a^^kk UNIVERSITY OF CALIFORNIA AT LOS ANGELES % \.ji,'-V !^^>^- METHODS OF INDUSTEIAL EEMUNEEATION METHODS INDUSTRIAL REMUNERATIOiN }^\ DAVID D. SCHLOSS THIRD EDITION EEVISED AND ENLARGED ^ WILLIAMS AND NORGATE 14, HENRIETTA STREET, COVENT GARDEN, LONDON 20, SOUTH FREDERICK STREET, EDINBURGH ; anj. 7, BROAD STREET, OXFORD 1898 li. s. s. COMRADE, COUNSELLOl;, ANH CllITIC. PREFACE TO THE THIKD EDITION Slnce the earlier editions of this book were published/' a considerable amount of fresh and more detailed information bearing upon the questions, with which it deals, has become available. This is especially the case in regard to Profit-sharing and Grain-sharing (Bonus on Output), with respect to which the reports on these subjects compiled by the present writer for the Labour Department of the Board of Trade con- tain much matter serviceable for the purposes of this book. In order to utilise this new material and to bring the book generally up to date, it has been necessary to make the third edition larger than its predecessors. At the same time, a slight re-arrange- * The tirst edition was published in 1892 ; the second edition (in which only a few verbal alterations were made) appeared in 1894. viii PREFACE TO THIRD EDITION. inent of some parts of the work, which appeared to bo desirable, has been made.* So far as diction, apart from substance, is concerned, it may be noted that a groat part of the book has been practically re-writttn. * Thus, while, in the earlier editions, attention was called in the chapters dealinf; with Time-wa^e and with Piece-wase to the common basis, which underlies all forms of wage-payment, this suliject is now treated in a separate chapter. The chapter on " The Interference of Public Authorities in regard to Sub-contract " has been omitted ; the chapters on " The Two Kinds of Co-operation ", on " Why Industrial Co-operation rejects Profit-sharing", on "The true Import of the Co-operative Movement," and on " Practicable Co-operation " also disappear, as separate parts of the book, from the third edition. But all the material facts originally given in these chapters ai'e re- stated in appropriate parts of the present edition, and will, it ia believed, be easily found by the help of the Table nf Contents and the Index. April, 1898, PREFACE TO THE FIRST EDITION Wjth the object of investigating- the method of industrial remuneration the writer of the following pages has visited a large number of factories and workshops, mines, quarries, &c. Employers, on the one hand, and employees, on the other, have fvirnished many interesting details in regard to the manner in which labour is organized and remunerated. From both sides he has heard the views entertained by practical persons in relation to the advantages and the defects of the various methods. Taking the particulars and the opinions thus col- lected for a basis, the writer has attempted to present a faithful delineation of the wage-system in all its forms, and of the several modifications introduced with a view to the improvement of that system. That his critical appreciation of these methods possesses any considerable value, he does not dare to hope. But facts are always valuable ; and it is because he X rEKFACE TO FIRST EDITION has been able to got together, and has done his best to arrange in a ssysteniatic shape, a great number of material facts bearing upon an important branch of the Labour Question, that he ventures to publish the present volume. In his inquiry into the position of l*rofit-sharing in the British Empire the author has received much assistance from Mr. T. W. Bushill, of Coventry ; while in regard to Industrial Co-operation he has supplemented his own researches by borrowing, with acknowledgment, from Miss Beatrice Potter's admir- able work on this subject some figures which it would have cost no little trouble to ascertain independently. A small part of the matter has already appeared in The Fortnightly Review, The Contemporary Review, The Charity Organization Review, The Economic Review, or The Economic Jovrnal ; to the editors of these publications their contributor is indebted for per- mission to make further use of it here. December Slst, 1891. CONTENTS Introductiox. — The Wage-system — Purchase by Employer of Labour of Employees — Various methods of paying the price of labour (Wages) — Remuneration of Super- intendents of Labour — "The Sweating System " — Proposed modifications of Wage-system — Profit-sharing — Industrial Co-operation ...... 1-8 Chapter I. — The Different Kinds of Wages. — Time-wage — Piece- wage — Task- wage — ■ Progressive Wages — Collective Task- wage Collective Piece-wage — Collective Pro- gressive Wages — Contract Work — Co- operative Work ..... 9-12 Chapter II. — The Common Basis of all KINDS OF Wages. — Time-wage very often has a Piece-basis, Piece-wage has in practically all cases a Time-basis — Piece- Xll CONTEXTS PAGES basis of Time- wages illustrated — Fixed in interest of Employer — Fixed in interest of Employees — Time-basis of Piece-wages illustrated— Basis sometimes fictitious — Examples of fictitious Time-basis — Ex- amples of accurately defined Time-basis — In fixing basis of wage-payment account is taken of Time, Output, Exertion, and Pay 13-42 Chapter III. — Tuie-wagk. — Time-wage most extensively adopted method — Circum- stances under which Time- wage preferred to other methods 43-47 Chapter IV. — Task- wage. — How distinguished from Time-wage, from Piece-wage, and from Progressive wages — Task-wage dis- liked by Working-classes. . . . 48,49 Chapter V. — Piece-wag f:. — Piece- wage obtains in many industries — Circumstances under which Piece-wage preferred to other methods ....... 50-55 Chapter VI. — Objections entertained to Piece-work BY Working-men. — Reasons for which Piece-wage in some cases preferred by Working-men — Cases in which Piece- wage objected to by Working-men — By " Piece-work " Contract or Sub-contract often meant — Piece-work said to promote irregular habits — To lead to over-exertion CONTENTS xni TAOES — To cause " scamping " of work — To cause disputes as to adequacy of remunera- tion — Piece-wage objected to by some Trade Unions — Reasons for objection — Arrangements for settling piece-wage pi'ices — Mill Committees — Piece-work sometimes objected to on fallacious grounds— The Theory of the " Lump of Labour" 56-86 Chapter VII. — Pkogressive Wages. — Fixed or minimum wage supplemented by Pre- mium on eflBciency — Illustrations of such " ProgTessive Wages " — " Gain-sharing " — Halsey's system — '• Reference Rate " System of Willans and Robinson — Com- ments on application of systems of Pro- gressive Wages ..... 87-113 Chapter VIII. — Collective Task-wage.^ — De- finition of Method lU Chapter IX. — Collective Piece-wage. — Illus- trated by flint-glass trade — Comments on application of method of Collective Piece- wage — " Task and Tonnage " system formerly in force in Royal Dockyards — Stimulus under Collective Piece-wage less effective than under Individual Piece- 115-126 Chapter X. — Collective Progressive Wages. — Illustrations of Method — Comments on XIV CONTENTS PAGES application of method— Yale and Towne " Gain-sharing " scheme — Foundry of Willans and Robinson — Outside Depart- ment of Willans and Robinson — Thames Ironworks scheme — Cases in which Col- lective Progressive Wages suitable — Composition of Groups .... 127-146 Chapter XI. — Contract Work. — Distinguished from Collective Progressive Wages — Various forms of Contract Work — How Contract Work i-egarded bj Working- Classes 147-164 Chapter XII. — Co-operative Work. — Dis- tinguished from other forms of Collective Wages — Examples of Work carried out by Co-operative Groups . . . . 155-165 Chapter XIII. — Piece-waue Foremanship. — Foremen usually remunerated by Time- wage — Results which ensue when the remuneration of Foremen depends upon speed of working maintained by sub- ordinate workers — Where subordinate workers paid individually — Where sub- ordinate workers paid collectively — " Piece-masters " — Distinction between " Piece-master " and " Sub-contractor " — Comments on Piece-wage Foremanship . 166-179 Chapter XIV. — Sub-contract. — Sub - con- tractor is Sub-employer under Principal CONTENTS XV Employer — Favourable opinion of Sub- contract formerly entertained by Econo- mists — Now denounced as " Sweating System " — Select Committee on " Sweating- System " — Points elucidated by Evidence — Many, but not all, Employees of Sub- contractors " sweated " — Other instances of Sub-conti'act — Sub-contract very com- mon — Disliked by Working-classes . 180-204 Chapter XV. — Objections entektained to the " Method " of Sob-coxtkact; "the Sweat- [Nii System." — Meaning of "the Sweating S^'stem " — Meaning of " Sweating " — Sweating not confined to Sub-contractors or other Small Employers — But Sub- contractors and Small Employers specially prone to over-drive their Workpeople — Reasons for this fact — Essence of ' ' Method of Sub-contract supervision of Labour by Superintendent remunerated by Profit — Profits of Sub-contractors sometimes exag- gerated — Difficulties in the way of abolish- ing payment of superintendence by results — Regulation of Superintendents by Trade Unionism and Co-operation . . . 205-220 Chapter XVI. — The Relation between Trade Unionism and Co-opekation, so far as CONCERNS the MeTHOD OF INDUSTRIAL Remuneration. — Ti-ade-Unionism, which does not propose to alter the Wage-system, outside the scope of this book — Leading XVI CONTJeNTS ]>A(iKS ideas of Co-operation — The association of self-constituted Groups, working under elected Leaders and dividing the Profits — Virtual identity of aims of Trade-Uniou- ism and of Co-operation — Both aim at securing" Control by Workpeople — But Trade-Unionisni, while regulating Profits, leaves all Profit to the Employer — Co- operation proposes to modify or abolish the Wage-System 227-238 Chapter XVII. — What is meant by Profit- sharing. — Co-operation complete or partial — Partial Co-operation consists in Profit- sharing — Method of Profit-sharing de- fined 289-248 Chapter XVIII. —Product-sharing. — Illus- trations of Product-sharing — Product- sharing distinguished from Profit-sharing 249-253 Chapter XIX. — The Theory of Profit- sharing. — " Stimulus " Participation — Extra Zeal of Employees, induced by Profit-sharing, creates new Profits — " Anti-union " Profit-sharing — " Deferred " Participation — " Minus,''' or " Negative " Participation — " Surrender " Participa- tion ........ 254-250 Chapter XX. — Profit-sharing in Practice. — Number of British Firms which have adopted Profit-Sharing — Trades carried CONTENTS XVll PAOES on bj these Firms — Period during wliicli Profit-sharing has been applied — Nature of Profit-sharing Schemes adopted — Re- sults obtained by Profit-sharing — Addition made to Wages by Bonus (Share in Profits) — Causes of Cessation of Profit-sharing — How far Industrial Peace promoted by Profit-sharing 260-286 Chapter XXI. — The Relation of Profit- sharing TO the Wage-system. — Is Profit- sharing unfair without Loss-sharing ? — Has the Employee an equitable right to share in Profits ? — Is " Deferred " Parti- cipation advantageous to Employee ? — Has not Profit-sharing tendency to weaken Trade Union Combination ? — How far can we expect Profit-sharing to pi'event industrial conflicts ? — What share in Profits ought to be allotted to Em- ployees ? — Advantages secured for Em- ployers by Profit-sharing — Might these advantages not be secured, with greater benefit to Employees, under the ordinary Wage-system ? — In some cases Profit- sharing markedly superior to ordinary Wage-system 286-309 Chapter XXII. — The Theory of Industrial Co-OPERATiON. — Industrial Co-operation conforms to working-class ideal — Pro- poses abolition of Wage-systera — Theory of Industi'ial Co-operation propounded XVI II CONTf:NTS by Economists, and by Working-class Co-opcvatovs :U0-818 Chaptick XXriT. — The PiiAcxrcK of Tndustkiai, Co-oi'EiiA'i'iON. — Various Forms of Indns- ti'ial Co-operation — Co-operative Cottmi- Mills at Oldham — Main Body of Industi ial Co-operation — Statistics showing- number and importance of Co-operative Societies of various types — "Distributive" Associa- tions — Wholesale Societies — Corn Mills — Consumers' Baking- Societies — Irish Co-operative Dairying Societies — Irish Co-operative Agency — Various Manu- facturing Associations — Practice of eac^h class of Society with respect to Profit- sharing, and to the Self-government of the Workpeople 819-851 CiiAPTEK XXIV. — The Relatiox of Indus- TRIAf, C0-0PERATI0\ TO THE WagE-SvSTEM. — Employees of most Co-operative Societies employed under unmodified Wage-system — Minority among Co-operative Societies conform, more or less, to ideal of Indus- trial Co-operation — " Labour Co-partner- ship " — How far would general adoption of Labour Co-partnership promote interests of Employers and Employees ? — In Middle-class Businesses ? — In Workmen's Co-operative Societies ? — Experiments on lines of Industrial Co-operation are of srreat interest ..... 352-365 CONTENTS XIX PAOK.S AppiiN'Dix A. —Profit-shaking Fikm.s. Part I. Past Protit-shariiig 3»;(5-87l Part 11. Present Profit-sharing :;7-J-;:{7!) Appi':ndix B. —Profit-sharing Schkmks. Part 1. — Simple Profit-sharing Scheme . 380-385 Part II. — Messrs. Bushill's Scheme . 386-395 Part III. — Profit-sharino- De- posits 396-402 Part IV. — Workmen's Deben- tures . . 403, 404 Appendix C. -Bonus in " Self-governiiLg " Co-operative Associations 405-419 Indkx 421-446 METHODS OF INDUSTEIAL REMUNERATION. INTRODUCTION. What is known as tlae Labour Problem involves a number of distinct questions, prominent among which are those connected with, on the one hand, the amount, and, on the other, the method of industrial remuneration. It is with the latter of the two subjects just mentioned that it is proposed to deal in the following pages. The purpose of this book is to present a picture, as faithful as possible, of the prevalent system of industrial remuneration, and to describe the various modifications in this system which have been adopted wath a view to its improvement. The prevalent system of industrial remuneration, known as "the wage-system," is one, the main feature of which is the purchase by one set of men — the employers — of the labour of another set of men — the employed. Let us examine in detail the 1 Z METHODS OF REMUNERATION. nature of the conditions under wliich tliis bargain is carried out.'^ At the summit of the industrial hierarchy we find the employer ; below him stands a row of managers, foremen, and other superintendents ; last come the clerks, artisans, and labourers. The employer fulfils a threefold function : he provides the capital — it may be his own or borrowed ; he buys the raw material and sells the finished product ; and he directs the process of working up the raw material, determining what goods shall be made and how these goods shall be made, settling what tools, machinery and motor power shall be used, and deciding what persons shall be employed, and what part each shall play, whether as manager, foreman, or workman, in the processes incidental to production. The employer is thus a capitalist, a merchant, and an organizer. The foremen and other superintendents perform two (in some cases three) distinct functions. In many instances the foreman is a superior workman, himself executing, or assisting in the execution of some, usually of the more diSicult, portions of the work ; in all cases the foreman is, in the first place, a sub- * The typical case referred to in the text is one in which a manufacturing enterprise is carried on upon a commercial basis by an individual employer. It is scarcely necessary to remark that there are many enterprises which are not commercial ; as, for instance, the private gas-works attached to the mansion of a landed proprietor ; or to remind the reader that the position of the employer is frequently occupied by a body of shareholders. For present purposes, however, it will be convenient to take as our typical instance a "one-man" business. INTRODUCTION, 3 organizer, being allowed a potent voice in respect to the selection and discharge of the operatives, and arranging (subject to the supreme control of the head of the business) in what manner the work of these subordinates is to be performed, and, in the second place, an inspector, whose duty it is to see that this Avork is performed in accordance w4th the contract between the workmen as wage-receivers and his principal as wage-payer. By selling the produce of his factory the employer obtains a fund out of which he defrays the cost of all materials and plant, rent, and other outgoings, and pays to his employees the price of their labour — their wages, finally retaining for himself the balance — his profit. Wages being the price of labour, the first point to Chap. i. be considered in relation to the various methods of ^^^' paying this price is the degree of correspondence maintained between the wages received and the labour given in return for these wages. We shall find that, while under the method of time-wage the time occu- pied in the performance of labour is the primary basis upon which the amount of the wages due to the workman is calculated, without any necessary measure- ment of the amount of labour performed, in the case of task-wage and of piece-wage an exact pro- portion between work done and pay received forms the essential basis of the wage-contract. All the Chap. n. same, whatever may be the method adopted, we shall observe that, to a greater or less extent, all forms of the wage-contract are founded upon a common basis, 1 * 4 METHODS OP REMUNERATION. Chap. III. time, output, exertion, and pay being, with more or less pp. 43-47 exactness, taken into account in every case. After ex- Chap. IV. ' . . ,. . pp. 48, 4cl only for that hour, and that, if he should set up 1,250 ens in an hour, the employer is not to be bound to pay him for that hour more than 8d, this man would be employed on task-uunie. If the contract were to be that the compositor shall receive 8d an hour with, in addition, a premium of Id for every 100 ens in excess of 1,000 ens of brevier type which he shall set up in the hour, this workman would be employed under the method here termed 2»'0firessire iranex. If the employer were to make a bargain with a group of ten compositors that they should receive between them 6s 8d for every hour worked by the group, but subject to their setting up in the hour not less than 10,000 ens of brevier type, and with the agreement that, if they set up in one hour no more than 7,500 ens, their pay for that hour shall be 5s only, while, if they should set up in an hour 12,500 ens, then THE DIFFERENT KINDS OF WAGES. 11 in addition to his fixed time-wage or piece-wage, a further remuneration, here called a premium. One matter of importance in relation to wages is the distinction between wages paid to a single work- man, in respect of his individual labour alone, and wages paid as the collective remuneration of the combined labour of a group of workmen. The lump sum paid in respect of the aggregate labour of the group may be apportioned among its members by their employer by allotting to each a specified share in this aggregate amount; this will here be termed '' collective task-wage," or " collective piece-wage," or " collective progressive wages," as the case may be. Or this lump sum may be apportioned by the their employer shall be under no obligation to pay to the group for that hour more than the stipulated fis 8^/, these compositors would be working under the method of collective ta>lay in piece- work methods of remuneration, that it is sometimes a little difficult to see at a glance wliothcr the system under which a man is working is time-Avage with a piece-basis, or jiiece-wage with a time-basis. Take, for example, the case of the rivetters employed by a firm of marine engine builders on the Wear, mentioned in the Report on Wages and Hours of Lahour published in 1894 by the Labour Department of the Board of Trade (Part II., pp. 188-140). Here, " assuming that the recognised time-rate for rivetters is 8d per hour, the price paid for nine rivets, as per the first two items of the following section of the list, would be Sd for each rivetter in a set : — Rivetting circumferential seams in shell, 1-in. rivets ... ... .. ... 9 rivets per hour. Rivetting circumferential seams in shell, IjL-in. rivets ... ... ... ... 9 ,, ,, Rivetting circumferential seams in shell, Ij-in. rivets ... ... ... ... 8 ,, ,, Rivetting circumferential seams in shell, l:J:-in. rivets ... ... ... ... 7 ,, ,, etc., Ac. &C., cl'C." At first sight, this method of wage-payment looks like that in force in regard to shipwrights mentioned above (pp. 22, 23) ; e.g., as to " caulking over the side," '•' cut out and horse up, and put in one or two threads — 80 ft. per day." But the difference is that, if the shipwrights should on any day exceed the specified amount of caulking, they could not claim payment for the excess ; for, since these workmen are on time- wage, their employer has a right to receive, in 32 METHODS OF REMUNERATION. exchange foi* a clay's pay, all the output that may be produced in the day. On the other hand, if" the rivetters, to whose remuneration the scale of wages just set forth applies, were to put in twelve rivets in an hour, they would bo entitled to receive pay as for one hour and one-third ; in other words, the rivetters are paid in exact proportion to the amount of their output, which shows that the method under which they are employed is that of piece-wage. Thus, " the recognised time-rate for rivetters of 8d per hour," merely denotes the time- basis of their payment ; their real remuneration is a piece-work rate — |cZ per rivet (on 1 in. and IjY; iii- work). One of the best examples of piece-wage remunera- tion with a clearly defined time-basis is to be found in the coal-mining industry carried on in Northumberland and Durham. The piece-wage per ton of coal hewn varies greatly according to the nature of the different seams, but is in each and every case so fixed that, whether a man is getting I s per ton or 2s per ton, his daily earnings, supposing him to be of average efiiciency, shall amount to an agreed sum (e.g., in Durham 5.y bd per day) * which is called " the county average." Within certain limits a mine-owner, so long as the average earnings of all his men do not fall materially below the county average, is allowed * Both as to the coal trade and the cotton trade the figures repre- sent the wages jjaid at the time when the writer was investigating the facts ; since they are given by way of iUustration only, it has not seemed necessary to take account of any subsequent changes in rates. COMMON BASIS OF WAGES. 83 to pay the men in different pai'ts of his mine, some a little above, others a little below the county averaii^p ; but if the men working in a particular "flat " find that their piece-wage is so low that they arc earning mnch (say 15 per cent.) less than bs 6d per day, then they apply to the Joint Committee (composed of representa- tives of the employers and the employed) to have the matter put right. The method adopted, in settling what is the proper piece-wage, is to allow a high tonnage rate where the coal is hard to work, a lower rate where the men are working in easy places. If a " hitch " occurs, then until the seam is again found to be in a " fair " (normal) condition, the miner will either be put on time-wage (this wage being based on his previous actual average earnings as shown by the pay-sheets of the last two pay-days), or will get an extra price per ton so calculated as to bring his daily earnings up to their normal level. Another instance of an express and accurately adjusted time-wage basis in a piece-work trade is to be found in the cotton-spinning industry. The system of remuneration adopted in the cotton-spinning trade is of a highly complicated nature, and cannot be fully described in this place.* The piece-wage at Oldham, for example^ is a certain sum for every thousand hanks (each of 840 yards) spun. This piece-wage varies very greatly (according to the number of * For a full account of this system see the Report ou the subject in Transactions of the BritisJi. Association, 1887, pp. 310-313, and the Labour Department Report on Wages and Hours of Labour of 1894, Part II., pp. 1-11. 34 METHODS OF REMUNERATION. spindles on the mule, the speed at whicli the spindles revolve, and at which the draws ^ are made, the lengtli of the " draws," and the number of turns or " twist ^' given to the tliread in spinning) ; but in every case the piece-wage is so fixed as to enable an operative, working during an agreed number of hours in a week, to earn in that time a certain agreed sum. In some places {e.g., in some of the Bolton mills) tlie operatives are paid a piece- wage (with a time-basis) similar to that in force at Oldham, but reckoned, not per thousand hanks, but per hundred draws. Thus, the wage-scale fixed for one mill defined the standard weekly earningsf to be for " mules of 930 spindles each, £3. Os 6d," with an allowance of 2jf? per set for time lost in dofiing.:|; The piece-wage in this case (the spinnei's being, of course, employed on piece- wages) varied from 2'81d per 100 draws (of 65 inches each), which was the rate payable when the mules were running the draw in 15 seconds, to 4>'69d per 100 draws — the rate payable when the mules were working at so low a speed that each outward and return movement of the mule-head occupied 25 seconds. But, whether the operative was "minding" fast- speeded mules with a low piece-wage, or slow-speeded mules with a high piece-wage, the piece-wage rate * The " draw " is the outward and return movement of the self-actor, each movement spmning a length of yarn corresponding with the number of inches passed over by the mule-head. f The joint earnings of the spinner and the assistants whom he employs. Each spinner works a pair (or set) of mules. + " Doffing " is taking the cops of spun cotton off the spindles. COMMON BASIS OF WAGES. 35 was SO fixed that he should, in all cases alike, be able to make the specified standard earnings in a '^ factory week" (i.e., "56^ hours, less li hours for cleaning, and 1 hour 20 minutes for breakages '').* The elaborate arrangements as to wages in force in the cotton trade are remarkable for the perfect manner in which, in the agreements between the employers and the employed, full recognition is given to each of those three important factors which lie at the root of the wage-contract under all the different methods of industrial remuneration — time, output, and pay. But in addition to these three factors, there is another element about which a few words must be said. When a workman is offered a given rate of wages, whether time-wages or piece-wages, he has, in order to judge Avhether he can prudently accept this offer, to consider not only how much he can, working at the wages offered, earn in a week, but also how hard he will have to work, in order to earn this money. He may be quite willing to work for earnings of Qs a day, but not if he has to ''do seven shillings^ worth of work " (that is, to exhibit an intensity of exertion greater by one- sixth than the normal standard), in order to earn this 6s. If we wish for an illustration of the maintenance of an explicitly defined standard * See Twelfth Annual Report (\%^\)of the Operative Cotton Spinners'' Provincial Association, Bolton and District, pp. 74-76. The speeds mentioned are the standard speeds; and it is provided that "if a quicker speed than the standard be required, then a fresh basis and consequent calculation of prices shall be made and agreed upon between the two Associations" (of the employers and the employed). 3 * 36 METHODS OF RKMUNE RATION. of exertion, we shall find this in the coke industry. Like the miners, the Durham cokemen work under a piece-wage system with a time-basis in the form of a county average. For some time past these cokemen had complained that their piece-wage per ton was in many cases too low, not because it did not yield the agreed standard daily earnings — very often the men's earnings were admittedly above the county average — but because, in order to earn what they did earn, the men had to handle a greater number of tons than they considered '' fair ; " that is to say, they alleged that they had to exhibit an intensity of exertion greater than was contemplated in their wage- con- tract. Accordingly, the whole matter was, in 1891, referred to Dr. Spence Watson, who, after taking a large amount of evidence, made an award in which he established an explicit standard of exertion, deciding that the remuneration of "^ fillers " (who put the coke into trucks), for example, was to be such as to enable a workman handliiig 20 tons of coke in the day, at a basis price of 2hd per ton, to make standard daily earnings of 4s 2d per day.* The manner, in which the element of exertion habitually enters into the wage-contract, may further * See also the Agreement in this trade of March 10th, 1896 {Lahoxir Gazette, May, 1896, p. 146). Compare the evidence of Mr. Lawlor, representing the Bakers' Society of Dublin, before the Labour Com- mission, in which he mentions a strike which took place in 1889, and which resulted in the bakers' remuneration (piece-wages) being fixed on the basis that the men should not have to produce more than at the rate of 320 two-lb. loaves per man per shift {^Evidence, Groiup C, Vol. III., p. 327). COMMON BASIS OP WAGES. 37 be illustrated by the familiar instance of overtime pay^ the extra strain incidental to the prolongation of the normal honrs of working* being, at any rate in most well-organized trades in this country, t taken into account, in fixing the remuneration of labour, with the result that the pay for work done in over- time is higher — often materially higher — than that given for the labour of the normal hours. :j: Closely connected with the point which is now under consideration — the importance of exertion as a factor in the basis of industrial remuneration — are * The fact, that operatives working overtime claim to be paid for this work at a rate higher than their normal pay, is not entirely due to the extra exertion which overtime involves ; to a great extent the demand for overtime rates is based upon the desire to discourage the practice of working overtime. t In France the proportion of the total number of establishments investigated by the Otiice du Travail in 1891-93, and stating that they worked overtime, in which extra pay was given for overtime work, was 18 per cent, in Paris and its environs, and 23 per cent, in the rest of France (see Salaires et Dincc du Travail dans I'lndusiiia FmnmUe, Vol. I., p. 481 ; Vol. IV., p. 128). \ A workman em^Dloyed on time-wage will receive for each hour worked in excess of the normal hours a time-wage higher by a specified amount than his usual hourly pay. With respect to work- men on piece-wage, when they receive extra pay for overtime work, a variety of methods obtain. The workman may get a specially high rate of piece-wage for the particular articles which he produces in overtime (if the output of overtime can be " ear-nrarked " in this manner); or he may get a higher piece-price than the ordinary rate for the whole of a job, part of which is done in normal hours, part in overtime ; or he may receive, in respect of his overtime work, the oi'dinary piece-price of his output, together with, in addition to that price, extra pay, in the form of time-wages, for every hour of overtime which he mav work. 203420 38 METHODS OF REMUNERATION. those not infrcrjuent disputes which arise when the workmen complain tliat they ai'e being required to "work short-handed." The men, in these cases, admit that a gang, e.(j., of dockers, can make an adequate amount of money ; but, because the gang is too small — six men being put to do the work of seven or eight men — each has to put forth, in return for his day's pay, an abnormal, and, as they allege, an unreasonable amount of exertion.^ With a view to meet difficulties of this character, we find that the number of men, by whom specific classes of work shall be pei'formed, is sometimes expressly specified in the rules of trade union organ- izations and in agreements made between employers and employed. Of this nature is the clause in the Practical Bye-Laws of the Quebec Ship Labourers' Benevolent Society, which states the minimum number of men of whom a gang shall be composed * The objection to "working short-handed"' is, in some cases, in part attributable to the " theory of the Lump of Labour," referred to later on (pp. 80-80), according to which it is considered a wrong thing for "one man to do the work of two." Thus, in a manifesto issued by Mr. Ben Tillett, general secretary of the Dock, Wharf, Riverside, and General Labourers' Union, we find it stated that, " The employers have adopted the most insidious form of reduction, viz., diminishing the number of men in gangs, slave- driving, killing those at work by non-observance of the conditions for working they agreed to, and wholesale reductions in wages. Every gang reduced from ten to six men means the ' stones ' and starvation for four of your mates, every two men doing the work of three men means a corresponding addition to the ranks of the unemployed. Every ' cent ' thus squeezed out of the wages by the employers is a robbery of the workers" (Times, August 29th, 1896). COMMON BASIS OF WAGES, 39 under different circnmstances [e.g., " Single-ported vessels shall employ no less than nine winders, five holders, one swinger, and one stager"),''^ and the arbitrator's award as to the number of bushellers of which a gang shall be made up in unloading a certain class of corn, mentioned in the Labour Department Report on the Strikes and Lock-outs q/1894, p. 170.t It may possibly be suggested that, in cases such as those just referred to, the matter in dispute is a mere question of the relation between pay and output — exertion not coming in as a separate factor. Obviously, if men are ordered to work six in a gang, the gang being expected to move 6 tons per liour, at a wage of Qd (per man) per lioui', then if they insist that, while their wages shall remain as before, an additional man sliall be employed in the gang, this is equivalent to a demand that the joint output per hour required from these six men in return for their joint remuneration of 3.S' shall, in future, be only 5-i tons instead of 6 tons, while the employer maintains that 3s is an adequate price for the amount of work in question — the moving of 6 tons, and objects to getting a smaller amount of work for this money. While, however, admitting that exertion may be expressed in terms of output, it will be well to note that, when, in discussing the subject of industrial remuneration, we have to deal with the relation between output and pay, output must always be considered not alone quantitatively * Report of Commission on the relations of Labour and Capital in Canada (1889), pp. 128, 129. t See also Report on the Sitrilies and T.ork-ont.'i of 1893, p. 108. 40 METHODS 01'' KKMUNEKATION. {i.e., with reference merely to its amount) but also qualitatively [i.e., with reference to the exertion involved in its production). For what the workman gives, in exchange for his wages, is, primarily, the performance of a given amount of labour, that is, the putting forth of a certain amount of exertion. In- cidentally, the workman also contracts to pr(xluce a certain output ; for the performance of labour usually"^ results in the production of output. But how much output can be bought from the workman in return for a given amount of wages will, to a great extent in nearly all cases, depend upon how much output can be produced by the putting forth of a certain more or less specifically defined atnount of exertion. This, of course, is why the hewing of a ton of coal may cost the employer perhaps twice as much, if the coal is abnormally hard to Avin, as he pays, if the coal is specially easy to work. The hewer, that is, is paid a higher price per ton when working in the hard place, because, if he were not, it would be necessary for him, in order to earn the normal weekly earnings (the county average), to work with a great deal more than the degree of intensity contemplated in the wage-contract. Accordingly, in reckoning the wage due to the miner, one ton of coal, won in a hard place, may be said to count as a ton and a half, or as two tons ; his output, in short, is reckoned qualitatively {i.e., with reference to the exertion * If you were to set a man to draw water in a sieve, lie would expect to be paid for his labour, though the output produced would be nil. COMMON BASIS OF WAGES, 41 involved) as well as quantitatively {{.>'., witli reference to the weight of coal hewn). To revert to the cotton-spinning industry, let us take the case of the operative who is " minding " mules tlie number of the spindles on wliicli has just been increased, so that the number of hanks spun in a *' factory week " is augmented, and let us observe the effect upon his rate of pay which ensues by reason of this change in the machinery. His remuneration, as will be remembered, is a piece-price — a certain sum per thousand hanks spun, so fixed as to yield him a certain agreed sum per week. If the basis of the wage-con- tract were the relation between time, pay, and output, apart from the exertion involved in producing the out- put, the employers could properly claim that the man^s piece-price should be reduced in exact proportion to the improved efficiency of the machinery, accompanied as this is by an augmentation in the rate of output ; for under such an arrangement the new, reduced piece-rate would still yield the same rate of weekly earnings as the operative has hitherto been receiving. But what happens is, that the operative, under the agreement between the employers and the employed in this trade, while he cannot object to a certain reduc- tion being, under the circumstances supposed, made in his piece-rate per thousand hanks, yet has the right to object to this reduction being I'ully proportionate to the increased efficiency of the machinery. The inule-niinder is, under this agreement, entitled to have the new piece-rate so fixed as to yield him now, not his old weekly earnings, but a larger sum. For 42 METHODS OF REMUNERATION. *' the operative nt the larger machine, having thus more resj^onsihility and more arduous worli, is entitled to a higher remuneration/'^ Accordingly, the new piece-rate is so arranged, ''that it is said that the advantage of the improved machine is equally shared by the employer and the operative."t The details, which have been stated in the present chapter, tend to show that the different methods of paying for labour under the wage-system have, underlying their different characteristics, a common foundatiou, the several factors of time, output, exer- tion, and pay, being, in a more or less well-defined manner, present in the basis of the wage-contract in all its forms. J Having, then, examined, sufficiently for our purpose, the features virtually common to all systems of wage-payment, we will, in the chapters which follow, proceed to investigate the points in which these various methods of remuneration differ, the one from the other. * Report on Wages and Hours of Labour of 1894, Part II., p. 2. la a list printed in this Report (pp. 3, 4), the weekly earnings for the spinner and his assistants vary from £1. 17xper week, when the mules have 36 dozen spindles, to £3. 15s 4(i, when the mules have 110 dozen spindles. t Ibid., p. 3. + It will be understood that, in specifying certain factors as usually present in the basis of the wage-contract in its various forms, no attempt has been made to present an enumeration making any pre- tence whatever to be an exhaustive list of all the elements which are taken into account in fixing wages — a task involving, of necessity, the consideration of questions concerning the amount of wages, which are altogether beyond the purview of this book. CHAPTER III. TIME-WAGE. " Taken as a whole," ^ye ai-e told in tlie Labour Department Report on Wages and Hours of Labour of 1894, Part III. (p. vi), " tlie system of time-work appears to be the most extensive method of Avage- payment in the United Kingdom."^ There are many kinds of work in which the nature of the work causes the method of time-wage to be preferred to any other. This is very often the case * In the industrial establishments, including those carried on by the Government or other public authorities but excluding railways, tramways, and omnibuses, investigated by the French Office du Travail in 1891-93 it was found that 70 per cent, of the employees (including about 3 per cent, who were foremen or forewomen, or apprentices, children, &c.) were on time-wage and 30 per cent, on piece-wage. Among railway servants some of the workmen in the workshops were on piece-wage ; all other railway employees were on time-wages. (See Salaires ct Duree du Travail dans V Industrie Franoaise, Vol. I., p. 514, Vol. III., p. 543, and Vol. IV., p. 200). This inquiry did not extend to agricultural labour, seamen, fishermen, or domestic servants. 44 METHODS OF REMUNERATION. where scrupulous perfection of workraaaiship is of much greater importance than speed in working. Especially is time-wage work preferred where the quality of the workmanship cannot easily be tested by inspection."^ In all these cases it is, in any event, necessary to select workmen of approved trust- worthiness ; and it is very frequently found best to rely upon their honesty and upon the efficient super- vision of their work by the foremen, rather than upon the stimulus afforded by piece-work or any other form of payment in proportion to the amount of output produced, to secure the performance of their woi'k at a reasonably high speed. * One case, in which we find time-wage adopted in preference to any form of piece-wage, is that in which a number of successive opera- tions have to be performed, and the quaUty of the work done cannot be decided until the whole of these operations have been completed. Thus, in explaining the reasons for his conviction that the work- men under his superintendence could not, with advantage, be paid by the piece, the manager of one of the departments of a shipbuilding firm doing work of an exceptionally high class, writes : — " You are, of course, aware that our work is of a special character, and it rarely happens that any one man commences a job and finishes it right out. For instance, the steel plates, which are delivered here from the mills in every stage of crookedness, pass through the hands of eight different sets of men before they are finished and erected in position. With each of these plates, were the work done by the piece, there would be a tendency on the part of the workmen to subordinate quality to quantity, with the result that it would be impossible to apportion the blame for bad work to any one indi- vidual. A. would cast the blame on to B., and he in turn would put it on to C, and so on ; so that we should need a court of arbitration constantly sitting to settle the differences ; whereas, in the system we adopt, there is no reason why each man should not do fully and well his own portion of the work." TIME-WAUE. 45 Persons in charge of specially valuable and delicate niacliinery are often put on time-wage, in order to prevent them from handling roughly or overtasking the machinery in their effort to obtain celerity of production . Another reason, why men are employed as time- workers, is frequently to be found in the difficulty of measuring or counting the output, as it is produced. In cases in which the nature of the work done varies from day to day, if not from hour to hour, the difficulty of fixing a piece- wage for each job is generally so great that the operatives have to be put on time- wage.'