description of workpeople whose low moral qualities render them unfit for anything more independent: and that the relation of masters and workpeople will be gradually superseded by partnership, in one of two forms in some cases, association of the labourers with the capitalist; in others, and perhaps finally in all,1 association of labourers among themselves.

2 § 5. The first of these forms of association has long been practised, not indeed as a rule, but as an exception. In several departments of industry there are already cases in which every one who contributes to the work, either by labour or by pecuniary resources, has a partner's interest in it, proportional to the value of his contribution. It is already a common practice to remunerate those in whom peculiar trust is reposed, by means of a percentage on the profits and cases exist in which the principle is, with excellent success, carried down to the class of mere manual labourers. In the American ships trading to China, it has long been the

in other cases and

1 [In 3rd ed.:"temporarily and in some cases finally in all." In 5th ed. (1862): perhaps finally in all.' In 6th ed. (1865), temporarily" omitted.]

2 [The following passage, inserted at this point in the 2nd ed. (1849) disappeared from the 3rd (1852).

§ 5. It is this feeling, of the nature of the problem" (see supra, p. 761, n. 1), "almost as much as despair of the improvement of the condition of the labouring masses by other means, which has caused so great a multiplication of projects for the organization of industry' by the extension and development of the co-operative or joint stock principle: some of the more conspicuous of which have been described and characterized in an early chapter of this work. It is most desirable that all these schemes should have opportunity and encouragement to test their capabilities by actual experiment. There are, in almost all of them, many features, in themselves well worth submitting to that test; while, on the other hand, the exaggerated expectations entertained by large and growing multitudes in all the principal nations of the world, concerning what it is possible, in the present state of human improvement, to effect by such means, have no chance of being corrected except by a fair trial in practice. The French Revolution of February 1848, at first seemed to have opened a fair field for the trial of such experiments, on a perfectly safe scale, and with every advantage that could be derived from the countenance of a government which sincerely desired their success. It is much to be regretted that these prospects have been frustrated, and that the reaction of the middle class against anti-property doctrines has engendered for the present an unreasoning and undiscriminating antipathy to all ideas, however harmless or however just, which have the smallest savour of Socialism. This is a disposition of mind, of which the influential classes, both in France and elsewhere, will find it necessary to divest themselves. Socialism has now become irrevocably one of the leading elements in European politics. The questions raised by it will not be set at rest by merely refusing to listen to it; but only by a more and more complete realization of the ends which Socialism aims at, not neglecting its meansso far as they can be employed with advantage."]

custom for every sailor to have an interest in the profits of the voyage; and to this has been ascribed the general good conduct of those seamen, and the extreme rarity of any collision between them and the government or people of the country. An instance in England, not so well known as it deserves to be, is that of the Cornish miners. "In Cornwall the mines are worked strictly on the system of joint adventure; gangs of miners contracting with the agent, who represents the owner of the mine, to execute a certain portion of a vein and fit the ore for market, at the price of so much in the pound of the sum for which the ore is sold. These contracts are put up at certain regular periods, generally every two months, and taken by a voluntary partnership of men accustomed to the mine. This system has its disadvantages, in consequence of the uncertainty and irregularity of the earnings, and consequent necessity of living for long periods on credit; but it has advantages which more than counterbalance these drawbacks. It produces a degree of intelligence, independence, and moral elevation, which raise the condition and character of the Cornish miner far above that of the generality of the labouring class. We are told by Dr. Barham, that 'they are not only, as a class, intelligent for labourers, but men of considerable. knowledge.' Also, that they have a character of independence, something American, the system by which the contracts are let giving the takers entire freedom to make arrangements among themselves; so that each man feels, as a partner in his little firm, that he meets his employers on nearly equal terms.' . . . With this basis of intelligence and independence in their character, we are not surprised when we hear that 'a very great number of miners are now located on possessions of their own, leased for three lives or ninetynine years, on which they have built houses; or that 281,5417. are deposited in savings banks in Cornwall, of which two-thirds are estimated to belong to miners.'” *

Mr. Babbage, who also gives an account of this system, observes that the payment to the crews of whaling ships is governed by a similar principle; and that "the profits arising from fishing with nets on the south coasts of England are thus divided one-half the produce belongs to the owner of the boat and net; the other half is divided in equal portions between the persons using it, who are also bound to assist in repairing the net when required." Mr.

