HI.ACKMAR: KXFF.RIMENTS IN SOLUllDX OV LAB(M< PROHLKM. 23 



then the total cost of making and marketing the goods was 

 Si 00, 000 less the the profit of $10,000, or $go,ooo. The amount 

 of wages paid Avas $20,000. The amount of profits given to em- 

 ployees would be then in the ratio of 20,000 to 90,000 or two-ninths, 

 and the proportion to the firm would be as 70,000 to go, 000 or 

 seven-ninths of the profits. The laborers' proportion of the profits 

 was distributed among them in accordance with the amount of 

 wages earned by each. This plan was in force for three years, 

 during which the dividend or share of the profits averaged 12^ 

 per cent, of the" wages. 



In i8go the firm of Proctor & Gamble was reorganized on the 

 basis of the payment of 12 per cent, on the common stock, if this 

 amount should be earned. This being practically the same rate 

 earned by the emplo3'ees under the old plan, it was an easy and 

 advantageous arrangement to adopt a plan of paying to employees 

 a-s their share of profits the same rate of dividend upon their wages 

 as was paid upon the common stock of the company. This method 

 was adopted and under it profit sharing is now carried on. The 

 dividends are paid semi-annuall}'. To illustrate this, suppose a 

 man earns $500 a }'ear in wages; he receives in addition a diviciend 

 of 12 per cent, on this amount or $60. The man that has $500 

 worth of stock in the company also receives 12 percent, or $60. 

 Thus the laborers and the stockholders are upon an equitable 

 basis. All employees are entitled to begin to share in the dividends 

 after l:)eing in the employ of the company for three months: but if 

 one quits work or is discharged before three months' labor in the 

 service of the compan}- he receives no dividend. At first the 

 laborers were divided into full participants and half participants in 

 profits. This was not found to be desirable and all employees were 

 placed on the same basis. Now full}' g8 per cent, of the laborers 

 participate in the profits. The company' reserves the right to deny 

 the dividend to the employee for cause, but the amount of this 

 unpaid dividend must be paid to other laborers and does not go to 

 the stockholders of the company. 



The company not only allows sharing in the profits but also 

 encourages employees to acquire a part of the capital stock. An}' 

 employee may obtain a share of the common stock upon the follow- 

 ing terms: $10 at the time of application, the balance in install- 

 jiients of not less than $5 each. Upon this balance he must pay 

 interest at the rate of 4 per cent, per annum. In the meantime all 

 dividends declared upon the stock accrue to the purchaser. But 

 the certificate of stock is held by the secretary of the company as 

 trustee for the subscriber until the final payment is made. There 