^ When work is of an abnormal nature and more than usually difficult, it is often found that the attempt to fix a piece-wage for this '^ awkward work ^' leads to so much disagreement, that it is better to have it done on time-wage. The same is the case in regard to repairs, especially in regard to those kinds of repairs in which it is impossible to determine exactly what work will be necessary, until the repairer has actually begun the job, or to classify and price each item, so that there can be no doubt as to the remuneration due in respect of the job when done.t * When work of a new kind is introduced, it is a common practice to put the workman on time-wage until it is seen how much he can do in a day ; when this has been ascertained, and a basis upon which to fix the piece-wage price for each job has thus been arrived at, he is put on piece-wage. t See post, p. 74. On the other hand, there are cases in which no difficulty is caused by getting repairs done on piece-wage ; as, for instance, is the case with boot-makers in the " hand-sewn " trade, 46 METHODS OF REMUNERATION. One gTOund, upon which operatives, are in some instances put on time-wage, is the impossibility of maintaining the continuity of their employment. Thus, in a ribbon- weaving factory the writer found that the foreman had recently changed the weavers from piece-work to time-work. Before the weaver can begin his work, the loom has to be "set" by another class of operatives, and, while this is being done, he is neces- sarily idle.* It was in this case found, impracticable to arrange a piece-wage, which should be so calculated as to avoid injustice to the worker thus frequently kept workless through no fault of his own ; and, accordingly, these men were put on time-wage, being- paid by the week and losing nothing in respect of the days or hours when they were off work. In some cases piece-workers kept waiting for work are paid time-wages while thus involuntarily idle (going back to piece-wages when their work is again ready for them).t In this connection it is to be noted, that in many cases in which men are engaged by the week, and rated nominally at a weekly wage, it will be found that they are, in fact, paid by the hour, no pay being given except in respect to the time actually spent in who, in London, have an agreement with the masters as to the exact piece-wage to be paid for about a dozen different kinds of repairs. * As to similar cases in the woollen-weaving industry, see the evi- dence given before the Labour Commission by Mr. Allen Gee, secretary of the West Riding Power Loom Weavers' Association (Evidence, Group C, Vol. I., pp. 201, 203). t See Labour Gazette, January, 1895, p. 19. TIME-WAGE. 47 labour. Where a trade is fairly regular in volume, there, in a well-managed workshop, the continuity of the employment is fairly well maintained, so that the operatives, as a rule, always earn nearly the lull amount of their nominal week-wage. On the othei* hand, in trades subject to periods of depression, espe- cially " season " trades, the employees are frequently kept waiting a long time between one job and another ; and, since no payment is made in respect of these intervals of compulsory idleness, their actual weekly earnings fall far short of the weekly wage at which they are i-ated. CHAPTER IV. TASK-WAGE. Task-work must be distmguislied from piece-work and from work done under various forms of the method of progressive wages (such as "time-wage piece-work "),* with which, as well as with piece- work, it is frequently confounded in popular parlance. In the case of a man employed on time-wage, although failure to produce a standard amount of output within a given period may lead to his dis- missal, yet such failure does not give his employer the right to pay him less than the full amount of his wages for the time during which he has been at work; the man on time-wage piece-work, again, although, by working at a rate slower than that laid down for him, he will fail to obtain the reward of extraordinary assiduity, which is paid under this method, is yet, at any rate, secure of his minimum fixed wages. But, if * I.e., a fixed rate per hour with, in addition, a premium of so much money for each unit of output produced in the hour in excess of a standard quantity ; see jwnt, p. 87. TASK-WAGK. 40 the task-wage workman does not complete within the specified period his " tale of bricks/' then he has to suffer a corresponding deduction from his task-wages. At the same time, while the man employed on piece- wage is remunerated in exact proportion to the amount of his output, and while the man doing time-wage piece-work receives a premium commensurate with the excess of his output over a given amount, the man working on task-wage has no claim to anything beyond his fixed wage, in case he should produce an output beyond the required standai'd. The adoption of the method of task-wage is said to take place in some instances in the following manner. The employer gives the workman a novel article to make on piece-wage. The man, working as fast as he can, turns out on the average x. articles per hour. When his measure has been taken in this manner, he is put on task- work, with the obligation of pro- ducing not less than ,r articles per hour. Generally — it is alleged — this task-wage is fixed upon a lower basis than that of the man's former piece-wage ; and it is obvious that the employer's chief reason for thus adopting the method of task-work must be to obtain the same amount of work as he got, when the man was on piece-wage, for less money than he then paid for it. It is scarcely necessary to add that the method of task-work is regarded by the working-classes with extreme dislike. CHAPTER V. PIECE-WAGE. Although, as remarked above (p. 43), time-wage is the method of wage-payment most widely prevalent in the United Kingdom, yet in a very large number of industries, especially, it would appear, in industries in which powerful trade union organizations exist,"^ piece-wage obtains to a very considerable extent. The reasons, for which, in certain cases, employers prefer time-Avage to piece-wage, have been stated in the preceding chapter. In relation to the clanger inherent in piece-work, that in his desire to increase his earnings the workman may be led to pay insufficient attention to the quality of his output, it must be men- tioned that experience shows it to be perfectly possible, * "Of the lllprincipal organizations, we see that forty-nine, having 57 per cent, of the aggregate membership, actually insist on piece- work, while seventy-three out of the 111, having 71 per cent, of the aggregate membership, either insist on piece-work, or willingly recognise it. The unions which tight against piece-work number thirty-eight, having only 29 per cent, of the aggregate membersliip " {laduxtriul Democmcij, by Sidney and Beatrice Webb, p. 2SG n). PIECE-WAG K. 51 in many industries, to guard against this contingency by proper precautions. That this danger exists, especially in cases in which it is difficult or impossible to test the quality of the work by inspection, is certain. But the cases in which this difficulty or impossibility exists are not so numerous as might be imagined. Thus, we find Mr. A. E. Seaton, managing director of the Shipbuilding and Engineering Company, Ijtd., at Hull, in his evidence before the Labour Commission,'* strenuously denying that piece-work among boiler- makers and iron ship-builders leads to '^ scamping; " the workmen know that the foremen of the yard and Lloyd's and the Admiralty Surveyors would not pass bad work. Similai-ly, Mr. A. Coventry, partner in Messrs. Smith and Coventry, of Manchester, engineei's find tool-makers, told the same Commission that his firm find no difficulty in getting work of satisfactory quality done on piece-wagCjt and Mr. A. F. Hills, managing director of the Thames Ironworks and Ship- building Company, Ltd., gave evidence to the same effect. J Certainly, it is beyond question that plenty of work, in the execution of which accurate workman- ship is essential, is done, and done in a thoroughly satisfactory manner by workmen employed on piece- wage. It may be of interest to note that the tendency of piece-wage to induce the Avorkmen to sacrifice quality to quantity of output is in some cases guarded against, not alone by careful inspection, but also by limiting * Kvidcuce before Lithoar Coiiunisaioii, Group A., Vol. III., p. 310. t Ibid., p. 351. + Ib:d., p. 314. 4 ^ bZ WKTHOIJS OF IIEMUNKRATION'. tlif output. '^IMins, in the watchmaking industry tlie writer has known an employer, witli this object in view, to refuse to give out to any man more work in each week than would enable him to earn a specified maximum amount of piece-wage. Speaking generally, it may be said that, except in those special cases in which the method of time-wage is considered superior on the grounds above indicated, piece-work is preferred by a large number of employers, as affording greater security for the performance of the maximum of labour of which the workman is capable without requiring, for this purpose, so large an amount of supervision as would be necessary to obtain this result, were the operatives employed on time-wage.* For although it is quite possible, by vigilant supervision, to exact from employees on time-wage a rigidly maintained quantum of pro- duction, yet in practice it is found that, as a rule, the speed exhibited by workmen on time-wage is considerably inferior to that shown in the work of operatives remunerated by piece-wage. This fact * Compare the evidence given before the Committee on the Manufaeturino- Departments of the Army (188G-87) by Col. Maitland, E.A., Superintendent of the Koyal Gun Factory, " if yovi have day- work, you at once want a tremendous lot of supervision to keep the men at work. For instance, in a night shift day-work would be ahiiost impossible — you would find all your men asleep — therefore, we put every man who is on a night shift, with one or two trifling exceptions, on piece-work " (Report, 1887, p. 104). In a large engineering establishment, with which the writer is acquainted, it is the practice, when at the end of the regular working day a job is nearly finished, to offer the workman (who is on time-wages) a lump sum to stay on and finish the work before he leaves. PIECE-WAGE. 53 comes out with special distinctness in cases in which operatives^ who have been working on time-wage, are put on piece- wage. Certain sole-sewing operators in a boot manufactoiy with which the writer is acquainted, when put on piece-wage, were found to have about doubled their output, with the result that four machines, worked by men on piece-wage, were shown to be yielding approximately the same amount of output as seven machines had previously yielded when the operatives Avere on time- wage. In a bicycle factory the superior activity of men on piece-wage was impressed upon the writer by seeing three brazing- hearths out of five standing cold and vacant — a puzzling sight, because the whole place was bustling with work, orders being plentiful. The explanation was that, the men having recently been put on piece-wage, two men were now doing the same amount of work as was formerly done by five men on time-wage. I have, in instances too numerous to mention, found that the excess of work obtained by putting men on piece-wage has been from 30 to 50 per cent. i In consequence of the superior rapidity of pro- duction, which the stimulus of piece-wage remunera- tion is able to secure, it w^ould appear not improbable that, as the pressure of foreign competition, on the one hand, and of the demand for higher wages and shorter hours of labour, on the other, becomes more and more keenly felt, our employers may to an increasing extent endeavour to introduce piece-wage remuneration. In this connection two points may be noticed. C4 METHODS OF REMUNEI.'A'l'ION. In many cases^ in wliicli macliiiicry and motor power have taken the phice of hand-work, it will be fonnd thnt the opei-atives are, as j-et, on timc- wnge. The reason is that the introduction of machinery and motor power have greatly diminished the cost of production, and, nntil the use of sucli machiner}" nnd power has become general, and has affected the market price of the product, the manufnc- turer has so great a margin of profit thnt he does not think it worth his while to put the workpeople on piece-Avage. For the present he finds that, by discharging all who do not produce an amount of output more or less nearly approximating to the maxiwum possible, he can get enough work out of his hands for all practical purposes. But as com- petition on the part of rival manufacturers, now possessing similar appliances, grows keener, or as the workpeople succeed in obtaining successive advances in wages and reductions of woi'king hours, their employer will be more and more likely to put on the pressure of piece-wage. Further, it must be observed that the tendency of modern manufacture is in favour of production on a large scale. Now-, one cause, which militates against the adoption of piece-wage is the practical difficulty which is experienced, when the operative is employed upon a succession of different kinds of work, because any attempt to price and pay fr r each job separately would lead to more trouble than is woT'th taking. This is the case with many of the employees in a small workshop, each of whom PIECE-WAGE. 55 must in turn perform different parts of the woi'k ; but in a large factory it is possible to employ the same operative, day after day, upon the same sub- divided process. One result of an augmentation in the size of our manufacturing establishments may, therefore, be expected to be an increasing tendency to put the workers on piece-wage. The reasons, for which piece-work is in some trades preferred, in others disliked, by the employees, Avill be examined in the succeeding chapter. CHAPTER VI. OBJECTIONS ENTEETAINED TO PIECE-WORK BY WORKING-MEN. The fact tliat working-men in some cases prefer piece-wage to time-wage remuneration^ and in other cases take a diametrically opposite view, is to a great extent to be accounted for by their belief that under time-wage or under piece-wage, as the case may be, the workpeople are more certain of getting full value for their labour, and of maintaining the standard rate of remuneration current in the trade. In those cases, specially numerous, as has been already pointed out (ante, p. 50) in well-organized trades, in which piece-work is preferred, one principal reason for this preference is the conviction enter- tained by the employees that only under a system of payment, under which the maintenance of an exact correspondence between the amount of work done and the degree of exertion involved in doing that work, on the one hand, and the remuneration for this labour, on the other hand, is expressly made an OBJECTIONS TO PIECE-WOKK. 57 essential part of the wage-contract, is it possible for them to secure a full sixpence for every " sixpenny- wortli of work " performed. If the workman on time-wage were in practice allowed to do, in return for his wages, as little work as he liked, then pay- ment by time might be a comfortable system. But, in fact, the employer exacts from time-wage opera- tives the performance of a more or less strictly defined amount of labour ; and it is not impossible for him, as in the cases cited in Chapter II., to keep on increasing the ''tale of bricks'' until he is getting far more for his money than originally contemplated. Against any such result as this the employee feels himself in a large measure safe-guarded by a system of piece-wage prices (under which the remuneration for every hour's work increases in exact proportion to the amount of output produced in the hour), especially if the price for each unit of output of every kind is settled between the employers and the trade organization of the workmen upon an uniform basis, securing for the men identical payment for identical or equivalent effort. The advantage to be derived from piece-wage payment is particularly noticeable in trades in which machinery is extensively used, and in which that machinery is of different kinds and of various degrees of efficiency in different cases. The manner in which, by agreement between the employers and the em- ployed, workmen in the cotton trade, employed in minding mules carrying different numbers of spindles and running at different speeds, have their piece-wages 58 METHODS OF REMUNERATION. fixed in sucli a manner as to secure uniformity of payment for identical eifort, has already been explained {ante, pp. 33-35 and 41, 42). It will also have been remarked that in the case of these cotton-spinners the piece-wage system, regulated as it here is by a very powerful trade union organization, is able not alone to obtain for the operatives extra payment for the additional exertion, which is incidental to working up to more complex and swifter-running macbinery, but also to procure for them a large share in the benefit ensuing from improved methods of production. These are advantages which, as the cotton operatives firmly believe, could not have been gained for them under any other method of remuneration than that of piece-wage.* Another trade, in which, under circumstances analogous in a great measure to those existing in the cotton trade, the employees prefer piece-wage to time- wage, is the boot trade. The recent introduction of machinery to do work formerly done by hand, and of a novel system of working (the "team system''), have, while greatly increasing the productivity of the men's labour, considerably augmented the intensity of exertion required in its performance ; and the work- men, with the object of securing an augmentation of their rate of pay proportionate to the increased exertion entailed upon them, and with the view of sharing in the advantages derived from the improved methods of production, and in order to avoid disputes about the * See Industrial Democracy, by Sidney and Beatrice Webb, pp. 288, 289. OBJECTIONS TO PIECE-WORK. 59 quantum cf output which the employers insist upon the men's producing in return for their weekly wages,* have shown a marked reluctance to continue working on time-wages and. a strong desire to revert to the metliod of piece-work whicli has for a long time been prevalent in their industry .t With respect to the cases in which piece-work is objected to by working-men, before commencing our investigation of the grounds upon whicli objection is taken to this method^ it is necessary to point out that "piece-work" is a term applied, in common parlance, to tw^o distinct sets of industrial conditions, and when a working-man denounces " the abominable system of piece-work," it will often be found that it is to group work under the metliod of contract or sub-contract, * The workmen allege that the emi)loyers keep on increasing, in an unreasonable manner, the amount of work which forms the piece- wage basis of the men's time-wage remuneration ; see, for instance, the disputes mentioned in lAihoiir Gazette, February, 1898, pp. fiO, 61. f Although Continental workmen are largely imbued with the Socialist prejudice against piece-work (see ante, p. 15), the Fifth International Congress of Diamond Workers, held at Antwerp in September, 1897, passed a resolution declaring that time-wage was, in every respect, injurious to the interests of their industry, and calling for the general introduction of piece-work. The special case of the bespoke tailoring trade deserves passing mention. Here time-wage is objected to because not applied all round. The employers, it is said, put a few men on weekly wages, and naturally take care to find work for these men, even in " slack " times, when the piece-workers are kept involuntarily idle (compare Labour Gazette, January, 1895, p. 27). The fact, that in certain cases workmen employed by con- tractors or by sub-contractors object to time-wage, will be explained by the remarks on these methods in later chapters {post, pp. 147-1-54 and 180-220). 00 MKTHODS OF REMUNEEATION. and not to ordinary piece-work, that he refers. Leaving the methods of contract and sub-contract to be dealt with in future chapters, we will here examine the objections taken to piece-work of the ordinary type. One sweeping objection to the motliod of piece- Vv'ork rests on grounds moral, no less than material, being founded upon the facilities which piece-work in many instances affords for the growth of pernicious habits. Operatives in piece-work trades, and these by no means the least skilful or intelligent, often spend one or more days in total or comparative idle- ness, making up for the time thus give a up to relaxation, not always of the most elevating character, by working at a furious pace during the rest of the week. The validity of this objection to piece-work will be admitted by all who are familiar with the facts j though it is scarcely necessary to point out that the evils inseparable from irregular labour exist in an extreme degree in many cases in which the workers are remunerated, not by piece-wage, but by time-wage, e.g., in the case of "casual'" dock-labourers. Another ground, on which piece-work is frequently objected to, is the tendency considered to be inherent in this method to promote a degree of exertion pre- judicial to the w^elfare of the individual workman and of the working-classes generally. To what extent this objection is valid, it is of interest to inquire. Adam Smith expressly declares that '' workmen, when they are liberally paid by the piece, are very apt to overwork themselves, and to ruin their health and constitution in a few years ;^' and cites a case OBJECTIONS TO PI KG K- WORK. 01 mentioned by an Italian physician, an authority of repute in relation to the diseases incidental to industrial occupations. "We do not reckon our soldiers the most industrious set of people among us. Yet when soldiers have been employed in some particular sorts of work, and liberally paid by the piece, their officers have frequently been obliged to stipulate with the undertaker, that they should not be allowed to earn above a certain sum every day accord- ing to the rate at which they were paid. Till this stipulation was made, mutual emulation and the desire of greater gain frei]uently prompted them to overwork themselves, and to hurt their health by excessive labour."* With this may l)e compared the facts narrated to the writer by the head of a large firm in the tea trade. This employer took some of his labourers, men carrying- heavy weights, from simple time-wage, and put them on time-wage piece-work (i.e., a time-wage supple- mented by a premium on the amount of work done) ; but, at the end of the first week or so, finding that the hope of earning a large premium had caused the men to gravely overtask their strength, and that they were visibly deteriorating in physique, he took steps to secure their working in future at a more reasonable rate. It is, however, submitted that the degree of over-exertion exhibited in cases like the two just cited may, in a great measure, be accounted for by the considerations urged by McCulloch, who remarks, "that this ultra zeal is not manifested, except in case of parties engaged for a short period only, or when they first begin to work under the system."t * ]]'ealtli of Nations, bk. i., chapter 8. t Treat itse on Wages, p. 70. 62 JIETirODS OF REMUNERATION. Thornton says tliat piece-work " tends to make men overtask themselves/'* Lord Brassey " has seen much to confirm" the opinion of Adam Smitli stated above, and illustrates its correctness by the case " of the slaves employed as coffee -carriers in the Brazils. These men are employed in removing bags of coffee, weighing from two to three hundredweight, on their heads, in and out of large warehouses and from the warehouses to the shipping. They often carry these immense weights a distance of three or four hundred yards. The men are the most powerful slaves in the Brazils, and they are paid at a fixed rate, in proportion to the amount of work performed. They work with the most intense vigour, in order to earn as soon as possible a sufficient sum wherewith to purchase their freedom, and generally succeed in accumulating the amount required in three or four years. But they are a short-lived race, and, in their devouring anxiety to accomplish their object, too often sacrifice their health by over-exertion, although they are well fed on dried meat, or salt meat from the River Plate, eaten with a large quantity of farinaceous food."! This instance, no doubt, shows that men can, if performing exceptionally heavy work, under cer- tainly an exceptionally strong incentive to exertion — stronger than exists in the case of ordinary work- men employed on piece-wage — be tempted into working at a rate seriously injurious to their health. What, however, we would wish to determine, would be the question to what extent the allegation, that the method of piece-wage tends to promote over-exer- tion, is borne out by the facts in the case of ordinary workmen. This is a question to which my own observation * On Labour, p. 315. t Work and Watjef!, pp. 2G7, 2G8. OBJECTIOXS TO PIECE-WORK. (J'S does Bot enable me to give any pi-ociso answer. Some men, employed on piece-wage, will strain every nerve to produce a large output; others will produce just so mucli output as will yield tliem certain accus- tomed Aveekly earnings, and no more ; many will purposely turn out less work than they could comfort- ably produce,* because they feel sure that, if the emplo^^er sees that they can work at a higher speed, he will alter the standard of remuneration, and " nibble " their piece-wages down ;t others, again, will restrict their out])ut in deference to those ideas which will shortly be referred to under the name of " the theory of the Lump of Labour.'^ One point, in particular, deserves attention. In estimating the extent of the injurious pressure exercised by the method of piece-wage it is necessary * " The witnesses differed in opinion as to whether the men tacitly agree together to restrict the work they perform to such an amount as would enable them to earn the normal rate of one-third in addition to their daily rating and no more, fearing that, if they earned more, the piece-work prices would be reduced. In some shops the uniformity of the earnings of the men seems to point to this conclusion, in others there is greater disparity, and instances were cited in the course of the evidence of individuals largely exceeding the general level of the wages made by their companions " {Ileport of Committee on the Manufacturing Departments of the Armrj, 1887, p. x). t Or the employer, having by the payment of piece-wages yielding, say, time and a quarter earnings {i.e., 25 per cent, more than the men's regular time-wage rates) induced the operatives to produce a large amount of output per hour, may put them on time -wage (at their ordinary rates), while insisting that they shall turn out as much work per hour as they did when on piece-wage. Instances, in which this practice is alleged to have obtained in enghieering workshops, have been reported to the writer. 64 METHODS OP REMUNERATION. to take into account, not alone purely physical over- exertion, but also mental strain and worry. Take the case of a man whom I saw making screws ; he was working two machines simultaneously, with the assistance of a boy ; while, if he had been on time- wage, nothing would have induced him to work more than one machine. It is unquestionable that the nervous tension involved, in many cases,* in looking after two machines at the same time is considerable. What is more, workmen in engineering workshops state, as an universal fact, that the work turned out by a man on piece-wage is not, and cannot be, as good as that done by a man on day- wage, and is repeatedly returned, as not "passing gauge," to be amended *'in the man's own time," which circum- stance necessarily creates an irritation seriously increasing the strain incidental to this labour. On the other hand, the foreman, under whose supervision the mechanic making the screws just referred to was working, explicitly asserted that the rejection of work done on time- wage was almost as common as that of work done on piece-wage; and I believe this assertion to be not far fi-om the truth. With a view to ascertaining the actual facts in relation to the pressure incidental to piece-work I have taken numerous opportunities of watching * There are, of course, cases, in which it is perfectly possible, without any undue strain on a man's powers, to work two machines simultaneously; the opposition to this practice is, no doubt, largely attributable to the Lump of Labour theory, which forbids one man to do " the work of two " (see j^ost, pp. 80-86). OBJECTIONS TO I'iECK-VVOUK. 65 engineers in different workshops while they worked machines driven by power, such as lathes, boring- machines, planing-machines, &c. In some instances the workman would require very frequently to attend to the machine, guiding and regulating its action. But in other cases all the work seemed to be done by the steam, while the mechanic was generall}' occupied in contemplating the machine, occasionally adjusting- it very slightly, but for the most part standing appa- rently idle, with his hands in his pockets. I could not for a lona* time see how a man workino- a machine under circumstances such as these could be led, by being put on piece-wage, into over-exerting his faculties in a manner detrimental to his health, or even to his comfort; until one day I came across a mechanic working a lathe, with whom I was able to chat freely in the temporary absence of the fore- man. This operative pointed out that, although, when one of these machines is once set going, there is, for the time being, next to nothing in the way of hard work for the workman in charge of the machine, yet, before it is started, the machine must be " set," i.e., the material to be operated upon must be placed in exactly the right position — right to a hair's breadth — in relation to the operating part of the machine ; and it is here that, in a case like this, the strain and stress of piece-work come in.* Certainly we are often somewhat prone to forget * An engineering employer informed tlie Labour Commission that, with respect to machines other than lathes, one-fourth to one-tifth of the time of a machine is occapied in set'ing the work up on it 5 GC) :\II';TfIO])S OF KEMUN'KI.'ATION. " lli.'it worlsiiio-.tiieii liiive ikm'Vos as well as innsrlcs, and tliat braiu-fatigue is by no means a nionojxdy of those to whom it is common to confine the designation of '^ brain-workers." Few tilings, as a matter of fact, can be more wearing to a man than to liave to j^erform an operation deman(Jing deb"cate and accurate adjustment " against time." If we were to compare the case of a workman performing as piece-work a job such as, for example, the boring of a pair of " eccentrics," to that of a surgeon engaged for nine hours in the day in per- forming a series of operations, such as lithotomy or trepanning, and obliged to do this at high pressure, " against time/' we should, after making due allow- ance for the ditference between the two cases, obtain a mental picture which would go far in helping us to realise how great a measure of validity is present in the objection made to piece-work as promoting, under circumstances of frequent occurrence, a kind and degree of exertion injurious to the well-being of working-men. It might, perhaps, be said that there is no necessary connection between remuneration by piece-w^age and special intensity of exertion, because the mechanic, {Evidence before Labour Commission, Group A., Vol. III., p. 358, n.). It is not intended to suggest that the difference in the rate of out- put between men on piece-wage and men on time-wage is, in cases like these, wholly attributable to the superior speed with which the man on piece-wage sets his machine ; much time may be saved in other ways, e.f/., if, while one job is in the lathe, the man will take care to be getting the next job ready for the machine. OliJKCllOXS I'O I'lKCK-WOUK. 67 who is on "time aud a quarter piece-wage",* is under no compulsion, except greed of gain, to work faster than at the normal rate. 15ut, even if a man be quite content to make " time " only, by working only at a normal (time-rate) speed, yet he generally has not the option of maintaining this moderate rapidity of ontput. For an employer, who pats his men on piece-wage, does so with the express oV)ject of forcing the pace ; and thus a manufacturing engineer told the writer tliat he should certainly discharge any man in his employment who failed to make, at any rate, time and a quarter. That a faster pace is maintained where piece-work is the rule, than in workshops and on jobs where the men are employed on time- wage, is certain ; and, wherever piece-work obtains, there workmen who are below the average standard of activity, or who have passed the prime of their vigour, find it difficult, or even impossible, to secure employment — a circum- stance which should not be forgotten in considering the causes of the dislike often entertained by the working-classes to this method of remuneration. To sum up the case in regard to the relation between piece-work and over-exertion. It must be admitted that there are certain circumstances under which piece-work is, undoubtedly, accompanied by a degree of exertion injurious to the well-being of the workman. Where the rate of pay is so low that a living can only be obtained by the main- tenance of an excessive speed, there piece-work is * See ante, p. 'Jo. (38 mi-:thods of uemunekation. extremely likely to be accompanied by over-exertion. Even where the rate of pay is in itself not specially low, yet if the work be intermittent in its nature, long periods of non-employment occurring, and especially if the supply of labour be considerably in excess of the demand, here, again, the necessity of providing for the wants of himself and his family by earning as much as possilile, while the job lasts, will very possibly cause the workman to overstrain his faculties. On the other hand, in a trade in which the great bulk of the workers are able to obtain fairly constant employ- ment, and in which the rate of pay is fairly adequate, there over-exertion will not be found to be an in- separable accompaniment of the method of piece- work. For, when free from the pressure of poverty, the British workman, as a rule, has a sufficient regard for his own health and comfort to leave a margin between his actual exertion and that which would be possible if he were to work positively " to the top of his bent." Take, for instance, cotton- weavers. If piece-work were, of itself, competent to secure the performance of the tnaximum of work of which the operatives are capable, how is it that employers, in order to encourag-e rapidity of pro- duction, invented the system of " bounties " * — • premiums on rapidity of output supplementary to the piece-wage ? or how could we explain the fact that the employers, as a rule, find themselves obliged, in order to get enough work out of their_^ hands, to * See pos^ p. 93. OBJECTIONS TO PIECE-WORK. 60 insist on the utmost vigilance of supervisioUj the overlookers being paid, not by time-wage, but in ])roportion to the output of their subordinates, and being frequently discharged on the ground that they have failed to " drive " the operatives into turning out enough work ? * And even under this " push- ing " system, the weavers, as a matter of fact, never work to the top of their bent except just before the occurreuce of a holiday, t when they wish to earn extra money for their amusement. No one would think of denying that the Lancashire cotton operatives work, on the whole, quite as hard as is good for them; but that these piece-workers invariably, or often, over-exert their faculties, can scarcely be asserted. And the same remark applies to our coal-miners and to the workmen employed in many other trades in which piece-work prevails. Although no attempt Avill be made to give an exhaustive enumeration of all the causes of the unpopularity of piece-work, one circumstance, which * See the evidence given before the Labour Commission by Mr. D. Holmes, president of the Burnley Weavers' Association, and by Mr. W. Booth, secretary of the Ashton-under-Lyne District Weavers' Association {Evidence heforn Labour Conimitixion, Group C, Vol. I., pp. 84, 85, 39, 40, 4.5), and that given by Mr. T. Birtwistie, secretary of the North-east Lancashire Weavers' Association (Ibid., pp. 58, oi), 61). ■j- See the remarks of Mr. Mundella and the evidence given before the Labour Commission by Mr. W. Noble, of the United Cotton Manufacturers' Association (Evidence be/ore Labour Commission, Group C, Vol. I., pp. 167, 168). My own inquiries tend to establish the same fact in regard to the cotton-spinners. 70 MKTHOUS OF KKMCNEUATION'. largely tends to induce the best men in many trades to dislike this method, must be briefly alluded, to. Remuneration by tlie piece, accompanied as it so frequently is, by the maintenance of a rate of speed so high as to be incompatible with really first-class qualit}' of execution, is detested by workmen who take a pride in their work. Piece-work unques- tionably leads, in many cases, to scamping. It is in piece-work shops that " those hateful words — that will have to do " (as a working engineer once called them) — are heard on frequent occasions. It is not meant to be asserted that every working-man, with- out distinction, objects to scamp his work. Bat it is undeniable that very many artisans are true artists, and honestly detest the slovenliness of execution, which is, in many industries, a concomitant of piece- wage remuneration. At the same time, it must not be forgotten that (as already pointed out) in namerous industries articles of unexceptional work- manship are habitually produced by workpeople employed on piece-wage. We come now to that important class of objections to the method of piece-wage which relate to the effects of this method upon the remuneration of the workmen, and to its tendency to promote friction between them and their employer, who is believed, rightly or wrongly, to take advantage of this form of wage-payment in order to get " sixpennyworth of work'' done for fivepence. It will be obvious that in any system of payment by the piece there is abundant room for serious differences of opinion oBJKCTioNs TO ^IKCE-^v■OI:K:. 71 between the buyer and the seller of labour. In fixing piece-prices the employer in some cases appears to nuike the scale as liigh as he can afford to do, consistently with his earning his accustomed rate of profit ;* in othei's ho will keep an eye on the men's earnings, and, if lie thinks that they are making too much money, will lower their piece-wage by ''nibbling," i.e., by an insidious process of continual petty reductions ; in others, again, he will profess his willingness to allow the operatives to earn at the rate of, say, ninepence an hour; but, taking as his standard * The owner of a slate-quarry told the Labour Commission that in lixing prices for the work, " We make, of course, a harder bargain upon anything that is not going to pay us;" while, on the other hand, if the rock promises to be rich in slate, then the men get prices fixed on a more liberal scale (Erideuri', Group A., Vol. II., p. 5). Compare the evidence of the manager of another slate-quarry, Ibid., p. 19. In a tiint-glass factory the piece-isrices paid for making thermometer tubes were stated to me by the employer to be on a considerably higher scale (i.e., on a scale giving considerably higher weekly earnings) than those paid for making wine-glasses, for the reason, as he i^ointed out, that wine-glasses are always sold with only a bare margin of profit, while on thermometer tubes the firm can earn higher prohts. Again, in confectionery works, where some of the articles manufactured, being novelties, yielded a higher profit than other goods, which, being subject to keen competition, were less profitable, I was told that a higher scale of piece-wage was paid on the more profitable articles solely by reason of their being more profitable. In like manner it will be found that in some establish- ments the piece-prices are higher in periods of profitable trade than in bad times ; so that a job, which would in good times yield time and a third earnings, would in a period of depression yield no more than time and a quarter. In connection with the point here adverted to — the fact that in some cases the employer pays for the labour of his workpeople virtually 7-:> 31EJ'H0DS OV REMUNERA.TION. tlie rapidity of output exhibited l)y one or two exceptionally fast workers — of the class called by working-men " cliasers " — the employer fixes tlie piece-wage so low that, with these exceptions, the operatives are quite unable to earn more than (Jd or 7d an hour without putting forth an intensity of exertion, which they maintain to be far greater than was contemplated in the wage-contract, and to which they take strong objection. In passing, a few brief comments on the tactics just referred to may be permissible. First, as to "nibbling.