the continent in which
participation has been carefully organized. The most important
of these was the manufacture of pianos of Monsieur A. Bord,1 who
died in 1888. He employed from three to four hundred men
and, at the end of 1882, had distributed among them one hundred and thirty thousand francs (f. 130,000) in ready money,
with no conditions.2
But not many continental firms have adopted this plan. Some
of the most successful make no annual payment. 3 Profits are
capitalized to the account of the laborer, accumulate at compound interest, and are payable only when he has completed a
large number of years' work for the house or attained a given age,
as fifty-five or sixty years.
The Compagnie d* Assurances Generates of Paris has practised
this plan for thirty-five years. It assigns only five per cent, of
profits to its employes, but from 1850 to 1885 the sum allotted
to labor was about one and a half millions (f. 7,850,257). 3 In
fourteen years twenty-four hundred dollars ($2400) were accumulated by a simple book-keeper, four thousand dollars ($4000)
by another, and thirteen thousand dollars ($13,000) by a superior
official.4 Monsieur Alfred de Courcy, managing director of the
company, is one of the warmest advocates of the system. New
insurance companies, in need of experienced management, he
explains, had often drawn away old employes by promise of increased pay. " T h e savings account," he says, " h a s put an end
to this. It is so highly prized that one does not lightly sacrifice
1
3

Profit-Sharing, by Sedley Taylor, p. 31.
Bohmert-Trombert, Table alephab'etique.

2
4

Enquete, p. 223.
lb. pp. 530-539.

METHODS

OF PROFIT-SHARING.

27

the share of profits to momentary gain. Even faithful servants
have become more industrious because it is to their interest that
the number of employes should not be increased." 1 He emphasizes the fact that the existence of the pensioning system
facilitates the prompt dismissal of employes who are incapacitated by age for profitable work. " The institution," says Monsieur
de Courcy in 1880, " has now had thirty years of experience,
that is to say, of unvarying successes. Each year, by augumenting the account of the employe^ makes him feel more strongly
the advantage of the deferred participation. Each year, too,
the company appreciates better what it gains in fidelity in
return for these sacrifices."
By other firms, the laborers' share of profits, instead of being
capitalized to their individual accounts, is paid into the treasury
of an Aid Society, which secures pensions to retired workmen,
usually continuing them, in whole or in part, to their widows or to
their orphan children till their majority.
Often these societies
give assistance in cases of illness or accident. The Company of
the Suez Canal practises this plan, assigning two per cent, of net
gains to this relief fund. In 1883 Ferdinand de Lesseps testified that six hundred thousand,francs had been so assigned.2
One of the oldest participating houses is the Maison Deberny
et Cte., a type-foundry in Paris, which introduced the system in
1848.3 It employs one hundred and fifty persons. In 1885 t n e
treasury of the relief society contained one hundred and eighteen
thousand, six hundred and sixty francs (f. 118,660), a sum produced by a tax of two per cent, on wages, by the workmen's share
of the profits (in the ratio of wages to interest) and by the interest
on invested funds.
This society is directed by a committee which includes members appointed by the firm and by the workmen. It makes small
loans, at six per cent.; furnishes assistance of every kind; provides pensions of retreat, after retirement, and partial pensions to
1

Bohmert-Trombert, p. 539.

2

lb. p. 576.

3

lb. pp. 563-566.

28

SHARING THE

PROFITS.

workmen over fifty years old, even if they still continue at work.
Thus there are employes, still drawing the ordinary salary, who
have, in addition, pensions varying from two hundred to seventeen
hundred francs.
" Profit-sharing and the relief fund {caisse de
ratelier) support and strengthen each other," says the present
head of the firm, Monsieur Tuleu.
Some of the firms which practise deferred participation retain
control of these relief funds, paying a fixed interest. Others invest these funds for the benefit of their employe's. These have
long desired the foundation of a government institution {caisse generate de la prevoyance industrielle commerciale et agricole) where
such funds may be securely invested. It is expected that the
government will soon make such provision.1
By a plan, which works a more radical change in the conditions
of working men, their share of profits enables them to acquire a
share in the capital of the business with which they are connected. The provident society of the Maison Leclaire is a
sleeping partner in the concern, owning half the capital. The
employes of the Godin foundry receive their profits in the form
of certificates of stock. Mr. N. O. Nelson allows his workmen to
leave their share of gains in the hands of the firm.
Recent labor laws in Switzerland are causing a change in the
regulations of the Geneva firm of Billon and Isaac. Originally,
they invested one-half the profit assigned to labor in one-hundredfranc shares of the company's stock, and payed the other half
annually, in money; illustrating, like the Maison Leclaire, the
method of the large class of business houses which combine the
plans of deferred and of immediate participation.
1

Bulletin, 1888, pp. 53, 74.

IV.
T H E RELATION OF PROFIT-SHARING TO PURE
CO-OPERATION.
THE association of workmen in the ownership of capital is an
important phase of the development of profit-sharing, for the
close distinction between capitalist and laborer is removed by
making the workman himself the possessor of a small capital.
By this path, profit-sharing approaches the ideal of true co-operation. But one radical difference will always remain between the
two systems. The function of the entrepreneur, or business manager, is the most important factor in the complicated problem of
our modern business life. The intellectual ability, practical prudence, and enlightened daring which should characterize him, are
the rarest of qualities, and those most essential to the success of
a financial enterprise. Co-operation annihilates the function of
the entrepreneur. Profit-sharing always retains and rewards highly
administrative and executive talent. The success of a co-operative
industry demands of the individuals who constitute it, not merely
an uncommon degree of industry, zeal, and efficiency, in a word,
of moral and industrial worth, but a high degree of that " genius
to plan " with which comparatively few are endowed. The failure
of many co-operative enterprises has demonstrated with lamentable conclusiveness the lack of this essential quality. Until it is
acquired, the system will be successfully applied to a very limited
number of occupations.
It is one of the greatest practical advantages of profit-sharing
that it demands no readjustment of the existing relations between
employers and employed. The assignment of a share of profits

SHARING

3Q

THE

PROFITS.

to workmen involves no necessary change of their position toward
entrepreneur or capitalist. At the same time, profit-sharing
admits of great development. The right of purchasing stock
may be granted to employes. Representatives of the workman,
as owners of capital, may be admitted to meetings of stockholders,
and committees from among them may be associated with the
firm in the decision of matters of discipline, though neither of
these measures is a necessary result of the simple admission of a
workman's savings to the capital of a concern. Always, in every
really profit-sharing system, the business will be under the efficient
and authoritative direction of one man, or a few men; and the
right of interfering in the financial management, or of assuming
the "responsibilities of production," is absolutely denied to all
employes.
More than twenty firms * permit or prescribe the ownership of
shares in their capital by their working men. Four of these have
grown, under the wise direction and provisions of their founders,
to the position of industrial institutions rather than private firms.
A short sketch of the development of some of them best illustrates
the expansive possibilities of profit-sharing.
Edme-Jean Leclaire, the first man to illustrate the practical
efficiency of the principle of participation, started in life as a penniless lad, and gained his business position by his talents and his
industry. He never forgot his origin and never lost his sympathy
with laboring men, nor wavered in his purpose to help them to an
assured position of independence. He made his first assignment
of profits in 1842, in the face of an irritating incredulity on the
part of his workmen and a persistent opposition on the part of
the city authorities, who suspected him of revolutionary designs.
The distribution among the forty, whom he included in the
assignment, of about two thousand four hundred dollars, overcame
the scepticism of the laborers; and the marked improvement in
1

Bohmert-Trombert, Table alphabetique.

RELATION

TO PURE CO-OPERATION.

31

the moral and social condition of these same laborers silenced the
opposition from without. During the thirty remaining years of
Monsieur Leclaire's life, he devoted all his splendid powers of intellect and heart to the development of this principle of united
effort and united interest. The results — material and moral — of
his life-work seem incredible, except to those who have faith in the
workings of justice on earth, who believe that a sympathy with
working men, when joined to an understanding of economic truth,
is not inconsistent with financial success.
In the counting-house of the Maison Leclaire, last June, profits
were assigned to seven hundred and seventeen workmen, of whom
about half are regularly employed by the firm. Fifty per cent, of
net profits, that is, more than thirty-five thousand dollars (f. 182,500) were paid to these men.1
This payment in money does not represent the entire share of
profits awarded in this establishment to labor. Twenty-five per
cent, of net profits are paid to the Mutual Aid Society, which is a
sleeping partner in the concern, and now the actual owner of half
its capital. By their interest in this society, workmen are directly
concerned in the ownership of capital.
This Societe de Prevoyance was formed, through the efforts of Monsieur Leclaire, in 1838. Its revenue was derived, at first, from the
monthly contributions of its members and from the private benevolence of its founder. Its present funds include the accumulated
amount paid from the profits of the business; the interest of five
per cent, on this sum, which forms part of the capital; finally, the
fees of twenty francs, paid by each member on his admission.
The society insures the life of each member for one thousand
francs; it secures him a pension of retreat of twelve hundred
francs, and assistance in temporary illness. In the event of his
death, his funeral expenses are paid. Half-pensions are accorded
to widows and orphan children of members of the society, and of
1

Authority: personal letter from Monsieur Marquot.

32

SHARING THE

PROFITS.

all workmen, whether active members or not, who have lost
their lives in the service of the house. All employes of whatever standing receive aid in case of accident, and a full pension if
permanently disabled. There are more than a hundred members,
besides the pensioned, who, in 1885, were sixty-two in number,
and received pensions amounting to nearly thirteen thousand dollars. In the course of the same year three thousand dollars were
applied to the expenses of illness and death among the members.
The principal conditions of admission are freedom from chronic
illness, a service of five years, and membership in the noyau}
This noyau, or kernel, of the establishment is a deliberative
assembly of the workmen, which consists, this year, of one hundred and thirty-seven men. They must be between twenty-five
and forty years of age to enter this body. Industry and moral
worth are the only other conditions of admission. But the standard of the noyau is high. Of seventy applications for admission a
few years ago, only six were granted. The names of members are
first approved by the partners, and then voted upon by the assembly general of the noyau.
This assembly selects the foremen and chooses from its members the so-called comite de conciliation.
To this body, formed
of eight employes, with one of the partners as its chairman, are
referred all difficulties between workmen and their superiors, and
all matters of discipline. This discipline is very severe. Recently
a relative of the present head of the firm was lowered in grade,
owing to some infringement of the rules.2 A few years ago, a
member of the noyau was expelled 3 because of disrespect to one
of the partners. He begged for readmission, but was refused in
spite of the intercession of the offended employer.
1

Reglement de la Maison Leclaire, pp. 71-109. Bohmert-Trombert, pp.
248-250.
2
Authority: personal interview with Monsieur Beudin, employe.
3
Authority: personal interview with Monsieur Marquot. Cf. Profit-Sharing.
Sedley Taylor, p. 22.

RELATION

TO PURE CO-OPERATION.