:

* This passage is from the Prize Essay on the Causes and Remedies of National Distress, by Mr. Samuel Laing. The extracts which it includes are from the Appendix to the Report of the Children's Employment Commission.

Babbage has the great merit of having pointed out the practicability, and the advantage, of extending the principle to manufacturing industry generally.* 1

* Economy of Machinery and Manufactures, 3rd edition, ch. 26.

1 [The long quotation from Babbage, which appeared in the 1st and 2nd eds. (1848, 1849), disappeared from the 3rd (1852): “I venture to quote the principal part of his observations on the subject.

The general principles on which the proposed system is founded, are―1st. That a considerable part of the wages received by each person employed, should depend on the profits made by the establishment; and 2nd. That every person connected with it should derive more advantage from applying any improvement he might discover, to the factory in which he is employed, than he could by any other course.

It would be difficult to prevail on the large capitalist to enter upon any system, which would change the division of the profits arising from the employment of his capital in setting skill and labour in action; any alteration, therefore, must be expected rather from the small capitalist, or from the higher class of workmen, who combine the two characters; and to these latter classes, whose welfare will be first affected, the change is most important. I shall therefore first point out the course to be pursued in making the experiment; and then, taking a particular branch of trade as an illustration, I shall examine the merits and defects of the proposed system as applied to it.

'Let us suppose, in some large manufacturing town, ten or twelve of the most intelligent and skilful workmen to unite, whose characters for sobriety and steadiness are good, and are well known among their class. Such persons will each possess some small portion of capital; and let them join with one or two others who have raised themselves into the class of small master-manufacturers, and therefore possess rather a larger portion of capital. Let these persons, after well considering the subject, agree to establish a manufactory of fire-irons and fenders; and let us suppose that each of the ten workmen can command forty pounds, and each of the small capitalists possesses two hundred pounds thus they have a capital of 800l. with which to commence business, and for the sake of simplifying, let us further suppose the labour of each of these twelve persons to be worth two pounds a week. One portion of their capital will be expended in procuring the tools necessary for their trade, which we shall take at 400l., and this must be considered as their fixed capital. The remaining 4007. must be employed as circulating capital, in purchasing the iron with which their articles are made, in paying the rent of their workshops, and in supporting themselves and their families until some portion of it is replaced by the sale of the goods produced.

Now the first question to be settled is, what proportion of the profit should be allowed for the use of capital, and what for skill and labour? It does not seem possible to decide this question by any abstract reasoning: if the capital supplied by each partner is equal, all difficulty will be removed; if otherwise, the proportion must be left to find its level, and will be discovered by experience; and it is probable that it will not fluctuate much. Suppose it to be agreed that the capital of 8007. shall receive the wages of one workman. At the end of each week, every workman is to receive one pound as wages, and one pound is to be divided amongst the owners of the capital. After a few weeks the returns will begin to come in; and they will soon become nearly uniform. Accurate accounts should be kept of every expense and of all the sales; and at the end of each week the profit should be divided. A certain portion should be laid aside as a reserved fund, another portion for repair of the tools, and the remainder being divided into thirteen parts, one of these parts would be divided amongst

1 Some attention has been excited by an experiment of this nature, commenced above thirty years ago by a Paris tradesman,

Thus each man would, in

the capitalists and one belong to each workman. ordinary circumstances, make up his usual wages of two pounds weekly. If the factory went on prosperously, the wages of the men would increase; if the sales fell off, they would be diminished. It is important that every person employed in the establishment, whatever might be the amount paid for his services, whether he act as labourer or porter, or as the clerk who keeps the accounts, or as book-keeper employed for a few hours once a week to superintend them, should receive one-half of what his service is worth in fixed salary, the other part varying with the success of the undertaking.

The result of such arrangements in a factory would be,

'1. That every person engaged in it would have a direct interest in its prosperity; since the effect of any success, or falling off, would almost immediately produce a corresponding change in his own weekly receipts.

2. Every person concerned in the factory would have an immediate interest

in preventing any waste or mismanagement in all the departments.