^' Of course, if after a new article has been given out at a certain price, the workmen, who usually make, say, time and a third on piece-work, are found to be " what the job will bear " — may be mentioned the cases in which a higher sum is paid per unit of output for work done on piece-wage than for similar work done on time-wage. Very often the price is the same under whichever system the work be done. Thus, under the old English statutes regulating wages, the time-wages paid per day and the piece-wage price of the amount of work customarily performed in a day were identical (see Wealth and Progress, by George Gunton, pp. 181, 182) ; so a London compositor, working under the trade union scale, gets 8^d for one thousand ens of nonpareil, the standard hourly wage being 8^d, and one thousand ens being the amount of nonpareil type which a compositor is able and is expected to set up in an hour. But sometimes more money is paid for a given amount of work when done on piece-wage than would be paid if it were done on time-wage, the reason being, as an employer told the Labour Commission, when explaining why the engines built by his firm cost more /or labour when made on piece-wage than when made on time-wage, that the men work faster on piece-wage than on time-wage, and speed of output reduces the part of the total cost of production attributable to standing charges (for rent, interest, salaries of office staff, &c.). (See Evidence before Labour Commission, Group A., Vol. III., p. 358). OBJECTIONS TO PIECE-WORK. 73 earnino', sa}', time and three quarters, this most likely shows that a mistake lias been made, the piece-prices having been fixed too high ; and it is not at all un- natural that the employer should think it necessary to cut down the prices to such a level as will result in his men making, in the future, only about time and a third. All the same, it may well be doubted whether the employer is wise in making reductions of this nature. For where men know that, if they work hard, then their remuneration will be reduced, they will take good care not to run this risk by doing their best. An engineer of high distinction told the writer that, Avhen he w^as managing some large works, he pledged himself to the workmen never to lower a piece-wage rate until the expiration of twelve months from its introduction, however much money the men might make; and experi- ence proves that, if you want your men to " do their level best,^' you must rigorously abstain from nibbling their wages down, even if it be demonstrable that a mistake in their favour has been made in fixing prices. Next, as to " chasing." While it is unquestionably true that working-men object to the exceptional ability of any one operative being used by the em- ployer as a means of unduly forcing the pace, and of thus bringing about a reduction in the remuneration of the general body of workers, yet the allegation so frequently made by unfriendl}^' critics of the working classes, that they object to piece-work because they dislike to see superior activity rewarded by remunera- 74 METHODS OF liEMUNEKATION. tion in excess of the normal rate, is altogether mifounded. So far we have dealt witli cases in which the employee knows beforehand what money he is to get for a given amount of work. If in cases like these the method of piece-work frequently makes for discontent, what can we expect when, as is sometimes the case, the relation between the work to be done and the pay to he received is unknown to the workman ?* Take, for instance, a repairing job; in such a job are included a number of items, which it is usually impossible to pi'ice separately, and the number and character of which can frequently not be ascertained at all until the work is all but finished, fresh defects appearing as the stuff is opened up.f Is it wonderful that, when employers pay for repairs of this nature by piece- wage, constant and bitter disputes arise ? Take, again, the analogous instance of the ^'lump" system so deeply detested in the cabinet-making trade, of which a description was given in his evidence before the * One of the most curious examples of " pay-as-you-please " piece- work is the practice prevaiHng in regard to liop-pickers. Thus, we read tliat " a number of hop-pickers at Fairbrook, near Faversham, refused to work on Monday until they had been told how much would be paid to them on the completion of their work — a proposal which growers invariably refuse " {Pall Mall Gazette, September 26th, 1894). f See ante, p. 45. While most of the work in building new ships is, as a rule, done by the piece, the trade union rules forbid repair work being done otherwise than on time-wages; see Bye-laws for the Mersey District United Society of Boilcrmahers and Iron-Shipbuilders (Liverpool, 1889). OBJECTIONS TO PIECK-WOUK. /O Select Committee of the House of Lords on the Sweating System by Mr. Jelliffe, secretary of No. 1 Branch of the Alliance Cabinet-makers' Association : " Lump-woik is an abominable sj-stem, whereby the employers sometimes will give you a drawing which does not always denote the amount of work that is in it ; and when you are started on the job, they will fix a price for it themselves ; they do not give you the option of saying whether you can make it for the price or not, and then they introduce more work ; but through the severe competition which we are put to, we invariably have to put up with it " (Eriileme, Vol. I., p. 31G). Eead, too, the evidence given in the same inquiry in regard to piece-work in the upholstery trade. In the workshopsof a very well-known firm, the operatives are paid a piece-wage based upon a declared time- basis, each man being rated at a time-Avage fixed in accordance with his ascertained speed in working. Now, if a man employed here had a chair given him to do, the piece-wage fixed by the foreman being 2s 3d (say three hours at 9c/), then, according to the evidence of Mr. Baum, a working upholsterer, secretary of the London Society of Upholsterers — "If by any mischance the wrong covering is given to it, or something is done that he is not able to do it in the three hours (it is not necessary that there should be fault of his own), he does not receive the pay for the additional hour that that chair would take him to do " {Evidence, Vol. I., p. 300). Even apart from accidental hardships of this kind, the whole system of piece-wage adopted in this factory — a system which there is uo reason to believe to be in any very marked degree more oppressive than that prevalent in many others — will be seen by refer- 76 METHODS OF KEMUNEKATION. eiice to the evidence, not alone of llie working-men witnesses, but also of tlie foreman, under Avliose exclusive control this labour was organized, to be such as might reasonably excite the suspicion and dislike of an employee possessing a moderate degree of self- respect and independence. When a job is given to a man, so many hours are allowed for its completion ; if the man takes, say, two hours longer, then he '' drops time,'' i.e., he '' works two hours for nothing." Perhaps he may make up his loss by completing his next job in two hours less than the allotted time ; perhaps he may not. Now, since the foreman (as he himself said) is partly guided in fixing this time-limit by the necessity of getting the work done at a price which shall leave for his employers (to cover rent, taxes, salary of foreman, &c., and profit) a fixed per- centage,"^ since working-men are not prone to believe the estimate of the time required for the execution of a job made by a foreman to be infallibly correct, and since this time-limit is fixed by the absolute arbitra- ment of this foreman, it is not altogether surprising that this system of piece-work is viewed with strong disapprobation by the operatives engaged in the upholstery trade. Enough will have been said to explain the nature of the grounds, upon which piece-wage remuneration is in many cases objected to, as tending to prevent tlie employee from securing a full sixpence for every '' sixpenny worth of work" done by him. In trades, * On the estimated value of the job ; see Evidence before Siccating SyMem Committee, Vol. I., pp. 689, 695, 696. OBJECTIONS TO PIECE-WORK. 7/ in which a fairly efficient trade nnion org-anization exists, an objection of this nature is felt with special force. For the aim of trade union combination is to obtain for all the members of the nnion a minimum rate of remnneratiou, fixed by a collective agreement between the whole body of the trade unionists, on the one hand, and the whole of the employers concerned, on the other, and securing that identical or equivalent effort shall receive identical payment in all cases. The object of the trade union is to arrange a scale of wage-payment under which, not only shall there be no danger of a workman who has been receivino- a ofiven sum for a given amount of exertion being called upon to put forth, in return for that sura, a greater amount of exertion, but there shall be a certainty that the relation between pay and exertion shall be the same for each and every member of the trade union. In a well-organized trade it is expected that no man shall find himself required to do " sixpenny worth of work " for fivepence ; and " sixpennyworth of work " must be the same amount of work for every man. The settled policy of trade union organization being of the character just described, the fact that many trade unions very strongly object to piece-wage remuneration will readily be understood. At the same time, it must not be supposed that the method of piece-wage is inconsistent with the principles of trade unionism. On the contrary, as has already been pointed out, many most powerful trade unions either insist upon, or have no objection to piece-wage, and the proportion of work-people employed under this /O j^IETUODS OF liEMUNEIIATION. method appears to be higher in organized than in unorganized industries. The trades, in which trade niiions object to piece- work, will be found to be those, in which, for one reason or another, it has not been found practicable to fix by agreement between the employers and the employed piece-prices arranged in such a manner as to secure uniformity of pay for identical or equivalent effort. Perhaps the greatest of all obstacles to the making of such an agreement is the variety of the output. Where there is plenty of " repetition, " where, that is to say, similar articles are produced by similar processes, day after day, no difficulty arises on this score. Even where a large degree of variety both in the nature of the output and in the circumstances under which this output is produced (speed of machinery, &c.) exists, it has, in many industries, been found possible to arrange a scale of piece-wage prices fulfilling the requirements of trade union principles. The arrange- ments of this nature in force in the cotton-spinning and in some other industries have already been described, and the reader who desires to make himself more fully acquainted with those obtaining in other trades (e.(/., cotton-weaving, woollen-weaving, hosiery, boot and shoe manufacture, hat-making, printing, &c., &c.) will find ample details in the Report on Wages and Hours of Labour, published by the Labour Department in 1894. In cases like these it is found possible to fix ])iece-wage prices upon an uniform basis, while any question, as to Avhat is the proper piece-wage in any particular case, is settled between OBJECTIONS TO PIECE-WORK, 79 the trade union and the employers, sometimes by simple negotiation, in many cases by the decision of a joint committee of masters and men, the services of an arbitrator being sometimes called in to decide a point as to which the parties fail to agree. It should be observed that in some instances, apart from the general organizations of the employees and of their employers, there exist, in addition, special committees formed of the workmen and the employers or their representatives in a parti- cular establishment, such as, for example, those existing in the manufactured iron trade in several important establishments, which were described to the Labour Commission by Mr. Long, president of the Barrow Lodge of the Associated Iron and Steel Workers, and by Mr. Thomas, of the same Association (workmen's representative for Eston),"^ and the " Mill Committees " occasionally found in the woollen trade, to whose useful influence Mr. Allen Gee, Secretary of the West Riding Power Loom Weavers' Association, in his evidence before that Commission, bore emphatic testimony. f On the other hand, in some industries, as, for example, in the engineering trade, there is very often a great variety iu the nature of the work done, and in the processes employed iu manufacture; and in industries of this character the method of time-wage is considered by the members of the workmen's * Evidence before Labour Continission, Group A., Vol. II., pp. 312-316. f Er'idenrc hi'fore Lahnttr Coimnixsio)), Group C, Vol. I., pp. 203-201). 80 METHODS OF REMUNKKATION. oro'anizations to be the only system of wai^e-payment compatible with the maintenance of the standard rate of remuneration. Before concluding our examination of the objections taken by working-men in some cases to the method of piece-work, reference must be made to those numerous instances, in which the dislike to piece-wage remunera- tion is based upon its tendency to promote a degree of efficiency on the part of the workman, which is considered to be prejudicial to the interests of his class. Thus, a workman, employed in a dockyard in making' " washers " by the aid of a boring-macbine, was asked by a visitor (whom this workman apparently took to be a trade union " investigator ") how many washers he was making per day. The answer was — '^Now that I am on piece-work, I am making about double what I used to make, wlien on day-work. I know I am, doing wrong. I am taking away the work of another man. But I have permission from the Society/' The words in italics are referable to the belief so firmly entertained by a large section of our working-classes, that for a man to exert his energies up to the point which, just stops short of undue exertion — to do liis level best — is inconsistent with his own interests and with loyalty to the cause of labour. The basis of this belief, which is in a large measure responsible for the unpopularity of piece- work, is that noteworthy fallacy to which it is desired to direct attention under the name of " the theory of the Lump of Labour." In accordance with this theory it is held that there OBJECTIONS TO PIECE-WORK. 81 is a certain fixed amount of work to be done, and that it is best, in the interests of the workmen, that each man shall take care not to do too much work, in order that thus the Lump of Labour may be spread out thin over the whole body of workpeople. As the result of this policy, it is believed that, the supply of available labour being in this manner restricted, while the demand for this labour remains (as it is supposed) unchanged, the absorption into the ranks of the employed of those who are now out of work will follow as a necessary consequence. In relation to this idea it must be pointed out that it is not altruistic sentiment alone that makes a work- ing-man reluctant to do more work than at present for fear of increasing the number of the unemployed. Any increase in the number of the unemployed not only casts a heavy burden upon the funds of the trade union, if out-of-work, or even travelling, pay is among the benefits which it gives to its members, but must also in all cases augment the number of men whom dire distress may at any moment induce to " scab the work,'' i.e., agree to work upon terms less favourable than those demanded by the organized workers, and so tends to depress the rate of wages all along the line. On the other hand, if by any means it may be possible to bring about a state of things in which the available supply of labour shall have become smaller than the demand, then, since (as it is assumed) two masters will now be running after one man, the operatives, having succeeded in this '^corner," will, 6 82 METHODS OF KEMQNE RATION. it is hoped, be able to obtaiu for their labour a very much better price than at present. This is a programme which has for a long time fascinated the minds of our industrial classes. Going back some sixty odd years to the early days of com- bination in the woollen cloth trade, we find the trade union attempting to reduce output in a characteristic manner : — " Tlie overlookers of a large factory were summoned before the committee, and ordered to pay the workpeople in their establishment at the rate of 21s a week, and not by the piece. Upon this, the over- lookers produced the books of the mill, and proved to the committee that the men were then earning 23s a week at piece-work." The orders of the union were obeyed ; " and at the end of the week the master discovered that his work- people had only turned off as much as was worth 15s at the usual price. . . . The absence of the stimulus of being paid according to the work done was doubtless one cause of the relaxed exertion of the men, but the large decrease was owing to the express commands of the committee." * In many of the rules prohibiting a man from doing his level best (for example, the rules restricting the number of bricks that a man may carry to a great height, mentioned by Thornton,t and explained by Howell,! and in the regulations established by the Glasgow plasterers, referred to ante, pp. 23, 24, we can recognise as their principal object the discourage- ment of injurious over-exertion on the part of the * This account is taken from Workmen and Wages, by J. Ward, pp. 97, 98. t On Labour, p. 329. X Conjiicts of Capital and Labour, 2nd edit., p. 338. OBJECTIONS TO PIECE-WORK. 83 workmen and the prevention of "nibbling" * and of " chasins:,'^ " forcing: the line/' and similar obnoxious practices on the part of employers ;t but in others there is no concealment of the fact that the aim is to spread the Lump of Labour tliin. Thus, the Bradford lodge of the Labourers' Union was, during the Trade Union Commission of 1867-1869, shown to have the following rule : — " You are strictly cautioned not to overstep good rules, by doing double the work you are required by the society, and causing others to do the same, in order to get a smile from the master. Such fool- hardy and deceitful actions leave a great portion of good members out of employment all the year round," In the same sense is the condemnation of piece-work cited by Mr. J. Ward, from T]ie Trades Union Magazine : — * See ante, p. 71 ; in this connection may be mentioned an instance, mentioned to the writer by a man of eminence among our working-men co-operators. He at one time attempted, with the assistance of several officials and ex-officials of the trade unions of the operatives in the glass manufacturing industry, to found a co-operative glass-workers' association. It is the custom with the members of these trade unions to discourage the production of more than a certain quantity of work in each shift, and the promoter of this co-operative society asked the officials of the unions whether, since the men to be employed in the i^rojected factory would be working on their own account, these operatives would be allowed to work free from this restriction, and to produce as large an output as possible. This request met with a point-blank refusal — a refusal explicable by the fear entertained that to break down the established custom might lead the employers to reduce the standard rates of remuneration by increasing the quantum exacted as a " day's work ; ' see ante, pp. 27, 28, and jwst, pp. 115, IIB, 128, 129. f See ante, XDp. 71, 72, and post, p. 94, 95. G ^ 84 METHODS OF REMUNERATION. " The worst passions of our nature are enlisted in support of task- work [piece-work is meant] . Avarice, meanness, cunning, hypocrisy, all excite and feed upon the miserable victim of task-work, while debility and destitution look out for the last morsel of their prey. A man who earns, by task-work, 40.s per week, the usual wages by day being 20s, robs his fellow of a week's employment."* The theory of the Lump of Labour will be seen to rest upon the utterly untenable supposition that a fixed amount of work exists, which has to be done, and will be done, irrespective of the conditions under which work is done, and, in particular, irrespective of the efficiency of the labour employed, and that, the less work is done by any one workman, the more work remains to be done by all other workmen. A full * Workmen and Waries, p. 244. Compare the objection to co-opera- tive piece-work, which Mr. E. Cridge, a stevedore, stated to the Labour Commission. "They [men on piece-work] work ever so much harder than they do at day-work, and therefore double their wages. It is not at all an uncommon thing for our men to earn 16s or 17s a day while executing that work. You are prepared to admit that is more than double the wages [of men on time-wage]. Now, that, I should say, is not right, inasmuch as, if they were to share that day's labour and wage among so many men that are standing outside, it would be better for all persons concerned " (Evidence before Labour Com- mission, Group B., Vol. I., p. 181). With regard to a strike of french polishers against piece-work in a Limehouse factory, we find a well- known member of the London Trades Council urging that " if the system were abolished, one-third more hands would be employed than were employed at present" (Daily Chronicle, Deeemhev 2nd, 1892). So, again, in an agitation in the building trade, we are told that " the great bone of contention is as to the proposal of the em- ployers that piece-work and sub-letting shall again be substituted, and this system on the part of the men is denounced as a retrograde step, and not in the interests of the public. In the case of the labourers, the reintroduction of this system, it is stated, would involve each man doing two men's work " (Daily Chronicle. April 19th, 1895). OBJECTIONS TO PIECE-WORK. 85 treatment of this subject would take us too far afield. But the character of this fallacy will best be under- stood, if the objection entertained to a man's doing his level best is compared with the precisely similar objection to a man's using the best available tools, in other words, with the popular objection to the use of motor power and machinery. No clear thinker believes that, in order to provide labour for the un- employed, it is advisable that we should give up steam ploughs for ordinary iron ploughs, these again for wooden ploughs, and, in the ultimate resort, should abandon these instruments and scratch the ground with the fingers. Just so, in regard to this doctrine of the Lump of Labour, it should be perceived that it is against the best interests of the community at large, and, first and foremost, of the working-classes, for working-men to handicap the industry of the nation in deference to a theory which proclaims it to be the duty of every man to work, as it were, with one hand tied behind his back. With the question of the length of the working day we have here nothing to do. Still, I shall not conceal my opinion that the claim of the working-classes to possess an amount of leisure adequate for the purposes of rest, of education, and of recreation is one in an eminent degree deserving of recognition. But, while a reduction of the hours of labour — say, to eight in the day — may readily be admitted to be, on grounds both economic and social, highly desirable, yet it is no less desirable that during those eight hours every woi'king-man in the country shall, using the best 86 METHODS OF REMUNERATION. available tools and machinery, and performing as much labour as he can perform without exerting himself to an extent prejudicial to his health or inconsistent with his reasonable comfort, produce as large an output as possible. In the interests of the people as a whole it is expedient that the remuneration of the labour of the industrial classes shall be increased; and, since this remuneration is paid out of the national income, it is a matter of great importance, not only that the working-classes shall succeed in obtaining for themselves a far ampler share in the national income than they at present receive, but also that the productive powers of the working-classes shall be exercised in a manner calcu- lated to secure that this income shall be of the largest possible dimensions.* * Among the cases of restriction on output by workmen not con- nected with the theory of the Lump of Labour two appear to deserve brief notice. Among tin-plate workers attempts are commonly made to limit the output, with the view of preventing the market from being overstocked and prices, and consequently wages, being lowered (see Labour Gazette, January, 1895, pp. 19 and 26 ; February, 1895, p. 62; March, 1895, p. 94). In regard to the policy of "ca-canny," which it has been proposed (in one case successfully) to introduce among dock labourers, the object was to show resentment for what were considered to be unsatisfactory conditions of employment by doing as httle work as possible. As explained in a leaflet issued by the International Federation of Ship, Dock and Eiver Workers, the basis of this policy is, "Pay workmen an insufficient wage, and you have no more right to expect the best quality and quantity of work than you have to expect to get a 5s hat for 2s 6d" (Times, October 10th, 1896) ; see also Report of Executive of the National Union of Dock Labourers in Great Britain and Ireland, 1891, pp. 14, 15. CHAPTER VII. PEOGKESSIVE WAGES. The common characteristic of all forms of progressive wages is that in every case a fixed or minimum wage is supplemented by a premium paid in respect of efiiciency. " Time-wage piece-work/' the first form of pro- gressive wages to come under our notice^ differs from piece-work pure and simple in this, that the employee engaged on time-wage piece-work is guaranteed a minimum remuneration, the amount of which is based upon the length of the period during which he is occupied, irrespective of the amount of work turneil out during this period, with an agreement, that, if this amount shall exceed a specified quantum, then the man shall get an additional sum, proportionate to the excess of the output over this standard, as the price of this extra work. In piece-work proper this guarantee is, of course, absent.* * In some cases work is given out at piece-wage prices, but with an express guarantee that every man shall receive at the end of the OO METHODS OF KEMUNEKATIGN. This metliod may be illustrated by the case of workmen in engineering worksliops^ making articles such aSj for instance, valves^ at a fixed time-wage with an arrangement that every valve produced in excess of a specified number shall eiititle the workman to a specified addition to his time-wage. It may be remarked, that the reason given to the writer in one case, and no doubt existing in many other cases, to explain the adoption of this system was the desire of the employer to induce the men to work at a high rate of speed, while avoiding putting them on simple piece- wage. For, many engineers, especially members of the trade union, entertain a great objection to piece- work. Another illustration of the method now under con- sideration may be found in the boot trade. When the writer was investigating this industry in the course of the inquiry undertaken in connection with Life and Lahoiir of the People, edited by Mr. Charles Booth, he observed that, while the majority of the men working sole-sewing machines in the East London boot trade were on ordinary time-wage, certain of these operatives received, in addition to their time- wages, a specified sum for every pair of boots over a fixed number sewn within the week. The reason here week a fixed miniiiiiiia sum, say time or time aud a quarter wages, whatever his ])roduction may have been. The method adopted in such cases is, of course, not piece-work, but progressive wages. The amount, by which the sum of the piece-prices of the work done in the week exceeds the stipulated minivium pay, is a premium on speed of working supplementing the guaranteed time-wages. PROGRESSIVE WAGES. 81) was this. As a rule^ tliese men either work as servants in the factories of the manufacturers, or else work machines of their own, carrying on this industry on their own account. In tlie former case the supervision of the employer, in the latter the operator's desire of gain secures his putting forth his best energies. But the employer, for whom these men on " time- wage piece-work ^' Avere working, was a man who owned a number of machines scattered through the boot-making districts at a great distance from his office. He had adopted this system in order to induce these operatives to work at a speed, which it was not likely that they would under these circumstances exhibit, if on simple time-wage. One class of workers, to whose labour the m^ethod now under consideration is specially applicable, is young hands being taught their trade, and especially indentured apprentices. For all such beginners the promise of an addition to their small fixed wages dependent upon their putting forth their best exer- tions affords an incentive of great practical value, this method rewarding' perseverance aud industry with a graduated scale of reward proportionate to the increasing proficiency of the novice. In some cases this extra remuneration takes the form of a gift not strictly proportionate to the output, but withheld if the amount of the output is unsatisfactor}^ ; in others a more rigid system is adopted — a true system of "time-wage piece-work." To exemplify by a concrete example, we ma}^ take the case of apprentices, whom the writer saw at work 90 METHODS OF REMUNERATION, in the movement-cutting room of a large watcli manu- factory. The 7)iinhnum output, which must be reached before any "exertion-money" is earned, is fixed by the foreman, who tests the matter by himself working each machine. All work turned out above this ■minimum is paid for in proportion to its excess over this standard. Here are the earnings for four weeks of two girls rated at 10.s per week, but each of whom, as will be seen, lost some of this time-wage through coming late to work : A. Total earninofs Time-Wcige . Exertion-money . B. Total earnings Time-wage . Exertion-money . It will be observed that apprentice A managed to earn a bonus on output equivalent to an addition to her time-wages of a little over 55 per cent., while the premium secured by B was at the rate «>f not quite 85 per cent, on her time-wage earnings. The extent, to which, in some cases, the fixed or minimum wages of Continental workers are supple- mented by exertion-money, may be exemplified by the instance given in M. Paul Leroy-Beaulieu's Essaisur la repartition des richcsses (p. 373) in regard £3 1 7^ 1 19 8i 1 1 11 2 13 4| 1 19 74 13 9i PEOGRESSIVE WAGES. 91 to weavers ; " a female weaver^ who has in a fort- night's work, produced a quantity of cloth exceeding the specified tninimum output by one piece, receives, as exertion-money in addition to her ordinary piece- wage, the sum of 2 francs [Is 7*2d'] ; but if her excess amount to two pieces, she gets, not only 2 francs (premium) for each extra piece, but also, as special exertion-money, the further sum of 1 franc [9*6t?]," say, in all, 5 francs [4.s].* M. Leroy-Beaulieu calls this system "progressive wages,'' a term which I have ventured to adopt, and to extend to other closely allied methods of remuneration. The particular case cited by M. Leroy-Beaulieu I should call " Progressive Piece-wage." When a premium is offered under the method of progressive wages in order to secure speed in working, care must be taken that quantity of output is not gained at the expense of quality. In a case, which * Further to illustrate the large premiums paid in France may be mentioned a case (communicated to the writer by M. Emile Cheval- lier, author of Les Salaires an XlXine Siecle) in which a manufacturer of fishing-nets pays his workmen thus : If a man makes sixteen nets, or any smaller number in a month, he receives 3 francs [2.s- 4-8J] for each net ; if he makes more than sixteen in the month, then for the seventeenth and eighteenth net he receives 3J francs [2.s- d'iid] apiece ; for the nineteenth and twentieth, 4 francs [3-s 2-id] apiece ; for the twenty-first and twenty-second, 5 francs [4.s] apiece ; and so on. In regard to progressive premiums in textile trades in Germany, see F. 0., Ann. Ser., 1896, No. 1752. Compare the differential rate system of piece-work in force with the Midvale Steel Company of Philadelphia, which is thus described in a pai)er read before the American Society of Mechanical Engineers at their Detroit Meeting, in 1895, by Mr. Fred W. Taylor : " Suppose twenty units or pieces to 92 METHODS OF REMUNERATION. came to the notice of the writer, yai^n-washers (in the woollen trade) had to be taken off time- wage piece- work and put on simple time-wage, because under the former method they were induced to " rush," and scamp the work. It should be observed that the system of paying a bonus on output appears to exist in at least three distinct forms. First, we have the system above described, in which each worker gets a premium proportionate to the excess of his work over the standai-d output, A second form is that in which each worker, who exceeds the standard, gets a premium fixed irrespective of the ratio of the excess to the standard. This might be called premium day-wage or premium piece-wage, according to the nature of the fixed or mhiininm wage of which the premium is the supplement. As an example of workers remunerated by premium day-wage may be mentioned the wine- bottlers, whom I found at Kheims receiving 5 francs be the largest amount of work of a certain kind that can be done in a day. Under the differential rate system, if a workman finishes twenty pieces per day, and all of these pieces are perfect, he receives say 15 cents [V^r?] per piece, making his pay for the day 15x20 = 3 dols. [12.S 6; 1,549 19 11 24-1 * The figures relate to the wages and bonus of workmen only, and do not refer to foremen, clerks, timekeepers, storekeepers or draughtsmen. The Table deals with the bonus system so far as concerns the Works of Messrs. ^Yillans and Eobinson. The applica- tion of the reference rate plan in their Outside Department (in which the system is applied in a collective form) is dealt with in a subsequent chapter treating of collective progressive wages Ipoxt, pp. ijJ'J, 140). 108 METHODS OF ItEMUNKKAllON. With regard to the figures just stated it is to be observed that, while the workmen belonging to the first eight classes mentioned in the Table work, as a rule, " single-handed," and the reference rate plan is, in relation to their work, applied, for the most part, in an individual form, each reference rate price relating to an operation performed by a single man, this bonus system is applied to the two last classes of workmen (whose work is group work) in a collective form ; and the case of the foundry will be dealt with later on when we come to consider the collective type of the Gain-sharing method. Turning, then, to the figures, so far as they relate to the first eight classes of workmen we shall see that these men have been able to earn under the Gain-sharing system bonuses constituting a very important addition to their ordinary wages, while reference to the illustrative figures given above {avte, p. 105) will show that this increase in the earnings of the workmen must neces- sarily have been accompanied by a most considerable saving to their employers. With respect to the Gain-sharing scheme in force with Messrs. Willans and Eobinson, certain points of detail require notice. In the first place, their scheme expressly states that ''the reference rates once fixed, will be permanent, except where the method of doing the work is changed/^ This, it is submitted, is a provision of the first importance. For any system of bonus on output to be successful, it is essential that the workman shall feel certain that if, whether by increased exertion and carefulness, by discovering PROGRESSIVE WAGES. 109 iniprovecl methods of working, or otherwise, he can reduce the time necessary for the execution of the work confided to him, the rate of his premium will not on this account be lowered.* Another point, in which the practice of Messrs. Willans and Robinson is in accordance with the principles essential to the successful application of the Gain-sharing method, is that, in all cases in which this is practicable, the reference rate prices are explicitly communicated to the workmen before the work is commenced, this information being, as ought always to be the case,+ given to the men without their having to ask for it. It is, further, a valuable feature in this Gain-sharing scheme that the reference rate applies to each job separately, so that if there be a 'Moss'^ on any given job [i.e., if the cost in time-wages exceed the reference rate), this is not taken into account against the work- man in relation to future jobs. Experience proves that every system, under which an adverse balance on one job has to be made good out of the " profit " on the next job, is intensely unpopular with workmen, and, moreover, that no such system is really advantageous * It is submitted that in all cases in which it may be practicable, it would greatly add to the acceptability of a Gain-sharing scheme, if in fixing the prices the workmen could be consulted. Nor will it be sufficient to settle prices with the foreman, treating him as repre- senting the men under him ; for the foreman is rather considered by the men to represent the interests of the employers. f Otherwise the workmen will very likely be afraid to ask for the information, suspecting that a man who exhibits too inquiring a mind may begin to find that his work is criticized with an unwelcome severitj', and may even get his discharge. 110 METHODS OK liKMlJN lOK'A L'K JN. to the employer, becau>f the expense incurred in remedying these defects is deducted from this premium. The truth is, that under whatever method of remuneration workmen are paid, strict inspection of their work is necessary ; and the extra care, which has to be taken in inspecting work done under a system of bonus on output, is certainly not an insuperable objection to the adoption of a system of this nature. One reason of much weight, which may be ui\ged against the introduction of any system of progressive wages similar to those which have been described in this chapter, is that this method involves so large an amount of complicated book-keeping as to render its adoption difiicult, if not impracticable. But it cannot be denied that accurate cost-keeping is well worth the trouble which it unquestionably entails. As a matter of fact, in many well-managed business concerns, in which no attempt is made to carry out any form of Gain-sharing, the labour-cost of every article is habitually checked with the most elaborate precision 1 1 2 METHODS OF REMUNERATION. at each stage of its manufacture, so that scarcely any addition to the work of the staff, by whom this cost is calculated, would be demanded, if it were determined to adopt some kind of Gain-sharing-. Once established, the statistical system required for the application of this industrial method will prove of the greatest service, enabling a manufacturer by a reference to the entries in his ])Ooks relating to past orders to fix speedily and accurately the price, at which he shall undertake the execution of any new order. A question of great importance to employers, who may think of adopting a scheme of Gain-sharing, and to employees, to whose remuneration it may be pro- posed to apply this method, is this. If the workman gets his job done for less than its normal cost, what part of the saving effected is to be allotted to the em- ployee by way of bonus, and what part shall be retained by the employer ? Whether the employer shall offer to allow his men to keep the whole of the difference between actual and standard labour-cost, or, if not, what fraction of this sum he shall offer to them by way of premium, is a question which will, of course, be determined according to the circumstances of each case. There may be cases, in which an employer, who is anxious to reduce that part of his cost of production which is attributable to establishment charges (in- cluding interest on the capital sunk in plant, rent, &c.), may find it worth while to allow the workmen to pocket the entire ^' profit balance/^ * In other cases the employer will allot to his workmen, by way * Compare ante, p. 72 )). PROGRESSIVE WAGES. llo of bonus, a part only of this balance — a proportion sufficient to provide premiums of adequate amount to stimulate their efficiency in the degree desired. On the other hand, from the point of view of the workman, it might be urged that a Gain-sharing scheme, which, if a man shall raise his efficiency above the normal standard by 50 per cent., offers him a premium equivalent to an addition to his normal wages of, say 33 per cent, and no more, is an arrange- ment by no means advantageous to the employee; and that he would do much better under the ordinary piece-work plan, under which a similar improvement in his efficiency would result in his earning the full time and a half (50 per cent, above his normal time- wages). But then, under the ordinary piece-work plan, is there not, in many cases,- a probability that, after the workman had been making time and a half for a few weeks, his piece-price would be cut down on the ground of his " making too much money/' and that the process of nibbling would go on until the employer found that the man was no longer able to make more than the permissible earnings, say time and a third, or time and a quarter? Wuu'd it not, then, suit the workman quite as well to work under a 'system, under which the employer tells you plainly that, if you can get the work done half as fast again as before, he means to have some part of the benefit of this improved production, states cleai-ly what part he means to keep for himself and what you are to get, and, this being once arranged, sticks to his bargain ? 8 CHAPTER VIII. COLLECTIVE TASK-WAGE. In regard to collective task-wage it will be necessary- only to explain the sense in which this term is used. Work is performed under the method of collective task-wage in those cases, in which an employer agrees to pay to a group of operatives a remuneration con- sisting in a wage proportionate to the time occupied by the performance of their labour, with an agree- ment on their part that they shall perform within a specified period not less than a certain stipulated amount of work, that if they shall perform in this period less than this quantum, their employer shall have the right to make a proportionate reduction in their wages, and that, should this quanfion be exceeded, he shall not be called upon to make any payment in respect of such excess. CHAPTER IX. COLLECTIVE PIECE-WAGE. The method of collective piece-wage may be illustrated by the case of the operatives employed in the flint- glass trade. The peculiar features of the basis, upon which the rate of wages in this industry is reckoned, have been explained in a preceding chapter [ante, p. 27). There we examined the method adopted in the remuneration of a man working single-handed. In operations such as the making of wine-glasses, in which combined labour is required, the plan adopted is as follows : — The men work in a group called a ''chair," composed of (1) a "gaffer'^ or "workuian,^^ (2) a "servitor," (3) a "foot-maker," and (4) a boy or " taker-in.^' The members of the chair aro rated in proportion to the degree of skill demanded by the work allotted to each. Thus, in a chair, which I saw at work, the gaffer was rated (nominally) at 6fZ per hour, with the (nominal) condition, that the chair should produce six wine-glasses per hour, say, in fact, at the rate of IcZ per wine-glass; the servitor was in the same manner rated at ocl; the 8 * 110 METHODS OP REMUNERATION. foot-maker at 3(^; and tlie boy at Ih^d, In each "turn^^ (i.e., shift) of six hours this chair was actually making eighty wine-glasses, the collective remuner- ation of the group thus amounting to ] 7*' 2?j.l, out of which 6s 8d became due to the leading man (gaffer), 5s 6nfZ to the servitor, 36' 4d to the foot-maker and la: 8d to the boy."