33

This committee fulfils its most important function, in the
event of the death or removal of either partner, when it nominates his successor for election, by the noyau. This new partner
is chosen from among the higher employes. That he may be
selected for his abilities, with no reference to his pecuniary situation, it is provided that the capital of the retiring partner shall be
withdrawn from the concern only so fast as the successor replaces
it by his accumulating share of profits.
This election has actually twice been made since the death of
Monsieur Leclaire. The intelligent members of the noyau realized
keenly the necessity to the success of their enterprise, of the most
competent men at its head. Both of the present partners, Monsieur
Redouly and Monsieur Marquot, have risen in this way from the ranks.
They are very prosperous men though they only divide between
themselves twenty-five per cent, of the profits. They receive,
besides, five per cent, interest on their capital and twelve hundred
dollars as salary of superintendence. They have absolute control
of all the interests of the firm, and no workman or body of workmen interferes with their executive functions.
The workmen are contented, independent, industrious, devoted
to the interests of the firm and to the memory of Monsieur Leclaire. " I can testify," one of the foremen said to me, " to the
great improvement of our workmen since the adoption of the
profit-sharing system. Parisian painters are proverbially dissipated, lawless, and lazy. Forty-five years ago our men were no
better than the average. They were tardy in coming to their
work, prompt in leaving it, careless in executing it. They were
disobedient to orders, and, in general, worked only just enough to
escape dismissal. Now they are apt to begin ahead of time, and
they linger after hours rather than leave the work in a critical
stage. They are obedient to directions and saving of materials.
The duties of foreman have become purely nominal."
The testimony of the employers to the effect of profit-sharing on
the productiveness of their men has been already noticed. It is

SHARING

34

THE

PROFITS.

just as strong with reference to its efficacy in the moral development of the workmen. In the investigation before the Minister of
the Interior, Monsieur Marquot testified to the fact that, among his
workmen, the common habit among Parisian laborers of deserting
the workshops on the Monday after pay-day was entirely overcome.
" According to our statistics," he says, " before the legal establishment of participation, . . . the number of workmen who didn't
work on Mondays, and who drank to excess was forty per cent. . . .
During the ten last years it has been only one per cent." 1
" We often have workmen in the country," he adds, " where we
can exercise no supervision, and we receive only compliments from
those for whom they work, for their exemplary conduct, and for
the good and loyal execution of their orders.
" If sometimes, in times of pressure, a black sheep slips into our
flock, it never stays long . . . ; we are at once informed. . . .
We owe these good results to profit-sharing, for the laborer knows
that it is to his interest to satisfy our patrons."
So the testimony of employers and workmen shows that the
money gained in addition to wages is not squandered in drink and
dissipation. The positive methods of employing it are very
diverse. More than twenty men own houses, bought with their
savings. Another will soon satisfy a long-cherished desire to enter
the trade. He will buy a little shop, where he will establish his
wife and a daughter, whom he is carefully fitting for commercial
life. The others have their savings-bank accounts or their certificates of stock; 2 all are assured against impoverishment through
sickness, or the hardships of a penniless old age.
The Maison Leclaire presents to-day a striking example of an
association of capital and labor, untroubled by business depression
or industrial disturbance. All its employes, of whatever standing,
share in the creation and in the enjoyment of its profits. A large
number of them are members of the Provident Society, which
1

Enquete, p. 54.

2

Bulletin, 1885.

RELATION

TO PURE CO-OPERATION.

35

owns half its capital, and form the assembly to which matters of
discipline are referred; by which, from among its own members,
the directors are elected. These directors are quite as independent as if they had been chosen by a company of stockholders, and
are far more secure of the loyal obedience and assistance of the
men who have selected them for their responsible position.
By an act of incorporation, the Maison Leclaire became, in
1869, a permanent industrial organization, with a " legally binding
charter." * The Provident Society had been already incorporated,
and its independent existence secured in the event of the extinction of the business concern {Vextinction de la Maison)?
Leclaire died in 1872 ; the Maison Leclaire still lives, and proves,
by its continued prosperity, that it owes its success not merely to
the personal influence of its founder, but to the practical excellence of the principles which underlie it.
Monsieur Godin's establishment at Guise demands more extended notice in its connection with social reform. His ideal was
the association of the laborers immediately connected with a business, in the ownership of its capital.3 He was constantly resigning his share of capital, in favor of his employes, anticipating the
time, when, as he says, " I shall be completely reimbursed for my
capital: the workmen will have taken my place; but," he adds,
iC
the statutory enactments are such that the reimbursement will
continue indefinitely, beginning with those longest in service, so
that the establishment shall always belong to the active workmen." 4
At the same time, Monsieur Godin held the position of business
manager and the power to appoint his successor, and to this
administrateur-gerant, with his associate counsellors, is secured,
by statute, a special share of profits. Thus, even a system tending
1

Rlglements de la Maison Leclaire, p. 252. Sedley Taylor, Profit-Sharing,

p. 11.
2
4

Bohmert-Trombert, p. 252. 3 lb. p. 601.
lb. p. 602. Enquete, p. 272.

36

SHARING THE

PROFITS.

so surely as that of Monsieur Godin toward simple co-operation
recognizes the superior value of executive ability.
In the Magasin du Bon Marche, Madame Boucicaut improved
her husband's system of participation by associating with herself in
actual partnership ninety-six heads of departments and superior
employes. By an act of incorporation, the establishment became
an actual co-operative association. Each of the associates owns
the whole or part of a ten-thousand-dollar share of the capital.
No one of them owns more than two shares, and in some cases a
single share belongs to several persons, though entered under one
name, so that the benefits of partnership are extended to more
than a hundred.
During the lifetime of Madame Boucicaut,
though these employes were associated with her in consultation for
the best interests of the house, they were nevertheless sleeping
partners, and she retained for herself the actual and final direction.
Now, at her death, the three men, appointed by herself, are the
directors of the new joint-stock company which retains the name
and the principles of the original house.
' At Angouleme, Monsieur Edgard Laroche-Joubert carries forward the system of profit-sharing introduced by his father in 1847.
Their whole share is paid to the workmen in money, but they are
encouraged to purchase stock in the concern. Deposits of savings
&re received, and their owners "may become," 1 writes Monsieur
JLaroche-Joubert, " actual co-proprietors of the capital of the
society . . . with the same title as the directors (gerants).
It is
,our intention that, by this means, our co-operators become later,
sexclusive owners of our establishment, thus transformed into an
^absolute co-operative society. That this be realized in time, and
without violence, our regulations have reserved to the managers
the right to reimburse our stockholders, without giving an account
of the act, a right of which we make periodical use, to absorb the
accumulated deposits of our employes."
In 1885, ninety of these men, of whom eight were retired, held
1

Bohmert-Trombert, p. 444.

RELATION

TO PURE CO-OPERATION.

37

stock to the value of six hundred and fifty-five thousand francs,
more than one-third of the whole capital. " If co-operation continue to grow in the same proportion," 1 said the founder of the
establishment, " it is probable that a time will come when by the
accumulation of their savings the workmen will come to possess
the whole property."
In this way, by gradually developing the industry and economy
of workmen, by training their mental powers, and by giving them
an experimental knowledge of economic truth, profit-sharing may
be, as it has been called, the apprentice stage to pure co-operation. There will probably always be a greater number of establishments in which participation will make no integral change in
the relation of capitalist and laborer. And in these cases the system will work a beneficent improvement in the productiveness of
an industry and the harmony of its agents. But let us hope that
there may always be great minds to conceive and attain the higher
ideal of more complete association; men who will perpetuate the
industrial enterprises to which they have given themselves, by establishing them on a permanent foundation, like that of the Maison
Leclaire or of the Familistere at Guise. " Institutions live longer
than men. They are the future, but human life is short and uncertain."
1

Bohmert-Trombert, p. 443.

V.
THE

RELATION

OF

PROFIT-SHARING

TO

INDUS-

TRIAL REFORMS.
PROFIT-SHARING provides no panacea for industrial ills. The payment to workmen, in addition to the wages which competition
regulates, of a fair share of the profits earned, will not miraculously
transform their mental and moral character. Such a transformation must work from within outward, and must include other than
economic elements. But profit-sharing is a necessary introduction
to this fundamental reform, an indispensable method of establishing equitable and profitable relations between employer and
employed, and a foundation for every other improvement in
the condition of working men. So the history of participation
shows that the system has always, in practice, been associated
with other important reforms. This is not a surprising result.
The more directly the workmen are interested in a business, the
more clearly it becomes of importance to the employer to raise
their productive capacity to its highest point. On the other hand,
by arousing their hope and ambition, profit-sharing stimulates
working men to make improvements in their own condition, and to
unite cordially in any such efforts on the part of their employers.
Since its introduction, participation in France has been closely
indentified with the formation of provident societies and benefit
clubs among laboring men. Wages are usually adjusted to the
cost of living, and the chief value to the workmen of a share in
gains is the assurance which it gives for the future, in the event of
illness, disability, or death.
Most participating firms distinctly recognize this principle in

RELATION

TO INDUSTRIAL

REFORMS.

39

their method of assigning to the employes their share of profits, —
which are in so many instances devoted directly to the attainment
of pensions or the advantages of a provident society. Thus profitsharing is doing much to popularize the practice of saving among
laboring people. Another benefit which often follows in its train
is in the line of industrial education. The Maison Leclaire provides
for its apprentices evening lecture-courses on hygiene, book-keeping, and every branch of decoration. The technical instruction of
these young men is especially painstaking and thorough. Every
year prizes are awarded to those who have made the greatest progress. This award, by a committee of employes chosen for the
purpose, is the occasion of a great evening gathering of them all.
There is always an address from some one of the foremen, who
recalls the history of the year and encourages the apprentices by
counsel and praise. " It is indispensable," says one of these
annual reports, " that our young people learn as soon as possible
the mechanism of the organization." The address in 1886 x testified to the immense improvement over the preceding year, of the
work for which the prizes had been bestowed, especially in economy of paint. " T h e application for materials," it says, "which
was classed as seventh this year, is much lower than that which
was first last year." The prizes which were awarded amounted to
thirteen hundred francs (f. 1300), already invested in the Mutual
Aid Society.
In the printing-house of A. Chaix et Cie., there is an elaborate
course of technical instruction for apprentices. It includes arithmetic and elementary geometry, lessons in the language, history
and geography of France, typography practically taught, including
an acquaintance with German and Greek characters, and a history of books and printing, with the essential parts of political
economy and constitutional law. The teachers are most of them
foremen in the house, but some professional instructors are employed.
1

Rapport presentee par Monsieur Beudin, 1886.

SHARING THE

40

PROFITS.

