Profit-sharing thus reduces the proportionate share of workmen. If extra profits, or, in other words, more goods, are produced solely by the "diligence and care" of employees, to them should belong the goods. No part of them should go to capital, for this has played no part in creating the surplus no part should go to the employer, for he hasdone actually less. Every consideration of justice demands that laborers who have, by increased exertion, produced more, should alone have the fruit of their labor. To bestow a part of this on the laborer and a part on the employer is what profit-sharing graciously offers to do! Any scheme, whatever advantages it may seem to possess, that fails to give workmen a larger proportionate share of the products is doomed beforehand.

3. Profit-sharing affords workmen no guarantee of a share of profits, even although entitled to it.

A year of the most painstaking service may be rewarded by the dishonest withholding of the bonus, and the workman has no redress,

Mismanagement may also deprive him of it. This would open the door to discontent and ill-will. Business depression might produce the same result; so also might expenditures for repairs and improvements.

This element of uncertainty seems a serious objection to this scheme of which so many good things can be said. It may be replied that the employer himself must be subject to uncertainties. True, but he is behind them, foresees them, and has a chance to control circumstances and prepare for contingencies.

4. A fatal argument, implied in the foregoing but worthy of special emphasis, against this scheme is that many employers cannot share profits, for they have none to share.

Ninety per cent of business men fail; or, as a French writer puts it, "ten out of a hundred succeed, fifty 'vegetate,' and forty go into bankruptcy." Most employers, therefore, cannot promise any bonus.

This fact ends profit-sharing so far as affording any general relief.

5. Profit-sharing, by distributing a certain per cent of the profits to employees, spreads before the public annually the actual condition of a man's business.

This is what he desires to keep secret and what other capitalists desire to know. If profits are large, capital will be attracted to this business till it is overdone, when profits cease and wages fall. The man who adopts this scheme therefore labors under serious disadvantages. If profits are large, he invites competition; if small, or nothing, he invites criticism, distrust, and ruin.

The inexorable law of competition thus stands directly across the path of profit-sharing.

6. Profit-sharing is not adapted to many kinds of business, and therefore can afford no general relief to wage-workers. In industries in which the value of the product depends largely upon the efficiency of the workmen, the principle can be applied to the best advantage. But in industries in which machinery is the principal factor, in which little skill on the part of labor is required and superintendence is easy, profit-sharing promises little; and it should be observed that new and improved machinery is rapidly bringing most industries into this latter class. Again, large bodies of wage-workers, such as carpenters, masons, farm-hands, street laborers and other employees of cities, wharf hands, etc., cannot from the nature of their work have any participation in profits. Any co-operative scheme or union of capital and labor so limited in its application as to leave large classes of laborers subject to the injustice of the wage-system may indeed be here and there temporarily adopted and ease friction, but cannot commend itself to practical men.

7. The history of profit-sharing shows that it has been tried and discontinued in a large number of industries. Professor Edward W. Bemis states, doubtless through inadvertency, that "with one or two exceptions . . . not a failure of the experiment can be found in this country or in Europe." In the seventeenth Annual Report of the

1 “Co-operation in New England," in publications of the American Economic Association, November, 1886.

Massachusetts Bureau of Statistics of Labor, Mr. Wright shows that of the six experiments in profit-sharing in the United States, four were failures; viz., A. S. Cameron & Co., Brewster & Co., both of New York; a mercantile experiment, which he says was "the most extensive trial of profit-sharing by bonus ever made in Massachusetts . . . was discontinued, because . . . too many showed no appreciation of its benefits;" and Lester Brothers, Newark N. J. The failures are far more numerous in Europe than in the United States.

Indeed, so far is profit-sharing from being an established success "with one or two exceptions," that, of the seven instances in New England cited by Professor Bemis himself, one, a shoe establishment of Brockton, Mass., was not a case of profit-sharing, but a percentage on capital paid in by workmen; one, the New Haven Wire Company, merely proposed the plan to the employees, which was rejected; and indeed only one of the entire seven had ever paid a dividend. Its friends claim that in many cases of discontinuance the failure was due, not to anything inherent in the system, but to extrinsic causes. This is true and is the most damaging and conclusive testimony against the system as a solvent of the labor question. Extrinsic causes are as fatal as intrinsic ones. Bullets in battle are extrinsic. The extrinsic causes so hostile to profit-sharing are the sine qua non of capitalism, and ever-increasingly active. The principles of profit-sharing and capitalism are antagonistic, and can no more unite than oil and water. They may indeed be stirred up together and a seeming union secured, but it will be abnormal and temporary.