^ It may be remarked, in passing that, as a rule, it will be found conducive to the acceptability of a system of collective piece-work to arrange that the lump sum paid to a group as collective piece- wage shall be paid to the different members of the group direct from the employer's pay-office,t being divided between the members of the group in such proportions as may be accepted by them as equitable — a propor- tion based upon the relative skill demanded by the work of each, and not upon any attempt to incite the leading man to hustle his mates into over-exertion * As to the systems of collective piece-wage which obtain in the glass-bottle trade, see lleport on Wages and Hours of Labour of 1894, Part II., pp. 210-220. As to various systems of collective piece-wage (in some cases called "fellowship") in factories under the War Office, see Ileport of Coniviittee on Manufacturing Departments of the Army, 1887, pp. 88, 105, 128, 131, 184, 185, 305, 315, and 605. As to collective piece-work among agricultural labourers, see Labour Gazette, October, 1897, p. 301. t What may happen if the entire sum is paid into the hands of the leading man of a group, for him to divide among its members, may be seen from the evidence of an engineering employer before the Labour Commission: "When the balance [i.e., the excess above the men's rated time-wages on the job] was paid on the piece-work, we paid it to the leading hand of the gang, and we left him to divide amongst his mates ; we found he did not divide amongst his mates ; COLLECTIVE PTECE-WAGK, 117 by giving him an unduly large proportion of the collective wage. In this connection it may be observed that, so far as concerns foremen and other superintendents of labour, it will generally be found a mistake to include in the piece-wage price of a job done by a group of workmen the remuneration of such oiScials. Theoretically, it is not altogether easy to understand why working-men so strongly object to an arrange- ment of this nature, at any rate in cases where the prices are based upon a scale sufficiently liberal to provide adequately for the remuneration of the fore- men and superintendents as well as for that of the subordinate employees ; but that workmen in geiieral do very earnestly disapprove of this plan is certain. It may be a matter of sentiment; but workmen, as a fact, do not like any system under which, whether really or apparently, the remuneration of a foreman " comes out of their earnings,^' as they put it."^^ consequently we said, ' We will have no more of this ; we will divide this money up in the office pro rata to the men's wages ; the leading hand is entitled to something for keeping the account, and we will give him that proportion.' I do not know the exact proportion which it worked out in ; but somewhere about 7 to 8 per cent., I think, is about the proportion which we should give the leading hand for managing the work, and the other men would be paid pro rata to their wages " {i.e., their rated time-wages] {Evidence before Labour Comviission, Group A., Vol. III., p. 356). * Thus, in a manifesto issued in August, 1896, Mr. B. Tillett, general secretary of the Dock, Wharf, Riverside and General Labourers' Union, complains that the employers are " forcibly extracting wages of foremen, (jangers and odd-job men out of the collective earnings of the gang" (Times, August 28th, 1896). 118 METHODS OF KEMUNERATION. The method of collective piece-wage offers special advantages in those cases in which it is difRcnlt or impossible to measure the exact amount of the output of each man in a group separately and pay him according to the results of the labour which he indi- vidually performs, and also in cases in which, although it would not be actually impossible to price and pay for the output of each man separately, yet to do so would involve an undue amount of trouble. One class of work, in regard to which collective piece-wage possesses marked practical advantage, is work which is done by men working in alternate day and night shifts. If you put the men on individual piece-wage, it is not improbable that the man, who works in the day-time, will, in the first place, be at no particular pains to leave the job in a condition making the work of the night-shift man as easy as possible, and will, in the next place, be likely to suggest, if any fault is found with the work, that the defect is due to the negligence of his successor ; and vice versa with the night-shift man. These difficulties are avoided by making the two men partners in the job.* As an example of collective piece-work upon a most extensive scale may be cited the system introduced some years ago in the Royal Dockyards, under the name of " task-wage " (in cases in which the work was measured by the foot, &c., or counted), or "ton- nage " (in cases in which the amount of the work * Compare Report of Committee on Manufacturimj DejMrtments of the Army, 1887, p. 88. COLLECTIVE PIECE- WAGE. 119 done was fixed by the weight of the material put into a ship). It should be explained that the account of this system which follows^ and which is given by way of illustration, is repeated from the earlier editions of this book, and describes the system as the writer found it in force in 1891, but is not intended to repre- sent existing facts, the methods of remuneration in force in these Dockyards having, as will be explained later, since been changed in important respects. The size of some of the groups of workmen employed under these arrangements is very large, thus, in connection with one ship I saw a group of .390 men working on collective piece- wage, the group including, not alone the workmen engaged in the building of the vessel, but also men in the machine-shops preparing the material ; thus, a man punch- ing holes in a plate with a punching-machine was employed on tonnage jointly with the rivettei-s, &c., working on the ship. Some of the groups are much smaller. I saw two sets of thirty men each, one on each side of a cruiser's bottom, into w^hich new bolts and planks were being put at so much per dozen bolts and so niuch per dozen planks ; groups of ten to twelve men each, moving timber (with horses) from one part of the yard to another at so much per cubic foot ; sets of four and of three smiths, and a set of two sawyers, working together in the same manner. On the other hand, I was informed that in some cases a group consisting of as many as six hundred or even seven hundred men is employed on collective piece-wage. Every man is separately rated at a certain rate per day, and the lump sum paid for the joint work of a group in respect of a given job or quantity of work is divided by the Admiralty officials between all the members of the 120 METHODS OF REMUNERATION. group, in proportions corresponding, -with approximate accuracy, to the clijrerent rating of each. The application of the method of collective piece-wage in the Dockyards is of recent introduction, having first been adopted about four years ago,* and its results are considered by the officials to be satisfactory. The work- men engaged on different ships in course of construction were said to earn an excess over their rated day-wage at the rate of C per cent, in one case, 20 per cent, and 25 per cont. in others, the higher rates prevailing in the cases of ships whose construction has been recently commenced ; "while the ships are said to be built on the average in 25 per cent, less time, and at 25 per cent, less cost than formerly. I was told that, when the Imperieuse was half built, the tonnage and task-work system was introduced, with the result that the men earned 28 per cent, more than they had formerly earned when on time- wage, and the labour-cost was 50 per cent, less than for the first half of the ship.f On the other hand, the workmen have, in manj' in- stances, viewed the new system with much disfavour ; and it is undoubtedly open to criticism on some points. One valid objection to this task aiid tonnage plan, especially when applied on a very large scale, 4] is that it has too much of a " pay as you please "' character (see ante, p. 74), there being nothing in the nature of a real agreement between employer and employed as to the standard of remuneration. In other words, there is nothing to show * I.e., about 1887; the first edition was written in 1891. t See Evidence before Laho2ir Commission, Group A., Vol. III., p. 3G7. I In the case of a small job, the workmen, to whom — I was in- formed — the total lump sum allotted for the work is, if they wish it, communicated, could reckon what the job would " work out at," and ascertain the standard of remuneration adopted ; this it is obviously impossible for them to do in tlie case of a large job. COLLECTIVE PIECE-WAGE. 121 the workman that he is not "doing sixpeunyworth of work for fivepence.'' The officials frame the estimate of the total cost of a ship, an estimate which, of course, includes a certain amount in respect of the cost of labour. The work done each week is measured up, and compared with the total quantity of work which has to be put into the ship. This ratio being thus established, a more or less exactly proportionate part of the total amount of the estimated labour-cost is divided up between the men in the group. It occurs sometimes that the officials find that the money is going too fast : in that case the weekly pay is reduced ; but the men never — I was informed — get less than their rated day-wage, and, taking one week with another, generally earn a good deal more. How far the excess over the rated pay corresponds with the excess over normal speed in working displayed by the woi-kman, it would be difficult to say.* In fixing the estimated labour-cost of the ship — the total lump sum out of which the piece-wage is, week by week, paid to the men — the officials have to take into account a variety of considera- tions. The ship must be built as cheaply as may be ; if at all possible, the cost must be lower than that of a similar vessel built in private yards. Thus, a strong temptation exists to cut the estimate for labour down to the lowest point. And, as a matter of fact, when task- * Some of the jobs done under the tonnage system lasted, with interruptions, for several months; in a case like this, Mr. Williamson, Director of Dockyards, told the Labour Commission, " the only thing you can do would be to i)ay the men a little over day pay, but you have to be so cautious with this tonnage system not to pay them too much, because there would be no getting it back, and the work being incomplete, the officers have to estimate how much they think they can afford to pay the men over and above their day-wages afterwards, when the job is completed. That is a very unsatisfactory system as regards the men" {Evidence before Labour Co)ninit>tsion, Group A., Vol. III., p. 373). 122 METHODS OP [{EMUNEKATION. work and tonnage were first introduced, the estimate of labonr-cost was (inadvertently, no doubt) iixeil far too low — so low, indeed, tliat the men in one yard, at any rate, did not even earn the equivalent of their I'ated time- wag-e. Probably these men, as soon as they were put on piece-wage, worked 20 per cent, faster than formerly ; and, when they found that they did not even make their regular money, great discontent naturally arose. 1 was told that the estimates for labour-cost are now on a much more liberal scale. Be this as it may, it is obvious that the system here referred to, although it possesses con- siderable merits, and may, if a liberal basis be adopted, be free from any tendency to promote the under-payment of the workers, yet exhibits this notable defect, that under this method the ratio between work and pay is not established by express agreement between master and man.* A second objection, which might be made to the method of industrial remuneration adopted in this instance, arises from the fact that the rate of piece-wage earned in each case does not depend entirely upon the greater or smaller degree of activity exhibited by the ordinary workman, but is to a large extent dependent upon the greater or smaller degree of intelligence exhibited by the foremen ("charge-men," &c.), who, by making proper arrange- ments, having the stuff ready when and where it is wanted, and so on, can do a great deal to expedite the * " Complaints were made before the Commission that men were working on tonnage work without knowing the price to be paid. That was a just complaint on the part of the men. Some time ago they were put upon tonnage work without being able to accurately know what wages they were likely to earn from it, but now they get that information " ; evidence of the Right Hon. Sir A. B. Forwood, m.p., then Financial Secretary to the Admiralty (Evidence before Labour Commiiimou, Group A., Vol. III., p. 367). COLLECTIVE PIECE-WAGE. 123 progress of the work. Now, in the Dockyards till fore- men and other superintendents of labour are remunerated solelj by a fixed time-wage, and have no direct pecuniai'y interest in making the best possible arrangements for expediting progress. How^ far it would be possible to avoid this defect, it is not easy to say. On the one hand, it is unfair that a group of men, who have been working 20 per cent, above the normal speed, should find that, owing to the negligence or unskilfulness of the foremen, they only receive 6 per cent, above their rated time- wage. On the other hand, if the foremen were to be supplied with a direct pecuniary incentive by being in- cluded, together with the ordinary workmen, in the group woi'king on task or tonnage, then there would arise the very grave danger that these superintendents might be tempted to hurry on the work, regardless of its being scamped, and even to deceive their superiors, where possible, as to the amount of work done. In the last place, it must be pointed out, from the point of view of the employer, that the method of collective piece-wage cannot be expected to improve outpu.t to the same extent when applied to very large groups, as it does when applied to smaller bodies of workmen. The striking economic merit of collective wages is the manner in which this method pi"omotes exertion, every member of the group encouraging every other member to do his best in order that the joint earnings may be as high as possible, and the less zealous finding a constant stimulus in the activity exhibited by their more energetic neighbours. But it is clear that, the larger the group, the less effective is the operation of this stimulus. The men working at one end of a big ship do not see why they should work specially hard for the benefit of the men at the other end, who may, for all they know, be " lazying." The man punching holes in the machine-shop feels no solidarity with the rivetters 124 METHODS OF REMUNERATION. at the sliip a quarter of a mile away. And in these large groups of two hundred, three hundred, or even six hundred men, each individual thi)iks, as a rule, that it does not much matter whether he works hard or " mikes," since his particular efforts can produce only a quite imperceptible and insignificant effect upon the total result. It is cer- tainly in connection with smaller groups that we find the greatest degree of economic advantage produced by the method of collective piece-w^ork. The remarks, with which the account just set forth conclude, appear to be borne out by the opinions expressed, in his evidence before the Labour Com- mission, by the Right Hon. Sir A. B. Forwood, m.p., then Financial Secretary to tlie Admiralty : " There are two classes of piece-work adopted, one which we may call ' task and job,' as it may be termed, and that is regulated according to the quantity and number. The men are paid according to the quantity or amount of work done. The other system is the tonnage system. On that they are paid according to the weight of material worked into the ship. The tonnage system has been quite an experimental one, and I am bound to say that it has not succeeded to the extent that the officers of the Dockyard hoped it would. It was based upon the completion of so large an extent of tonnage, so large an amount of material, that it required so many men to be employed upon it, that the individual man's own personal exertions were rather lost in that of the aggregate, and there- fore the incentive to bis work is not as great as where he works with a smaller number of men, and where COLLECTIVE PIECE-WAGE. 125 he can get the result of his laboui' at an earher date than he can where he works up such a large number of tons into a ship.''* From the evidence given before the Select Com- mittee on Government Contracts in June, 1896_, by Mr. James Williamson, Director of Dockyards, it appears that the system of remuneration, to which attention has just been called, had, before that date, been abandoned. f Speaking broadly, it may be said that, though under certain circumstances the method of collective piece-wage is preferable to individual piece-work, yet experience shows that the best results are obtained where it is possible to pay each man according to the results of his own labour. As is pointed out in an official memorandum on the piece-work system in operation in the Royal Carriage Department, the system of collective payment by results is defective in the nature of the stimulus to exertion which it provides, " because the busy man knows he will not get the full benefit of his greater activity, and the idle man is encouraged in his idleness by the know- ledge that he will have his equal share of the total * Evidence before Labour Commission, Group A., Vol. III., pp. 366, 367; see also p. 374. f " The task and job system is only now used in the yard when we are trying to frame reasonable rates, what I call the scheme of piece- work rates. ... I may say that the tonnage system has disappeared," Report from the Select Committee on Government Contracts (Fair Wages Resolution), 1896, p. 56J 126 METHODS OF REMUNP:i{ATION. eai'iied by bis branch or his shop, whether he exerts himself or not."* * Report on the MannfactuniKj Departments of the Army, 1887, Appendix xxxi, p. 605. In this Report it is stated that " in eases where several men are employed on a job, the system of fellowship {i.e., collective] piece-work is adopted, but individual piece-work is applied wherever it is possible to do so " (p. ix.). CHAPTER X. COLLECTIVE PROGRESSIVE WAGES. Under the method of collective progressive wages the joint labour of a group of persons is remunerated in part by a fixed or niinimum wage, in part by a bonus proportionate to the efficiency of this labour. As an illustration of the application of this method in a manu- facturing industry we may take the " preparers " in a woollen yarn factory, whom I found working in sets of four. Each of the women in these groups was in receipt of a weekly w^age of ILv Id; the output of each set was measured each week, and, if it were found to exceed a specified standard, the excess entitled the set to a joint premium, divided between the members of the set in such proportions as the firm considered just. From the books it appeared that in the preceding week the A set had earned a premium of 6s, the E set one of 5s, the J set one of 5.s',while the L set, having produced less than the standard output, earned no premium. The premium had been divided equally between all the four members of the A set and of the E set ; but in the case of the J set the o.s had 128 METHODS Ol'- UEMUNEKATKJX. been shared in equal halves by the two adult members of the set, the others being' young and inefficient hands, and, thei'efore, held by tlie firm not to have contributed to the result of the week's working further than to the extent of the standard output. Many other instances, in which a group of emphjyees divide between them, in proportions fixed by their employer, an addition to their wages dependent upon the fact of their joint labour exceeding a specified standard of efficiency, might be cited. Here, for example, is an extract from the rules of a Devonshire paper-mill in relation to the work of twenty-eight operatives : " Tonnage-money will in future be paid on the weight of (good) paper made in excess of 108 tons per month, and if in any month the weight made is under 108 tons, the deficiency will be carried for- ward against the following month. '^ Again, in a match and taper-making factory, where the women work in sets of three, the plan laid down was that the leading member of each set (the platewoman) should receive " lbs per week for eleven drums, and l*- for every extra one,'' while the subordinates (drumwomen) would " get 10s per week for eleven drums, and Is for every extra one" {Star, November 15th, 1890). Another example of collective progressive wages is to be found in the glass bottle industry, as carried on in some districts,* where the groups of workmen em- '■'■ E.g., in Lancashire, and in the North of England, with the ex- ception of Blaydon ; seeliejjort on IVages and Hours of Labour oi 1894, Part II., pp. 214, 215, and Fourth Annual Report on Changes in Wages and Hours of Labour for 1896 (1897), pp. 256, 257. COLLECTIVE PEOGUESSIVE WAGES. 129 ployed get a fixed weekly rate of wages^ aud, in addition^ are paid for " over-work/' i.e., receive a piece-price for all bottles produced in the week in excess of a certain specified number. The method of collective progressive wages appears to be applicable with advantage in cases in which machinery ran by steam or other power is used by groups of operatives ; for in these cases it is possible for a set of workmen^ by exhibiting due diligence and by " working-up to each other " in a loyal and intelligent manner, and without in any way over- straining their faculties, considerably to increase the output. To exemplify the value in this respect of the method now under consideration the facts in relation to its operation in the factory (producing oil-cake for cattle) of the Agricultural and Horti- cultural Association will be stated. Each of the two presses is worked by a set composed of a head press-man, an assistant press-man, and two boys, all of whom receive, in the first place, fixed time- wages. In relation to each press (the two having different capacities) a standard weekly output is fixed ; after that limit is passed, the operatives receive a premium of Is 6d per ton on the first three tons produced in a week in excess of the standard, and of 2s 6d per ton for every additional ton produced. This joint pre- mium is divided between the set in proportions established by the employers. Before this system was introduced, the output had been very unsatisfactory, in part because the men employed, having been accustomed to work up a different material — a material 9 130 METHODS OF REMDNERATION. which it is impossible to get through the machines at as fast a rate as that used in this factory — altogether failed to make the most of the power of the machinery. In the first month after the premium on production was offered, the output of the press (they had only one press at this time) rose from 26 tons per week to 31 tons ; after six months the output was 52 tons, after ten months it reached 57 tons, and has since been maintained at this figure. The second press, added subsequently, began with an output of 48 tons, which by the end of a year was brought up to over 76 tons a week. Mr. E. 0. Greening, the Managing Director, has stated that '' the men and boys have raised their earnings from an average of £1. O,'? 7d per week to an average of £1 . 6s Qd, and for the Association have converted a loss into a profit." * In this instance (as is also the case in the paper-mill above mentioned) the employees, in addition to their premium on pro- duction, receive a fixed share in the profits of the factory — a point of importance, because it is upon their having an interest in maintaining the good name of the Association amongst its customers that, as Mr. Grreening states, reliance is placed in order that the tendency to obtain quantitative, at the expense of qualitative efficiency of production, which is inherent * Co-operative Neius, August '22nd, 1891. Taking the two presses together, the ratio of premium on output to fixed wages during the twelve months ending July 31st, 1891, was 11-7 per cent. It is worth noting that this system tends to the elimination of inefficient workers. It is, of course, to the interest of each man in the set to see that all work hard ; and any incapable or idle man is promj^tly reported and discharged. COLLECTIVE PEOGRESSIVE WAGES. 131 in this system of progressive wages, may be counter- acted. To show the working of this compound scheme of progressive wages plus Profit-sharing, the average weekly earnings during the twelve months ending July 31st, 1891, of one of the head press-men (overtime excluded) are subjoined. Fixed weekly wage . . £1 12 Premium on output . . 4 7 Bonus (share in profits) . 2 9 Total weekly earnings 1 19 4 Turning from manufacturing to other branches of industry, we find the method of collective progressive wages frequently adopted in our business houses in relation to salesmen, clerks, &c., these employees getting a bonus proportionate to the turnover (that is to say, proportionate to the sales, irrespective of the rate of profit earned by these sales). In some cases this bonus is contingent upon the amount of the sales effected in a certain department, and is divided among those employed in that department ; in others, the entire staS" of the house forms the group-unit.^ * A system of collective progressive wages in force in certain clocks owned by the East and West India Dock Company was explained to the Select Committee on the Sweating System in the following terms : — " A standard cost per ton is taken ; we will say that the discharge of a cargo costs &d per ton, and in that Gd per ton would be included the superintendent's salary, stores, almost everything that would affect the docks. Take the case of discharging at 6(Z per ton, if owing to economy or harder work, the cost during any given time was 5^d per ton, there would be a saving of a halfpenny ; this halfpenny would be 9 * 132 METHODS OF REMUNEKATION. It ma}^ be of interest to note tliat in some cases, in which the different departments of a firm carry out separate parts of the work done by the house, each part being a fraction of a complex succession of processes required to be performed before the finished product is ready for sale, the method of collective progressive wages may be adopted in a special form. Suppose, for instance, that the firm (i) manufactures paper, (ii) prints bookstand (iii) publishes those books. In this case the printing department will be debited with the wages of its own staff, with the cost of materials, &c., used by it, and with interest on, and depreciation in respect of the capital sunk in its plant and premises, and will, in its turn, debit the pub- lishing department with the value {i.e., the estimated market price) of the printing done by it, the accounts of the other departments being kept upon a similar basis ; while of the profit balance shown in the books of each of these inter-linked departments a definite part is assigned to the persons employed in that depart- ment by way of bonus on eflSciency.* One matter, which should not escape the attention of an employer, who wishes to adopt a system of multiplied by the number of tons discharged during the period under consideration, and 25 per cent, of that result would be given to the staff ; therefore the Dock Company would have saved 75 per cent, of a certain amount " {Evidence, Vol. II., p. 324). * Irrespective, of course, of the rate of profit realised by the firm. Thus, in the case above supposed, the employees of the printing department might, by working with zeal and intelligence, earn a high bonus in a year in which the firm, owing to trade depression or for other reasons, earned exceptionally low profit?. COLLECTIVE FROGRESSIVE WAGES. 133 this nature, is the danger which exists of inconvenience caused by rivalry between the various inter-dependent departments of the business. Thus^ in a large firm, which formerly practised this method, it was found that the printing department, for example, did its best to over-charge the publishing branch for work done for it. However, I have been assured by M. Edgard Laroche-Joubert, the head of the celebrated Papeterie Cooperative at Angouleme,^'' who has great experience in this matter, that it is perfectly possible to avoid all difficulties of this nature by referring the question of the price to be charged by one department to another to the heads of the business for final decision. In regard to all forms of collective progressive wages one very important point to observe is the proportion in which the joint premium is divided by the employer among the different members of the group by whom it is earned. (A.) The joint premium may be divided among all the members in equal shares, or (B.), the premium may be divided between the members of the group in accordance with the importance of the services rendered by each ; in some cases the ratio of the respective fixed or minimum wages of the members is taken to be the measure of the importance of the work done by each, some claim to an extra share in right of length of service being also not infrequently recognised ; in other cases the employer makes his own estimate of the relative importance of the services rendered by the different * 8ee Gilman On Profit-sharing, pp. 106, et acq., and the Board of Trade Report on Profit-sharinfj, 1891, pp. 8, 9. ]34 METHODS OF REMUNERATION. members of the group, and fixes the share of each in accordance with that estimate. It should be re- marked, that the importance of the services rendered by the leading- member of a group frequently depends upon the amount of pressure, which he is able to exercise upon his subordinates with a view to securing intensity of exertion and a proper degree of careful- ness on their part. Or, lastly (C), the employer may allow the principal member of the group to take the whole of the premium to the exclusion of the subordinates.* Speaking with special reference to the methods of division B. and C. just described, it is to be noted, that, from the moment that an employer accords to the leading member of a group a much larger share in the premium than is taken by his fellow- workers, at once a special feature is introduced capable of producing peculiar and, in many cases, most objectionable results. For the head of a group of workpeople employed under these circumstances, naturally anxious that the premium on output shall be of large dimensions, is under a powerful inducement to secure the utmost possible speed in working, and may be tempted into bullying his subordinates into the exhibition of a quantitative efficiency of labour purchased at the sacrifice of their reasonable comfort and even of their health. The best illustration, which can be given, of this * For an example of this form of collective progressive wages see post, pp. 169, 170. COLLECTIVE PEOGRESSIVE WAGES. 135 obnoxious tendency of tlie metliod now under discus- sion is afforded by the system of "piece-work ", as it was in force in certain of the metropolitan docks prior to the Dock Strike of 1889. The labourers employed under this "piece-work " system were paid a fixed wage of 5f? per hour from 6 a.m. to 6 p.m., with an extra Id per hour for overtime. A. rate per ton was decided by the dock officials to be the proper standard labour- cost in each case. This rate, multiplied by the number of tons, which the holds of a vessel were supposed to contain, gave the total estimated labour- cost of discharging her cargo. The actual sura paid away as the fixed time- wages of the men employed in clearing the ship being deducted from the total estimated labour-cost, the difference, if any, was divided between the men as " plus.'^ This system was unpopular for many reasons. The men were ignorant of the basis of the calculation, and alleged that the standard labour-cost was fixed constantly lower and lower; so that " sixpennyworth of work" was a constantly increasing quantity. They had no means of knowing the number of tons comprised in a given job, and alleged that the company^s officials often calculated the labour-cost on a false basis, reckoning the number of tons as smaller than it was in fact. The dockers always thought that they were entitled to a plus ; but they often got none, or a far smaller plus than they had calculated upon receiving. But, in addition to these complaints as to the general working of the system of remuneration in force in this instance, there was one special feature. 136 METHODS OP REMUNERATION. which did much to give to it a character of grievous oppression ; this was the method adopted in the division of the plus. The leading men (the '' ship- workers " and " quay-workers ") received a share of the plus either four or three times (according to the nature of the work) as great as that of the ordinary labourers. These leading men were thus clearly under a strong inducement to bully their subordinates to an intolerable extent; and the reader will now under- stand on what grounds the dockers, as those who followed the course of the negotiations between the Dock Companies and the strikers, which preceded the conclusion of the dispute, will not fail to have observed, firmly insisted that the division of the plus should, in future, be an equal division between all the members of each gang — a concession, which the companies at last very reluctantly consented to make. Assuming that in applying the method of industrial remuneration now under consideration due provision be made to guard against dangers and difficulties such as those just indicated, there can be no doubt that the system of collective progressive wages possesses noteworthy economic advantages. Since, however, considerations of space comjael brevity, the reader who desires to study in detail further examples of its practical operation must be referred to the Labour Department Report on Gain-sharing, already mentioned. But with regard to the '' Gain-sharing ^' system of the Yale and Towne Company, manufac- turers of locks and cranes at Stamford, Connecticut, to the application to group labour of the Reference COLLECTIVE PKOGRESSIVE WAGES. 137 Rate plan of Messrs. Willaus and Robinson (see ante, pp. 103-111), and to the very elaborate "Good Fellowship Scheme " in force since September, 1891, with the Thames Ironworks and Shipbuilding Company, Limited, a firm carrying on at Blackwall a large shipbuilding and general engineering business, and employing from a ■iiilnimuni of about 1,500 to a maximu'iti of about 3,000 persons, a few observations will be submitted. The Gain-sharing system was introduced in the Yale and Towne Works in 1887, its leading features being briefly as follows : — The cost of the product in labour, supplies, and material having been ascer- tained, the workmen were told that, if the actual cost came out at less than this standard price, the difference should be shared in stipulated proportions between them and their employers. This bonus was offered to groups of men, each consisting of some twenty operatives, and was payable at the end of each year. However, after five or six years the Gain-sharing system was abandoned,* and the men were put on individual piece-work. Among the principal reasons for this change stated by the employers are the remoteness of the reward, which was found inade- quate as a stimulus, and the collective character of the Gain-sharing system {" experience in both has proved that [individual] piece-work is more profitable in our business, probably owing to the fact that in * Except iu the case of two groups in which individual piece-work would involve practical inconvenience, it being difficult or impracti- cable to measure up and pay separately for the output of each man. 138 METHODS OF REMUNERATION. [individual] piece-woi'k tlie workman must depend entirely upon his own efficiency, while in collective work he may believe, or at least hope, that his fellow- workmen will do it for him.") * The method adopted in regard to the work done in the Foundry of Messrs. Willans and Robinson is as follows : — By comparing the total amounts of the wages (time-wages) paid to the workmen employed in the foundry, less the value of '^ wasters " (articles useless owing to defects), it was found that the production of good castings to the value of £1 had cost in wages, on the average, a certain sum. On the introduction of the bonus scheme, the reference rate was fixed at this sum -j)l^is about 10 per cent., the arrangement being that, if the cost of the output of the Foundry in wages, per £1 value of good castings, be less than this reference rate price, then the balance shall be divided, as bonus, equally between the company and the workmen employed in the Foundry, each man sharing in the bonus in proportion to the amount of time-wages (overtime pay included) which he has earned in the month. It is to be observed that for the first four years after the introduction of the Gain- sharing scheme the workmen in the Foundry did not succeed in earning any bonus, and in 1895 (as the figures stated at p. 107, ante, show) they earned a bonus at the rate of only I'l per cent, on their time-wages. This ratio of bonus to time-wages compares very unfavourably * Report on Gain-sharing, 1895, p. 23 ; in this Eeport the circum- stances, which led to the abandonment of the Gain-sharing system in the Yale and Towne Works, are explained in detail. COLLECTIVE PROGRESSIVE WAGES. 189 with that of the bonuses earned by the workmen employed single-handed {e.g., pattern-makers, 31 '6 per cent. ; fitters, 38 ; grinders, 38'3 ; machinists, 46"3 ; turners, 46*6) ; and it is of interest to inquire what are the reasons to which this fact is due. One reason ap- pears to be that the Foundry was much less well installed than the other branches of the works, the appliances in use there being less efficient than in the other departments, and the premises neither adequate nor convenient. Another reason would appear to be that the bonus is paid monthly, instead of weekly as in the other shops, and accordingly affords a less vigorous stimulus. But the principal cause of the incapacity of the workmen in the Foundry to earn a good bonus is, according to the opinion of the works manager, to be found in the fact that in this case all the forty odd men here employed work together as one group, the bonus being reckoned on their aggregate output — an arrangement which this gentleman considers ill- adapted to promote that special efficiency which it is the object of the Gain-sharing scheme to evoke, since, while the less industrious among the members of this comparatively large group leave it to their more energetic mates to exhibit any special degree of efficiency, these workmen do not care to put forth their best energies with the knowledge that their own extra zeal is likely to be, to a great extent, neutralised by the inactivity of their fellow-workers. With respect to the arrangements in force with Messrs. Willans and Robinson in relation to the work of their Outside Department (the whole of which is 140 METHODS OF REMUNERATION. doue under tlie bouus system^ and which consists partly of overhauls, but mainly of the unloading and erection of engines), it should be noted (1) that almost all of the work done in this department is done by men working together in small groups, (2) that the bonus is paid quarterly as to over-haul jobs, and as soon as the work is passed, so far as concerns the other jobs (though in this case instal- ments on account of bonus are sometimes paid as the work proceeds), and (3) that the addition made by the bonus to the men's time-wages, although considerably greater than in the case of the Foundry, is very much smaller than that made by the bonus earned in the departments in which single-handed work prevails, the bonus paid in the Outside Department having been in 1895 at the rate of 3"8 per cent, on the wages of the employees'^ {Labour Gazette, June, 1896, p. 175). The scheme of Collective Gain-sharing in operation at the Thames Ironworks is of particular interest by reason both of its peculiar features and of the circumstances under which this system of progressive wages is applied. t The lines, upon which this scheme is framed, are noteworthy, because the plan adopted is that, if the actual cost of the work in time-wages comes to less than the standard labour-cost, the group, by which the work is done, receives by way of bonus, not a part, as is commonly the case, but the * The ordinary workmen, excluding foremen, clerks, timekeepers, storekeepers, and draughtsmen. t For a full account of this system, see Report on Gain-sharuuj, 1895, pp. 63-112 and 129-132. COLLECTIVE PEOGRESSIVE WAGES. 141 whole of the difference between the actual and the standard costs. As to the circumstances^ under which the Gain-sharing- system has been adopted in the pre- sent instance, these appear to be about as unfavourable to its success as can easily be imagined. For in this case that requirement generally found essential to the successful ap^jlication of the method of Gain-sharing — the preponderance of " repetition " work — is con- spicuously absent. And while infinite variety is the rule in the work done in this yard, the large size and complex character of a great part of the output, including vessels of upwards of twelve thousand tons, must greatly add to the difficulty of fixing in a satis- factory manner the standard labour-costs on which the system is based. As bearing upon the results attained by the intro- duction of this system of Collective Gain-sharing, the Table set forth on the next page, which is based upon tbe details given in the Labour Department Report on Gain-sharing, and shows the ratio, which the bonus earned in the different departments has borne to the time-wage earnings of the workmen, contains details of interest. The figures stated in this Table relate to each depart- ment, as a whole ; the Report, from which they are taken, gives the figures also for the different classes of workmen in each department, together with a minute examination of the method of grouping adopted in each branch. For these particulars space cannot be found here. It is, however, proper to point out that the general conclusion arrived at is, that the best 142 METHODS OF REMUNERATION. Ratio of Bonus to Time- Wage Earnings. Department. Tinic-wa^. Earning.- e Bonus. Period to which the tigure.s relate.* ShipbiiiMing Civil Engineering Engineering Forge (iiow closed) Dry Dock .. .. V4,S1D IS 39,835 2 33,004 l(i 14,036 8 4,105 lit d. 11 1 2 8 iL s. 5,341 10 i,5i(; 7 1,231 1) 1,042 5 224 f, d. 11 11 Per cent 7-26 381 3 -60 7-43 5-40 Jan. 1892 to Dec. 1894. .March,18!t2toDec. 