This ecole professionelle, as it is called, is more than a free school;
for Monsieur Chaix awards to each pupil ten centimes for every
thoroughly satisfactory attendance. He is the personal director
of the school, and so enters into friendly relations with his apprentices. For their benefit a savings-bank fund is organized, to which,
by premiums and prizes, they are encouraged to contribute. 1
As a result of this thorough trial, Monsieur Chaix has become the
enthusiastic advocate of industrial education in connection with
business houses. He claims that the workmen obtained by this
careful and exact instruction are incomparably better than any
others, that the knowledge of their character and ability which is
gained in this industrial school is of great advantage, and, finally,
that the greatly increased capability of his employes more than
remunerates him for his outlay of time and money.
Profit-sharing is practised in connection with many improvements in the homes of working people. The Bon Marche has
introduced some of these. Madame Boucicaut interested herself
very especially in her workwomen. The home for the homeless
girls among them occupies a part of the building in which she
herself lived.
Walking through the large halls, one catches glimpses of pleasant,
airy rooms, each with polished floor, curtained window, and pretty
furniture. Every room is arranged for one occupant, and bears
the impress of her personal tastes, in photographs, ornaments, or
flowers. An attractive parlor is provided with a piano, well-filled
book-cases, and games. Here, these young women receive their
friends and meet together for,social evenings.
Special consideration for working women is indicated again by
the arrangement of the dining-rooms, which occupy almost an
entire floor of the main building. In providing lunch and dinner
for its employes the Bon Marche follows a Parisian custom, more
or less general, in reference to which wages are adjusted; but it
1

Bohmert-Trombert, p. 488. Sedley Taylor, p. 57.

RELATION

TO INDUSTRIAL

REFORMS.

41

can safely be said that no other establishment provides such delicate and nourishing food, while wages are, at least, as high as in
similar business houses. There are five dining-rooms, large, sunny,
and airy. One of these is set apart to the use of the working
girls, and is more tasteful in its furnishing. They are all comfortable and scrupulously neat.
The Mais on B otiticaut makes provision to satisfy mental cravings as well as physical needs. A large room is set apart to the
use of the evening classes. Here, on different evenings of the
week, are courses in book-keeping, the modern languages, orchestral music, and chorus-singing. Concerts are given by these music
classes, with the assistance of well-known artists. A few programmes suggest the extent of the musical instruction. On one
evening the overture to Rossini's "William Tell," and a "Rhapsodie Hongroise " of Liszt were executed by the orchestra, and the
chorus sung a selection from " T h e Huguenots," and songs by De
Ritte and Wittmann.
No profit-sharing establishment combines more of these reforms than the Familisfere of Monsieur Godin at Guise. The
very name suggests the character of the buildings erected by Monsieur Godin for the comfortable accommodation of the working
people in his great foundry. These buildings, now three in number, are divided into apartments, containing from two to five
rooms; they offer to eighteen hundred people real homes, provided with every necessity and convenience. They are built about
large courts, sunny and airy, so arranged that every set of rooms
has at least half its windows on the street or garden. Galleries
run about the court on each story, with staircases at the corners ;
the apartments open into these galleries, and to so great a degree
is the individuality of the home life preserved that even the postman delivers the letters at each house door, instead of leaving
them at any central office below.
Gas and water are found in the corridors of each story. That
the women of the families may have only their own domestic

42

SHARING

THE

PROFITS.

work, the care of staircases and halls is the charge of those especially hired for the purpose, and held to strict account, as is proved
by the cleanliness of the tiled floors and whitened walls. To secure this delicate neatness, washing in the buildings is forbidden,
but a large laundry offers every facility of blanchisserie. A visitor
is impressed at once by the fact that every window has its little
muslin curtains. The whole spirit of the place encourages a pride
in the home, and one will hardly enter an apartment which lacks
a few pictures on the walls, a shining stove, and one or two good
pieces of furniture. Order characterizes every corner of the establishment.
These comfortable homes, at the price of ordinary lodgings
would be in themselves an inestimable benefit to Monsieur Godin's
working people. But connected with them are innumerable other
advantages. A beautiful garden is one of these, a public hall is
another; still a third is a large bathing-house, whose floor is adjusted by pulleys to the height of the swimmers, so that the boys
as well as the men enjoy its benefits. Such a device as this is an
indication of the minute care with which every detail of this enterprise has been perfected.
But upon the babies and the children the /ami'liste're lavishes its
tenderest care. The most fascinating building of the whole series
is the nourricerie, where, all day long, kind women care for the
little children, leaving the mothers free for their work. The older
ones have games and walks and kindergarten lessons. The babies
have their cradles and little chairs in a large, sunny room.
From the nourricerie the children are graduated to the excellent
school more practical than the government schools in their present
stage, but sending its pupils to the national examinations. Besides
the ordinary rudimental studies, there are classes in algebra, geometry, industrial drawing, and political science. Sometimes one is so
fortunate as to happen upon a recitation in domestic economy, and,
hearing a class of girls discuss the qualities of a good housewife,
and the necessity of system and order in a family, one easily under-

RELATION

TO INDUSTRIAL

REFORMS.

43

stands the happiness of all these homes. Nearly six thousand
dollars are yearly expended on these schools.
The lowest floor of the largest familistere is occupied by a succession of shops, which give employment to a score of women who
serve by turns in the intervals of their domestic work. Here are
sold clothing, groceries, meat, vegetables, and fuel, of the best
quality and at market prices. Half of the profit is assigned, at the
end of the year, to the customers, in proportion to the amount of
their purchases; the remaining half belongs to the business firm
which owns the foundry and the fa^nilis teres.
The familistere is an investment, not a charity. Business principles are not neglected in its management. For instance, a
dining-room for unmarried working people was abandoned, a few
years ago, because it was found to entail a loss. In 1882 the
familistere was able, besides paying all expenses, to assign to purchasers five per cent, on their purchases, and to the Association
five per cent, on its capital.
A complete system of insurance against poverty and illness is
connected with the establishment. The societies through which
such assistance is given, provide not merely pensions of retreat
and medical care in illness, but what is called the " assurance du
necessaire" .• that is, they guarantee to every family connected
with the house an income large enough to provide absolute necessities to each one of its members. There is a regular tariff fixing
the minimum daily cost of living for persons of different ages,
according to which the amount of assistance is regulated.
The funds of these societies are provided by an annual payment
equal to two per cent, of the total wages, from the gross gains of
the establishment; by a tax of one and a half per cent, on
wages; by the sum of the fines imposed for infractions of rules
and careless workmanship; by the total share of profits assigned
to the class of auxiliaires, young men who have served less than a
year. A very wise regulation provides that if the funds of the
"Assurance contre la maladie " prove insufficient, the deficit shall

44

SHARING THE

PROFITS.

be shared between the Association and those who receive the aid.
In this way, a strict economy in the use of the assistance is
secured.
These Aid Societies have a capital of more than eight hundred
and thirty thousand francs. Their annual receipts are constantly
in excess of their expenses. At the present rate of increase, there
will be formed, in less than thirty years, a fund, from whose interest alone, all their expenses can be met. 1
The formation of such organizations, in connection with every
industrial enterprise, in order to provide for the actual necessities
of every person connected with a business concern, was not regarded by Monsieur Godin as an act of charity, but rather as a
recognition of the inalienable right to existence. Land and the
natural agents form one of the factors of production, on which all
men have a claim. " In the name of these resources," he said,
•"society ought to assure the existence of all its members." 2
The capital invested in the factory, in the familistere with all its
adjuncts, and in the Aid Societies, is owned by a single association,
legally incorporated, which included Monsieur Godin and about
eight hundred among his fourteen hundred employes,3 who shared
directly in the profits of the enterprise. Since the death of the
founder his share of the capital has, of course, passed into the
hands of his heirs. About one-third of this capital of nearly seven
million francs belongs immediately to the participating workmen;
that is, they own it, individually, in the form of certificates of
stock. Indirectly, as members of the Association, they are partowners of the reserve fund, and of the capital of the Aid Societies,
so that we read in the last annual statement: 4 " The laboring class
in the Association {Vassociation ouvriere) owns to-day a capital
of five million, two hundred and twenty-nine thousand, six hun1

Le Familistere, par S. Deynauci, pp. 6-8. Le Devoir (the journal of the
2
Familistere), 2 Oct. 1887.
Le Familistere, p. 4.
3
Note: The laborers' shares of profits are not of course always immediately
4
absorbed into the capital.
Le Devoir, 2 Oct. 1887.

RELATION

TO INDUSTRIAL

REFORMS.

45

dred and ninety-eight francs" (f. 5,229,698), about one million
dollars.
The workmen are divided, according to their length of service, into the three classes, associes, societaires, participants} 2
The associes, of whom in 1887 there were ninety-three, own a
share of at least five hundred francs of the capital, and have
lived at least five years in one of the buildings of the familisfere. They form the assemblee generate. The societaires, two
hundred and nine in number, live in the familisfere, and have
served the house for three years; the participants, of whom
there are nearly five hundred, have worked for the association
at least one year. The gains of the workmen of these three
classes are partly proportional to this length of service.
Besides these three classes, there are also the auxiliaires,2
young men who have not yet worked the required year, or whose
military service is not completed. They have a share of profits,
but it is paid into the treasury of the Aid Societies, so that they
themselves enjoy its benefits only indirectly.
The annual revenue of the Association includes not merely the
proceeds of the manufacture, but the rent from the apartments of
the familistere and the receipts of the shops connected with it;
for both institutions are sources of profit. From these gross
gains, after paying the ordinary expenses, are subtracted the sums
necessary for the educational fund and the treasuries of the Aid
Societies.
One-fourth of the remainder was originally paid into the reserve
fund. This has now reached its statutory limit, and the entire
net profits are divided between the stockholders, the employers,
and the employed.3 One-fourth is paid to the executive officers,
the director, and the members of the councils by which he is
assisted, " to assure to this administrative element, talent, a share
1
2
8

Bohmert-Trombert, p. 603; also Le Devoir, 2 Oct. 1887.
Le Familistere, p. 5.
Bohmert-Trombert, p. 604. Le Devoir, 2 Oct. 1887. Le Familistere, p. 5.

46

SHARING

THE

PROFITS.

of profits equivalent to its preponderance in production." 1 The
rest is divided between the stockholders and the workmen, according to the ratio of total interest on the stock to total wages. In
the last commercial year, June, 1886, to June, 1887, one hundred
and eighty-two thousand, four hundred and seventy-four francs
remained to be divided between stockholders and workmen. Interest on stock during this time amounted to two hundred and
thirty thousand francs (f. 230,000), and the total of wages to
about one million, seven hundred and fifty thousand francs (exactly f. 1,753,516), a sum more than seven times as large. Therefore about eighteen thousand francs were paid as dividends, while
more than one hundred and twenty thousand francs were divided
among the workmen.2
Most of these are stockholders, and receive their share of the
sum allotted to capital as well as of that devoted to labor.
Monsieur Godin testified s to the possession of an annual income
of three hundred thousand francs. During his lifetime he wras
himself the head of this organization. He had the right of naming
a successor to fill his place as director for life. He died without
making the appointment or indicating it by his will. His employes
have justified this last mark of his confidence and trust by choosing
Madame Godin to carry on the life-work of her husband. 4
The election is from among the members of the executive
council always for life, except in the case of grave faults, for which
the regulations especially provide. The director is assisted by
this executive council (eonseil de ge ranee), an industrial council
(eonseiZdyIndustrie), and a council of the familisfere.
The first
is composed of associes, including heads of departments, chosen
by the assembly for a service of three years. Its province includes
all the affairs of the association, while the other two councils are
limited in their functions, as their names indicate. A supervising
1
2

le Familistere, p. 5.
Le Devoir, 2 Oct. 1887.

