PROFIT-SHARING. 



By Frederic O. Mather. 

 [Read before the Albany Institute, March 18, 1890.] 



Profit-sharing is a term applied to any arrangement whereby labor 

 is rewarded in addition to its ordinary wages, or, in place of wages, 

 by a participation in the profits of the business in which it is 

 employed. The term is somewhat synonymous with the word "co- 

 operation." The latter is divided, naturally, into distributive and pro- 

 ductive. Distributive co-operation (known as co-operation proper) aims 

 to save money to consumers by dispensing with middlemen. Roch- 

 dale, in England, and Brook Farm, in Massachusetts, are conspicuous 

 examples. A most notable instance of success is shown by the 

 Beverly Co-operative Association, organized in Massachusetts in 1875. 

 College co-operative societies are represented at Harvard and Yale 

 and the University of Michigan. Some of them sell books, crockery 

 and tenuis goods, and they have direct connections with town 

 tradesmen. 



Profit-sharing is the productive, or participative branch of co-opera- 

 tion. It should always be known by that term, and not be confounded 

 with distributive co-operation. In 1844 the Paris and Orleans Rail- 

 way Company adopted the principle of profit-sharing. Between 1844 

 and 1882 about twelve million dollars were distributed as profit divi- 

 dends among the employees, while the wages paid to them were equal 

 to those paid by roads that gave their employees no share in the 

 profits ; and there is good reason to believe that at the same time 

 the dividends to the stockholders were at least as large as they would 

 have been had there been no profit-sharing. 



Among foreign works on the subject, those of Dr. Bohmert, of 

 Dresden, and Dr. Fougerousse, of Paris, are the most valuable. The 

 latter declares that the simplest system is that which distributes this 

 share in ready money at the close of each year's account, without 

 making any conditions as to the disposal of the sums so paid over. 

 This mode of proceeding is adopted by a very limited group of firms. 

 The most important among them is the piano forte establishment of 

 M. Bord, in Paris. Participation was introduced in 1865 in conse- 