1894. Jan. 1892 to Dec. 1894. Oct. 1891 to April, 1893. July t(i Dec. 1894. Total . . . . l(5tJ,39S 5 5 9,440 2 4 5-08 work has been done and the biggest bonus earned by the smallest groups. The nature of Collective Gain-sharing having been sufficiently illustrated, it remains to consider what are the cases, in which this method, as distinguished from the individual type of the Gain-sharing system, is suitable for adoption. In certain cases, in which the work is done by a number of men between them, each working up to the other, it is practically impossible to ascertain in what proportion each man has con- tributed to the joint output; and here the adoption of Collective, rather than Individual, Gain-sharing * The Gain-sharing Scheme was adopted gradually, being intro- duced in the Civil Engineering Department in September, 1891, in the Forge Department at the beginning of October, 1891, in the Engineering Department in December, 1891, in the Shipbuilding Department and in the smiths' shop attached to that department in January, 1892, and in the Dry Dock Department in July, 1894. COLLECTIVE PROGRESSIVE WAGES. 143 is inevitable. In otlier cases, although it cannot be said that the separate measurement of the work done by each man is impossible, yet, as is especially the case where the work is large and complex, and where there is little or no "repetition," this measurement could be carried out only by the expenditure of an intolerable amount of labour; in such cases, accord- ingly, it will be best to make the group-unit consist of a number of men performing a series of operations, which are, for the calculation of the bonus, treated as a whole. An incidental advantage claimed for the collective system is that it tends to the avoidance of the friction arising from complaints of unfair pricing. Do what you will to secure that all jobs shall be priced on an uniform basis, it will be found impossible to escape making occasional, probably frequent, mistakes. But suppose that it were possible to secure that the price of each operation shall be fixed in exact proportion to the amount of labour normally involved in its performance, there still remains the difficulty that prices perfectly fair under normal circumstances may be grossly unfair if applied to work done under abnormal conditions. For it is obvious that, as between two men of equal efficiency and activity performing absolutely identical opera- tions in respect of which one and the same standard cost is fixed, if one man's work has to be done under circumstances of greater difficulty than that of the other (as, for instance, in a cramped corner of a ship), it may well occur that, while his neighbour makes a big bonus, the man on this " awkward work " 144 METHODS OF KEMUNKRATIOX. may, tlirougli no fault of his own, fail to earn any bonus at all. An}^ unfairness of prices of the nature here indicated will, it is claimed, be obviated under a system, under which the separate jobs done by the different members of a group are pooled, all alike sharing in a collective bonus, the amount of which will depend on the net " gain '' shown in relation to the sum total of the operations carried out by all the men in the group, taken together. Withrespectto all schemes of Collective Gain-sharing, the determination of the composition of the various groups is a matter of importance. In determining who shall be the persons to be comprised in the group, to whom the collective bonus on output is offered, it must be borne in mind that, since the correct deter- mination of the standard labour-costs is essential to the success of the system, and since in fixing costs a great amount of reliance is, in most cases, necessarily placed upon the opinion of the superintendents of labour, it will generally be advisable not to include in the ordinary groups persons occupying positions of this nature, who, if so included, would be placed under a strong temptation to over-estimate the normal cost of production, but rather to provide for them a bonus of a special and separate nature. So, again, as to those persons whose duty it will be to inspect the work, for the purpose either of testing its quality or of measuring its quantity ; all such inspectors ought, it is submitted, instead of sharing in the general bonus offered to a group, the amount of which they might unduly increase by passing faulty COLLECTIVE PROGRESSIVE WAGES. 145 work, by measuring work iuaccurately or iu otliei- ways, to liave assigned to them separate premiums, the amount of which should depend on the degree of skill and cai'e displayed in the performance of the special duties which these officials are called upon to perform.* In cases, in Avhich several fore- men have to work up to, or otherwise co-opei'ate with each other, it may be found best to arrange that these officials shall share in a joint premium. Thus, under the Gain-sharing scheme of Messrs. Willans and Hobinson the works manager and the foreman of the machine-shop participate in a bonus calculated in the following manner. For each article a " receiving rate'' is fixed, this sum representing its estimated cost of production (including labour, materials, and establishment charges). Fj^om this standard price is deducted the actual cost of the article, and of the balance then left the works manager and the foreman of the machine-shop each receive a specified share by way of bonus. Similarly, in the case of the foreman of the machine-shop and the foreman of the erecting-shop, an " erecting-shop date " is fixed in relation to each engine ; if the engine is ready for steam by the date named, then a specified sum is divided equally between * With regard to special bonuses for inspectors, note the ]provision made under the Gain-sharing scheme of Messrs. Willans and Robinson {(inte, pp. 110, 111). Where a foreman shares in the general group bonus, he may either take a^^ro rata share along with the subordinate operatives, or (a plan sometimes recommended) may have allotted to him a separate fraction of the bonus fund, or his bonus may consist, in part of a specified fraction of the fund, in part of a pro rata share along with the men working under him. 10 14(3 METHOJJS OF KEMIJNKK'ATIUN. these two foremen ; but for every day that the com- pletion of the engine is delayed beyond the " erocting- shop date/' a specified sum is deducted from this joint premium (so that, if the engine be one week late, the deductions will have swallowed up the entire premium). In their Outside Department Messrs. Willans and Robinson arrange that the principal officials shall eacli take a specified share in the balance left after deducting from the aggregate value {i.e., price charged to customers) of the work done in this department the actual cost of laboui*, materials, and establishment charges (but not interest on capital). So far as concerns the composition of the groups of workmen under a scheme of Collective Gain-sharing, it will be found advisable to avoid making the size of these groups larger than the practical necessities of the case require. For in regard to this method, no less than to that of Collective Piece-work (see ante, pp. 124-126), experience proves that any method of payment by results, applied to the work of a group, is most likely to be successful, if that group be small, rather than large. This is a point of no little impoi-tance, but which, since the matter was fully dealt with in regard to Collective Piece-work, does not call for further observations in this place. CHAPTER XI. COXTEACT WOEK. In the case of collective progressive wages^ as we have seen, the lump sum paid as the remuneration of the joint labour of a group is divided in such a manner, that, while all its members, whether principal or subordinate, receive, in the first place, a fixed or minimum wage, all, or some of them receive, in addition, a premium calculated in proportion to the efiiciency with which that labour has been performed. Contract work, with which we deal in this chapter, is work performed under an arrangement, by which, while the subordinate workers receive a fixed time- wage, the principal member or members of the group, have no right to any fixed or tiiinimum wages, but draw the whole of their remuneration from the balance which remains after deducting from the lump sum paid for the execution of the work the total amount of the aggi-egate fixed wages of the subordi- nates. Thus, the remuneration of the leading member of a contract group is a piece-wage, the amount of which varies inversely with the amount of the fixed wages paid to the subordinate members, and directly 10 * 148 METHODS OF REMUNERATION. with tho rate of speed in working maintained by the group. '^ In all the cases of contract work, with which the ■writer is acquainted, the contractual remuneration of the subordinate workmen consists exclusively in a fixed rate of time-wage, while the entire balance of the lump sum paid for the work (after deduction of these wages) is paid over to the principal member or members of the group. At the same time, although it is not, so far as I know, the practice to give to the subordinates a specific contractual right to receive, by way of premium on efficiency, any definite share in this surplus or balance, yet in many cases an under- standing exists between the leading man and his mates that he shall distribute some part of this amount among tlie men under him. Before, however, discussing in detail the various forms of contract work, it will be useful to exemplify the general features of this method. We will seek our example in the engineering trade, in which a very large part of the work in many branches is commonly conducted upon this plan. A piece of work is given to a highly skilled mechanic to be done by him wdth the assistance of subordinates — mechanics of inferior skill, or unskilled labourers. The fixed time-wages of the subordinate workers are, in the first instance, * Obviously, the faster the subordinate members of a contract group get through tlieir work, the smaller will be the amount deducted from the contract price in respect of the time-wages of these work- men, and the larger will be the balance (of this price) which consti- tutes the remuneration of the leading man— the contractor. CONTRACT WORK. 149 drawn by tliem, as the work proceeds. The leading mechanic g-enerally also draws in like manner snms equivalent to what would be his time-wages^ if he were Avorking on time-wage. But the sums di'awn by ' the principal man are only in the nature of advances on account of his ultimate earnings^ that is to say, of the balance of the lump sum payable in respect of the job remaining after deducting the aggregate time-wages of his subordinates ; and, if the work should be done slowly, he may find that this balance turns out to be so small, that, instead of having earned his rated time-wages and also a " surplus," he has " lost on the job,'^ i.e., that his remuneration is less than it would have been, if he had been working during the same number of hours on time-wage.'^ Here are two extracts taken at random from the books of a firm of manufacturing engineers, showing the actual working of the contract system : — Plating up twelve buckets at 9.s each, £5. Sn'. Time-wages of two labourers . £.2 4 Plater's rated time-wages .282 Total . 4 12 2 Surplus (payable to the plater as leading man), 15s 10^^. * In such an event, if he has drawn his rated time-wages in full, as the work proceeded, he will be in debt to his employers, and will have to allow this debt to be cleared off by deductions from his future earnings. ITiO METHODS OP REMUNERATION. Rivetting- up twelve buckets at 4^' Sd each, £2. 14s. Time-wag'O.s of two suLorclinates (only partially employed) . £0 10 10 Rivetter's rated time-waores . 15 7 Total . 1 12 Surplus (payable to the rivetter as leading man), £1. U Id. Such being the method of contract work, it remains to state that this method is applied in three distinct forms. In the first of these forms the whole of the surplus remaining after the subordinates have received their time-wages, and the leading man has drawn the equivalent of his rated time-wages, is paid to, and retained by this leading man. The head of an engineering firm, which adopts the contract system in this form, declared, that equity demanded the exclusion of the unskilled workers from all participa- tion in this surplus ; on the ground that in bis opinion the skill and industry of the leading man alone were the cause of this money being earned, the "coarse labour" of these subordinates in no way contributing to produce this result. In the second form of the con- tract system the leading man is expected to give a fair share of the surplus to the labourers or other subordinates ; this sum being frequently divided by him between the group in the ratio of the rated wages of each member. Although in these cases the sub- ordinates do not appear to possess any contractual CONTRACT WORK. 3 51 right to receive any part of this surphis, either as monej due from the firm, or as money due from the leading- man, there is no doubt that any gross unfairness in the division of the spoils would be the subject of complaint on the part of the men thus treated and of remonsti-ance on the part of the foreman of the department, whose admonitions the leading workman cannot aiford to disregard."^ The third shape, which contract work may assume, is seen in those numerous instances, in which the leading man is, indeed, allowed to retain the whole of the surplus, but that surplus is arrived at after deduction of the time- wages of the subordinates calculated at a higher rate of pay than their ordinary rating. For example, I know some very large engineering works, in which the contractors' subordinates are always paid " time and a quarter" or " time and a half" wages, according to whether the contract work is at the one or the other of these rates ; and in certain bicycle-making work- shops I found that, from the moment a workman was taken off ordinary (single-handed) day-work and placed under a man employed on contract work, this operative was paid \d per hour more than his ordinary rating. The reasons, which can be adduced in favour of giving to the subordinate members of a group working on the contract system a higher remuneration than * In some cases a fair division is secured by the influence of the trade union ; see the evidence of Mr. Burnett, Chief Labour Cor- respondent of the Board of Trade, before the Sweating System Committee (Ecideucc, Vol. II., pp. 529, 530). !•»- MtTllOD.S UK KKJiUNKRAiJON. that which they receive when working by themselves, are not far to seek. Tlie leading man, who is practi- cally a foreman in relation lo his subordinates, naturally desires that the job may be executed with the utmost possible dispatch. He is given the chance of " making time and a quarter " by getting the work done Avith a speed, say, 25 per cent, higher than the normal rate ; and, in order to secure a big surplus, he is bound to exact the performance on the part of his subordinates of as large an amount of labour per hour as incessant supervision, coupled with the requi- site modicum of strong language, can secure. There seems to be no doubt that men, whether labourers or mechanics, working on a contract job work far harder than when employed on ordinary time-wage. Thus, in the engineering firm, from whose books the figures given above are taken, it was found that the total amount paid in a recent year for work performed l^y groups under the method of contract work was £1,225. 4.y lOcZ, while, if the men engaged had re- ceived, in respect of the number of hours which the performance of this work occupied, their ordinary time-wage, the total amount of their remuneration would have been no more than £],014. 5s 7d — a difference in favour of contract work of nearly 21 per cent. Here it is clear that the I'ate of speed main- tained under contract work was much greater than that which would have been exhibited, if the men had not been engaged under this method. How much of the extra percentage of production was attributable to the leading men, and how much to the subordinates. CONTRACT WORK. 158 it would not be easy to say ; the proportion would certainly vai-y according to the nature of the work in each case. But, speaking generally, the writer submits that, since the subordinate members of a group engaged on contract work invariably exhibit a greater degree of assiduity than they would display if working under other circumstances, these mechanics and labourers — even labourers of the most unskilled type — may fairly claim to be entitled to receive higher pay in proportion to their harder work, either by participating in the surplus, or else by receiving, by way of reward for extra efficiency, a higher rate of wages than when employed on single-handed time- wage work. When w^e inquire what is the view taken by the working-classes in regard to the method of contract work, we find that in certain cases very little exception appears to be taken to the adoption of this method. In particular, where operatives on piece-work are assisted by learners, this method is practised with, as a rule, little complaint on the part of the employees. Nor, in regard to groups, in which the subordinate members are all adults, is the contract system inva- riably disliked. In many branches of industry the operatives are accustomed to work under this method, and do not appear to regard its operation with dissatisfaction. But the strenuous character of the supervision exercised by the leading member of a contract group under a system, which makes the amount of his earnings depend entirely upon the rate of speed maintained, causes many classes of working- 154 METHODS or RKMUNEKATION. iiieu to regard the niotliod of contract work with marked disfavour.'^ * In some instances, as for example in the case of many smith's strikers, the subordinate workmen, formerly paid time-wages under the method of contract work, have obtained a change in the system of their remuneration, and now work under the method of collecti\e piece-wage, sharing the price of the work with the smith ; see Inchis- trial DeDiocnicij, by Sidney and Beatrice Webb, Vol. I., p. 290. CHAPTER XII. CO-OPERATIVE WOEK. Under all the metliods of collective remuneration hitherto examined the relations between the different members of each group are determined by the employer alone. On the other hand, the distinctive features of Co-operative Work (whether the remuneration of that work be task-wage, or piece-wage, or some form of progressive wages) are that (1 ) the members of the co-operative group are associated by their own free choice, determining for themselves of how many persons and of what persons that group shall consist, (2) the associated workmen select from amongst them- selves their own leader, and (3) arrange the division of the collective wages between the members of the group in such manner as may be mutually agreed upon between these associates as being equitable. Our examination of the methods of collective remuneration already reviewed will have convinced us that in some forms of collective work a certain 156 METHODS OF REMUNERATION. danger of grave industrial evils exists. Leaving the detailed discussion of these evils to later pages, we may, in the meantime, say that, speaking generally, in all cases, in which the remuneration of the prin- cipal member of a group of workers is largely dependent upon the rate of speed in working main- tained by the subordinate operatives, especially if this leading member is allowed to settle how many or how few men shall be employed on a given job, and if the selection and the discharge of the workmen rests mainly or entirely in his hands, there is a strong probability of this man's becoming a bully and a sweater. Now, the great value of the method of co-operative, as distinguished from collective, work is that this co-operative system is entirely free from the tendency to promote the ill-treatment of the subordinate workers not seldom found in cases in which work is done under a system of collective wages. It may appear to some that an organization of industry so democratic in character as that, Avhich is involved in the system of Co-operative Woi'k, must entail practical difficulties of too grave a nature to permit of its general adoption. In this chapter, however, the reader will find particulars in regard to numerous instances, in which in the arrangements made with respect to the remuneration of labour in various occupations the leading features of the method of Co-operative Work will be seen to be present. In agricultural operations it is common for self- constituted co-operative gangs to undertake work, such as hoeing, or as hay-making, and other harvest CO-OPERATIVE WOEK. 157 work, taking" the contract at a piece-wage price wliicli the members divide among themselves.* In relation to the making of canals, roads, railways, and other similar works the method of co-operative work has long been applied, and has been found to increase the earnings of tbe men, while reducing the cost of labour. Thus, in Work and Wages (pp. 265, 266) Lord Brassey tells us that "in the canal-making days, men working in butty-gangst would earn 4i>-, while others working on the day-work system would not earn more than from 2s to 3.5 a day " ; and that in making the railway between Leicester and Hitcliin ^'^at the commencement of the works, instead of paying the Avorkmen at so much per cubic yard, the piece- work system was abandoned, and the men received the average amount of the agricultural wages of the country, namely 2s 3d a day. On my father's attention being directed to this subject, the system was changed, and [co-operative] piece-work introduced. It was * In order to avoid disputes as to the share in the joint remuner- ation to which each is entitled, it is best that the members of a co- operative gang be persons of very similar working capacity, who share equally. On small farms, where the facility for forming a group of such equally efficient labourers does not exist, it will be found that individual, and not co-operative, piece-work is the rule. f " This word ' butty-gang ' requires some explanation. It means that certain work is let to a gang of about ten or thirteen men, as the case may be, and that the proceeds of the work are equally divided amongst them, something extra being allowed to the head man. This system was originated when the formation of canals first began in England. ' Butty-gangs ' were afterwards employed on the Paris fortifications which were constructed by French workmen " (Life and Lahours of Mr. Brai^sey, by Sir Arthur Helps, p. 51). 158 METUODS OF KEMUNEIJATION. fouud tliat, when the men were paid by the day, the excavation in the cutting-s had cost \s 6d a. yard. When the system was changed, day-work abandoned, and piece-work adopted, the cost of the work was reduced to 7d a yard." The co-operative system (" tut-work ") in force in the Cornish mines "from the middle of the hist century, if not from a yet earlier date, down to the present day "^ is of the following nature : — The work to be done during a fixed period (work which consists in sinking shafts, driving levels, and making excava- tions t is marked out, and examined by the workmen during some days, thus affording them an opportunity of judging as to its difl&culty. Then it is put up to auction and bid for by different gangs of men, who undertake the work as co-operative piece-work, at so much per fathom; finally each lot of work is offered to the gang which bids the lowest price, usually at a reduction on this price, this offer being rarely declined. An instance of the application of a similar method * Mr. L. L. Price, " West Barharij " (p. 13), a work giving full details in regard to the system of work and wages in the Cornish mines. This Cornish co-operative system "has been introduced — with some differences — into other districts, and has there met with equal success, and shown promise of equal longevity," for instance, in "Flintshire, Cardigan, Cumberland, Yorkshire, and Ireland " {ibid., p. 24). j The minerals are worked and dressed by men employed upon a system possessing the same feature of co-operative organization as above described ; but in their case the method of remuneration is "product-sharing," a method, the application of which in this and other instances is commented upon post, Chapter XVIII. CO-OPEKATIVE WORK. 159 of industrial remuneration In extensive coal mines in Belgium (Mariemont and Bascoup) is given in tlie Report on the Social Economy section of tlie Paris Exhibition of 1889, prepared for the Canadian Govern- ment by M. Jules Helbronner (pp. 28, 29). In these mines, we are told that '' the greater part of the yearly work, such as the driving of machines, the repair and the care of the material, are all contracted for, the contracts not extending over a year. They are signed by the coal companies and the bands of workmen who accept them. The amount for which they are accepted is frequently based on the quantity of coal extracted. All the risks of the work, which very often varies in quantity, are accepted by the workmen. Past experience shows that, though the coal company may at times advance money, and, at others, the woi-kmen may advance work, in the end the compensation is about equalised. Besides, the profits made by the [co-operative] contractors show that the confidence in the results was not misplaced. They have, in fact, signed new contracts under con- ditions entailing i^eductions of 20, 30, and even 40 per cent, in favour of the companies. If, therefore, their wages have not diminished, it must be because they have worked harder, or they have improved their method of working, making it more intelligent, and have thus seconded the efforts made by their superiors in providing improved implements." The average net results of the adoption of the method of co-opera- tive work are, in this case, " an increase of wages of 20 per cent., with a proportionate decrease in the 100 METHODS OF REMUNERATION. price of returns." (Probably, " cost of production " is meant by these last words.) In relation to the copper mines worked by an English Company (the Rio Tinto) in Spain, the fol- lowing account is given in The Pall Mall Gazette, of April 11th, 1890: "The work is divided into con- tracts, which the men themselves undertake in gangs of two, four, six, or twelve, the proceeds being equally divided according to the number of days worked. The men invariably choose their own companions, with the result that the most industrious, steady and intelligent class of labourers is drawn to the mines, and those of indolent habits are generally kept out. At any period during the contract or month each man can draw up to 80 per cent, of his earnings." One interesting example of the co-operative butty- gang system is to be found in the arrangements, which have for some years past been adopted in New Zealand in relation to the execution of public works. For a full description of this system the reader is referred to the Report on Co-operative Contracts pre- pared for the Labour Department by the present writer.* It is sufficient here to say that the applica- tion of this system to formation works on roads and railways, including bridges and culverts, the laying of the permanent way and the supply of sleepers, also in some cases to the erection of * Report on Contracts given out by Public Authorities to Associations of Workmen [C— 8233 of 1896], pp. 42, 55, 237-244 ; as to the similar system adopted to a certain extent in the colony of Victoi'ia, see ibid., pp. 50-62. CO-OPERATIVE WORK. 161 buildings,"^ appears from tlie particulars supplied by the New Zealand Government to liave met with success. In the printing trade a true system of co-operative piece-work has long been known under the name of " working in pocket." In these cases the group {" companionship '^), working together under a leading man elected by themselves, collectively undertake the performance of a specified amount of work in return for a lump sum^ which is divided among all the mem- bers (including the leader) in proportions determined by the associated workmen. "Working in pocket" is much less common now than formerly in this country, but is habitual in France, where it is aptly designated "limited partnership" {commandite) .f With respect to co-operative groups in the engi- neering industry some remarks contained in a letter of Mr. Denny, the great Dumbarton ship-builder, are of interest. Mr. Denny there states that he knew of an instance in which a foreman "gave out his contracts in such small and scattered portions, and under such conditions as to the way in which the work was to be * In all these cases, it will be understood, the material is supplied by the Government. In the erection of buildings a separate contract is entered into with a group of each trade concerned. Thus, a contract will be let to a gang of labourers for levelling the site, &c., another to a group of carpenters and joiners for the woodwork, another to a number of plumbers, another to a grouj) of painters, and so on. t The French Government has for many years got its official newspaper (Journal Officiel) printed by a co-operative society of com- positors, the State furnishing the paper and also providing the plant and premises ; see Report on Co-operative Contracts, 1896, pp. 104-108. 11 1G2 METHODS OF IJKMUNERATION. (lone and as to the composition of the co-partneries formed by the men, that he not only reduced their earnings to very nearly time rates, but created very serious disaffection among them. He was in the habit of forcing the men to take into their co-part- neries personal favourites of his own, who very naturally became burdens upon those co-partneries. As soon as our returns and inquiries revealed to us these facts, we insisted that the contracts entered into with the men should be of a sufficient money amount to enable them to organize themselves and their work efficiently. We removed the defective arrangements above referred to, and laid down the principle that their co-partneries were to be purely voluntary. We were enabled, by these means, and without altering a single price, to at once raise their earnings from a level a little above what they could have made on time-wages to a very satisfactory per- centage of increase and to remove all discontent" {Life of William Benny, by A. B. Bruce, p. 113). In regard to dock labour the employment of co- operative gangs has in numerous instances been adopted, with varying degrees of success. In some cases employers have found that the co-operative labourers worked with very little zeal ; in others the dockers have complained that, in practice, they were allowed no voice in the selection of the leading men, that the dock officials preferred dealing with certain men as chiefs of groups, and that the dockers found themselves virtually obliged, in order to secure em- ployment, to give to these leading men a greater share CO-OPERATIVE WORK. 163 in tlie money paid for the work tlian the subordinate workmen thought equitable. In some instances, on tha other hand, the co-operative method has been applied to dock labour with excellent results. As an example of this character may be cited the case of the coal- trimmers thus described in Labour Gazette, April, 1896, p. 111. " For some years past the work of stowing coal at Burntisland (Fife) has been carried out by a co-opera- tive group of associated coal trimmers, consisting of sixty-one members — a foreman and five squads of twelve men each. The association elects its own members, and once a year chooses the foreman, and appoints one member of each squad to be leading man. The foreman and the five leading men form the committee, which is the executive body of the organization. The rules of the association contain stringent provisions as to the suspension or the expul- sion of members guilty of misconduct. On the other hand, while the voluntary discipline of the co-opera- tive workmen is strict, their employers, the company which controls the dock, do not attempt to exercise any sort of control either over the membership of the -association, the selection of the foremen or the lead- ing hands, or the composition of the squads ; nor are any labour superintendents employed by the company to supervise the work. The association is, in fact, in the position of an independent contractor, an agree- ment having been made with the committee to trim all coal requiring to be dealt with, at certain fixed rates. The agreement under which the men are now n * IGl- METHODS OF EEMUNERATION. working was made early in 1890, as a contract for one year, determinable by three months^ notice on either side, and has remained in force until the present time. '^The money due from the employers on each fort- nightly pay-day is paid by them to the foreman, by whom the amount (loss certain small sums retained as working capital) is divided among all the members of the association, who (foreman and leading hands as well as ordinary members) all take equal shares. If a man be absent (from illness, &c.) his place is taken by a substitute, who is usually one of the members of another squad. Only in rare cases does an outsider act as a substitute ; and in such cases the outsider shares equally with the members. The sums retained as working capital are used to keep up the small amount of tackle (value about £20) required for the work, and any surplus is divided twice a year among all the members equally. Each man owns his own shovel. The association meets regularly once a- month ; the committee once a fortnight. The fore- man delivers to the committee the note showing the amount of work done in the fortnight which he receives from the employers, and hands over any cash retained for working capital to the treasurer, to whom he submits the accounts. The secretaiy to the committee makes a report to the association at each monthly meeting. At the end of the year the books are audited by a professional auditor. " It may be added that the Coal Trimmers' Asso- ciation is nearlv identical with the trade union CO-OPERATIVE WORK. 1G5 organization coucerned, the local branch of the National Union of Dock Labourers consisting entirely of members of the association, and only three mem- bers of the association being outside the union. The branch secretary is the treasurer of the association. The co-operative arrangements here described are stated to give satisfaction to both employers and employed." ^ * A system of co-operative work applied to the discharging of coal is mentioned as working satisfactorily at Melbourne (Royal Commis- sion on Strikes, Neic South Wales, Minutes of Evidence, 1891, p. 23). With respect to the important co-operative groups ("Nations") working in the docks of Antwerp, see Forum, September, 1894, pp. 117-121, and compare the " Societe du Grand Corps " at Havre, mentioned in Kabbeno's Societd Cooperative di Produzione, p. 186. A system of co-operative work largely prevails in Russia, where the practice of employing associated bodies of workmen, known as " Artels," has, for many centuries, extensively prevailed ; see Report on Co-operative Contracts, 1896, pp. 62-81, 245-249. A system similar to that of the artel is universal in Bulgaria, under the name of " Zadrouga," especially among carpenters and market gardeners ; see Board of Trade Journal, August, 1890, pp. 219-221, and Co-operative Netcs, September 13th, 1890, pp. 929-930. As to gang-work among Belgians and Italians, see Board of Trade Journal, April, 1891, p. 374, and in Pomerania, see Consular Reports, 1891, No. 882, p. 6. CHAPTER XIII. riECE-WAGE FOREMANSHIP. In relation to the tnetliod of industrial remuneration the position assigned to the superintendents of labour is a matter of so great importance as to merit special consideration. The case, in which the person, v/hose duty it is to supervise the labour performed by subordinates, is remunerated — as most foremen are — exclusively by time-wage, calls for no remark. But, from the moment that the remuneration of the fore- man or overlooker is made to vary directly with the rate of speed in working maintained by the sub- ordinate workers, at once certain features are introduced, to the nature of which it is desired to direct attention. The position of the superintendent of labour in relation to a group of subordinate workers must be considered under two distinct sets of circumstances, according as these subordinates are remunerated individually, or collectively. As an example of PIECE-WAGE FOi:£MANSHIl\ 1G7 superintendence remunerated by piece-wage in pro- portion to tlie rate of speed maintained in working by the subordinate operatives wlien these persons are employed and paid individually, may be cited the case of the yarn-washers in a woollen yarn factory, whom the writer saw working on time-wage under an overlooker remunerated by a piece-wage proportionate to the amount of their output ; or^ — to take an instance in which the subordinate workers are on piece-wage — we may refer to the method adopted in regard to weavers in the cotton trade, who are employed on piece-wage, while the overlookers receive a poundage on the earnings of the weavers working under their supervision. No general objection is taken by the cotton- weavers to this system ; though occasionally the operatives complain that their overlookers, anxious to earn a high piece-wage, "push" the workers under them to an undue extent ; and strikes caused by such conduct are not uncommon."^ Among' the spinners in the cotton trade, whose trade union organization is stronger than that of the weavers, piece-wage super- * See ante, pp. 68, 69. With regard to the remuneration of over- lookers in the woollen-weaving trade, see the evidence before the Labour Commission of Mr. W. H. Drew, representing the West of Yorkshire Weavers' Association : " There is a bonus to the over- looker ; but I do not know to what extent that prevails ; but it certainly does prevail, and it is perhaps a cause of discontent. The overlookers, where the system obtains, are what I may term practically drivers in the sense of the word that they hurry their weavers up, and, as a rule, the weaver has to suffer all sorts of indignities because of it" (Evidence before Labour Connnit^sioii, Group C, Vol. I., p. 223). 108 METHODS OF KEMUNERATIOX. iiitenJeuce is rare ; ami in cases, in wliicli this method exists, the trade union usually succeeds in obtaining the removal of foremen convicted of bullying the operatives into over-exertion. In those cases, in which the subordinate workers are remunerated collectively, the methods of piece- wage superintendence adopted necessarily fall into three categories. First (1), we have the case in which, under the method of collective piece-wage, all the members of the group, including the foreman, are remunerated by participating, in shares determined by their employer, in the joint price paid for the labour of the group ; * next (2), we have the case in which, under the method of collective progressive wages, all the members, including the foreman, receive, in the first place, a fixed or minimum wage, all or some, including the foreman (or — it may be — the foreman alone), receiving in addition a premium on output; lastly (3), we have the system of contract work, which differs from that of collective pi'ogressive wages in this respect, that here the receipt of a guaranteed minimum time-wage is confined to the subordinate workers, while the leading member of the group receives, as his sole remuneration, the balance of the lump sum allotted in respect of the job remaining after paying the fixed time-wages of these subordinates (or a share in this balance). (1) With respect to the position of the foreman under the method of collective piece-wage, it should be noted that the inclusion of the foreman within the * See ante, p. 117. PIECE-WAGE FOKEMANSHIP. 1(39 group may occur in either of two ways. Either (a) a lump sum may be paid, eo nomine, for the aggregate labour of the group, of which lump sum the foreman takes a specified fraction ; or {h) the gang of journey- men being separately dealt with at the pay-office, the remuneration of the superintendent of their labour may consist in a sum proportionate to the aggregate output pronounced by these subordinates. (2) With respect to the position of the foreman under the method of collective progressive wages, the work- ing of that form of this system, under which the whole of the premium on efficiency of production goes to the superintendent of labour may be illustrated by the circumstances of a case, which occurred some years ago, and the particulars of which were verified by investigations made by the writer.* The contractors to an important public body, although bound, under a heavy penalty, not to sub-let any part of the work undertaken by them, were alleged to have employed sub-contracting foremen, who were bullying the bricklayers into working at a rate, not only most prejudicial to the reasonable well- being of these workmen, but also utterly inconsistent with the possibility of good workmanship. The report * The form of collective progressive wages, of which the case referred to in the text is an example, is probably by no means common ; and is cited, not to illustrate the normal working of the system, but to show the manner, in which the system is capable of being employed, when it is desired to "force the pace" by especially vigorous and vigilant supervision, and the danger of evil results to the subordinate employees present in this special type of progressive wages. 170 WKTHODS OF REMUNEUATIUX. of" this alleged iniquity went forth far and wide. Brick- layers many miles away told me that all the trade knew that the brickwork included in this contract was being scamped in an almost incredible manner ; they said, for instance, that the mortar, instead of being laid on with a trowel, was " chucked on out of pails." These reports, which I believe to have been exaggerated, were followed by an attempt on the part of the trade unions to get the penalty against sub-letting enforced against the contractors. Upon inquiry, it was found that the method adopted in relation to the remunera- tion of each of two foremen was as follows : the brick- work was booked to the foreman at so much (say, £3. 2s Qd) per rod ; from that sum were deducted, in the first place, the total amount of the time-wages of the bricklayers and labourers, and, in the second place (as was alleged by the contractors), the fixed time-wages of the foreman. The entire balance or plus was paid to the foreman. It was, in the result, found impracticable to enforce the penalty against the contractors, the method adopted not being, in law, a form of sub-contract. If we were called upon to decide, to what extent the violent opposition exhibited to the adoption in this instance of this special form of progressive wages was justified, one most important point for us to weigh would be the ratio of the premium to the foreman's fixed salary, a point upon which these contractors firmly declined to give the public authority, by which they were employed, any information. A premium of, say, 5 per cent, ou his fixed wages would riECE-WAGE FOREMANSHIL'. 