3
4

Enquete, p. 272.
Bulletin, April, 1888.

RELATION

TO INDUSTRIAL

REFORMS.

47

council [conseilde surveillance) watches over the fulfilment of the
regulations and audits accounts.
To become a member of the conseil de gerance, an employe*
must first have attended the meetings of the committee, a right
which he obtains by passing examinations " to prove his theoretical and technical (professionelles) attainments."
The director chooses the foremen and heads of departments.
He is the financial manager and authoritative head of the Association. At the same time, the perfection of the organization
relieves him from the detailed responsibility for the various parts
of this complicated industrial organism.
No doubt the familestere at Guise is an exceptional instance
of the application of a great mind and a large fortune to the solution of the industrial problem, but the mere existence of such an
institution discloses wonderful possibilities for the future of profitsharing. It is no cast-iron regulation, repressing all individuality
and reducing business enterprise to a single form, but rather a
principle of righteousness, manifesting itself in countless ways and
constantly expanding in new directions.

VI.
OBJECTIONS TO

PROFIT-SHARING.

PROFIT-SHARING occupies a middle ground among suggested labor reforms. Therefore it encounters objections from radicals and
from conservatives. In the eyes of communists, who are organizing resistance to landowners and capitalists; and of anarchists,
who would snatch by violence the " rights of labor," it is but a
clog to the wheels of progress, an unhappy effort to cry peace
where " there is no peace." On the other hand, the conservative
class, including some economists and most practical business men,
regard it as a system of unwarranted concessions to the laboring
class, a form of philanthropy quite inapplicable to commercial
transactions.
The objections of the lawless classes may be dismissed without
argument. Experience is rapidly convincing them that, while
they may injure others, they will never really benefit themselves by
their revolutionary designs. But the difficulties raised by the conservatives should be fairly and carefully met. The " leaders of industry " in America are still the stronger class, and profit-sharing
must be introduced by them whenever it is to be practised. They
deprecate the results of strikes and boycotts, in which the victory,
always on their side, is yet purchased at a ruinous cost to themselves, and leaves a legacy of suffering to the whole community.
But they hesitate to adopt a system which may involve fresh difficulties and dangers.
The objections to profit-sharing, like the arguments in its
favor, are both ethical and purely economic. The best recent

OBJECTIONS

TO

PROFIT-SHARING.

exposition of the first is made by Mr. Richard Aldrich.1 Holding
to the theory of wages, already outlined, he defines wages as a
" commutation of the laborer's share of the product.'
" In consideration," he says, " of this regular payment in advance . . . and to indemnify the capitalist for his loss of interest,
the laborers agree to take a smaller sum than they would otherwise
be justly entitled to."
Mr. Giddings, who has ably answered Mr. Aldrich,2 points out
the doubtful application of the term " commutation " to a payment which may be reduced at will by the employer. In fact,
wages are no greater concession to the workmen than the sums
drawn for personal expenses to the business manager. An equitable system of profit-sharing does assign such a salary of superintendence to the entrepreneur, or the undertaking capitalist, and if
he delay to draw it, he has a right to interest. A business enterprise which does not pay the living expenses of its director, as
surely as the wages of its workmen, is carried on under such unfavorable conditions that it would better be discontinued. In
fact, this objection relates to a mere question of detail, and derives its only importance from the suggested problem of the participation of workmen in losses.
Mr. Aldrich further claims that the system of profit-sharing, if
widely introduced, would involve an injustice to the employes of
the less successful firms. Failure or success is due, he says, primarily to the ability of the entrepreneur. Two sets of workmen,
equally faithful and intelligent, might receive at the end of a year
widely different sums as their shares of profits. But this difference
signalizes the uncertainties of gain, in the present economic regime,
as surely as in the supposed reign of profit-sharing. Some industrial establishments pay larger dividends than others; heavy failures sometimes occasion a loss of back wages to the most worthy
workmen; while others, less industrious, perhaps, enjoy the advan1
2

Quarterly Journal of Economics, Jan., 1887.
lb. April, 1887.

SHARING

50

THE

PROFITS.

tages of connection with a successful enterprise. The inequality,
then, is inevitable ; it could especially apply to profit-sharing firms
only in that it would effect a sifting of workmen, so that the successful employer would control the most efficient labor. Thus the
tendency would be to drive to the wall entrepreneurs of deficient
skill, and so materially to reduce the cost of production and to
check over-production. " T h e assumption," adds Mr. Giddings, 1
" that any part of the profit that has been created by the ability of
the manager could go to anybody but the manager without violating the ethical principles of profit-sharing itself, betrays a theoretical misconception. If wealth created by the manager goes to
somebody else, it shows, not that profit-sharing is wrong, but that
the manager's salary is less than he earns."
A more radical objection, constantly brought forward, is suggested by one of those already noticed. It is unjust that workmen should have an interest in the gains of a business when they
do not share in its losses. This assertion usually implies a perversion of the facts. To secure its own existence, every business
must guarantee the living expenses of all those engaged in it. In
most profit-sharing firms the managers draw their salaries as regularly as the workmen receive their wages. In years of commercial depression the workman shares in losses, as his employer
does, in that he is deprived of the expected share of profits,
toward the creation of which he has expended a greater industry
and vigilance than he would have employed under the wages
system.
But a financial crisis may involve a loss to the capitalist of accumulated capital, which will have been diverted to the payment
of wages and other expenses not covered by the production of the
year. Can the workman share this risk ? Evidently he does, if he
has become a stockholder in the concern. But in this case he is
affected by the loss only in his capacity of capitalist, and no solution to the problem is furnished.
1

Quarterly Journal of'Economics, April, 1887.

OBJECTIONS

TO PROFIT-SHARING.

5I

The element of injustice is, in fact, removed by the creation of
a reserve fund, formed to cover these losses and to enable a business to weather the storms of financial crises. To this fund the
workmen directly contribute, for, to form it, a fixed per cent, is
annually subtracted from the gross gains, before the division of
profits. Such a provision for losses is recognized by the regulations
of most firms which have introduced the system, and by the most
careful students of the subject, as a condition of success in profitsharing; " i n any prudent business administration," adds Monsieur
Billon.1
These are the chief objections which involve distinctly ethical
principles. There remains a series of difficulties which tend to
depreciate the efficacy of profit-sharing as an agent in increasing
productiveness, by indicating the practical obstacles to its application.
Most elementary of these is the reference to the complicated
system of book-keeping which the plan involves. To keep the
individual accounts of hundreds of men will require a library instead of a ledger, demand the service of an extra book-keeper,
and entail an expense, it is claimed, which will offset the extra
gains of profit-sharing.
Evidently, this difficulty can only be met by an appeal to actual
experience. I laid it before Monsieur Marquot, one of the heads
of the Maison Leclaire, where the participation is carried out to
its minutest detail. By way of answer, he opened the books, and
explained the simple system which he employs. Each foreman
keeps, in a pocketbook ruled for time-tables of only two weeks'
duration, account of the number of hours of work daily by every
man under his charge. Fortnightly this number of hours is entered in a ledger, in which the name of each workman heads a
vertical column, so arranged that the sum total, at the foot of the
page, will indicate the number of hours of work accomplished
1 Participation, p. 46.

SHARING

52

THE

PROFITS.

during the year. There is space at the end to enter the rate of
hourly wages, and then the amount of yearly wages is obtained by
multiplication. The percentage of profit is written below, and the
final multiplication shows the individual share of profit. Thus one
column of a ledger page contains all the necessary figures of each
workman's account with the house. About four hundred occasional
hands are employed by the Maison Leclaire, besides about four
hundred regular workmen, but I was assured by Monsieur Marquot
that the book-keeping required is an inconsiderable addition to
the ordinary accountant's work.
A single entry, copied from the "profit-sharing ledger," illustrates the system: —
1885.

HOURS OF
WORK.

June I—15
J u n e 16-30

120
115

July 1-15
July 16-31
&c.
1886.
May 1-15
May 16-31

125
104
&c.
no
120

Total 12 months
Wages at .80 per hour

3 } ioo
80

For 12 months
Profits at 20 per cent

f.2480.00
20
f.496.00

Thus " Henri Bord," whose name was written above the column,
in addition to the f. 2480 which he had received as wages during
the year, deposited in the savings bank at its close f. 496 as profits.
On the same page of a moderate ledger were ten names. Everything was printed except the names and the figures. A ledger of
about one hundred pages, with entries twice a month, and a little
multiplication once a year, kept the profits' account for nearly a
thousand men.

OBJECTIONS

TO PROFIT-SHARING.

53

An objection which is constantly made by theoretical opponents
to the system, never encountered in any actual experiment, is the
fear that the right to share in profits will impel workmen to a
troublesome interference with the financial and executive management of the business with which they are connected. There is no
a priori justification of such a fear. A system of profit-sharing is
introduced by the employer and subject to the regulations and
restrictions which he imposes. That the workmen have no control of the accounts, says one of the employes of Billon and Isaac,
" is one of the conditions laid down by our employers. We cheerfully conform to it." 1 Perhaps this objection may fairly be dismissed with a reference to the fact that no one of the firms which
has abandoned the system of profit-sharing has given this reason
for the discontinuance. 2
A more serious difficulty relates to the attitude of the workmen
during bad years and hard times. Profit-sharing may do very well
during good years; but a laborer accustomed to receive a considerable bonus in addition to his wages will become dissatisfied and
mutinous when it decreases or ceases. H e will not appreciate the
necessity of the situation. Strikes and disagreements will result at
the most critical stages of financial difficulty.
The experience of participating houses happily contradicts this
expectation. It is the general testimony of the foremen that there
have been no signs of discontent during these last years when
profits have been measurably reduced. In the Maison Leclaire,
these reductions were accepted by all the workmen whom I met,
as a natural result of business conditions.
" What would you
have," they said, " i n a poor y e a r ? "
The firm of Billon and Isaac, in 1870, introduced profit-sharing.
Owing to the commercial depression in the year of the RussoTurkish war, the profits, which had previously risen to twenty-eight
1
2

Participation, par Jean Billon, p. 38. Bohmert-Trombert, p. 229.
Participation aux Benefices, par Jean Billon, p. 82.

SHARING

54

THE

PROFITS,

and a half per cent, of the average wages, sank suddenly to absolutely nothing. In this very year of financial difficulty, a workman
of the house writes in glowing praise of the system, whose " benefits," he says, "are still more manifest in times of commercial
crisis like the past winter. For a considerable time we have been
reduced to seven hours of labor, and more than one of us would
have had to sleep with the stars for roof, had not the deposits
account come in opportunely to the rescue." 1
In these years, since 1886, new Swiss labor laws are necessitating
a change in the plan of making workmen limited stockholders in
this establishment, while business depression and increased competition have reduced profits to little or nothing. But the workmen have not changed their estimate of profit-sharing. " When
there are no profits," one of them said to me, last July, "we have
still the satisfaction of knowing that we and our employers have
done our best."
Since 1873, Baron Zytphen-Adeler,2 on his estate named Dragsholm, in Denmark, has successfully applied profit-sharing to agriculture. In the third year of the experiment the amount divided
among the laborers amounted to fifteen hundred and fifty dollars
($1550). In the next year the harvest was so poor that there
was no profit to be allotted, but not one of those eighty ignorant
peasants showed symptoms of dissatisfaction.
Critics have been too apt to generalize from cases of failure, in
the United States, especially from the experience of Brewster and
Co., carriage-builders of New York, whose satisfactory plan of
profit-sharing and industrial association was checked by the action
of the workmen themselves, who joined an eight-hour strike. It
is not so generally known that these same workmen had borne
unflinchingly several severe tests of their fidelity, including two
reductions of wages; and that, during all the agitation, the Board
of Governors, chosen by the men from among themselves, refused
1

Bohmert, p. 290.

