Such distributions are to industry what the Squire's coal and blankets are to village life, but they are not profit-sharing. It also excludes forms of “output bonus,” etc., under which the individual employee (or the squad or gang) gets, or is supposed to get, a share of the money which he individually saves to the firm by working faster or better; this was formerly classed with it under the general term gain-sharing, and profit-sharing is still sometimes incorrectly used to cover such forms of bonus. Under true profit-sharing the share of the employees varies with the prosperity of the firm, and depends therefore not on their exertions solely but on the competence of managers and directors, the state of the market, and other considerations.
The Labour Co-Partnership Association in 1911 expressed its view that the co-partnership of labour with capital involved: (1) “That the worker should receive, in addition to the standard wages of the trade, some share in the final profits of the business, or the economy of production. (2) That the worker should accumulate his share of the profits, or part thereof in the capital of the business employing him, thus gaining the ordinary rights and responsibilities of a shareholder.” To this in 1919 the Association added a further clause: (3) “That the worker shall acquire some share in the control of the business in the two following ways:—(a) By acquiring share capital, and thus gaining the ordinary rights and responsibilities of a share-holder, (b) By the formation of a co-partnership committee of workers having a voice in the internal management.” The addition of the last clause is due to the belief, now rapidly gaining credence, that the smaller shareholders in the ordinary firm have in reality little or no voice in its management, and that other means are necessary to provide the employee co-partners with their share in control. It has not, however, been adopted by all, or nearly all, of the firms which have co-partnership schemes.
Profit-sharing and co-partnership are thus seen to differ in theory by the fact that the profit-sharer has a share only in the cash profits of his employer over a given period, and may take his share away in his pocket entire, whereas the co-partner must take some of his profit in the form of investment in the business, and receives also some share in the management. In some cases the co-partner does not actually have to invest, but is offered shares at par or at reduced rates, or even free, these shares generally carrying with them all shareholders' rights. In practice, however, there are so many possible variations that no general distinction is possible, and the terms are frequently interchanged. It will also be observed that both forms assume the existence in industry of two parties, the “firm” and its “employees.” They are therefore not connected with the various coöperative experiments which have been made from time to time by groups of workers, forming themselves into a firm and dividing amongst themselves the profits or losses, with the coöperative colonies of Robert Owen in England, or the ateliers or self-governing workshops of Louis Blanc in France. Co-partnership, as now understood, is distinctly a “paternal” movement, the dominant “partner” in industry being moved to confer a favour on its junior; and though the ideals of Owen, Fourier and the Christian Socialists may have had some influence on the minds of the earliest co-partners, a truer descendant than the co-partnership of to-day is the working-class Coöperative Movement, which aims at the supersession of capitalism.
The earliest example of co-partnership comes from France. In 1843 a master painter of Paris, Edmé-Jean Leclaire, divided among his permanent hands (43 out of about 300 employed) the sum of 12,266 francs. The scheme met with approval and up till 1870 this “kernel,” as he called it, of permanent workmen, who were members of the firm's mutual provident society, continued to take their share of the increasing profits. At no time did the members of the mutual provident society amount to more than a third of those employed. In 1870 the profit-sharing was extended to all the men employed, for however short a time, and upon this basis it has continued as “Brugniot, Cros et Cie. (ancienne maison Leclaire).” The arrangement for division of profits is as follows:—5% is first paid on the capital; of the remainder 15% goes to the managing partners (who according to French law have unlimited liability), 50% as a dividend to all workers in proportion to their time wages, and 35% to the mutual provident society—the “kernel”—which is now a partner in the business. The managing partners also receive a salary. This experiment, as it was the first, is also peculiar in the amount of control entrusted to the permanent workmen, the “kernel,” who are very carefully chosen. Among their other privileges it falls to them to elect new managing directors among the employees, a privilege not, as far as the writer is aware, granted under any English scheme of co-partnership. The whole business, however, employs only between one and two thousand workers; its interest is, therefore, chiefly as an experiment. (For fuller accounts of this and other French schemes, including the Familistère of Guise, consult the publications mentioned at the end of this article.)
France, as it was the original home of co-partnership, has also been the country in which it has excited the most interest, and the comparative lack of trustification in French industry has made it easier for schemes established by individual firms to be accepted. The numerical weakness of French trade unionism has also made it easier to gain the adherence of French workers, for an established trade-union movement is generally hostile to co-partnership and profit-sharing.
United Kingdom.—In the British Isles, if we except a scheme inaugurated in 1829 by Lord Wallscourt for the farmers on his Galway estates and abandoned shortly afterwards, the movement begins in 1865 with the adoption of six schemes, of which five have since been abandoned, although one (adopted by Messrs. Jolly & Son, silk mercers, of Bath) survived until 1906. One of the five was the famous Briggs scheme, of the Whitwood and Methley Collieries, to which reference is made below. The movement then progressed very slowly for some years. Between 1865 and 1888 only 66 schemes in all were launched, of which all but fourteen had disappeared by 1920.
The International Congress on Profit-Sharing which drew up the definition quoted at the head of this article was held in 1889. In that year also the South Metropolitan Gas Co. adopted profit-sharing, and thus initiated it in the only British industry in which it has obtained any considerable hold. These two facts combined to stimulate an interest in profit-sharing, and during the four years 1880-92, 83 schemes were adopted, of which only 12 survive. A long decline in profit-sharing, owing partly no doubt to the trade depression which began in 1892, led up to rather less vigorous revivals during 1908-10 and 1912-4. The World War then practically put an end to the development of the system, until the phenomenal profits of the early months of the peace and the willingness of many firms to share some of them with their employees, led to an outburst of 42 schemes in 1919. The boom continued during the early months of 1920 (19 during the first six months); but during the subsequent industrial depression there was a marked slackening of interest in this direction.
Up to the end of 1919 the British Isles had given birth to 417 schemes, of which 198, or slightly less than half, have been abandoned for one cause or another. Of the remainder, 36 were run by gas companies (see below). These figures alone, however, would give a misleading impression of the size of the movement. Of the 144 schemes started up to 1918, only 15 are returned as affecting more than a thousand employees, while no fewer than 54 affect less than a hundred. Out of the 15 again, four are run by gas companies (the South Metropolitan, the South Suburban, the Gas Light and Coke Co., and the Liverpool Gas Co.), and of the remaining 11, four of the largest affect only a portion of the workpeople in the firm's employ. These are:—Messrs. Armstrong Whitworth & Co., (12,215 out of 69,000 employed); Messrs. Pease and Partners, of Darlington (2,243 out of 11,000); Messrs. Lever Bros. (3,542 out of 8,833); and the Bradford Dyers' Assn. (3,600 out of 9,800). The only really large concern whose profit-sharing affects nearly the whole of its workpeople is the Prudential Assurance Co., 18,500 of whose 20,000 employees participate in its scheme. Details of the number participating are not available for schemes