171 scarcely tempt a foreman into bullying the men under him ; but how, if he depended for say, one- half or more of his entire earnings upon this premium upon production ? Is it not obvious, that in a case like this, the foreman, almost to as great an extent, as if he were a " contract foreman," or a " sub-contractor," and accordingly wholly dependent for his remunera- tion upon the '^profit on the job," must find himself exposed to an all but irresistible incentive to slave- dinving ? There is, unquestionably, much to be said in favour of such a view of the circumstances in question ; and we must remember that builders' foremen at an outlying job (such as this was) have practically unlimited powers of weeding out at their uncontrolled discretion the weaker workmen, and of discharging all who will not, or cannot, keep pace with the specially fast workers whom, if they are under any special inducement to hurry on the job, they take care to engage. It seems certain that any system resembling that here referred to must lead, on the one hand, to the nigger-driving of the workmen, and, on the other, to the scamping of the work. (3) The third of the types of piece-wage foreman- ship now under consideration is that which comes under the category of contract work. That the con- tract foreman, who agrees to get a job done at a fixed price, depending for his remuneration exclu- sively upon the balance of this price remaining after he has been debited with the time-wages of the sub- ordinate workers, is under a very strong incentive to 172 METHODS OF KEMUNERATION. over-drive these subordinates, is a fact too patent to require proof or comment. In many instances the method adopted for the remuneration of the foreman is — if we are to employ a strict economic analysis' — a combination of two or more of the several forms of piece-wage superinten- dence distinguished in this chapter. Take, for example, a case in which a foreman contracts " to get so much work done for so much money," making what '' profit " he can, after allowing for the payment of the wages of the subordinate workers. Here, if all the subordinates are on time-wage, we have that form of piece-work superintendence which comes under the category of contract work ; but if some of these subordinates are on piece-work, then, so far as his relation to these particular subordinates is concerned, the piece-work foreman is not a contract foreman, the method adopted being, as explained above (p. 168), properly classified as a form of collective piece-wage. Under these circumstances it will be convenient if, leaving on one side our exact classification, we agree to speak of the foreman, whose supervision of subordi- nate workers is remunerated by a piece- wage or by a premium, without reference to the particular type to which he may belong, by the generic name commonly applied to such a man by the working-classes — the name of '' piece-master. '^ The piece-master system is to be met with in very many branches of industry ; though — so my inquiries lead me to believe — this method is considerably less common in trades, in which the trade union organiza- PIECE-WAGE FOREMANSHIP. 173 tion is fairly effective, than in those in which the workers are imperfectly combined. In the course of the lengthy investigation of the London boot trade, which I made for Life and Labour of the People, I came across only two instances of piece-wage foremanship. One of these was in the " lasting " department. The lasters are a well-organized, sec- tion of the trade ; but in relation to the particular employer in whose workshop I found this system in force, the trade union had very little control. I did not detect any bad results arising from the adoption of the piece-master system in this case; nor in the second instance, which was found in the upper-making factory of a large manufacturer, where the employees (other than the foreman) were women, none of whom belonged to any trade organization.* Most of the other cases of piece-master foremanship, which I have come across, have occurred in trades in which no trade union organization, or none possessing any real efficiency, existed. I have heard of such a case in regard to watch repairers at Glasgow ; women in East London in many unorganized trades are to be found at work under piece-working foremen ; so are * The earnings of the lasters working under a piece-master referred to in the text, ascertained by inspection of their wages-books, were higher than those of ahiiost any other men in the trade. They were on piece-work, worked such hours as they thought fit, and altogether seemed to have no special ground for complaint. The women making uppers under this system alluded to above were some of the very best- paid women that I met with ; they worked (some on time-wage, some on piece-wage) the Factory Act hours. The accommodation in both cases was excellent. 17-i METHODS 0¥ liEMUNEKATION. some bag-makers of the less skilled sort, though the influence of the trade union has stamped out the piece-master system in the portmanteau trade. In the building trades, although the trade union organization is vigorous, the piece-master system is by no means unknown. In cases of the description here referred to, a given quantity of work is con- tracted for by the foreman or some leading man who " takes it piece-work," receiving as his remuneration whatever balance remains after the payment by his employers of the wages of the subordinate workmen. Work performed under these conditions, equally with work done under " sub-contract," is said by the men in the building trade to be done " under the sweating system," and the piece- working foreman is the subject of no less bitter denunciation than the sub-contractor, properly so called. By way of illustration, it may be useful to cite a case, investigated by the present writer, in which, after a public body had, at the instigation of the trade unions, forbidden their contractors to continue sub- letting certain wox'k on a large job, the work was taken away by this firm from the sub-contractor, under whom it had until then been done, and at once given out to a foreman — a man, whom these contractors had previously employed on other jobs as a sub-contractor. This foreman took over the work (apart from the provision of the principal materials) as contract work, his remuneration consisting in the difference between the total time-wages of the journeymen employed in executing the work and a PIECE-WAGE FOREMANSHir. 175 certain agreed labour-cost, at which he undertook to get it done, being in fact the very same price at which the dismissed sub-contractor had previously got the work done. This man's interest in getting his subordi- nates to work quickly was, of course, precisely the same as that of his predecessor; and he ''shoved the men along " in identically the same manner, with the result that they went out on strike. These workmen suspected, but, naturally, were unable to prove, the existence of this arrangement, which the contractors vaunted to me as a clever stroke of business. I have known other cases, in which foremen have, by private arrangement with the contractors, been paid by the piece in the manner above described, the treatment of the employees of these contractors being, under these circumstances, in all respects similar to that which they would have experienced at the hands of a sub- contractor. As a matter of definition, it may be well to note that, while the men working under a sub-contractor ai'e employed by him and not by the firm for whom the sub-contractor does the job, those working under a piece-master foreman are in the service of the same persons by whom this foreman is himself employed. But, as a matter of fact, the distinction between the sub-contractor and the piece-master is one of little practical importance. Both alike are, from the nature of their position, under a strong incentive to " sweat " the workers ; and both possess ample opportunities of doing so. It is, no doubt, true that the piece-master's employers, although, in settling what rate of wages 17() METHODS OF KEMUNEKATION. shall be paid to the subordinate workmen, thej^ frequently follow implicitly the guidance of their foreman, yet in most cases exercise some sort of control in this matter, and it may, therefore, be impossible for the piece-master to g-et their wages cut down to the same extent as he would cut them down if he were a sub-contractor. All the same, it is obvious that the piece-master can, in any case, always " sweat " the operatives working under him by com- pelling them to work at a rate far beyond their normal speed. If the accepted rate of wage for any class of labour be sixpence per hour, there is, for all practical purposes, quite as much oppression of the kind known as " sweating " in getting " sixpennyworth of work " out of a man for fivepence by forcing him, while employed at sixpence an hour, to work 20 per cent, faster than the normal rate of speed as there is in getting his labour at the same reduction below its ''fair" value by paying him only fivepence an hour, while not exacting more than the standard amount of output per hour.^ Nor is that well-known custom of the sub-contractor — the custom of ''working short- handed/'t that is to say, of putting three men on to do a job which (unless the men work with an intensity of exertion very much greater than the normal standard) requires four men to do it — altogether un- heard of under the piece-master system, especially in cases in which the piece-working foreman is engaged on a job reinote from headquarters, or in which the * See ante, pp. 35, 70, 77. t See ante, pp. 37-41. PIECE-WAGE FOREMANSHIP. 177 employer, for any other reason, interferes little, if at all, with the discretion of his representative. All things considered, it is difficult to discover any respect save one, in which the practice of giving the work to a piece-wage foreman is, to any material extent, less oppressive than that of giving it to a sub-contractor. Certainly, when the work is done away from the premises of the principal employer, the keenness of the competition between the rival sub -contractors, each eager to take the work away from his neighbour, however small the price given for it may be, is a special and a most obnoxious feature of sub-contract in very many industries — a feature, which can seldom find a parallel in the cases in which the work is done " indoors." For, even if the employer put the work up to Dutch auction, giving it to the foreman who undertakes to get it done for the smallest sum, there is no scope for competition of the same cut-throat character as goes on among a crowd of "outside" sub-contractors. Nor should we omit to bear in mind the important fact that combination among the workpeople to resist oppression is easier, when the work is done in a big factory, than when it is done in small^ scattered " sweating-dens." There can, therefore, be no doubt that the pernicious tendencies too often apparent in the system of piece- wage foremanship are present, in a still greater degree, in most instances of what is commonly termed "outdoor sub-contract." To sum up in regard to piece-work superintendence generally. It is clear that in cases, in which it is 12 178 METHODS OK ItEMUNEUATION. desired to secure a liit^-li (jualit.y of workmanship, any method, wliich makes the amount of the remuneration received by the superintendent of labour depend entirely upon the rate of s])eed maintained in working, must involve a considerable danger to the interests of the employer, the foreman being thus placed under a strong inducement to pass scamped work as perfect, or even to represent work to have been put in, which has never been done at all. At the same time, the practice of paj'ing to a foreman, in addition to his wages, a moderate bonus has much to recommend it. For unless his own pecuniary interests are in some measure at stake, a foreman cannot always be relied upon to secure the maintenance of a reasonably high rate of speed in working. Not that it is impossible, in the case of a foreman remunerated by a salary, to insist upon a certain standard of efficiency in his work. Of course, in a well-ordered business a strict account of the work done under each foreman is kept; and, just in the same manner as a journeyman on time-wage, who does not turn out a minimmn quantity of work in the week, is sure to be discharged, so a foreman, who does not take care to get at least sixpennyworth of work done for every sixpence paid away in wages, is not likely to retain his position for any length of time. But the great advantage of the method of piece-wage foremanship is that it supplies a self-acting stimulus, which dispenses with the necessity of in- cessant supervision of the foremen by their employer. On the other hand, this stimulus may — it is obvious — easily lead the superintendent of labour to over-act riECE-VVAGE FOREMANSHIP. 179 his part, and to promote his own pecuniary interests by exacting from the operatives under his control a degree of exertion seriously prejudicial to their well- being. It is, therefore, not surprising that all forms of piece-Avork superintendence are viewed with dis- favour by the working-classes. The grounds of this antipathy, which finds its chief expression in the popular denunciation of " Sub-contract/' are so f nlly commented upon in the succeeding chapter, dealing with that "method" and with ''the sweating system'^ generally, as to require no further treatment in this place. 12 * CHAPTER XIY. SUB-CONTRACT. In preceding pages we have considered the case, in which a group of persons, all of them being in the im- mediate employment of the same master, are employed under the method of Contract, that is to say, under an arrangement, by which the remuneration of the lead- ing man in this group consists in the balance remaining after deducting from the lump sum agreed upon as the pi'ice of a given amount of work the sum total of the wages of the subordinate workmen (or a share in this balance). The amount received by this leading man is the piece-work remuneration of his labour — labour consisting, in most cases, partly in manual work done by the man himself, and, in all cases, in the superintendence which he exercises over the work of his subordinates. The nature of the remuneration received by the leading member of a group engag'ed under the method of Contract Work is thus seen to closely resemble profit, differing-, however, in this respect, that a man cannot properly be said to earn SCB-CONTKACT. 181 a profit {i.e., j^rofit de V entrepreneur) , unless the earn- ings referred to accrue to this man by reason of the employment by him of subordinate workers. Now, under the method of Contract Work, the subordinate workers are not in the employment of the head man of the contract group, but are the employees of the same master by whom this man is employed. This remark, as we have already seen {ante, p. 175), applies also to the subordinate workmen who are employed under the superintendence of a piece-master. The distinction, therefore, between a " contractor " or a piece-work foreman, on the one hand, and a '^ sub- contractor," on the other, is that neither a contractor nor a piece-master is an employer, while the sub- contractor is an employer, being, in fact, a sub-em- ployer, Avorking under a superior employer. The earliest critical appreciation of the method of sub-contract, with which the writer is acquainted, is that contained in McCulloch's Treatise on Wages (pp. 70, 71). Describing the sub-contractor, who undertakes to execute a certain amount of work for a certain price, and Avho employs others to assist him in its execution, McCulloch observes that " it is his object to finish his task as expeditiously as possible, and to employ his profits as a means of extending his business. In this way he gradually rises in the scale of society, till, having ceased to work with his own hands, he becomes a contractor on a large scale, or engages in some other occupation. And it is plain that the ti'aining and experience he has had, and the habits he has formed, must make him at once a vigilant 1S2 METHODS OF REMUNEKATION. and a tliscerning master. The foundation of tlionsands of midilling, and of very many large fortunes, hare been laid in the way now stated. It is, in truth, the broadest, the easiest, and the safest of the various channels by which diligent, sagacious, and frugal individuals emerge from poverty, and attain to respec- tability and opulence. Those, who thus rise to distinction, may be emphatically said to be the architects of their own fortunes. They owe nothing to interest, to favour, or to any unworthy means. They stood originally on the same level with their fellow-workmen, and they owe their elevation to the judicious exercise of talents common to them all." The highly favourable opinion of sub-contract work entertained by McCulloch agrees in all respects with the views expressed by Professor Cairnes, who, in an article published in 1865, in Macmillan' s Magazine (Vol. XL, pp. 181-190),^ entitled " Co-operation in the Slate Quarries of North Wales," called attention to " a species of co-operation prevailing throughout some large industries in Great Britain " known by the name of " the contract system," a system which will be seen to be identical with that referred to in the present chapter — the method of sub-contract. " The portion of the slate, which it is proposed to work, is divided into sections carefully marked out, which are let out as ' bargains ' to as many small co-partneries, consisting generally of three or four working-men. These co-partneries ' contract ' to produce slates, each from the section of the rock assigned to it, according to sizes and shapes at so much per thousand." * Kepublished in £s.sa(/.s- on Political Economy, pp. 166-186. SUB-CONTRACT. 183 The men, who take these contracts, are " the older, more experienced, and better off,^' while "^ the re- mainder are employed by them as labourers at fixed wages." "The capital employed in the undertaking is furnished principally by the proprietors or lessees of the quarries, but a portion is also provided by the ' contractors.' Thus the former supply the larger and more expensive machinery, such as the tramways, waggons, steam- engine, pumps, slate saws, and planes, itc, while the latter furnish the smaller tools, as well as the gunpowder used in blasting." Professor Cairnes observes that '' the beneficent tendency of these arrangements " has resulted in the very satisfactory position of the workpeople, and cites the case of a manual labourer " who was known to be in receipt of between £80 and £100 a year, independ- ently altogether of his current earnings — the return on capital saved and invested," while " the earnings of the ' contractors ' average something like £5 monthly." At the same time it is specially noted that all the labourers have an equal opportunity of attaining the rank of " contractor ; " hence arises '^ a state of things which serves to diffuse throughout the entire organization an influence of the healthiest kind."* A writer contemporaneous with Cairnes and no less sympathetic in his attitude towards the claims of labour is Thornton, who draws attention to the useful part played by sub-contract in technical education. " When, according to a not uncommon practice in * Compare Evidence before Labour Commission, Group A., Vol. II. » pp. 5-9, 18-20. 184 METHODS OF REMUNERATION. certaiu trades, a superior workman takes from his employers a sub-contract for the performance of a certain job, he generally associates in it with himself a number of inferior hands, apprentices and others, whom it then becomes his interest to instruct in his and their business, instead of leaving them, as appren- tices are generally left, to pick up instruction as they can^' {0)1 Labour, p. 316). Another authority of eminence, possessing a large knowledge of the practical details of labour organiza- tion, Loi'd Brassey, speaks in terms no less eulogistic than Professor Cairnes of the method now under consideration. Lord Brassey tells us that " on a long line of railway every cutting, bridge, tunnel, embank- ment, and station is executed by one or more separate sub-contractors ;" ^ and that in his father's business " all his work was done, as far as possible, by sub- contract, which is piece-work on a somewhat larger scale. Even the scaffolding for the erection of an iron bridge, such as that over the Severn, near Cole- brook Dale, of two hundred feet span, was carried out upon the principle of sub-contract ; and the same system was adopted for the excavation of shafts and adjacent lengths of tunnel. Payment by piece is beneficial alike to the master and the men.^'t Mr. Denny, the shipbuilder, in a lecture in which he expressed himself as a warm advocate of the method * Lectures on the Labour Questio7i, p. 137. t Work and Wages, pp. 2(j4, 265. Compare Life and Lahours of Mr, Brassey, by Sir Arthur Helps, pp. 41-50. SUB-CONTEACT. 185 of sub-contract, refers to " the bands of workmen in a ship-yard, engaged in the larger operations of plating or framing an entire ship, and managed and paid by one or more superior tradesmen. . . . You will invariably find such men paying their labourers a greatly increased rate of wages compared with that paid by the firm/' * This is accounted for by the fact that " they select the best men, and knowing they are the best can afford to pay such wages as will induce these men to do their utmost." f The terms of laudation, in which the method of sub-contract has been spoken of by economists and social reformers, such as Cairnes and Thornton, and by practical business men, such as Denny and Lord Brassey, are all the more striking when we remember that it is this same method which, under the sinister appellation of ''the Sweating System," has in recent years aroused in an unparalleled manner the indigna- tion of the public, and has formed the subject of inquiry on the part of a Select Committee of the House of Lords. No attempt to summarise the im- * Worth of Wages, p. 18. In the letter already {ante, p. 162) referred to, which was written some years after the publication of this lecture, Mr. Denny modifies his praise of sub-contract, admitting that instances occasionally occur in which sub-contractors " treat their labourers, either intentionally or unintentionally, with harsh- ness " (Life of William Denny, by A. B. Bruce, p. 113). t " We know that sub-contractors often pay far better wages than the chief contractor can, because they know their men better, and get better work out of them " (Contemporary Socialism, by John Rae, second edition, p. 432) ; compare Report on Co-operative Contracts, 1896, p. 57; and see ante p. 151 n). 18G METHODS OF REMUNERATION. monsc mass of evidence taken by that committee, and published in five enormous blue-books containing the answers to nearly thirty-three thousand questions, can be made here. But in reference to the subject of the present chapter — the position occupied by sub-contract in relation to the method of industrial remuneration — one point must be brought to the notice of the reader. Although the nature of the inquiry made by this committee was such that all cases of sub-contract, in which no complaints of ill- treatment were made by the work-people, were, so far as possible, excluded from its investigations, yet, even upon the evidence taken by the Lords' Com- mittee, it is abundantly clear that the employees of sub-contractors are not in every instance alike exposed to that kind and degree of ill-treatment which goes by the name of ^' sweating.'^ That the earnings of many of the workpeople employed by many sub-contractors are very low indeed, and that, in order to keep body and soul together, they are forced to work, as one witness puts it, " all the hours that God sends," the evidence before this Committee amply proves. Thus, in East London, Mrs. Killick works from 6 a.m. to 8 p.m., and does not clear 1^ a day. Mrs. Hayes, another trouser finisher, works from 8 a.m. to 10 or 11 p.m., assisted by her daughter ; the two together earn hs %d a week. Mrs. Casey, a shirt machinist, begins between 7 and 8 in the morning, and has to work sometimes till 11 at night. Mrs. Liddle, who often works longer than this, earns in the same trade from SUB-CONTRACT. 187 5.S to 75 per week, less 9d for cotton and 2. 4d per day ; she averages four to four and a half days' work in each week. Miss Annie Sessions, a baster, employed by another sub-contractor, works the same hours as the last two witnesses, and earns 4s a day ; she gets work about four days out of seven through the year. Can it be said that women in the position of the button- holer, the machinist, or the baster just mentioned, are sweated ? When we come to the male employees of the sub- contractors in London, we find, again, that, while the condition of the unskilled workers is deplorable almost beyond conception, that of the more capable workers is by no means so unhappy. Take the boot trade, in regard to which we must note that the evidence here summarised refers to a state of things subsequently changed ; for the strike of April, 1890, has to a great extent abolished " out-door " work and sub-contract, so far as the "lasting " and ''finishing" SUB-CONTKACT. 189 departments are concerned.* The part of the work of making a boot which requires the smallest degree of skill is the "^ finishing." The finishing of boots of inferior quality — the task of finishing boots of the better class was never entrusted to sub-contractors — was entirely in the hands of foreigners. The work was divided into two parts, of which the one that demands by far the greater degree of skill, the '^knifing/' was performed by the sub-contractor himself. The " journeyman " finishers, whose work was of the most unskilled description, were perhaps the most unfortu- nate set of men in the United Kingdom, if not in the whole wide world. The gi'nesis of the boot-finisher may be exemplified by the case of Hirsch. This witness had been an agricultural labourer in Russia, and had come to England sis months prior to his appearance before the Committee. He presents him- self to a " countryman " (fellow townsman in Russia) of hisj who is himself a journeyman finisher employed by a sub-contractor. " He [the '' countryman "] gave me nothing the first week, but he gave me food, and he arave me a shillino- for the second week, with food." Then Hirsch is advanced to bs a week, and now he is making" 8s. " I start on Sunday morning, commencing at 7, and work up * For a detailed account of the boot trade in East London, see the paper by the present writer in Life and Labour of the People, edited by Mr. Charles Booth, Vol. I., first edition, pp. 2J:l-308 ; see also Reports on the Volume and Effects of Recent Lnmigration, published in 1894 by the Labour Department, pp. 07-94, 157-194. 190 METHODS OP REMUNERATION. till 10 ; and the other days I start at (>, and work rij^ht up to 10 as well, bat on Thursday I work up to 12 o'clock, and Friday come again at 0, then I work till sunset." But, if the present circumstances of tliis agricultural labourer, who turns boot-finisher in a foreign land, are pitiable, what are we to say of his future ? The chances are very great that, his faculties being hopelessly blunted by the cruel strain of this truly awful existence, he will never acquire the superior ability demanded in the " knifing," and can never look forward to earning more than about S^d per hour, and that in a trade in which employment is so irregular that his average weekly earnings are unlikely to exceed those of Solomon Rosenberg, who says — " The average through the year is 15s a week, and out of that I have to pay 6s 6fZ weekly rent, and then 1 have to pay l.s M per week for parafKn for lamp, and Is 3d per week for coal for burning, then I have to pay 6d a week to send six children to school at a i^enny a week, that comes to Us 6d a week, and then take into consideration that I have left only G.s a week to maintain seven children, nine in family." Rosenberg (who was a '*' professor '' in Poland before he came to this country in 1870, with 10s in his pocket, and whom I know to be a hard-working and competent journeyman) was most unmistakably sweated. But, on the other hand, the evidence con- tains full details with respect to the position of other men — skilled, hands in the tailoring trade, for example — also working for sub-contractors, whose circum- stances are by no means so wretched, as those of this typical boot-finisher. To refer again to Mark Moses, whom Mr. Burnett SUB-CONTKACT. 191 calls a ^' fair representative of tlie sweaters in East London/^ saying that ''he does not do the best class of work, although he employs his people under good conditions/' This sub-contractor is shown by Mr. Burnett to employ "in a large well-fitted workshop " the following men : — One general tailor at 86' 6d per day. five fitters (at 6s, S.v Qd, bs, 4s 6d, and 3.'* 6d per day), seven machinists (one at 8.^, one at 7,9 6d, one at bs 6d, two at 4s 6(7, and one at 4s per day), four pressors (at 8s, 7s, bs, and 4s per day). Mark Moses is proved to find employment for his hands for nearly five days out of seven (which corresponds with the evidence given by another sub- contractor, employed by the Civil Service Stores, and with the observation made by Mr. Burnett, that the larger sub-contractors "have good regular work"). It is clear that, so far as the remuneration of their labour is concerned, the employees of Mark Moses and of other sub -contractors of the same or of a superior type, can scarcely be said to be sweated. Woolf Zeitlin, secretary of the Jewish Branch of the Amalgamated Society of Tailors, says : " The machiners and pressors are well paid ; they get as much as 7s or 8s a day." Another machinist, formerly president of the London Tailors' Machinist Society, told the Committee that his wages were 9s a day, that these wages are not at all exceptional, and that friends of his get lO.s. At the same time, the hours of employment, even in an otherwise well-regulated workshop, like that of Mark Moses, are very much longer than we can approve of ; for his general tailor 192 METHODS OF RKMUNERATION. works thirteen and a half, and his other male employees thirteen honrs in the day. In this most important respect, sweating-, in the sense of overwork, appears to exist in the workshops of all the East End tailoring sub-contractors without exception. The great majority of the sub-contractors in the metropolitan tailoring industry are located in East London. In the West End we find an instance of a sub-contractor (Poswa) who pays to his worst man £2. 5.9, and to his best £2. 17s, per week ; his hours are proved to be from 8.30 a.m. to 8 p.m., with a half- holiday on Saturdays ; the accommodation is shown to be excellent. It is difficult to see how the employees of this sub-contractor can properly be termed sweated. But another sub-contracting tailor (Marks) admits employing his hands from twelve to fourteen hours a day j and I am inclined to believe that, so far at any rate as overwork is concerned, a large proportion of the men employed in the workshops of these West End sub-contractors are, beyond all question, sweated. Turning from Whitechapel and the West End to the "east metropolitan district'^ (including a large area in Hackney, Bethnal Green, Mile End, Old Ford, and Bow, in which sub-contractors, engaged in the tailoring, and in many other industries, are extremely abundant) we find that Mr. Bowling, the factory inspector, reports as follows : — "In the occupations where work is given out in my district by contract, the facts, as far as I have been able to ascertain them, show that according to the accepted rate of wages, skilled labour of all sorts is fairly remunerated, while in many cases unskilled labour is poorly paid ; but whether the i^ayment of unskilled labour is sufti- SUB-CONTRACT. 19t5 cient, i.e., for the labour given in return for it, is a most difficult point to decide ; the principal cause of the lowness of wages paid is the excess of unskilled labourers over the demand for their labour ; and, in my opinion, this excess of unskilled labour is produced more by indiscriminate charity and Mansion House Funds than by other agencies. I remember a case where the father of a family was incapacitated, and required the nursing and attendance of his wife and daughters. They could not have made long journeys to get the work, but a contractor was established near them, and from him the mother and two daughters obtained work enough to bring them in 27** a week ; and they were able to attend to all their domestic duties as well. The house was in excellent order, and the girls looked healthy and strong. I only mention this case because I believe in my district, which is further away than Mr. Lakeman's [the ' central metropolitan '] from the big warehouses, the contractor is often a beneficent and useful person." But it is when we leave behind Loudon^ with its congested population and its vast supply of female and foreign cheap labour^ that the less unamiable features of the sub-contract system strike the eye. At Liverpool the workshop accommodation provided by many sub-contracting tailors is shown to be good. " The hours ofwork/^ writes the factory inspector, "in the sweating shops are almost universally from 8 a.m. to 8 p.m., with one hour for dinner and half an hour for tea. Overtime on Friday nights is very prevalent." In the table of wages given by the same authority we find pressors getting 7s or 7^ 6d, and good machin- ists (female) are rated at Ss to 4s per day. At Leeds the sub-contractors were found by Mr. Burnett (see Appendix O, Report, Vol. IV.) to work on a large scale, " the average of machines to each master is some- where between twenty and thirty." Some are " men of much capital, and have laid down engine-power to 13 19-A METHODS OP JREMUNERATION. drive their sewing-tnacliines." Mr. Bui'nett adds that '' the work is chiefly carried on in workshops of fair size, fairly cleanly, well ventilated, and under the super- vision of the factory inspectors. '^ The hours are for headmen ("fixers") eleven and a half hours per day, for the others ten and a half. Overtime is very seldom worked, even in the busy season. One Leeds sub- contractor tells the Committee that he pays his men "on the board" from SO-sfto 36s; pressers, S3s to 38s; nnder-pressers, 246' ; machinists (male), 33s to 42s, and (female) J 5s to 32s, per week; and a glance at the figures given by Mr. Burnetc shows that the wage of a competent hand employed by a sub-contractor is, for a man, not less than (js or 7s, and for a woman, from 4s to OS, per day. A female operative, working for one of the Leeds " middlemen," told the Committee that these sub-contractors " pay better than the inside masters." * The factory inspector of the district * Information as to the wages paid to tailoresses employed by the " inside masters " (manufacturers) at Leeds is contained in an article by Miss Clara E. Collet in Economic Journal, September, 1891. A comparison of the figures given in this article with those contained in Mr. Burnett's report shows that women can earn at least as good day- wages in the workshops of the sub-contractors as in the factory of a manufacturer. Possibly the women give more in return when em- ployed by a sub-contractor ; and they appear to be then affected to a greater degree by irregularity of employment. In East London I came across a large firm which gave out some of its trouser work to a sub- contractor (a person employing over one hundred operatives, some in an admirably arranged factory, provided with motor power, others in their own homes) ; the women in the trade stated that they prefer working for this sub-contractor to being employed direct by the firm, and declared that they earn more money when employed by the sub- contractor. SUB-CONTEACT. 195 declares point blank tliat there is no sweating in the • Leeds trade."^ A due regard for the patience of the reader will not permit me to follow the evidence given as to the tailoring trade throughout the provinces. Suffice it to say that, speaking of the sub-contractors in the tailoring trade at Birmingham, Mr. Tinker, Inspector of Factories, says : ''I do not think that there is any trade in any town in England where the wages are better, where the people seem better off, and there are no complaints"; and one of these Birmingham sub- contractors informed the Committee that all his men (excluding learners) earned 6s a day, working five days a week all the year round, from 8 a.m. to 8 p.m., with an interval of one hour for dinner and half an hour for tea. At Glasgow, a thoroughly efficient man can command from a sub-contractor as much as 7^d per hour ; while capable female machinists take bs per day. At Bristol and Stroud, where there are a number of tailoring sub-contractors, the factory inspector writes that " good wages are paid to their work-people; in fact, more than the current rate. Their workshops I found to be in good condition." * Miss Collet says, "The title of Mr. Burnetfs reijort ('On the Sweating System at Leeds ') is misleading. There is a system at Leeds, but it is not a sweating system " (Economic Journal, September, 1891, p. 469). The system at Leeds is, of course, the same system as that in Whitechapel, &c., — the system of sub-contract. For a later account of the conditions prevalent in the sub-contractors' workshops at Leeds see the report made by Miss Collet, as Labour Correspondent of the Board of Trade, in Reports on the Volume and Effects of Recent Immigration, 1894, pp. 116-122. 13 * 196 METHODS OF REMUNERATION. The hours of work are those allowed by the Factory Acts. Another inspector writes — " There are many cases in Plymouth, Stonehouse, and Devonport, in the tailoring and outfitting trade, in which work is let out to a contractor or middleman, who undertakes to perform it and finds the requisite labour ; but I have not found any case in which such labour is inadequately remunerated, and the workshops of this class are, on the whole, fairly ventilated and not over-crowded." A third inspector of factories remarks — *'' In brick manufacture it is common for the foreman to make bricks at so much, per thousand for the occupier of tbe works, paying his own labour ; but I havejnever heard that the wages were unduly lowered thereby." Enough will have been said to justify, even from the evidence taken by this Committee, the assertion tbat there can be sub-contract without sweating ; but it must again be pointed out, that many more cases of innocuous sub-contract might have been brought to the notice of the Committee, if it had not been for the manner in which the inquiry was limited, so far as possible, to cases in which sub-contract was alleged to be accompanied by the ill-treatment of the workers. This may be exemplified by the method adopted in investigating the sub-contract system in the boot trade. Among the numerous operations, which together make up the manufacture of a boot, there are three in which sub-contract exists — the " upper- making," the "lasting," and the "finishing."* In the " lasting " there was considerable, and in the "finishing" there was (as already stated) the utmost * See ante, pp. 188-190. SUB-CONTRACT. 197 conceivable, misery among the workers employed by the sub-contractors ; in the " upper-making ^' depart- ment no complaints of oppression on the part of the sub-contractor are made.* Accordingly, while some little evidence is adduced in regard to the sweating- masters in the lasting, and much as to those in the finishing, branch, not one of these upper-making sub- contractors (of whom there are many hundreds in Hackney, Bethnal Green, and other parts of East London, to say nothing of those in the provinces) was brought before the Select Committee, nor was a single person employed by any one of them asked to bear witness ; and this, although more than one of the persons brought before it to give testimony in regard to the boot trade distinctly informed the Committee of the wide prevalence of sub-contract in the upper- making department. Turning now from the evidence given before the Lords' Committee to instances of sub-contract work, which the writer has come across in his investigations into different points connected with labour questions, the reader is begged to note that the examples which follow are simply given as instances casually met with by the writer, and are by no means intended to form an exhaustive list of the industries in which sub-contract is prevalent. For, while a very general opinion appears to exist that sub-contract is a peculiar and comparatively rare mode of industrial organiza- tion, my own observation of the facts has convinced me that sub-contract is a system so widely adopted * See post, p. 198. 198 METHODS OF KEMUNEKATION. tliroug'hout the lengtli and breadth of British industry that any attempt to make here an exhaustive enume- ration of the trades, in which it is met with, would he altogether impracticable. When I was making investigations in regard to the boot trade^ I came across a large number of sub-con- tractors in different parts of the districts examined. I found that the uppers of "bespoke" boots for the retail "hand-sewn" trade are usually made by " closers," many of whom employ machinists and cer- tainly do not sweat these women. In the wholesale trade the bulk of the "uppers" are made by operatives employed in small workshops under sub-contractors, persons who have never yet been accused of " sweat- ing " their employees.^ In the slipper-manufacturing industry, though in the making* (i.e., lasting and finishing) of inferior goods, foreigners are employed under sub-contractors, both they and their masters working during hours almost incredibly long for the most wretched pittance, yet the boys and women employed as sew^ers by the English workmen, who make the better class of " sew-rounds," are in every way well treated. I also came across " chamber- masters " (manufacturing complete boots) against whom no chai'ge of sweating can by any possibility * For an account of these upper-makers the reader is referred to the Annual Report of H.M. Cliicf Inspector of Factories and Worhshops for 1887, pp. 101-103, where the remarks of Mr. Lakeman, Senior Metropolitan Inspector, upon the very small earnings of these sub- contractors may be noted. A case, in which I found upper -makers working under a piece-master, is referred to ante, p. 173. SUB-CONTRACT. 