3. The talents of all connected with it would be strongly directed to improvement in every department.

4. None but workmen of high character and qualifications could obtain admission into such establishments, because when any additional hands were required, it would be the common interest of all to admit only the most respectable and skilful, and it would be far less easy to impose upon a dozen workmen than upon the single proprietor of a factory.

5. When any circumstance produced a glut in the market, more skill would be directed to diminishing the cost of production; and a portion of the time of the men might then be occupied in repairing and improving their tools, for which a reserved fund would pay, thus checking present, and at the same time facilitating future, production.

6. Another advantage, of no small importance, would be the total removal of all real or imaginary causes for combinations. The workmen and the capitalist would so shade into each other-would so evidently have a common interest, and their difficulties and distresses would be mutually so well understood, that instead of combining to oppress one another, the only combination which could exist would be a most powerful union between both parties to overcome their common difficulties.

'One of the difficulties attending such a system is, that capitalists would at first fear to embark in it, imagining that the workmen would receive too large a share of the profits: and it is quite true that the workmen would have a larger share than at present: but at the same time, it is presumed the effect of the whole system would be, that the total profits of the establishment being much increased, the smaller proportion allowed to capital under this system would yet be greater in actual amount, than that which results to it from the larger share in the system now existing.

A difficulty would occur also in discharging workmen who behaved ill, or who were not competent to their work; this would arise from their having a certain interest in the reserved fund, and perhaps from their possessing a certain portion of the capital employed; but without entering into detail, it may be observed, that such cases might be determined on by meetings of the whole establishment; and that if the policy of the laws favoured such establishments, it would scarcely be more difficult to enforce just regulations than it now is to enforce some which are unjust, by means of combinations either amongst the masters or the men.'"]

1 [In the original ed. (1849) this paragraph began thus: "In this imaginary

a house-painter, M. Leclaire,* and described by him in a pamphlet published in the year 1842. M. Leclaire, according to his statement, employs on an average two hundred workmen, whom he pays in the usual manner, by fixed wages or salaries. He assigns to himself, besides interest for his capital, a fixed allowance for his labour and responsibility as manager. At the end of the year, the surplus profits are divided among the body, himself included, in the proportion of their salaries.† The reasons by which M. Leclaire was led to adopt this system are highly instructive. Finding the conduct of his workmen unsatisfactory, he first tried the effect of giving higher wages, and by this he managed to obtain a body of excellent workmen, who would not quit his service for any other. "Having thus succeeded" (I quote from an abstract of the pamphlet in Chambers' Journal,‡) "in producing some sort of stability in the arrangement of his establish aent, M. Leclaire expected, he says, to enjoy greater peace of mind. In this, however, he was disappointed. So long as he was able to superintend everything himself, from the general concerns of his business down to its minutest details, he did enjoy a certain satisfaction; but from the moment that, owing to the increase of his business, he found that he could be nothing more than the centre from which orders were issued, and to which reports were brought in, his former anxiety and discomfort returned upon him." He speaks lightly of the other sources of anxiety to which a tradesman is subject, but describes as an incessant cause of vexation the losses arising from the misconduct of workmen. An employer "will find workmen whose indifference to his interest is such that they do not perform two-thirds of the amount of work which they are capable of; hence the continual fretting of masters, case described by Babbage, see supra, p. 766, n. 1, "it is supposed that each labourer brings some small portion of capital into the concern: but the principle is equally applicable to the ordinary case in which the whole capital belongs to an individual capitalist. An application of it to such a case is actually in progress by a Paris tradesman," &c. The present text, but with "about ten years ago," dates from the 3rd ed. (1852). The 4th, 5th, and 6th eds. (1857, 1862, 1865) have about sixteen years ago "; the 7th (1871)" above thirty."]

* His establishment is 11, Rue Saint Georges.

† [1849] It appears, however, that the workmen whom M. Leclaire had admitted to this participation of profits, were only a portion (rather less than half) of the whole number whom he employed. This is explained by another part of his system. M. Leclaire pays the full market rate of wages to all his workmen. The share of profit assigned to them is, therefore, a clear addition to the ordinary gains of their class, which he very laudably uses as an instrument of improvement, by making it the reward of desert, or the recompense for peculiar trust.

For September 27, 1845.