The mistake is continually being made, of considering the phenomena of profit-sharing apart from and independent of the hostile forces of the capitalistic system on which it is unnaturally grafted. Profit-sharing, when successful, has generally been under the guiding hand of a master mind, who has generally and bravely stepped forth from the ranks of employers with the purpose of improving, not only his own, but the condition of his employees.

The feature that renders this scheme attractive to econ

omists and philanthropists is its Socialistic one; namely, the tendency to unite the interests of employer and employee. Our contention is not against this tendency, but against the claim that the abortive and sporadic application of it by profit-sharing is sufficient. A careful consideration of this method of co-operation shows its inadequacy. Its history and working show that it is exceptional, indefinite, capricious, and opposed by the whole genius of the existing industrial system. Notwithstanding all this, it concedes the justice of the laborer's claim to a larger share of the product, and is, as we observed at the outset, a step in the right direction. We shall be glad to see it more generally adopted, as an encouraging sign of progress toward that larger and juster union of economic forces which Socialism demands and which alone will restore industrial and social peace.

"The pathology of co-operation may be studied with profit."

PROFESSOR AMOS G. WALKER.

Co-operation, in its broadest sense, means to labor together, and by implication, for the same end, and in a spirit of mutual helpfulness and sympathy. This is the economic and ethical key-note of Socialism. Indeed, the term cooperation was first applied to industry about 1820 by Robert Owen, the founder of English Socialisın.

This reformer, moved at the hard lot and degraded condition of laborers, proposed the establishment of working communities of from 500 to 3,000 people with 1,500 or more acres of land for each community. Each should carry on agriculture and manufacturing with the best machinery, and offer every variety of employment. Work and the rewards of work should be in common. "As these townships,' as he also called them, 'should increase in number, unions of them federatively united shall be formed in circles of tens, hundreds, and thousands,' till they should embrace the whole world in a common interest."1

1 "Encyclopædia Britannica," title, "Owen, Robert."

Such was the expectation of the founder of the co-operative movement in England. A scheme so humane in its aims, so curative of social ills, so Christian in its principles, and so promising in outlook attracted wide attention. Many thought the era of industrial association and equality was about to dawn. It is needless to say the expectation has not been realized. Old Plutus does not abdicate so easily. The capitalistic system admits of variations, but it is capitalism still. Mr. Holyoake says, "The term co-operation was at first, as the reader sees, used in the sense of communism, as denoting a general arrangement of society for the mutual benefit of all concerned in sustaining it. Later the term co-operation came to be restricted to the humbler occupations of buying and selling."

Thus the great industrial principle announced by Owen took form and developed in a manner different from his expectations. So far from becoming a general movement, based on the motto "each for all and all for each," it was only able to unite individual bodies of laborers for purposes of trade or manufacturing; thus securing a partial and temporary advantage in the struggle with competition.

Holyoake defines the term thus: "Co-operation, in the social sense of the word, is a new power of industry, constituted by the equitable combination of worker, capitalist, and consumer, and a new means of commercial morality, by which honesty is rendered productive. It is the concert of many for compassing advantages impossible to be reached by one, in order that the gain may be fairly shared by all concerned in its attainment."2 This definition is very general. It can be made to fit Socialism or its extreme opposite, individualism, and it includes profit-sharing. It reminds us of the answer of a western physician who, after a fifty-mile drive over the prairies visiting patients, was thus rallied by a friend who had accompanied him: "How is it, doctor, that you have given the same medicine to all your patients irrespective of their ailments?" The doctor spiritedly replied, "Bless your heart, there are forty-five different

1 66 History of Co-operation," vol. i. p. 68.

2 Ibid., p. 2.