199 be made ; for Mr. K. McCrae, secretary of the Amalgamated Society of Boot and Shoe Makers, wrote to me (in 1888) in regard to these sub-contractors — "These middlemen work for large shopkeepers, taking the work out in considerable quantities, and make it right out. All these middlemen pay the full scale of wages fixed by our first-class West- end statement. There are no complaints as to the way in which they treat their men. I believe that these middlemen get rather low prices from their employers, and do not earn large profits." In the printing trade (as Mr. C. J. Drummond, then secretary of the London Society of Compositors, wrote to me in the same year) ''weekly newspapers are not unfrequently 'farmed' by members of the Society, the farmer paying the full scale-price to the compos- itors engaged. In such cases the farmer takes the newspaper from the proprietor at a fixed price, engages his own compositors, and j^ays them, the proprietor being practically ignorant of the men employed. For example, Lloyd's Newspaper, The Illustrated London News, and The Graphic are farmed, all the compositors employed being members of this Society." Would it be accurate to speak of the compositors engaged by the farmers in these cases as sweated by these sub-contractors ? * Desiring to study the method of industrial remu- neration adopted in the iron trade, I visited some extensive ironworks in the Midlands, belonging' to an old-established company, which gives employment to * Farming in the printing trade has, since the date of this letter, grown less and less common, and may now be said to be a thing of the past, so far, at any rate, as London is concerned. 200 METHODS OP KEM UN K RATION. nearly teu thousand men. Posted upon the office door I read a notice intimating that " Contractors will be furnished with change with which to pay their men.^' And I found that here, as is the case — I was told — in most similar establishments, almost every operation was performed under sub-contract. The puddlers employed their own " underhands ; " the shinglers, the rollers, the mill-rollers, the saw-men, all employed their own assistants, varying in number from one to four. The sheet-mill was under a sub- contractor employing half a dozen subordinates; the hammerman had three; the iron-moulders, thirteen in number, were under a sub-contractor."^ The coal was brought in, and the ashes removed, by sub-con- tractors; of whom there were in different departments numerous other varieties. Descending one of the mines from which the company obtains its coal and iron, I found that the minerals were got by miners, each of whom had under him from three to nineteen day-wage men and boys employed by him,t were cax'ried to the pit's mouth by another class of sub- contractors and their employees,J and were taken thence to the railway trucks by the ''banksmen," sub-contractors each of whom employs half a dozen * See Report on Wiu/es cnid Hourx of Labour, 1894, p. 109. t See the evidence given before the Labour Commission by Mr. T. Bichards {Evidence, Group A., Vol. I., pp. 302, 303), and by Mr. J. P. White (Ibid., p. 377), and Report on Wafies and Hour.t of Labour, 1894, p. 96, also Daili/ Chronicle, September 26th, 1893. X See the evidence given before the Labour Commission by Mr. W. Kerry (Evidence, Group A., Vol. I., pp. 445-449). 8UB-CUNTKACT. 201 subordinates. Proceeding to tlie quarry from whicli the limestone used in smelting is obtained, I found that the work was carried on by sub-contractors in the manner described by Professor Cairnes (see ante, pp. 182, 183). The existence of sub-contract in the manufacture of agricultural implements is referred to in Old World Questions and New World Ansivers, by D. Pidgeon, p. 283. In the ship-building industry sub-contract is widely prevalent, the merits of this method being set forth by Mr. Denny, of Dumbarton, in his Worth of Wages already cited, while its demerits are ably expounded in a paper by J. Lynch {Report of Industrial Remuneration Conference, pp. 114-116). "^ That the investigation made by the Sweating System Committee embraced all the varieties, or was suffi- ciently exhaustive to afford a clear insight into the general operation, of the system of sub-contract, will scarcely be contended. Did space permit it, it would be easy to enumerate many further instances of sub- conti'act, which were never brought to the notice of * See also Mr. Denny's letter referred to ante, p. 185 n. In ship-building yards, in which sub-contract prevails, the visitor will often be told that no work is done on sub-contract, the ground of this statement being, that all the men are borne on the books of the firm. But this fact has no bearing on the question. The leading member of each group will in these cases be found to be the only one who receives his pay from the firm ; he gets a lump sum, out of which he pays what he chooses to his subordinates, whom he possesses an uncontrolled discretion in selecting and discharging. These sub- ordinates are thus the employees of this leading man and not the employees of the firm. The system is clearly sub-contract. 202 METHODS OF EEMUNERATION. tlie Lords' Committee ; from the '' butties " in mines,* sub-contractors wlio undertake to get the coal from a large part of a mine, to perform all the necessary operations required in working it, and to deliver it to the mine-owner at so much a ton, down to the innumerable sub-contractors to bo found in all branches of the building trade ;t to those in the cement trade along the Medway (in which the " burning " and " grinding " are done under the method of sub-contract) ; to the pressors and basters in the London mantle factories, who arc allowed to pay their own assistants ; to the women in match factories, who pay their own helpers; to the "minders" in the Lancashire cotton-spinning trade, who always engage and pay their own '^piecers;" and so on, almost ad infinitum. % Sub-contract, in fact, is practically ubiquitous. The ideas, which occupied so prominent a place in the agitation against " the sweating system," that sub-contract was a special, exceptional, and univer- sally oppressive method of industry, and that the whole, or a large part, of the phenomenon known as " sweating " was due to the fact of the '' sweatees " * See the evidence given before the Labour Commission by Mr. John "Weir, secretary of the Fife and Kinross Miners' Association [Evidence, Group A., Vol. I., p. 221) ; and compare Labour Gazette, August, 1895, p. 252. t Sub-contract in the building trade is in the United States called " lumping ; " see Netv York Herald, April 1st, 1893. I As to sub-contract in the pottery trade, see llie Ecovoimj of High Wages, by J. Schoenhof, p. 187. SUB-CONTRACT. 203 being employed under this peculiar and sinister '' method/' are^ in the main, unfounded. Nor could it be expected that, upon the correctness or incor- rectness of these ideas an adequate amount of light could be shed by an inquiry which, while it called for evidence of those cases only in which sub- contractors were alleged to ill-treat their work- people, not only consistently, and, on the whole, successfully, endeavoured to exclude from investi- gation those numerous cases in which sub-contract exists without any trace of sweating, but also did its utmost to avoid embracing in its scrutiny all cases in which large manufacturers, not called '' sub- contractors,^' oppress and underpay their employees. That the rejection of evidence in favour of good sub-contractors and against bad manufacturers was the necessary consequence of the form taken by the reference to this Select Committee, is possible. But, in any case, this rejection inevitably detracted in a larg-e measure from the value of the evidence collected by this body, considered as material for the scientific study of methods of industrial remuneration. Sub-contractors, it is fully admitted, often treat their employees in a manner of which these work- people complain, and frequently complain with justice. But the improper treatment of employees is not a monopoly of any particular class of employers ; and it is indeed, extremely doubtful whether the number of persons sweated by sub-contractors is appreciably greater than that of those undeniably sweated by employers to whom this name is never 204 METHODS OP KEMUNEKATIGN. given. All the same, there exist in relation to sub-contract certain circumstances which go far to account for the strong aversion entertained by a large section of the working-classes to this ''method^' of employment. The nature of these circumstances will be considered in the following chapter.* * On the subject of "the sweating system," see also Journal of Social Science (American Social Science Association), No. XXX., October, 1892, pp. 57-72; Report on the Sweating Sytttem, by Horace G. Wadlin, transmitted to the Senate and House of Representatives of Massachusetts, March 17th, 1893 ; liejjort on the Siceatimj System of the Committee on Manufactures of the House of Representatives, Washington, 1893; and Beport upo)i the Sioeating System in Canada 1896. CHAPTER XV. OBJECTIONS ENTERTAINED TO THE "METHOD" OF SUB-CONTRACT; "THE SWEATING SYSTEM." The aim of the present chapter is to consider the objections advanced to the " method " of sub-contract, and, in the first place, the reasons, which have caused this " method '^ to be so generally identified with that " system '' of industrial organization which is desig- nated by the opprobrious title of ^'the sweating system.''^ In passing, we may examine the meaning attached to this term, "■ the sweating system," by those who do not confine its signification to sub-contract. Omitting all reference to the earlier agitation against the sweating system (in 1 848 and a few subse- quent years) we find in Crompton's Industrial Conciliation (1876), p. 12, '^The strike of the cabinet- makers . . . was to maintain the true piece-work system, to prevent the introduction of the lump or sweating system." This " lump " system, explained ante, pp. 74, 75, has, of course, nothing to do with 2UG METHODS OF REMUNERATION. sub-contract. Turning to the evidence before the Sweating System Committee we find one case adduced by a witness in the tailoring trade, in which the method described as an instance of the sweating system consists in the sub-division of labour, different parts of a gar- ment formerly made throughout by one man being now given out to be made by several operatives (Vol. I., p. 394) ; another " system/^ to which this witness applies the name of the sweating system, consists in the employment of women to do work formerly done by men {ibid., p. 393). Another definition appears in the Rejjort as to the Condition of the Nail-makers and Small Chain-makers in South Staffordshire and East Worcestershire, by Mr. Burnett (1888) : ''This master gives work out to women at less than list prices, which. is here considered a form of the sweating system " (p. 39). That is to say, if an employer, no matter under what method his workpeople are employed, declines to pay the full rate of wages fixed by the workmen in agreement with the general body of masters, he is said to employ his operatives "under the sweating system." A wider definition still was given to the Committee by Mr. Parnell, secretary of the West End Branch of the Alliance Cabinet-makers' Association, who, when asked what he understood by the expression " the sweating system," replied — " What is usually meant by the sweating system I think does not at all convey the correct idea of what sweating really is. The sweating seems to convey an idea to the generality of the public that it only exists where such bad wages are earned, that the individual who is sweated can scarcely live upon them, but in our opinion (I am speaking ior my fellow-workmen) that is not the idea which we have of sweating. "the sweating system." 207 We consider sweating to be the taking out of any undue profit from work that would otherwise go. or that could otherwise be applied, to the labour put in that work " (Vol. I., p. 279). Wider still is the definition given by another woi>k- ing-class witness, Avho says : " My definition of a sweater would be a person that lives on the labour of other persons ; whether he takes work and sub- contracts that work, or whether by any other means he manages to live without working, I call that person a sweater" (Vol. I., p. 391). Widest of all was the definition given by Mr. Aniold White, to whose untiring zeal in getting up the case and bringing forward evidence on behalf of the pro- secution the Committee was so deeply indebted. When requested to define the sweating system, Mr. White answered : " I think it is impossible to give a scientific definition of the term, but it involves three ideas which are sufficiently distinct. The broad- est definition that I can give of a sweater is one who grinds the face of the poor ; the second is that of a man who contributes neither capital, skill, nor specu- lation, and yet gets a profit; and the third is the middleman" (Vol. I., p. 35). So much as to the vagueness of the term, " the sweating system," as it is commonly used ; its signi- fication, as will be seen, being far wider than the narrow limits of sub-contract, and extending beyond the confines of our present subject — the method of industrial remuneration. In the pages which follow an attempt will be made to consider the nature of the evils incidental to " the sweating system " so far only 208 METHODS OP KEMUNERATION. as the set of industrial facts referred to under this name are coincident with a particular method of remuneration, so far, that is to say, as " the sweating system" is coincident with the *' method" of sub- contract. Wliat, then, is the method of industrial remuneration and organization denoted by the term " sub-contract ? " If you ask the man in the street what he means by " the method of sub-conti'act," he is pretty sure to reply — '^Oh, the sweating system, of course. Sup- pose a master tailor gets the cloth for a coat cut out on his own premises, and then sends the stuff out to a middleman to be made up : that is sub-contract." To begin with, locus in quo has nothing to do with the matter ; for the clothier may quite well have his sub- contractor on his own premises, as was the case in regard to the sub-contracting tailor, Poswa, already {ante, p. 192) mentioned {Sweating System Report, Vol. I., pp. 924-925). But, whether he be a " sweater indoors" or a '^sweater outdoors," what is it that makes a man a sub-contractor ? What, in short, distinguishes this " middleman" from all other kinds of employers ? Keeping to our concrete facts, let us inquire into the whole history of this coat, and see at what point the sub-contracting comes in. A " middle- man," it is conceived, is someone who comes between the " producer " (by which is generally meant the workman who performs the manual labour necessary to the production of any article) and the consumer, who uses this article. Now, as to this coat, pre- sumably we begin with the manufacture of the ''the sweating system/' 209 cloth ; though it is hard to see why we should not begin witli the growing of the wooh However^ we will consider the first step in the production of this coat to be that the cloth manufacturer sets to work to turn the wool into cloth. The first thing that the manufacturer does with his wool is, in all likelihood, to send it out to a sub-contractor to be combed and spun. He gets it back as yarn, and weaves it ; then he probably gives it out to yet another sub-contractor to be dyed and finished. Then the stuff goes to the London wuollen-draper, who promptly passes it on to a cloth-worker to be examined and shrunk. After this, the cloth is sent by the woollen-draper to the master tailor, who, as we are now supposing, gets the cloth cut out by his own cutter, and then sends the pieces to a sub-contractor (a " sweater ") to be made up. Now, for what reason is it that the last alone in this chain of sub-contractors is spoken of as a middle- man and abused as a sweater ? Why is it that the employees of this sub-contracting wool-comber and spinner, and of this sub-contracting dyer and finisher, and of this sub-contracting cloth-worker are not sup- posed to be emjDloyed under the peculiar " method " variously termed "sub-contract" or "the sweating system," while the employees of the sub-contracting coat-maker are invariably spoken of as being so employed ? Take, again, the cotton linings of our typical coat. These the master tailor orders from Jones in London, who gets one hundred pieces at a time — say sateens — from Brown & Co. of Manchester, Brown & Co. getting 14 210 METHODS OF REMUNERATION. these from Smith, a large merchant in tliat city. And how does Smith get the stufT ? He goes to Doe & Co., and orders them to make him one hundred pieces of "grey cloth;" those manufacturers then probably order the necessary yarn from Iloe Brothers, and having got it, proceed to weave it. Smith, having now got his grey cloth, proceeds to send it out to Dobsons, Limited, to be printed. Very possibly, Smith will also send the printed cotton out to Rawson to be ''beetled." Smith then delivers the finished goods to Brown & Co., "who send up the sateens to Jones, who sends on his sateen to our master tailor ; whereupon the stuflF goes out with the cloth to the " middleman " to be made up " under the sweating system." Does it not seem somewhat capricious to speak of the employees of this particular sub-contractor (the " middleman " coat- maker) as being employed under a special and obnoxious " method " of industry absolutely distinct from the method under which the workpeople of the other sub-contractors in this chain are employed — e.g., the employees of Roe Brothers, and of Dobsons, Limited, and of Rawson ? If " sub-contract " neces- sarily involves " sweating," why is it that no one would think of saying that the employees of Roe Brothers, a^nd of the rest of these sub-contractors are employed " under the sweating system " or of alleging that these operatives are " sweated ? " To take one final concrete instance, why is it that, if Messrs. Maple in the Tottenham Court Road, buy a carpet from Messrs. Crossley at Halifax in order to sell it again, that carpet is not said to be made "the sweating system/' 211 ''under the sweating system/' while, if ]\Iossrs. Maple buy a stock side-board from a " garret-master/' or, as he would correctly call himself, a " cabinet-maker to the trade" in Bethnal Green, that side-board is said to be made " under the sweating system ? " The more one examines the facts in regard to " the sweating system,'' the more difficult it becomes to believe that ''the sweating system" as a system, i.e., a method of industrial organization, has any existence whatever. " Sweating " — sweating of the most deplorable character — is widely prevalent. No one who possesses the slightest degree of acquaintance with the facts of industry will deny that the conditions, under which a large number of working-men and working-women exist, are inhumanly oppressive. Overworked to the utmost limit of endurance, remunerated by wages just — and only just — sufficient to stave off starvation, these miserable people drag out, often in the most noisome and stifling dens, a life immeasurably inferior in point of comfort to that of negro slaves. " Sweating " exists ; but sweating is not coincident with any circumstances to which can properly be given the name of an industrial method. The attempt to classify these circumstances as a " system " is mis- leading. The employers, who sweat their hands, do not employ these hands under a peculiar method. All the same, certain circumstances do most power- fully make for sweating; and employers of a certain class are specially prone to exhibit in the treatment of their workpeople a well-defined form of oppression. 14 * 212 METHODS OF REMUNERATION. What these circumstances are, we will jiroceed to consider. Sweating may be taken to denote in particular three more or less distinct kinds of ill-treatment. A worker is sweated (1) if he is grossly underpaid; (2) if he is emjDloyed during unconscionably long hours ; (3) if, whether the period of his employment be long or short, and even if his wages be not extremely low, he is compelled to tax his powers to an unreasonable extent. Now, as to under-payment, no one acquainted with the facts would ever suggest that there is much to choose between one class of employers and another. No doubt, unskilled and unorganized labour receives in many cases from " sub-contractors " a very low rate of remuneration ; but can anyone assert that the unskilled and unor- ganized operatives employed by large firms^ directly, without the intervention of any " sub-contractor," are appreciably better off ? It may be admitted that the operatives engaged in factories belonging to the wholesale houses are, in many industries, better treated than those employed by sub-contractors. But the reason of this is, not so much that large employers are especially humane, as that the work, which is reserved to be done in the factories, is relatively high-class work, which must be done by skilled hands, whom their masters would find it difficult to replace, and whom they therefore treat with politic consideration. Most of the inferior work is given out at very low prices to sub-contractors ; but in many cases the very worst paid work of all — work "the sweating system.'" 213 which no sub-contractor can be found to take — is given out to out-workers employed directly by the wholesale firm, people whose earnings are the very lowest in the whole trade. Proof of the truth of this assertion is hardly to be looked for in the evidence before the Committee on the Sweating System, since the large employers enjoyed, as already observed, a fortunate immunity from investigation by that tribunal. But truth has a way of leaking out ; and, accordingly, if we turn to that evidence, we find that in regard to the tailoring trade Miss Beatrice Potter (Mrs. Sidney Webb), who has herself worked in some of the lowest sweating dens under '' sub-contractors," told the Committee, in relation to what she rightly calls " the very lowest layer of the coat trade '' — " That work is done by women and men at their homes ; it really does not pay the contractor to take it out. That is the sort of coat that is done for Id or Sd ; it hardly pays the Jewish contractor to take that coat out, so that it is done to a great extent by Gentile women. That is the very lowest w-ork ; and that is what I mean by saying that sweating, in its most intense form, has nothing whatever to do with the contract system. In fact, the contract system is the top stratum, as it were, of the trade. It [the very lowest work] is taken straight from the wholesale houses. They [the women who do this work] earn the lowest wage in the coat trade" {Report, Vol. I., p. 321). In the Midlands, also, as proved by Mr. Hoare, a factory inspector, the lowest and worst paid work is, not that which the sub-contractors undertake, but that which is given out directly to out-woi-kors by the wholesale houses. For instance, a woman thus employed gets Q^d jDer pair for making moleskin trousers, finding her own machine, needles, and 214 METHODS OP REMUNERATION. thread, this last item costing her l^d per pair, and carrying from and to the warehouse bundles weighing twenty-four ])oiinds each. "We have to walk five miles for each lot of work^ and lately we have had to go nearly every day, and sometimes twice a day, and when we go, wo often have to wait many hours before we can get any." Apart altogether from the revelations made by this Inquiry, the manner in which eminent wholesale houses deal with their workpeople is, now and then, accidentally brought to the notice of the public. At an inquest held in Manchester it was proved that a very large firm (which has establishments in that and three other towns) paid to its out-Avorkers lOd per dozen for "making'^ (query, machining?) shirts — shirts with a pocket and a narrow lining at the back. From a statement made a few years ago by the Eev. Henry Williamson, president of the Dundee and District Mill and Factory Operatives' Union, in regard to a spinner thirty-two years of age, who had learnt the trade when nine years old, we find that " She was making the magnificent sum of Gs lOd per week, and was supposed to Hve on Id worth of bread a week, taking peasemeal for dinner every day, except when she varied the diet with a half-penny worth of broth out of a coffee-house. When eggs were cheap, she generally partook of an egg ; an ounce of tea and a pound and a half of sugar had to last her a week." The fact is that no one, who is- acquainted with the rate of remuneration received by the less skilled among our wage-earners (such as scavengers, many minor classes of clerks in warehouses, and female operatives in many trades, especially women employed 'the sweating system." 21-: in sack-making, rope-making, shirt- making, &c.), will think of asserting that it is small employers of the class known as sub-contractors, who alone, or chiefly, are addicted to the payment of very low wages. As to long hours of employment, it is scarcely necessary to adduce instances of the cruel length of the tasks exacted from their workpeople by large employers, in cases in which the vis major of the Factory Acts does not make such treatment impos- sible. The deplorably long hours, during which many employers carrying on business upon a very extensive scale have been accustomed to employ men such as, for example, omnibus* and tramcar drivers and con- ductors, railway servants, shop assistants, &c.j are too well known for the facts to need detailed statement in this place. To contend that it is '^sub-contractors," who alone, or chiefly, sweat their employers by over- working them, would be out of the question. When we come to the third kind of ill-treatment above specified, that which consists in the exaction of an unreasonable degree of exertion — '^ nigger-driving" — then we do, indeed, discover that this important form * It is worth noting that during the omnibus strike of June, 1891, it was made clear that the small omnibus proj)rietors treated their men much better, in the matter both of hours and of pay, than the big companies. See the facts stated by Mr. H. H. Champion in Pall Mall Gazette, June 4th and 12th, 1891. My own inquiries tend to prove the truth of Mr. Champion's statements. In the same way it was shown at the time of the Dock Strike in 1889 that the men employed by the small wharfingers were better off in every way than those employed by the two large companies managed by the Joint Docks Committee. 216 METHODS OP REMUNElv'ATIOX. of sweating is in a marked degree move prevalent among " sub-contractors " and other small masters than among large employers. In order to explain tMsj let us go back to our typical coat. If we were to watch the wool and cotton from the bale onwards, we should find that the superintendence of the operatives employed in the different processes of manufacture is delegated to foremen, &c., few of whom are paid by results. But the remuneration of the ''sub-con- tractor/' who gets the coat made up, is strictly proportionate to the intensity of exertion which he is able to induce his workpeople, working under his immediate personal superintendence, to maintain. He may possibly employ a foreman on time-wage ; but that is rare ; and even so, he will trust little to the supervision of his foreman. For the most part, the " sub-contractor " will keep each and every one of his employees under his own close and rigid super- vision. Such being the case, it is practically certain that the workpeople employed by the sub-contracting coat-maker will be subjected to a degree of pressure far more severe than is at all likely to be found present in the factories of the big manufacturers by whom the cloth and the lining stuff were produced, and it is very probable that this pressure will be carried to the point of oppression. It must be added that, while the '' sub-contractor " is much more prone to " drive " his workpeople than is the average big manufacturer, it is also the fact that, the smaller the scale upon which the '^sub- contractor " works, the worse, as a rule, will be the "the sweating system." 217 conditions of employment. Wliilo^ as Mr. Burnett said in his Report on the Sweat hnj Si/steni in East London, " the larger workshops tend to approximate to the factory system (p. 1), and while "the larger sweaters have not only better but more regular work, with higher prices/' on the other hand, the smaller " sub- contractors " are stated to " do the commonest work, have the lowest prices, pay the least wages, and exact the maximum, of toil from their workers " [ibid., p. 15). The reasons which account for the fact, to which attention is now directed, are not far to seek. Given a team of workers, most of whom are very deficient in skill and devoid of habits of discipline, such as, for example, a gang of "greeners" (newly-arrived foreigners), the labour of these men can only be used at all, and can only be made to yield even the most meagre "wages of superintendence," if the superin- tendence exercised be of the most stringent character, and such as it is practically impossible for the " sweater " to exercise over more than a very small number of subordinates. This is why the lowest class of labour gravitates to the little " sweating-dens," and why the little " sub-contractor " is very often so harsh a task-master. On the other hand, where his workpeople are fairly skilled and less undisciplined, the "sub-contractor" finds it possible to supervise effectively the labour of a relatively numerous group of assistants. And while the large "sweater" is, under these circumstances, under no necessity to attempt to exercise the same extremely stringent 218 METHODS OF REMUNERATION. superintendence as the small " sweater," the very number of his workpeople makes it impossible for their master to '' drive " them by the same minute and incessant supervision which the small "sweater" bestows upon every member of his small gang ; and^ at the same time, the skill, which these operatives possess, is sufficiently scarce to make it certain that their employer will not dare to risk the loss of their services by indulging too freely in any bullying practices. To revert to our concrete instances. The essential difference between the employer, who makes the carpets bought by Messrs. Maple for re-sale, and the employer, who makes the stock sideboards bought by Messrs. Maple for re-sale, lies in the fact that the carpet manufacturer is a large employer, who employs his workpeople under time-wage foremen, superin- tendents who have no special motive for " driving " their subordinates, while the " cabinet-maker to the trade " is a small employer who looks after all his workpeople himself, and whose remuneration depends to a great extent upon the degree of ability which he displays in compelling these workpeople, by means of incessant personal supervision of a very stringent character, to do sixpennyworth of work for fivepence. This is the reason why the maker of these cabinets — although he is certainly not a sub-contractor — is often called by that name, and why this " garret-master " is invariably said to employ his men " under the sweating system." The objectionable characteristics so often found in *^THE SWEATING SYSTEM/^ 219 the '^sub-contractor" have, it is abundantly clear, but little connection with the " method of sub-con- tract ; " they have, that is to say, very little to do with the fact that this " middleman " does not himself sell to the general public the goods which his workmen make. To refer, again, to the tailoring trade, it is certain that the conditions of employ- ment are in every respect as oppressive in the work- shops belonging to small retail shops as in those of the sub-contractors (the men who take work to get it done for the wholesale firms). Miss Potter (Mrs. Sidney Webb), w^hose knowledge on this subject is beyond question, expressly declares that, ''undoubtedly the worst paid work is made under the direction of East End retail slop-shops or for tallymen — a business from which contract, even in the equivocal form of wholesale trading, has been eliminated.''^ "^ What is here said of the small tailors is equally true of a large number of other little shopkeepers manufacturing and selliug directly to the public goods of a low class, and of other petty employers of all kinds. These little masters and mistresses, none of whom can by any conceivable straining of this very elastic term be said to work " under the sweating system," frequently sweat their hands to a deplorable extent. The true inwardness of the offence laid at the door of the so-called " sub-contractor " consists in his being a small employer, and as such being remunerated by * Life and Labour of the People, first edition, Vol. I., p. 237. — " The tally-man takes orders direct from the actual wearer, and is paid for the garments in small instalments " (Ibid., n.). 220 METHODS OF REMUNERATION. profit. This objection is identical witJi that taken to the method of piece-wage foremanship,* wliich any working man will tell you is another form of " the sweating system." The gist of the whole matter is that the working-man^ who complains of work being done under the " method " of sub-contract, complains because the work might be, and is not, done under a, foreman or other superintendent remunerated by time-wage, and, for this reason, free from any strong incentive to bully the subordinate workers into over- exertion. The essence of the ''method'^ of sub- contract is the supervision of labour by a jierson i^emu- nerated by piece-wage or profit. Put in this way, the objection to work, which might be done under a time-wage foreman, being done under a small employer, must be deemed to be deserv- ing of the most attentive consideration. That a man should do " a fair day's work for a fair day's wage," is right ; but that he should be hustled into working at a speed incompatible with his reasonable comfort and often with his health, is a grievous wrong. Of course, the very valid objection, which exists to *^ sub-contract," is not always put in this way. Some- times the sub-contractor is represented as an idle man, who makes a big profit " out of the labour " of his employees. But the sub-contractor is, in most cases, anything but an idle man. The large sub-contractor may, indeed, do no work with his hands. All the same, unless we are prepared to maintain that no activity other than actual manual labour is worthy to be * See ante, Chcapter XIII., pp. 100-179. ''the sweating system.'^ 221 dignified with the name of " work/' we must admit that the work of organizing" the labour of operatives, many of whom ai-e deficient in skill and in habits of discipline^ is quite as hard work as any manual labour", especially when, as is often the case with work done under sub-contractors, a minute sub-division of labour is practised. Nor, after the evidence which, since the commencement of the agitation against ^^the sweating system,^' has been produced both by witnesses before the Select Committee and by inde- pendent and impartial investigators, such as Mr. Charles Booth j"^ can it be contended that the profits made by most sub-contractors are out of proportion to the value of the services which they render. As Miss Potter (Mrs. Sidney Webb) told the Lords' Com- mittee, " where a sweater makes a profit, it may be taken, as a general rule, that he pays his hands well. In the lowest class of work he makes, I consider, less money than his machinists and his pressers " [Re- port, Vol. I., p. 332). And this observation is confirmed by the evidence given by Mr. Burnett, who said: "In very many cases (and I have not the slightest doubt that it is absolutely true) the master- sweaters will tell you that they themselves receive less money at the end of the week than their own workers" [Rejwrt, Vol. I., p. 532). f These remarks * Life and Labour of the People; see especially Vol. I. (first edition) . t So again, in his Report on the Sweating Sijste)ii i)i East Luiulon (p. 15), Mr. Burnett says that " the lower-class sweaters . . . make little more than a bare subsistence, and earn little, if any, more than 222 METHODS OF REMDNEr.ATION. relate to the tailoring trade ; as to the gains of the sweating-masters in the boot-trade (who, in this case themselves performed the more difficult part of the work)^ I refer the reader to my paper on that industry in Life and Lahour of the People, Vol. I. (first edition) ; adding that it is within my knowledge that, since the abolition of sub-contract in this trade, the ex-sweating-masters have in some instances earned in wages as ordinary workmen at a rate at least as high as when they were small employers, remunerated by profit. In some instances, indeed, the weekly earnings of sub-contractors, whose accounts I investigated in the course of my inquiry into the boot trade, were so extremely meagre that I could only explain their preferring the position of employer to that of employee by the fact that the work of the sub -contractor is less irregular than that of his subordinates, who are taken on or discharged accord- ing as he has work enough to employ a large or small staff. Thus, a sub-contractor might receive less money at the end of the week than his assistants, but might earn more in the course of the year. Although the real gravamen of the charge against the sub-contractor is, not so much that he makes a big profit, as that he is an employer remunerated by profit instead of a foreman remunerated by the best of their own workpeople." Compare the remark of Professor Marshall: "The small so-called 'sweater' or ' gaj.'ret-master,' who takes out a sub-contract at a low price, will often work harder than the ordinary workman, and for a lower net income " (Priiicqiles of Economics, by Alfred Marshall, second edition, p. 641). " THE SWEATING SYSTEM." 223 time-wage, yet there can bo no doubt that there are many cases, in which the gains of the sub- contractor are simply the spoils of flagrant ex- ploitation, no work, or none, at any rate, useful and necessary, being performed in return for these ill- gotten profits. The sub-contractor in the docks, in the days before the Dock Strike of 1889, may be admitted to have given to the dock directors full value in the shape of vigorous slave-driving for the money which he earned; but was so great and ex- pensive an amount of slave-driving required ? and can it be said that these cruel task-masters were fairly entitled to their earnings ? So long as the companies encouraged, as was the case in certain docks, the employment of the scum of the labour- market, the slave-driving sub-contractor may have been a necessity. But that, given a set of men will- ing to do a fair day's work without any such oppressive supervision, the sub-contractor can, in some cases, advantageously be eliminated from the organization of industry, is a proposition, which it does not seem unduly bold to advance, and the truth of which the success of the system of co-operative work adopted in the Burntisland docks, which has been described in a preceding chapter (see pp. 163-165) tends to demonstrate. To what extent it may be practicable to abolish the method of piece-work, or payment by results, as applied to the remuneration of the leaders of industrial groups, is a question, in regard to which it would savour of presumption to express too dogmatic an 224 METHODS OF KEMUNERATION. opinion. As lias been shown, the essence of " the sweating- system" consists in the stimulus given to the immediate superintendent of labour by making his earnings proportionate to the vigilance and severity of his supervision. If it were possible to replace every superintendent remunerated in this manner (whether small employer, sub -contractor, or piece- master) by a superintendent remunerated by time- wage or salary, irrespective of results, then we should have entirely done away with " the sweating system." The difficulties in the way of a change such as this are, undoubtedly, of a grave nature. If the remuneration of the superintendent of labour be made wholly inde- pendent of the results obtained by the efficiency of his supervision, then, as has already been pointed out, is it not probable that, in many cases, the work of superintendence will be done in a very inefficient manner ? And is there not a type of working-man incapable of producing a reasonable amount of output except under supervision of a somewhat strict nature ? Again, if you allow your time-wage foreman, who will no longer have a direct interest in giving preference to the most active and intelligent workmen, to select and discharge the subordinates, will he not exhibit an interested favouritism ? And yet, are there not many instances in which, for practical reasons, it is neces- sary to leave the selection, and (to a great extent) the discharge, of the operatives to the foreman ? Even in regard to work done on the premises no one is so capable of performing these duties with efficiency as the foremen ; and in respect to an out- ^'THE SWEATING SYSTEM.'' 