(See App. p. 66.)

2

Bohmert-Trombert, p. 311.

OBJECTIONS

TO PROFIT-SHARING.

55

steadily to exercise the authority conferred on them, by which
they might have forced the firm to yield to their demands.
The superintendent of the works, Mr. John W. Britton, through
whose influence the plan had been adopted, was not disheartened
by the failure, attributing it largely to his own inability, because
of illness, to give personal attention to the matter. He would
have introduced profit-sharing again, had it been in his power.
His faith in a system in whose application he himself had been
unsuccessful is worth notice. 1
The Peace Dale Corporation, manufacturers of woollen fabrics,
in Peace Dale, R. I., have shared profits with their workmen
since Jan. 1, 1879. The depression in the woollen industry,
caused chiefly by the high tariff, has prevented any assignment of
profits in six of these ten years; no dividend has been paid to
labor since 1883. Yet profit-sharing is not distrusted by employes nor abandoned by employers. In the last of their circulars, or reports of profit-sharing, issued March 1, 1888, these
announce that " n o dividend will be paid to labor for 1887," but
a d d : " We also desire to congratulate ourselves and our employes, on the continued pleasant relations which exist between
us. We appreciate the efforts to secure perfect work which have
been made, and we earnestly ask that they be continued and increased. . . . We, here at Peace Dale, have furnished a striking
example of how mutually helpful capital and labor are to each
other. While we have paid no bonus dividend to labor, there
has been real co-operation."
Experiences of this sort may be multiplied. There are instances in which profit-sharing has failed, because workmen have
not appreciated the necessity of falling profits in seasons of business depression; or because they have yielded to the demoralizing influences of so-called " labor agitators." But the vast ma1
History of Co-operation in the United States, pp. 168-171.
p. 69.)

(See App.

56

SHARING

THE

PROFITS.

jority of cases seems to show that " profit-sharing, good in all
times, is best in bad times."
The most serious objection remains to be considered: The
financial condition of profit-sharing houses must be published.
This public disclosure, in these times of keen competition, would
be ruinous. In years of exceptional success, additional capital
would be attracted to the branch of trade which is making the
most money, and profits would thus be diminished; while in
years of commercial depression, failure and ruin might follow
an involuntary confession of weakness. " A temporary embarrassment might arise in the safest and most conservative house
which can be tided over by means of its credit; but that
credit would rapidly disappear ifx the condition of its affairs
were published." 1
This is a real difficulty and a very grave
one. The danger in the case of very successful enterprises
has probably been exaggerated. Without the intervention of
profit-sharing, men generally discover who is making money.
In the event of financial embarrassment the need of secrecy is
far greater.
The question is complicated by the need, already noticed, of
giving to workmen some knowledge of a firm's financial standing,
as a guaranty of honorable dealing towards themselves. How
reconcile sufficient publicity to assure workmen of fair play, with
sufficient secrecy tor secure a business against the evil effects of
undue disclosure?
We have seen, in our discussion of guaranties to working men,
that some few firms, like that of Monsieur Godin, boldly ignore
the necessity of privacy, by publishing their yearly accounts ; that
many avoid this absolute openness, by admitting only representatives of the workmen to an examination of the inventories, or the
results of the participation; that others, satisfying still more
strictly the conditions of security and secrecy, submit their books
1

Mr. Aldrich, Quarterly Journal of Economics, January, 1887.

OBJECTIONS

TO PROFIT-SHARING.

57

to an accredited accountant, who testifies before the workmen to
their accuracy.
Yet all these methods avoid only the direct disclosure which
would result from the immediate interference of workmen. But
given the rate of division, which is published, and the total amount
distributed, which must, of course, be known, the estimate of a
firm's prosperity or embarrassment is the result of a simple calculation. This danger has been successfully encountered by every
one of the firms which have practised participation. Indeed, the
publicity attendant on profit-sharing is no greater than that demanded of business corporations by Massachusetts law. All corporations formed under the general laws of the State are required
to submit to the Secretary of the Commonwealth an annual statement of their assets and their liabilities, and these statements are
open to inspection in the Secretary's office. But in spite of the
dangers of public disclosures so strongly emphasized in the arguments against profit-sharing, firms often avail themselves of incorporation laws, and business corporations are constantly being
formed. Thus experience furnishes unassailable testimony to the
possibility of commercial success, in spite of a complete disclosure
of financial standing. That the difficulty has hardly been noticed
by the majority of the firms, which employ the system, seems to
indicate conclusively that the risk is not so great as has been imagined.
Yet the danger exists, and the evil results of publicity are, at
least, theoretically possible, when the rate and amount of profits
are known. A simple but perfectly effective method of meeting
this difficulty would consist in merely limiting the extent of participation. The plan, so far as I know, has never been tested by
actual experience, but the cordial approval of Monsieur Charles
Robert, the president of the French society for the study of profitsharing, and of Monsieur Billon, the Swiss manufacturer, warrant
the explanation of it. The system demands that the profits
allotted to labor, in any one year, should never exceed a certain

58

SHARING

THE

PROFITS.

definite per cent, of wages, nor fall below a small per cent, which
must be fixed as a minimum rate. A model set of regulations,
defining the method of distribution, would add, for instance, after
fixing the amount of profits to be assigned, the following stipulations : —
" Whenever this share of profits would yield to the employes,
in any one year, an amount less than two per cent, of wages, it
shall be withheld.
" Whenever it would yield to them an amount more than twentyfive per cent, of wages, the excess over twenty-five per cent, shall
also be withheld.
" The amounts thus deducted from the statutory share of the
employes shall be capitalized to their account, and added to their
profits in unfavorable years, when these are small."
Of course the figures limiting the extent of participation may
be infinitely varied, and some other disposition may be made of
the money which is thus diverted from the share of the workmen.
For instance, it may simply be added to the reserve fund of the
firm. In any case, the regulations must provide for the appointment of an accredited accountant to certify to the workmen that
these regulations have been strictly followed.
In this way, the complete secrecy which is desired would be
secured when most needed. The financial condition of a firm
could never be exactly known. Extremes of depression and prosperity could never be calculated. In years of misfortune, when
no profits were divided, it might still be supposed that there was
a continued small gain, and the height of success could never be
estimated. In fact, by this device, the difficulty which practically
has often been ignored, and without bad results, may actually be
overcome.
Theory and experiment alike meet the objections to profitsharing. By deductive and by inductive reasoning its position is
strengthened. It is a mistake to suppose that the advocates of
the system claim for it an unvarying success in all instances in

OBJECTIONS

TO PROFIT-SHARING.

59

which it has been tried. Numerically, twenty-eight of more than
one hundred and sixty firms, which have attempted profit-sharing,
have later abandoned the plan. In the most of these, the principle of participation has been adopted in a half-hearted, hesitating
way, the plan has been ill-regulated, and the experiment has
hardly received a fair trial. In a few, the failure has been due,
more or less clearly, to the misapprehension of the workmen, who
have shown themselves incapable of furthering their own improvement. In no case has a failure of profit-sharing ever involved a
failure of business.1 The experiment is absolutely safe. The plan
is worth a trial for what it promises. Failure implies merely a
return to the old conditions.
Critics who claim that profit-sharing rests on a basis of purely
inductive reasoning have failed to appreciate the theoretic justification of the system; business men who reject it on the ground that
it is " mere theory " are themselves theorizing in the face of actual
experience. For, as the German historian of the movement truly
says : " Most of the judgments pronounced against profit-sharing
proceed from business men who have either never tried the
system at all, or else only to an inadequate extent and for too
short a time. . . . On the other hand, it is precisely from
those employers who have most thoroughly developed the system
that we receive decidedly favorable judgments and experiences."2
1
The Outlook for Profit-Sharing, by J. B. Clarke, in the Age of Steel, Jan.
I, 1887.
2
Bohmert, p. 215. (See App. p. 66.)

APPENDIX.

REGULATIONS OF PROFIT-SHARING IN THE FIRM OF
MOZET ET DELALONDE, MASONS, 65 RUE D'ERLANGER, PARIS. 1
ARTICLE I . Beginning with March 1, 1885, M M - Mozet and Delalonde freely resign a part of the net profits of the year, which shall be
assigned to all the employes and workmen, who . . . shall be designated
as sharing in the profits.
This . . . is fixed for the year 1885 at ten per cent, of the net profits.
Admission of Participants.
ART. 2. Those employes and workmen shall be admitted as participants whose names are found on the list drawn up by MM. Mozet and
Delalonde, a copy of which shall be sent to each one of the participants admitted.
ART. 3. To be admitted as participant in the future, the requirements are at least two full years of service, a written request to the
employers, a copy of a man's record in the books of the police department, added to this request, and the approval of MM. Mozet and Delalonde, after taking counsel with the Advisory Committee (comite consultatif) composed as prescribed in Article 9.
Always MM. Mozet and Delalonde reserve to themselves the right to
admit as participant, without the fulfilment of these regulations, every
workman or employe 2 who seems to them to deserve this favor.
1 Translated from the Bulletin of Participation, 1885, Vol« VII. p. 6.
2
The French distinguish between the employe, foreman or superior workman
(usually on a salary), and the ouvrier, or laborer.

SHARING

62

Division

THE

PROFITS.

{Repartition).

A R T . 4. T h e division of the sums produced by Participation shall
be made among the participants, in the ratio of the sums which they
shall have received during the year, whether as salaries or as wages,
and conformably to the regulations of Article 5.
To determine the share of each . . . no account shall be made of
premiums or of other variable payments.
Manner of Payment {Remise des

parts).

A R T . 5. The sum allotted to each participant shall be divided into
two equal p a r t s : —
One of these shall be paid over each year after the accounts have
been approved, and at the times fixed by MM. Mozet and Delalonde;
the other shall be paid to his account into the treasury of the society
fonpensions in old age (Caisse des retraites pour la vieillesse).
Accounts

{Comptabilite).

A R T . 6. The capital invested by M. Mozet and M. Delalonde shall
receive interest at five per cent. . . . This interest, the monthly salaries of the employers, the rent of offices and grounds where work is
carried on {chantiers), the allowance for depreciation and for wear and
tear, the amount of taxes, etc. shall be considered as a part of the
general expenses.
Auditing

of Accounts {Contrdle des comptes).

A R T . 7. To guarantee the rights of the workmen and employes, and
that the accounts may be kept in a manner to assign the parts regularly,
the participants, if they desire, may proceed to the election of a public
accountant {arbitre-expert)
accredited by the tribunal of commerce,
who shall be charged with the auditing of the accounts, in connection
with the book-keepers and the employers.
The report made by the accountant shall have the purpose of declaring whether the accounts have been regularly kept and if the share of
ten per cent, of net profits has been duly allotted to the participating
workmen, according to the present Regulations.

APPENDIX.

63

The remuneration of this accountant shall be subtracted from the
total amount of the workmen's share before its division among them.
Advisory Committee (Comite consultatif).
ART. 8. A Committee of Advice and Oversight {surveillance) is
formed to second MM. Mozet and Delalonde in the execution of the
laws relative to profit-sharing, and to the admission of the new participants who shall present a request as indicated in Article 3.
Formation of the Committee.
ART. 9. This committee is composed of seven members, namely: —
MM. Mozet, president.
Delalonde, vice-president.
Two foremen and three workmen, chosen from among those longest
in service.
(The names follow.)

Iii case of the removal of one or more members of this committee,
their places shall be filled by foremen or workmen, named by MM.
Mozet and Delalonde . . . so that the committee may always include
two foremen and three workmen.
Owing to the difficulty of bringing together the members of the
committee because of the distance of the diiferent places of work
(chantiers), the advice and decisions of the committee may be received
by correspondence.
Stability of the Participants.
ART. 10. Since the title participant implies peculiar conditions of
stability and attachment to the house, no participant may be definitely
discharged without the decision of M. Mozet or of M. Delalonde.
Every employe or workman who shall leave the house or be discharged shall lose for the future his right to a share of profits.
Administration (Gestion despatrons).
ART. 11. Profit-sharing is a gratuity {liberalite) freely offered by
the employers to their employes and workmen. MM. Mozet and Delalonde accord to no one the right to criticise their management; those
who do not approve of it are free to withdraw. . . .

64

SHARING

THE

PROFITS.

ART. 12. The annual division takes place in accordance with the
annual accounts of the firm, balanced at the end of the financial year
(last of February), without any right on the part of the participants to
interfere in any degree in the books. The accounts are subject, however, to the control allowed by Article 7.
Share of Workmen Incapable of Seizure (Repartitions insaissibles).
ART. 13. The amounts coming to participants in accordance with
the present Regulations are in advance declared to be free gifts, and for
benevolent purposes, and as such incapable of cession and seizure.
Modifications of the Regulations.
ART. 14. The modifications which experience may add to the present Regulations shall have no retroactive effect.
Discontinuance of the Regulations.
ART. 15. MM. Mozet and Delalonde expressly reserve the right to
conclude the effect of the present Regulations at the end of each year.
Claims.
ART. 16. MM. Mozet and Delalonde are sole judges of all the
claims which may be made relative to the present Regulations.
They may in all cases consult the Advisory Committee.
Model of Adherence of a Participant.
The undersigned, after having read the Regulations of Profit-Sharing,
declares that he perfectly understands them, and that he engages to
conform to them, and faithfully to execute them in all that concerns
them.
The share of profits is accorded to him, and his admission bears date
of
, 188-.
In
this — day of
, 188-.
Seen and approved: —

APPENDIX.

65

PAUL MOUTIER, LOCKSMITH, A T ST. G E R M A I N - E N LAYE A N D A T V E S I N E T .
Monsieur Moutier makes generous provision for his workmen in case
of illness or accident. To those who have been three years in his
service he yields a share of his profits, requiring in return a saving of
five centimes, or one cent daily. These amounts are applied to the
purchase of annuities in the State Pension Office. His profit-sharing
is subject to the following
REGULATIONS.1

A R T I C L E I . Beginning with the first of April, 1882, the employer
voluntarily yields one-fourth of his net profits for the year to the
employes and workmen of his house, who have applied their savings
to the purchase of state annuities (admis a la Caisse des retraites).
A R T . 2. A deduction of ten per cent, shall be made before the assignment, to form and maintain a reserve fund.
A R T . 3. The division is made proportionally to the individual wages
(appointements).
A R T . 4. The sum to be divided is determined by the annual calculation made by the book-keepers. This inventory shall be shown to
all those who send to the employer a written request.
A R T . 5. Every individual share of profits {toute repartition)
less
than one hundred francs is added entire to the individual account in
the State Pension Office (verse'e . . . sur le livret no?ninal de la Caisse
des retraites}.
The excess [over one hundred francs] up to two hundred francs is
paid [in money].
Every individual share above two hundred francs is divided into two
parts, one of which is at the disposal of the participant, while the other
is added to his pensions account {portee stir son livret).
A R T . 6. Profit-sharing is one of the advantages offered by the
employer to his employe's and workmen.
The plan formed and adopted by the employer is explained to those
interested, before their admission to the workshops. Therefore the
1 Bohmert-Trombert, pp. 634, 635. Bulletin for 1885, pp. 153, 154.

66

SHARING

THE

PROFITS.

employer does not admit the right of any one to criticise his management ; those who do not approve of it are free to withdraw, or not to
enter his employment.
ART. 7. The reserve fund, of which mention is made in Article 2,
has for its object to mitigate, in poor years, a division of little or
no importance.
ART. 8. The money which forms this fund shall be deposited in the
savings bank until change of regulation.
ART. 9. From the reserve fund small advances may be made to
employe's and workmen to aid them in times of difficulty (dans un
moment difficile). These advances shall not receive interest, and
shall be held back, by instalments, from wages.
ART. 10. The foregoing provisions are valid even in the event of the
death of the employer.
In order to afford entire freedom to every one, the modifications considered useful may not be introduced until they shall have been announced at the general reunion (a la reunion generale).
PAUL MOUTIER,
Employer,
18th March, 1883.

LITERATURE.
NOTE. — The following list does not claim to be a complete bibliography of
profit-sharing. Indeed, the literature of the subject is increasing so fast that it is
difficult to keep pace with it. The list includes, however, the chief authorities and
most recent monographs.
HISTORIES OF PROFIT-SHARING.

Die Gewinnbetheilung.
und Unternehmergewinn.
Brockhaus, 1878.

Untersuchungen uber Arbeitslohn
Von Victor Bohmert. Leipzig, F. A.

The first history of profit-sharing, including a theoretical investigation of the
system, and a description of eighty-one cases in which it had been applied at that
date.

La Participation aux Be*n£fices. Par le Dr. Victor Bohmert,
traduit de PAllemand et mis a jour par Albert Trombert. Avec une

67

APPENDIX.

preface par M. Charles Robert. Paris, Librairie Chaix, rue Bergere, 20,
1888.
A translation of the work of Dr. Bohmert, by the secretary of the French society
for the study of profit-sharing. It contains more than seventy additional examples
and an "Alphabetical and Analytical I n d e x " of names and subjects which is
invaluable to the student.
To be published in the

Autumn.

Profit-Sharing between Employer and Employe's. A Study in
the Evolution of the Wages-System. By Nicholas P. Gilman.
A history as well as an economic study. This is likely to be the completest and
most useful English book on profit-sharing.
STUDIES (THEORETICAL AND DESCRIPTIVE).

Profit-Sharing between Capital and Labor. Six Essays by
Sedley Taylor, M.A. London, Kegan Paul, Trench & Co., 1884.
New York, J. Fitzgerald, 30 Lafayette Place.
T h e book contains very interesting papers on the failure of profit-sharing in
the Whitwood collieries.

Die Gewinnbetheilung. Hire praktische Anwendung und theoretische Berechtigung auf Grund der bisher Gemachten Erfahrungen,
Untersucht von Heinrich Frommer, Leipzig, 1886.
This treatise is hypercritical; adds nothing to our practical knowledge of profitsharing ; justifies occasional profit-sharing from an economic, but not from an
ethical standpoint.

Patrons et Ouvriers de Paris. Par A. Fougerosse. Paris, Imprimerie Chaix, rue Bergere, 20, 1880.
Le Partage des Fruits du Travail. Par M. Charles Robert; and
La Question Sociale. Par M. Charles Robert. Paris, Librairie
Franklin, 11 rue des Saints Peres.
La Suppression des Greves. Par M. Charles Robert. Paris,
Librairie Hachette et Cie., 1870.
La Vraie Solution Sociale. Par M. Alfred de Courcy. Paris.
Institution de Caisses de Prevoyance. Par M. de Courcy.
Paris, 1875, Armand Auger.
Profit-Sharing. By N. O. Nelson. St. Louis, Mo., 1887.
Papers reprinted from the Missouri Republican, Age of Steel, and other sources.

68

SHARING

THE

PROFITS.

A d d r e s s of Mr. Ara Cushman upon A Plan of . . . ProfitSharing. Auburn, Me., 1886.
A d d r e s s of Mr. Ara Cushman . . . at the Close of the First
Year's B u s i n e s s u p o n the P l a n of Profit-Sharing. Auburn, Me.,
1887.
ESSAYS.

S o m e Objections t o Profit-Sharing. By Richard Aldrich. Quarterly Journal of Economics (Geo. H . Ellis, Boston), January, 1887.
Theory of Profit-Sharing. By Franklin H. Giddings, Quarterly
Journal of Economics, April, 1887.
An answer to Mr. Aldrich.
Profit-Sharing.
By N . O. Nelson.
North American Review,
April, 1887.
Profit-Sharing. By Nicholas P. Gilman. Forum, September, 1887.
Profit-Sharing in Practice. By Nicholas P. Gilman. Unitarian
Review, January, 1888.
Profit-Sharing as a M e t h o d of R e w a r d i n g Labor. F . J. Kingsbury. New Englander, November, 1887.
Unfavorable to the system.
The Outlook for Profit-Sharing. By J. B. Clark. The S o c i a l
Question. By M. Godin; and other papers on Profit-Sharing. Age
of Steel, Jan. 1, 1887. (Journal of Commerce Co., St. Louis, Mo.)
The P h i l o s o p h y of "Wealth. By John B. Clark, Chapter X., The
Principle of Co-operation. Ginn & Co., Boston, 1887.
The Modern Distributive P r o c e s s .
By John B. Clark and
Franklin H . Giddings. Ginn & Co., 1888. Chapters III. and IV.
The Labor P r o b l e m . Edited by William E. Barns. Chapter IX.,
A Plea for Profit-Sharing. Harper and Bros., New York, 1886.
R e p o r t of the Fifth N a t i o n a l C o n v e n t i o n of the Bureaus of
S t a t i s t i c s of Labor. Madison, 1887. Papers by Fred Woodrow
(pp. 19-21), Mr. N . O. Nelson (pp. 25-29).
R i s k Sharing and R i s k and L o s s Sharing. Papers in the
January, 1887, number of Work and Wages.
(November, 1886October, 1887. Clark W . Bryan, Springfield, Mass.)
The L a b o r M o v e m e n t in A m e r i c a . By Richard T. Ely, Chapter
VII., Co-operation, pp. 190-195. T. Y. Crowell, New York, 1886.

APPENDIX.

69

REGULATIONS AND DESCRIPTIONS O F PROFITS-SHARING F I R M S .

R e g l e m e n t s d e la M a i s o n Leclaire. Paris, Librairie Guillamin
e t C i e . , 1877.
R a p p o r t s . . . sur le c o n c o u r s d e s A p p r e n t i s . . . d a n s l a M a i s o n
Leclaire. Imprimerie Chaix, Paris.
Reports printed annually.

R e g l e m e n t s d e la M a i s o n Barbas, Tassart e t Balas. Paris,
Imprimerie Chaix, 1884.
Participation d e s Ouvriers a u x Benefices d e s P a t r o n s . . .
d e l'Ancienne M a i s o n Billon et Isaac. Par Jean Billon. Geneve,
H. Georg, 1877.
The S o c i a l Palace. By Edward Howland, Harper's Magazine,
April, 1872; and The Familistere at Guise. By Edward Howland,
Harper's Magazine, November, 1885.
Familistere de Guise. Par S. Deynaud, Guise (Aisne), 1884.
H i s t o r y of Co-operation in the U n i t e d S t a t e s . Publ. Agency
of Johns Hopkins University, Baltimore, 1888.
Co-operation in New England.
By Edward W . Bemis, P h . D .
Profit-Sharing, pp. 111-128.
Co-operation in the Middle States. By Edward W . Bemis. ProfitSharing, pp. 168-180.
Co-operation in the Northwest. By Albert Shaw, Ph.D. Co-operative
Profit-Sharing in the Pillsbury Mills, pp. 255-262.
Profit-Sharing.
From the Seventeenth Annual Report of the
Massachusetts Bureau of Statistics of Labor.
R e p o r t of Mr. C. S. Y e a t o n . Printed with the Address of Mr.
Ara Cushman. Auburn, Me., 1887.
Co-operation. Circulars of the Peacedale Manufacturing Company.
Peace Dale, R.I., 1879-1886, 1888.
Report printed w i t h E s s a y s on Profit-Sharing.
By N. O.
Nelson, St. Louis, Mo., 1887.
Circular on Profit-Sharing for the S t o c k h o l d e r s and E m p l o y e s
of the Toledo, A n n Arbor, and N o r t h Michigan R a i l w a y Comp a n y . Printed with the Seventh Annual Report, April, 1887.
N O T E . — Most profit-sharing firms of note print copies of the regulations, and
often annual reports of the results of participation.

JO

SHARING

THE

PROFITS.

Consult Work and Wages for notices of the introduction of profitsharing into many firms. See especially the numbers of January, February, March, April, and May, 1887.
Consult current numbers of the Age of Steel for information about
profit-sharing firms.
Enqueue de la Commission Extra-Parlementaire des Associations Ouvrieres. Nommee par M. le Ministre de Plnterieur, 2d
Par tie. Paris, Imprimerie Nationale, 1883.
Reports, at length, of the evidence given by thirty-five employers who practise
profit-sharing, before a commission appointed by the Minister of the Interior in
1883.
PERIODICALS.

Bulletin de la Participation aux Benefices. Paris, Imprimerie
Chaix, rue Bergere, 20. 1879-1888 (5 francs par an).
This is the quarterly journal of the French Society "formed to facilitate the
practical study of the different methods of profit-sharing." It contains reprints of
the most notable essays on the subject, copies of the regulations of profit-sharing
firms, information of all new experiments.

Le Devoir, Revue des Questions Sociales.
1877-1888.

Guise (Aisne).

A weekly journal, especially devoted to the interests of the Familistere.
BIOGRAPHY.

Biographie d'Un Homme Utile. Par M. Charles Robert. Paris,
Librairie Fischbacher, 33 rue de Seine, Paris, 1878.
The story of Monsieur Leclaire's life.

Biographie de Monsieur G-odin.
(Aisne), 22 Janvier, 1888.

Supplement au Devoir, Guise

INDEX
T O N A M E S O F EMPLOYERS A N D O F F I R M S .

Billon, M„ 17, 2i, 23, 51, 53, 57.
Billon and Isaac, 17, 20, 23, 28, 53.
Bohm, Herr, 16.
Bon Marche, 15, 20, 21, 36, 40, 41.

Leclaire, M., 16, 21, 30, 31, 3 3 ; Maison,
14, 15, 18, 20, 22, 24, 28, 31, 34, 35, 37,
39. 5 1 . 52, 53Lesseps, Ferdinand de, 27.

Bord, M., 23, 26.
Boucicaut, Mme., 36, 40; Maison, 41.

Marquot, M., 3, 18, 31, 33, 34, 51, 52.

Brewster and Co., 54.

Masson, M., 15.

Britton, J. W., 55.

Morgenstern, Dr., 15.

Moutier, M., 65, 66.
Chaix, M., 20, 23, 40; A., et Cie., 15, 16, Mozet, M., 15, 61-64.
18, 20, 39.
Compagnie Generate d 'Assurances, 24,26. Nelson, N . O., 4, 12, 23, 28.
Courcy, M. de, 26, 27.
Paris and Orleans R. R. Co., 14, 15, 23,
Deberny et Cie., 14, 27.

Peace Dale Corporation, 55.

Delalonde, M., 61-64.

Pillsbury, C. A., 4.

Dupont, M., 14.
Redouly, M., 33.
Familistere de Guise, 37, 41-47.
Gaste, M., 16.
'Godin, M., 15, 22-25, 28,35,36,41-46,56;
Mme., 46.

Robert, M. Charles, 3, 22, 57.
Suez Canal Co., 15, 27.
Tuleu, M., 28.

Goffinon, M., 19.
Wanamaker, J., 4.
Laroche-Joubert, M., 18, 36; Papeterie,
14, 15, 18, 22, 25, 26.

Zytphen-Adeler, Baron, 54.

POLITICAL SCIENCE.
The Philosophy of Wealth.
Economic Principles Newly Formulated. By JOHN B. CLARK, A.M.,
Professor of History and Political Science in Smith College; Lecturer
on Political Economy in Amherst College. 12mo. Cloth, xiii + 235
pages. Mailing Price, $1.10; for introduction, $1.00.
r p H I S work is a re-statement of economic principles in harmony
with the modern spirit. I t aims to secure a truer conception
of wealth, labor, and value, and of the process of distribution. I t
takes into account the action of moral forces and the organic
nature of society. I t is intended for general readers, and may be
used by college classes whose teachers instruct partly by lectures
and topical reading.
The clearness and originality of the thought, and the freshness
of the style, serve to render the work singularly stimulating and
suggestive as well as instructive.
Dr. Foldes, in the Jahrbilcher fur
Nationalokonomie
und
Statistik,
Jena: The clear comprehension of
the phenomena of our time, the
sharply critical estimate of the different struggles and movements, the
steady holding of the attention upon
the common life of men and the interests of a common civilization, the
ideal conception of society notwithstanding the rejection of everything
visionary, the absence of all that is
scholastic and of all verbal pedantry,
will favorably affect every reader.
H. C. Adams, University of Michigan and Cornell University, in the
"Political Science Quarterly" : I
cannot express too warmly my appreciation of this treatise. It presents
the rare excellence of fully recogniz-

ing the influence of moral forces in
economic actions, while at the same
time maintaining the scientific spirit
in the analysis of industrial processes.
Its title is not misleading. From the
first chapter to the last it is a scholarly discussion of The Philosophy of
•Wealth.
{December, 1886.)
The Workman, Cleveland, 0.:
The book is one that every wage
worker should read, for it is the
honest thought of an honest man,
honestly expressed.
(Dec. 11, 1886.)
New York Tribune: No other book
is remembered in which these vital
questions have been treated in a
more elevated and noble tone, or
with more of searching and original
thought.

POLITICAL SCIENCE.
A. D. Morse, Prof, of History and
Political Economy in Amherst College : I think it will prove highly
useful. Everything in it is intelligible to school children, and important for them to know. Many adult
citizens are very imperfectly acquainted with the structure and
working of our somewhat complex
government, because we have lacked
hitherto such a text-book.
J. B. Clark, Prof of History and
Political Science in Smith College,
and Lecturer on Political Economy
in Amherst College: The topics
treated are those needing to be discussed with elementary classes in
political science, and the mode of describing institutions by briefly tracing their origin and development is
especially to be valued.

125

Thomas M. Balliet, Supt. oj
Schools, Reading, Pa.: It treats the
subject in a novel and most attractive way. It will be an admirable
text-book for our grammar schools.
Richard T. Ely, Assoc. Prof, of
Political Economy, Johns Hopkins
University: Beyond all comparison
the best work on the subject.
R. Bingham, Prin. of Bingham
High School, N.C.: It is CAPITAL.
B. M. Zettler, Supt. of Schools,
Macon, Ga.: The subject ought to
be taught in our schools, and this is
an excellent book from which to
teach it.
W. M. Crow, Supt. of Schools, Galveston, Tex.: The most original and
practical text-book yet issued on this
important subject.

S.W. Mason, Supervisor of Schools,
L. C. Hull, Prin. of High School,
Boston: It is an excellent book, and
I hope it will have the extensive cir- Detroit, Mich.: I have examined it
with care, and with real pleasure. It
culation it so richly deserves.
is surely the best text-book of the
E. H. Russell, Prin. of State Nor- kind that has been prepared for use
mal School, Worcester, Mass.: It in our schools.
seems to me to be made upon the
A. D. Wharton, Prin. of High
right plan, and the treatment of the School, Nashville, Tenn.: It is an
subject is unusually interesting and exceedingly attractive book, and I
suggestive.
think ought to be introduced in every
A. B. Watkins, Ass't Sec'y Univer- high school and academy.
sity of Neio York: It is certainly
I. J. Manatt, Chancellor of Univen
very philosophical, and at the same sity of Nebraska: A live book by a
time very simple.
practical man on a vital subject, adJames MacAlister, Supt. of mirable alike in matter, method, and
Schools, Philadelphia: An admir- spirit.
able little book.
John Swett, Prin. of Girls' High
S. A. Ellis, Supt. of Schools, Roch- and Normal Schools, San Francisco :
ester, N. Y.: The only book on civil A delightful book. It is just what
government that is not simply an we want.
analysis of the constitution.
The Nation, Neiv York: The book,
C. B. Wood, Prin. of Central High in its plan and its details, deserves
School, Pittsburg, Pa.: It appears high commendation, and ought to
come largely into use in our schools.
to be just the fit for our course.

124

POLITICAL SCIENCE.

Our Government:
How it Grew;

What it Does; and How it Does it.

By JESSE MACY, Professor of History and Political Science in Iowa
College. 12mo. Cloth. 250 pages. Mailing Price, 78 cents; for introduction, 70 cents. Allowance for an old book, 25 cents.
r t l H I S work aims to give a clear view of all our governmental
institutions, and their relations to one another. I t is chiefly
peculiar in its way of doing this. The historical method is followed, and the growth of our institutions is briefly traced from
" old Schleswick in Denmark," — where our ancestors lived in free
towns and villages; through England, — where wars and violence
resulted in kings and lords, and where the old free institutions of
town and shire gave birth to a free Parliament; to America,—
where the same institutions, transplanted and preserved, were
finally united into free commonwealths, and the commonwealths
into a national Republic.
This is the only book that "covers the ground," explaining our
really complex system of political institutions.
I n treating of Our Government, attention is first called to local
matters that can be explained and understood most readily.
" Constitutions " come last, and are then fully explained.
The style is remarkably fresh, simple, and clear. The desiderat u m of text-book style — that the subject itself be made interesting
— is here met.
Summaries and suggestions, with helpful questions, are given to
assist in the thorough mastery of the subject.
The success of Our Government has been signal and immediate.
Within four months of the date of publication, it was indorsed by
the representatives of 57 Colleges, 24 Normal Schools, 113 High
Schools and Academies, and 114 cities and towns. All these are
leading educators, and the recommendations were exceptionally
cordial. Only specimen opinions need be quoted here.
H. C. Adams, Prof, of Political
Economy in University of Michigan
and Cornell University: I am free
to say that I believe the book will
prove a great success. It goes to
work in the right way, proceeding

I from what is known to what is unknown. Teachers in our common
j schools and normal institutes will
\ find it of great assistance in giving
I instruction upon the American govI ernment.

127

POLITICAL SCIENCE.

Railway Tariffs and the Interstate Commerce
Law.

By Professor EDWIN R. A. SELIGMAN, Ph.D., of the School of Political
Science, Columbia College. Reprinted from the Political Science Quarterly. 8vo. vi + 87 pages. Retail Prices: cloth, 75 cents; paper, 50 cents.
A M O N G the topics treated in this monograph are : " Nature of
the railway; the principle of tariffs; cost of service t h e o r y ;
classification; discrimination; value of service principle; preferential and differential r a t e s ; the short haul system; the short haul
and anti-pooling clauses of the interstate commerce l a w ; the doctrine of free competition; seven forms of combinations ; pools —
their advantages and dangers; effect of abolishing pools; mistake
of t h e interstate commerce l a w ; competition of carriers on the
line; railway legislation in the United States; probable results of
the law."
Munroe Smith, Adj. Prof., Lecturer on Roman Laio, School of
Political Science, Columbia College:
Professor Seligman's monograph has
been received with equal favor byscientific authorities, in this country
and abroad, and by practical railway
managers. It has been pronounced,

by competent judges of both classes,
the best discussion that has yet appeared of the Interstate Commerce
Law and of modern transportation
problems, — basis of rates, local and
personal discriminations, x>ools, combinations, and traffic arrangements.
{March 10, 1888.)

The Modern Distributive Process:

Studies of Competition

and its Limits, of the Nature and Amount of Profits, and of the Determination of Wages in the Industrial Society of to-day.
By JOHN B. CLARK, Author of the Philosophy of Wealth, and FRANKLIN

H. GIDDINGS. 8vo. Cloth. 77 pages. Retail Price, 75 cents.
r p H I S is t h e first candid and scientific study of the new problems of distribution resulting from competition in its modern
form, and t h e organization of pools, trusts, labor unions, etc. I t
is a view of the present social evolution, its causes, principles, a n d
tendencies. As a fair and able treatment of the most vital questions of the day these essays seem of peculiar value and interest.
They were originally published in the Political Science Quarterly,
and in that form attracted great attention both here and abroad.

126

POLITICAL SCIENCE.

Political Science Quarterly.
A Review devoted to the Historical, Statistical, and Comparative Study
of Politics, Economics, and Public Law.
Edited by the Faculty of Political Science of Columbia College. Crown
8vo. About 180 pages in each Number. Annual Subscription, $3.00 ;
Single Numbers, 75 cents. Vols. I. and II., half morojco, each: £3.50.
"TN" the present great popular interest in economics, political
science, and all public questions, there is a demand everywhere, from working as well as professional classes, for scientific
unpartisan information and discussion of a higher grade than
newspapers attempt to furnish. This new Quarterly supplies this
better than any other serials or books. Even the smallest library
must keep at least one copy on file, if it meets the best requirements of its readers. Present popular interest makes these discussions as interesting as light literature, and as improving as
the driest standards."
The Prospectus is sent free on application.
I t meets a deeply felt want, and meets it admirably well. — ROSWELL
D. HITCHCOCK, Pres. Union Theological Seminary, New For/j City.
Beginning on a high plane, it has steadily grown in interest from
the first number. The Avork undertaken by its accomplished editors
is admirably conceived, and thus far well executed.—JULIUS H. SEBLYE,
Pres. of Amherst College.
The Political Science Quarterly begins with high promise. — GEORGE

WILLIAM CURTIS in Haider's Weekly.

A review of great promise. I have read with much interest the
articles in the first number, and if it continues to maintain the same
high standard it will soon take distinguished rank. — MAURICE BLOCK,
in Journal cles Economistes, Paris.
I t is going to succeed. . . . Serious and thoroughly good work. . .
The plan upon which it is edited is excellent.—VON HOLST in the
Deutsche Literatur Zeitung.
A journal of the first rank. . . . Scientific and readable. — DR.
PETERSEN-STUDNITZ, in the Nationalokonomisk Tidshrift, Copenhagen.
A notable evidence of serious political thought and study in this

country. —THE NATION, New York.

A journal that sets out with such ideas deserves to live, and it no
doubt will live. —THE WORLD, New York.
I t has a rich, free field. I t begins well. —THE TRIBUNE, New jDrk.
I t takes hold, with a strong and close grip, of the most vital public
questions of the day.—THE INDEPENDENT, Neiv York.
I t is certainly one of the most promising of the many new periodicals recently started in this country. I t is scholarly, solid, and well
written.— THE CRITIC, Neiv York.
The articles are few, but of solid value.—EVENING POST, San
Francisco.

G I N N & COMPANY, BOSTON,

NEW YORK, AND CHICAGO

HISTORY.
Outlines of Mediceual and Modern History.
By P. V. N. MYERS, A.M., President of Belmont College, Ohio; Author
of Outlines of Ancient History, and Remains of Lost Empires. 12mo.
Half Morocco, xii + 740 pages. With colored maps, reproduced, by
permission, from Freeman's Historical Atlas. Mailing Price, $1.65;
for introduction, $1.50.
r p H I S work aims to blend in a single narrative accounts of the
social, political, literary, intellectual, and religious
d e v e l o p m e n t s of the p e o p l e s of m e d i a e v a l and m o d e r n
times, — to give in simple outline the story of civilization since
the meeting, in the fifth century of our era, of Latin and Teuton
upon the soil of the Roman Empire in the West. T h e author's
conception of History, based on the definitions of Ueberweg, that
it is the unfolding of the essence of spirit, affords the key-note to
the work. Its aim is to deal with the essential elements, not the
accidental features, of the life of the race.
Unity and cohesion are secured by grouping facts according to
the principles of historic development, and while t h e analysis
is rigid and scientific, the narrative will be found clear, continuous,
interesting, and suggestive.
W. F. Allen, Prof, of History,
University of Wisconsin: Mr. Myers'
book seems to me to be a work of
high excellence, and to give a remarkably clear and vivid picture of
mediaeval history.
E. B. Andrews, Prof, of History
and Political Economy, Brown University, Providence, R.I.: It seems
certain to take its place as one of the
most serviceable books of its kind
before the school and college public.
{Jan. 6,1887.)

Geo. W. Knight, Prof, of History,
Ohio State University: The author
seems to have gotten hold of the
active principle, the leading motives
and tendencies of each age; to have
taken a comprehensive view of the
development of man's ideas, of nations, and of governments. Then he
has grouped the various events in
such a way as will bring clearly to
view these different phases of the
world-development without ignoring
what may be called the collateral
events.

100

HISTORY.

Ancient History for Colleges and High Schools.
PART I. THE EASTERN NATIONS AND GREECE. By P. V. N. MYERS,
President of Belmont College, Ohio. 12mo. Cloth. x + 369 pages, with
illustrations and colored maps.
Until Allen's Rome is ready, the publishers will bind with this book the
history of Rome from Myers' Ancient History. Introduction Price, $1.40.
r p H I S is a revision and expansion of the corresponding part of
the author's Outlines of Ancient History. I t embraces the history of the Egyptians, Assyrio-Babylonians, Hebrews, Phoenicians,
Lydians, Medes and Persians, and Greeks.
The chapters relating to the Eastern nations have been written
in the light of the most recent revelations of the monuments of
Egypt and Babylonia. The influence of Oriental civilization upon
the later development of the Western peoples has been fully indicated. It is shown that before the East gave a religion to the
West it had imparted many primary elements of art and general
culture. This lends a sort of epic unity to series of events and
historic developments too often regarded as fragmentary and unrelated, and invests the history of the old civilizations of the
Orient with fresh interest and instruction.
I n tracing the growth of Greek civilization, while the value of
the germs of culture which the Greeks received from the older
nations of the East is strongly insisted upon, still it is admitted
that the determining factor in the wonderful Greek development
was the peculiar genius of the Greek race itself.
The work is furnished with chronological summaries, colored
maps, and numerous illustrations drawn from the most authentic
sources.
For P a r t II., R o m e , by Prof. W. F . Allen, see Announcements.

Historia do Brazil.
Resumo da Historia do Brazil, para uso das escolas primarias Brazileiras.
Pela Professora MARIA G. L. DE ANDRADE. 12mo. Cloth, x + 231
pages. Illustrated. Mailing price, 85 cents ; for introduction, 75 cents.
r p H I S is a history of Brazil from the earliest times to the year
1848, written in the Portuguese language. I t is believed to be
the best work of its kind extant, and would be found also an excel*
lent reading book for students of Portuguese.

HISTORY,

101

The Leading Facts of English History.
By D. H. MONTGOMERY. New edition. Rewritten and enlarged, with
Maps and Tables. 12mo. Cloth. 448 pages. Mailing Price, $1.25.
Introduction Price, $1.12; Allowance for olcf book, 40 cents.
HP H E former edition has been rewritten, as it had become evident that a work on the same plan, but more comprehensive,
and better suited to prevailing courses and methods of class-work,
would be still more heartily welcomed.
Important events are treated with greater fulness, and the relation of English History to that of Europe and the world is carefully
shown. References for further study are added.
The text is in short paragraphs, each with a topical heading in
bold type for the student's use. The headings may be made to
serve the purpose of questions. By simply passing them over, the
reader has a clear, continuous narrative.
The treatment of each reign is closed with a brief summary of
its principal points. Likewise, at the end of each period there is a
section showing the condition of the country, and its progress in
Government, Religion, Military Affairs, Learning and Art, General
Industry, Manners and Customs. These summaries will be found
of the greatest value for reference, review, and fuller study; but
when the book is used for a brief course, or for general reading,
they may be omitted.
No pains have been spared to make the execution of the work
equal to its plan. Vivid touches here and there betray the author's
mastery of details. Thorough investigation has been made of all
points where there was reason to doubt traditional statements. The
proof-sheets have been carefully read by two experienced highschool teachers, and also by two college professors of history.
The text is illustrated with fourteen maps, and supplemented
with full genealogical and chronological tables.
I t is believed that this book will be acknowledged superior—>
1. In interest.
2. In accuracy.
3. I n judicious selection of matter.
4. I n conciseness combined with adequacy.
5. I n philosophical insight free from speculation or theorizing.
6. I n completeness.
7. I n availability as a practical class-room book.