225 lying job the difficulty of interfering- with the dis- cretion of a foreman in command of a group mainly composed of local workmen, engaged for the occasion, is almost insuperable. In any case, if the subordi- nate opei'atives are employed on piece-wage, will it not often occur that, when business is not at its briskest, those operatives only will obtain a full share of work who are willing to ingratiate themselves with the foreman ? It is clear that, although the foreman, who is paid a salary irrespective of results, is unlikely to be guilty of the cruel severity exhibited by the slave-driving piece-master or sub-contractor, yet the financial ex- ploitation of the workmen may be carried out, not only by the sub-conti'actor who pays starvation wages to his employees, or by the piece-master who insists on sixpenny worth of work being done for fivepence, but also, to some extent, by the time-wage foreman who exacts bribes from his subordinates;* and that the mere substitution of salary for profit or piece- wage as the remuneration of the superintendent of labour will not of itself suffice to procure the complete abolition of all those grave industrial evils which we * To how great an extent the bribery of time-wage foremen prevails, it is not easy to say. In the East London tailoring trade the "taker- in," who is employed by the manufacturer to give the work out, is usually, if not invariably, allowed to exercise an absolute discretion as to which sub-contractors shall be employed, and is often bribed by men anxious to secure the work. Journeymen in the West-end declare that the cutters of the master tailors receive similar propi- tiation ; and like allegations are made in regard to foremen in charge of building jobs. 15 226 METHODS OP REMUNERATION. associate with the name of " the sweating system." It is, none the less, beyond question that many cases exist, in which the replacement of the sub-contractor and of the piece-master by a foreman remunerated either by a simple time-wage, or (under the method of progressive w^ages) by a time- wage supplemented by a premium proportionate to results, but not large enough to tempt him to abuse his position by any- thing in the nature of "nigger-driving," is highly desirable. At the same time, it is possible that, as combination and association extend their influence, all persons who exercise supervision over the per- formance of labour, whether they be foremen or employers, and whether remunerated by salary, by piece- wage, or by profit, will to an increasing extent find their action regulated in the interests of the sub- ordinate workers by either of the two great sister forms of democratic control — Trade Unionism and Co-operation. CHAPTER XVI. THE RELATION BETWEEN TRADE UNIONISM AND CO-OPERATION, SO FAR AS CONCERNS THE METHOD OF INDUSTRIAL REMUNERATION. That tlie position of the working-man under the existing wage-system is one, which in many important respects leaves much to be desired, few of us will feel inclined to deny. The two great movements, which have been initiated amona^ the workino--classes with the view of improving their position, are the Trade Union Movement and the Co-operative Move- ment. But with Trade Unionism the limits of our present subject make it impossible to deal in these pages. This is a jioint which it is desired to bring out with clearness ; because, in default of explanation, the absence of any treatment of Trade Unionism might be misunderstood. The subject of this book is the method (as dis- tinguished from the other elements, e.g., the amount) of industrial remuneration. Now, in regard to the method of industrial remuneration Trade Unionism does not propose to make any change whatever in the 15 * 228 METHODS OF IIEMUNEIIATION. arrangements at present prevailing. Co-operation, on tlie other hand, embraces in its various forms all the attein])ts whicli have been made with the view of superseding-, wholly or partially, the existing wage- system by novel methods of industry. Co-operatiBI{AT[ON. 237 conceded here. Whether under a sliding-scale (under which a rise in prices is automatically followed by a corresponding rise in wages), or without any such self-acting arrangement, the consistent aim of trade union conibination, an aim which it is able in a ver}' large numl^er of cases to achieve without any dis- turbance of industrial peace, is to secure that the employees, without sharing in the profits of their employers, shall — as Mr. Benjamin Jones put it in his presidential address at the Ipswich Co-operative Congress — " receive in wages a full share of the pro- ducts of the joint exertions of labour and capital. ''* In regard to the cotton-spinning industry, to which Mr. Jones referred, there can certainly be little ques- tion that vigorous trade union action has, without any such revolution in the method of industrial remuneration as is proposed by the advocates of Co-operation, succeeded to a remarkable extent in carrying into effect that regulation of the earnings of the employer which is the common object of both Trade Unionism and Co-operation. For in this trade, while the " wages of management " have been very greatly reduced,+ the rate of interest earned by capital has sunk to a very moderate level, f so that * Eeport of Co-operative Congress, 1889, p. 21. t Compare the remarks made by Miss Potter (Mrs. Sidney Webb), in her book on The Co-operative Movement in Great Britain, p. 132. :*; See the evidence given before the Labour Commission by Mr. Albert Simpson, who i)roduced " the last Oldham list, which gives the results and values of the whole of the mills in Oldham — 110 mills," showing that the shares of sixty-seven were at a discount. Speaking of the earnings of the cotton mills during the last ten years, 2:38 METHODS OP REMUNERATION. the employees are able to say, in the words used in his evidence before the Labour Commission by Mr. George Silk, president of the Amalgamated Society of Card and Blowing Room Operatives, " We look at the general profit that the trade is making ; we know the price cotton can be bought at ; we know the price that yarn is sold at every day ; we know exactly the margin ; we know to the hundredth part of a penny what it costs in stores ; the fixed stock is public property; we know what a sensible and reason- able depreciation is upon the same ; and we know that after we have got our wages out of it and we leave the balance to the employer, he has nothing to mahe a great noise ahout."* The reasons, which make it proper to exclude from a work dealing solely with the method of industrial remuneration any detailed consideration of Trade Unionism will now be obvious. Trade Unionism accepts the ordinary methods of industrial remunera- tion as it finds them, and tries to make the best of them. Co-operation, with more ambitious aim, pro- poses to supplant the wage-system, wholly or partially, by certain novel methods, the nature of which will be examined in the succeeding chapters. Mr. Simpson said — "If they were all averaged up, fairly averaged, that even upon their own showing they would not reach 5 per cent., but if they were calculated on what I hold is a fair basis, they would not reach 2 per cent." (Evidence before Labour Commission, Group C, Vol. I., pp. 77-83). Compare the evidence to the same effect given by Mr. W. A. Russell (ibid., pp. 133-140). * Evidence before Labour Commission, Group C, Vol. I., p. 21. CHAPTER XVII. WHAT IS MEANT BY PROFIT-SHAEING. The modifications, wliicli Co-operation proposes to introduce into the method o£ industrial organization and remuneration, may be thus briefly summarised. Co-operation contemplates that the operations of industry shall be carried on by groups voluntarily associated, and working under managers elected by the members of the respective groups, each of these groups dividing between its own members the entire profits realised. The proposals just explained are those made by Co-operation in its perfect form. But, in addition to the perfect type, there exists a partially co-operative ideal, according to which the solution of the Labour Problem is to be sought in the adoption of a method known by the name of "Profit-sharing.'^* Under the method of Profit-sharing no attempt is made to secure for the workmen the control of the business ; * Sometimes also termed " Industrial Partnership." 240 METHODS OF REMUNERATION. the power of the employer is to remain paramount, but he is to give to his employees, in addition to their wages, and as the further remuneration of the labour performed by them, a share in his profits. The perfect type — Industrial Co-operation — is essen- tially a working-class ideal. To put the matter shortly ; the main ideas underlying Industrial Co- operation are (1) that the employer is an unnecessary encumbrance; (2) that control ought to rest with the workmen ; (3) that the receipt of wages is in- consistent with the dignity of labour; (4) that the exclusion of the workmen from participation in profits is a flagrant injustice; and (5) that, if the workmen can get into their own hands the profits of the busi- ness in which they are engaged, their financial position will be immensely improved. Industrial Co-operation proposes that the working-classes shall seek salvation by eliminating from commerce and manufacture the interference of the superfluous middle-classes.^ Profit-sharing, on the other hand, is a device adopted by middle-class employers — men who have not the smallest intention of ceding the government of their business into the hands of their employees, and who entertain the firm conviction that the class to which they belong is anything but super- fluous — mainly because these employers consider that the prosperity of the undertakings, which they * Compare History of Co-operation, by G. J. Holyoake, Vol. II., p. 83. " What Co-operation proposes is that workmen should com- bine to manufacture and arrange to distribute profits among them- selves, and among all of their own order whom they employ." MEANING OB' " PROFIT-SHARING." 241 manage, will be promoted by allowing their employees to participate in their profits. 80 much as to the distinction between the ideal of Profit-sharing and the ideal of Industrial Co-operation. It is now time to examine in detail the theory and the practice of these two distinct forms of Co-operation. Before we commence our investigation of the peculiar method of industrial remuneration known as *' Profit-sharing," it will be necessary clearly to define this method, and to distinguish it from other systems, with which it is not seldom confounded. The definition of the Profit-sharing method has formed the subject of resolutions by two bodies well qualified to deal with the subject — the Inter- national Congress on Profit-sharing, held at Paris in 1889, and the International Co-operative Congress, held at Delft in 1897. The latter Congress had before it a report dealing with the definition of Profit-sharing, which had been drawn up, after careful deliberation, by a special Committee appointed by the preceding International Co-operative Congress, held at Paris in 1896 — a report, which took as its basis the definition arrived at by the Paris Congress of 1889, and pro- ceeded to illustrate and explain its application. The Delft Congress adopted this report in its entirety ; and the text of this authoritative exposition of the method of Profit-sharing will now be set forth as passed by the Congress, with the addition only of certain comments, mainly by way of explanation, which will be added in notes. With respect to the definition of Profit-sharing, this 16 242 METHODS OF REMUNERATION. Committee takes as its basis tlie definition implied in the first resolution passed (without op|)osition) at the Inter- national Congress on Profit-sharing- lield at Paris in 1889, a meeting attended by a large number of the leading exponents of the method, and the competence of which is beyond question. " Le Congres international est d'avis : 1. Que la convention librement consentle, par laquelle I'ouvrier ou I'employe re^oit une part deter- minee d'avance des benefices, est conforme a I'equite et aux principes essentiels du droit positif " {Compte Rendtc in extenso des Seances, p. 267, Paris, Chaix, 1890). "The International Congress is of opinion, 1. That the agreement, freely entered into, by which the employee receives a share, fixed in advance, of the profits, is in harmony with equity and the essential principles of positive law." In order that the definition just set forth may be of practical utility as a test of what is, and what is not Profit-sharing, it is necessary to explain in what sense its terms are understood by this Committee. With respect to the "agreement" mentioned in the definition, the Committee consider that, while an agree- ment binding in law is the normal form, they do not exclude cases where the agreement has only a moral obligation, provided that it is, in fact, honourably carried out. By a " share " in profits is meant a sum paid to an employee, in addition to his wages, out of the profits, and the amount of which is dependent on the amount of these profits. If an employer undertakes, for example, to contribute to a Pension Fund £1 for every £2 contributed by his workmen, this is not a case of Profit-sharing, unless the undertaking is to pay out of profits only, because the MEANING OP " PROFIT-SHAIUNG." 243 sum payable under the agreement does not depend upon the amount of the year's profits.* With respect to the " profits," a share in which is, under a Profit-sharing scheme, allotted to the employees, these profits are, in the opinion of the Committee, to be understood as the actual net balance of gain realised by the financial operations of the undertaking in relation to which the scheme exists. f It is, therefore, necessary to point out that the payment of bonus on output, premiums * It will be observed that it is sufficient if the bonus depend on the profits ; it need not vary with the profits. Thus, an agreement to pay an uniform bonus at the rate of 5 per cent, on wages in each year, in which the profits sliall amount to not less than 4 per cent, (on the capital), would be a case of Profit-sharing, since, if only 3 i^er cent, is earned on the capital, no bonus is payable. t " The actual net balance of yain realised bij the financial operations of the undertaking in relation to which the scheme exists." Compare the article, "Comment definir la participation aux benefices?" by M. Maurice Vanlaer in Revue d' Bconomie Politique, August-September, 1897, pp. 771-786. There are some cases in which participation in profits is applied departmentally, i.e., separately to separate parts of a business having several branches. Suppose, for example, a firm in the manufactured iron trade has its own collieries, iron mines, lime- stone quarries, and blast-furnaces, supplying the works in which it makes bar and angle iron, deck-beams, (fee. The firm may fix a standard cost of production for the products of any one or more of the subsidiary undertakings, say its blast-furnaces, and may under- take that, if the pig-iron shall be produced at less than this standard cost, one-half of the difference between the actual and the standard cost shall be paid to its blast-furnacemen by way of bonus, in addition to their ordinary wages. Such a plan as this will not be an example of Profit-sharing, because the amount of the bonus is not dependent upon the actual profits realised. The firm might quite well be making heavy losses at a time when, the cost of production of their pig-iron being below the standard, they were (in accordance with their agreement) paying high bonuses to their blast-furnacemen. Suppose, again, that a firm with several distinct factories, were to 16 * 244 METHODS OF REMUNERATION. proportionate to savings effected in production, commis- sion on sales and other systems under which the amount of the bonus depends upon the quality or amount of the output or volume of business, irresjjective of the rate of profit earned, does not constitute Profit-sharing.* It is to be observed that the money to be received by the employee under Profit-sharing is to be received by him strictly as an employee, i.e., in consideration of the work done by him. The fact, that an employee holds agree with the persons employed in each that, (1) if the cost of pro- duction in eacli case should fall below the market price of the day of the articles produced in each separate factory, then one-half of the difference between the cost of such articles and their market value should be paid to the employees of the factory by way of bonus. Would this be Profit-sharing ? Or, again, (2) if the divisible profit fund were the difference between the cost of production and the actual realised price of the several products (whether above or below the market price) ? It is submitted that the former of the two cases last supposed would not come within the definition set forth in the text, because the profits divided would not be an actual balance of gain realised by the financial operations of the undertaking ; but the second plan might well be held to fall within the definition. By the present writer any scheme of departmental participation in profits applied to a business, in which each department is carried on practically as a separate undertaking, would be considered to be a case of Profit-sharing. * With respect to the distinction between Progressive Wages and Profit-sharing, see ante, p. 99 ; what distinguishes all cases of bonus on output and other forms of Progressive Wages from Profit-sharing is, of course, the fact that in all cases of Pro- gressive Wages the bonus is a premium upon efficiency of produc- tion, the amount of which is the same, whether the profits of the business are high or low ; while in all cases of Profit-sharing the amount of the bonus varies directly with, or is dependent upon, the rate of profit earned by the undertaking. It may be of interest to note the existence of a peculiar form of bonus payment, which cannot well be classed as either Progressive Wages or Profit-sharing. MEANll^G OF ''profit-sharing." 245 shares or any pecuniary interest in an undei'taking, and as such holder receives, on account of such shares or interest, a part of its profits, does not constitute a case of Profit- shai'ing.* Having explained what they understand by a " share in profits," the Committee direct attention to the require- ment contained in the Congress resolution that the share shall be " fixed in advance." It is not necessary that the employees shall know all the details of the basis upon which the amount of their share is fixed ; thus, an employer may agree to give his employees one-half of all his profits in excess of a certain Reserve Limit, that limit being communicated only to an accountant who cei'tifies This is the case (of which several examples are known to the writer) in which the bonus is dependent upon the total turn-over of the business — the " gross sales." This is evidently not Profit-sharing, because in any given year the firm might make no profit, and yet, if it had sold a large quantity of goods, a high bonus would be payable. Nor is it Progressive Wages in the same way as the payment of commissions on sales to a salesman or traveller; for in the case of commission on sales, this is a bonus, the amount of which depends directly upon the amount of goods sold by the person receiving the commission, and varies mainly in a direct ratio with the intensity of exertion and degree of skill displayed by this individual ; while, where the bonus is a sum, divided between the whole body of the employees, which varies in amount with the amount of the total turn- over of the firm, many other elements, distinct from the zeal and ability displayed by the employees, will, of necessity, influence the amount of the turn-over, and, consequently, of the bonus. * Profit-sharing is a method of industrial remuneration (i.e., a system of paying for labour) ; but the dividend received in respect of shares held by an employee is received, not as the remuneration of his labour, but in right of his capital ; and, as all who have dealt with this subject agree, the mere fact that shares in a concern are owned by some of its employees, does not give the business the slightest claim to be considered co-operative ; see Thornton, On Labour, p. 360, and Holyoake, History of Co-operation, 246 METHODS OP 1!KMUNEUATI0N. what is due to the employees ; this would be a case of Profit-sharing-. On the other hand, if the share given to the employees is indeterminate, i.e., if the employer at the end of the year detei'mines whether he shall give one- tenth or one-fifth, or some other fraction of his profits, to his employees, at his absolute discretion and not upon any prearranged basis — this is not Profit-sharing.* The next question is, supposing the total amount which an employer is to give to his employees as a body to be fixed upon a predetermined basis, must the share of each individual participant be similarly fixed ? Or may the employer distribute this amount at his unfettered discre- tion among the difFerent employees, according to his opinion of their merit or otherwise ? In strictness, cases Vol. II., p. 82. In some cases an arrangement is made that money shall be received on loan from the employees, to bear a fixed rate of interest, and, in addition, a further rate, which shall bring the total return on this capital up to the rate of dividend earned from time to time by the shares (or such further rate as shall equal one-half or some other fraction of the difference between the fixed interest and the dividend on the shares). It is sometimes denied that an arrange- ment of this nature is a case of Profit-sharing, because it is said that, what the employee receives, is received in right, not of his labour, but of his capital. But it is submitted that, in cases in which the arrangement in question is made loltli employees only, and not with the outside public, all that the employee receives in excess of the fixed interest may fairly be regarded as a bonus out of profits paid to him by way of remuneration (in addition to wages) for his labour, and that all such schemes can properly claim to come within the category of Profit-sharing. * This plan of paying to employees periodical bonuses, the amount of which is not fixed on any predetermined basis, is usually termed " Indeterminate Profit-sharing," or (more accurately) " Bonus- giving." The practice of giving gratuities, varying in amount at the discretion of the employer, appears to be of too unsystematic a character to justify its elevation to the dignity of an industrial method. MEANING OF " PROFIT-SHAKINg/' 247 of the latter type might well be held not to fulfil our definition,* but the Committee, on careful consideration, are not prepared to declare such cases inadmissible as instances of Profit-sharing, provided that in any event the whole of the employees' share be distributed among all or some of the employees, except such as shall have forfeited their share by their failure to comply with precise reasonable conditions of participation, but so that in no case shall any part go back to the employer. It is important to inquire how far a distribution of profits must extend in order to constitute a case of Profit- sharing. If the distribution be confined to managers, foremen and leading hands, or to any of such classes of employees, this, in the opinion of the Committee, is not Profit-sharing. A profit-sharing distribution may exclude persons who are not adults, or who have not been in the service of the employers for some reasonable qualifying period, but must, in order to come within the definition of Profit-sharing, include in any case a large pi-oportion, which the Committee consider should not be less than 75 per cent, of the total number of the adult employees who have been in the service of the employer for at least one year.f In accordance with the definition given in the report just cited, the term " Profit-sharing " will in this book be used as applying to those cases, in whicli * See this view urged by Dr. Heinrich Frommer, Die Geivimi- betheiligung, p. 60 ; this book contains a most vahiable analysis of the profit-sharing method. t In the account of the practice of Profit-Sharing given in subse- quent pages no attempt will be made to draw a hard and fast line of this nature as to the irreducible minimum proportion of the total number of employees who must participate in order to constitute a case of Profit-sharing. 248 METHODS OF EEMUNERATION. an employer agrees with his employees that they shall receive, in partial remuneration of their labour, and in addition to their ordinary wages, a share, fixed beforehand, in the profits of the undertaking to which the profit-sharing scheme relates. CHAPTER XVIII. PEODUCT-SHAEING. With a view to presenting in as lucid a manner as possible tlie special features Avhich characterize the co-operative method of Profit-sharing, it may be well briefly to contrast this method with a system of industrial remuneration possessing certain points of resemblance — the system known as Product-sharing. One of the cases of Product-sharing most commonly referred to is that which exists in agriculture under what is known as the " metayer '^ system. The land- lord supplies the land and buildings, and often also some or all of the stock, seed, and implements required, receiving in return an agreed proportion of the crops and other products of the farm, the balance, of course, being the property of the tenant. But this plan of " farming on shares " does not involve the existence between the two parties to the contract of any such relations as exist between employer and employed; and the consideration of this system Avould be foreign 250 METHODS OF REMUNERATION. to the purposes of a book dealing with the method of industrial remuneration. A form of Product-sharing, which certainly comes within our purview, is the system of "^ tribute/' still in force (although apparently dying out) in the Cornish mines. The different pieces of ground varying con- siderably in point of metalliferous richness, difficulty or ease of working, &c., each " pitch '^ is let to a miner on the terms that he shall receive a specified percentage of the agreed value of the mineral actually extracted from this piece, the man who offers to work the ground for the lowest sum per pound on the agreed value of the ore raised becoming the " taker.'" The ^^ taker,'' it should be understood, is the repre- sentative of a co-operative group (consisting '' some- times of as many as twelve men and boys, sometimes of sixteen, sometimes of eighteen, sometimes even of twenty-four or thirty-six ") * who work together, and divide between them in equal shares the lump sum received for the job. This group or " pair," before the auction takes place on the ''public survey day,'' carefully inspect the parts of the mine to be dealt with, and are fully competent — probably more com- petent than their employer or his agent — to judge as to the comparative richness of the ground and as to all other matters necessary to enable them to know how much the job will yield to them. Now let us contrast Product-sharing with Profit-sharing; in the former case, if the miners find a job unprofitable, they have * "West Barhanj," by L. L. Price, p. 52 n. ; to this work the reader is referred for a full description of the system of tribute. PRODUCT-SHARING. 251 only their own bad judgment or bad luck to blame for it."^ But under a Profit-sharing" scheme, no matter how well the operatives may have done their work, they may quite well find that, owing to the bad management or bad luck of their employer, their bonus may be one of quite microscopic proportions, or may have vanished altogether. Another example of the method of Product-sharing is to be found in the share system in force among a certain number of our barge sailors. Under this plan the net freight, after deducting working expenses, is shared in agreed proportions between the owner of the barge and the captain, the latter paying his mate and any other assistants whom he may find it necessary to employ. t Perhaps the best example of the position occupied by the system of Product-sharing in regard to the * Observe that no mistake ^macle by the employer in failing to get the best possible price for the ore can affect the earnings of the tribute-worker ; for the amount of those earnings depends upon the agreed value of the mineral extracted, and not upon the price at which the ore is actually sold ; see "JFesi Barhanj,^' p. 90. f As to the system in force in working barges on the Thames and Medway, see the evidence of Mr. James Tookey, the representative before the Labour Commission of the United Bargemen and Water- men's Protection Society. This witness laid before the Commission certain objections which exist to the share system, e.g., the irregularity of men's earnings when their barge is only casually employed, their losses through detention of their barge, for which it is often impracticable to recover demurrage (Evidence before Labour Com- mission, Group B., Vol. II., pp. 194-196). With respect to the system prevailing in relation to the sailing barges plying on the Lower Mersey, see ibid., p. 312, 252 METHODS OF REMUNERATION. method of industrial remuneration is afforded by the numerous cases which occur in the fishing in- dustry. The systems in force among fishermen are very various ; in some instances they are paid ordinary time-wages, in others progressive wages (a fixed time- wage supplemented by a premium of so much per ton of the catch) ; in other cases, again, their remuneration consists, not in any form of wages, but in a specified share in the catch or its market value; sometimes they are paid partly by fixed wages, partly by a share in the catch.^ The plan last mentioned is closely analogous to Profit- sharing, but differs in certain important respects. Let us suppose that the employer (the boat-owner) has paid an exorbitant price for his boat, and for his nets, and has, it may be, sold his share of the catch in advance at a ridiculously low price ; under such circum- stances it may occur that his profits in relation to a given trip may be very low indeed. In such a case, does it follow that the bonus allotted to the men (in supple- ment of their wages) will also be correspondingly low? Certainly not; for the bonus of these fisher- men is wholly irrespective of the rate of profit realised by their employer. But if the method adopted had been Profit-sharing, then such mismanagement on the part * For a full account of the various forms of the share system in our sea fisheries the reader is referred to the details, based mainly upon information supi^lied by Mr. H. Noel Malan, Inspector of Fisheries, which are contained in the lieport on Profit-sharing, by the present writer, published by the Labour Department [C. — 7458 of 1894], pp. 6-13. PRODUCT-SHARING. 253 of their employer would, of course, have diminished their remuneration. Under the method of Product- sharing, on the other hand, the reward of the men^s labour is — it will be seen — dependent for its amount exclusively upon the success of their own efforts. The method of Product-sharing is, for obvious reasons, one incapable of very wide application. The circumstances of the " tribute " mining are peculiar,"^ and do not find a parallel in many other industries. The sale of a man's share in a catch of fish is a simple matter, transacted by a market sales- man in a few minutes. But a boot operative, who should find himself asked to take home every week, in lieu of his wages, or as supplemental to his wages, a number of pairs of boots, or, it may be, a single shoe, would decidedly feel extremely embarrassed. However, the general features of this system have seemed to deserve description, on account at once of their strong- resemblance to, and of the instructive contrast which they afford with, the more generally important method of Profit-sharing. * The principal peculiarity consists in the difficulty of ascertaining beforehand the richness or poorness of a "pitch "—a difficulty which " the growth of knowledge on the part of the captains " (or mine agents) is gradually overcoming (" West Barhanj,'' p. 87). CHAPTER XIX. THE THEORY OF PROFIT-SHARING. Having now arrived at a clear conception of the method of Profit-sharing, under which the employee is to receive, in addition to his wages, and as the further reward of his labour, a stipulated proportion of the net gains of the business carried on by his employer, we will proceed to consider the natui'e of the parti- cipation thus proposed. It is not intended in these pages to expound at any length the theory of Profit-sharing, which has been amply explained by Dr. Boehmert, and Mr. Sedley Taylor, and, more recently, in an admirably concise and practical work by Mr. N. P. Gilman [Projit- sharing between Employer and Employee) .^ For our * Many of the cases mentioned by Mr. Gilman as examples of Profit-sliaring will be seen not to fall within the definition of that method adopted in these pages (Rand McNally & Co., Kingman & Co.,Fabriqued'appareils61ectriques, Rumford Chemical Works, Bri^re et Fils, Tramways Suisses, W. H. Smith & Sons, Mame, Masson, Proctor & Gamble, Ara Cushman & Co., Globe Tobacco Co., Ptt^Zic THE THEORY OF PROFIT-SHAKING. 255 purpose it will be sufficient to refer to tlie various forms in which this theory is capable of application. We will commence by examining the typical case of Leclaire, the French house-painter, by whom the method of Profit-sharing is commonly stated to have been originated. At the time when he adopted Profit- sharing, Leclaire employed three hundred men, all on time-wage. Leclaire reckoned that, if each of these men could be induced to work with greater zeal and intelligence, to waste less materials, and to spoil less tools than at present, a saving would be efi"ected equivalent to rather more than £3,000 a year. His plan consisted in providing the requisite inducement, and that without any cost whatever to himself, by offering to his employees a share in his profits, such share to be paid out of this new profit of £3,000 a year which the new method was to create.* " The increased Ledger, Staats Zeltung, Norriton Woollen Mills, Tufts, Yale & Towne Manufacturing Co. (see ante, pp. 187, 188), Mongin et Cie, Fives Lille Co. — a case of Gain-sharing, accurate particulars as to which, stated by M. Charles Eobert, president of the French Profit-sharing Society, will be found in Rapports du Jury International, Economie Sociale, Section II., pp. 136, 137. All Mr. Gilman's cases of Indeterminate Profit-sharing are also outside our definition. It may be noted that Veuve Boucicaut is wrongly classed as Indeterminate ; so are Tangyes, and Young & Co. (both of which firms have since abandoned Profit- sharing) ; while the Wardwell Needle Co. is improperly placed among the "Determinates." * It is related that, when John Marshall, of Leeds, was showing Eobert Owen over his mills, he remarked that " If my people were to be careful and avoid waste, they might save me £4,000 a year." Owen replied, "Well, why don't you give them £2,000 to do it? and then you yourself would be the richer by £'2,000 a year." 256 METHODS OF KPIMUNERATION. activity of tlio "workman^ liis greater care of the tools and materials entrusted to him, and the consequent possibility of saving a considerable part of the cost ot superintendence^ enable profits to be obtained under a participating system which would not accrue under the established routine. If these extra profits were to be wholly divided among those whose labour pro- duced them^ the employer would still be as well off as he is under the existing system. But, assuming that he distributes among his workmen only a portion of this fresh fund, and retains the rest himself, both he and they will, at the end of the year, find their account in the new principle introduced into their business relations'' (Sedley Taylor, Profit-sharing, p. 23). Such is the general theory of what may be called '^stimulus" participation, i.e., Profit-sharing applied in cases in whicli the object of its adoption is to stimulate the zeal and increase the efficiency of the employees. In some cases, however. Profit-sharing is introduced with a view to gaining for the employer advantages other than these. Thus, if it is desired to paralyse, so far as possible, the power of a trade union, the promise of a share in profits, especially a promise conditional upon the participant's abstaining from joining a trade union, or, at any rate, upon his taking no part in strikes, may be made for the purpose of detaching the employees from allegiance to their trade union or otherwise weakening the influence of such combinations. This type might be termed *' anti-union " participation. THE THEORY OF I'KOFIT-SHAKING. 257 It frequently occurs tliat the profits of a firm depend largely upon the preservation of trade secrets, or would be gravely imperilled by the foundation of opposition establishments, officered by its ex-servants. In such cases, and, generally, in all cases, in which it is wished to prevent the employees from leaving the service of the firm, Profit-sharing has been found capable of application with advantage to the employers, and that quite apart from any possibility of inducing the display by the employees of any extraordinary degree of efficiency. The form of this method most suitable, under circumstances of this nature, is that, in which the share in profits allotted to the employees is placed to the credit of a Provident Fund, providing pensions, &c., for those employees only who have spent a long continuous period in the service of the firm — an arrangement known by the name of " deferred " participation. It remains to mention two types, to which the name of Profit-sharing is commonly given, although each of them embraces characteristics foreign to the accurate conception of the Profit-sharing method. The first of these types is that, in which the employee is asked to accept lower wages than he would other- wise have been able to obtain, and induced to do so by the expectation that his share in profits will recoup the deficiency in his earnings. It must be admitted that (quite apart from any bargain of this nature) other forms of Profit-sharing, such as "anti-union,'* and "deferred" participation, make it not unlikely that the employee will find it difficult to obtain an advance 17 258 METHODS OF KKMUNERATION. in wages, which he might have insisted upon, if he had been unfettered by participation in profits ; so that, in effect, his share in profits may very possibly turn out, in the end, to be, iwo taido, in lieu of, and not wholly in addition to, normal or ordinary wages. Still, it would be incorrect to assert that the theory of Profit- sharing contemplates that the share in profits re- ceived by an employee shall be, to any extent whatever, in lieu of his ordinary wages. Those employers, therefore, who may adopt the practice of sharing profits with their employees on the condition that these employees shall, ah initio, consent to receive lower wages than they would otherwise have obtained, cannot be considered to practise what is properly known as Profit-sharing. This type, being, in effect, Profit-sharing minus the payment of full wages, might be called "minus" or "negative" participation. The second of the two types above referred to is Profit-sharing pins the payment of gratuities. The cases covered by this description are those, in which the share of profits allotted to the employees is allotted upon so generous a scale that no probable, or even possible, increase in the efficiency of their work can be expected to produce a new fund of profit sufficient to cover the amount divisible among the participants, and in which no conceivable advan- tage, capable of being measured in terms of money, can be expected to accrue to the employer sufficient to compensate him for the sacrifice incurred. It is clear that we have liere something entirely extraneous THK THEOliY OP PROFIT-SHARING. 259 to the metLod of" Profit-sharing ; for under that method, as Mr. Sedley Taylor has told us, the em- ployer, who practises Profit-sharing, is to be, at the least, "as well off as he is under the existing system." To the extent, to which the adoption of a profit-sharing scheme causes a net disadvantage to the employer, that scheme is so far false to the central idea of Profit- sharing, and is an example of Profit-sharing plus philanthrophy. This may be called " surrender " participation. 17 CHAPTER XX. PROFIT-SHAKING IN PRACTICE. With regard to the manner, in which the method of Profit-sharing has been applied in the various instances in which some system of this nature has been adopted, it would not be possible within the compass of these pages to present any complete account. The reader, who is anxious to investigate these details, is referred, so far as Continental and American experience is concerned, to the work of Mr. Gilman, already referred to, and to the publications of the French Profit-sharing Society (" Societe pour I'etude pratique de la partici- pation du personnel dans les benefices," 20, Rue Bergere, Paris), in particular to Les Ajjplicatioris de la Partici'pation aux Benefices, and the quarterly Bulletin de la Partici'pation aux Benefices, and, so far as regards the cases which are known to have occurred in the British Empire, to the Report on Profit-sharing, by the present writer, published by the Labour Department of the Board of Trade in 1894 [ante, p. 252 n), and to the articles in continuation of that PKOEIT-SHAKJNG IN PRACTICE. 261 Report which have appeared in the Labour Gazette, July, 1895, July and September, 1896, and July, 1897.^ The epitome of available information with respect to British Profit-sharing contained in the Fourth Annual Report of the Labour Bepartment (1897), which furnishes the most recent statistics pviblished on this subject, gives the details set forth in the tabular statement printed in the two following pages ; while in Appendix A., 2?06'^, pp. 366-379, there will be found lists, compiled from the particulars published by the Labour Department, giving the names of all the British firms, which are known to have adopted profit-sharing schemes, the particulars as to cases, in which Profit-sharing is no longer in operation, being- contained in Part I., and those as to cases, in which Profit-sharing is now in force, being stated in Part II. of that Appendix. * A careful analysis of the facts and figures in relation to Profit- sharing in various countries is contained in an article, by Dr. Rudolf Einhauser, in Zeitschrift fiir die gesamte Staatswissenschaft (Tii- bingen), o4th year, First and Second Parts (1898), pp. 120-272. 262 METHODS OF REMUNEEATION. NUMBER OF BRITISH FIRMS WHICH HAVE ADOPTED PROFIT-SHARING SCHEMES.' Profit-Sharing Schemes. Vear. (1.) Total Number started in each year. (2.) Number tliat ha^■e since ceased to exist. (3.) Number as to which particulars could not be obtained. (4.) j Number I known to be still (June I 30tli, isor) ill operation. I (5.) 1829 1865 1866 1867 1868 1870 1871 1872 1873 1874 1876 1878 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 (6 months) Total .. 6 4 1 1 2 4 2 1 3 2 2 2 2 3 3 3 6 7 6 19 32 16 15 5 5 6 4 170 1 2 2 2 4 4 14 6 8 1 4 73 1 2 1 2 1 1 3 1 4 3 6 15 16 10 7 4 5 2 4 2 94t * Of the tinns included in the 1S96 Abstract of Labour Statistics, 19 sent no returns in 1S97. Out of these 19 firms, 1 is known to have been dissolved in 189(5, 3 (which sent no returns either in 1S96 or 1895) are referred to in column 4 (1 of these 3 firms being in a British colony) ; while 15 (of which 11, including 1 colonial firm, sent returns in 1890, and 4 in 1895) are, for the present, assumed to still practise Profit-sharing. t Including 5 (of which 1 was started in 1885, 1 in 1888, 2 in 1S91, and 1 in 1S9G) in British Colonies. PROFIT-SHARING IN PRACTICE. 2G3 TRADES IN WHICH PROFIT-SHARING SCHEMES HAVE BEEN ADOPTED BY BRITISH FIRMS. Nature of Bnsiness Building trades Mining and quarrying . . . Metal, engineering, and ship-building trades : Metal Engineering and ship-building Textile trades Clothing trades Transport Agriculture Printing, paper, and allied trades : Printmg Other Woodworking and fur- nishing trades Chemical, glass, pottery, &c r.. Food and tobacco Gas works and tar dis- tilling Fibre and cane working.. Other businesses Total Number of Busiues.si>s in whicli Protit- sh;inii;.r, having lii-i'ii iiistituttHl, no lonser exists. Number of Businesses as to which particulars could not be obtained. Number of Busini'ssi's iri which Prolit- sharinj; \vas known to exist at 30th June, 1807. 14 78 1§ S 6t 6 3 12 6 9 3 i: 31S 94 Number of Persons liipliiycil in IJusinosses in wliich Profit-sharini: was known to exist at 30th June 1897.* lljl 340 380 23,579 2,439 1,071 420 2,588 424 473 1,556 5,082 4,531 95 3,936 47,075 * The numbers employed in some of the businesses vary from seasonal and other cause*!. The figures given above are a mean between the riuuimum and minimum numbers employed. In regard to I'l firms, as to which later particulars could not be obtained, the numbers given are, as to 2, those appearing in the Report ])ublished in 1894. as to S, those supplied by the tirms in 1895, and as to 11 (including 1 C(donial tirm, an engineering business, employing 889 persons), those supplied by the tinns in 1890. t Including 1 colonial tirm, employing 889 persons. t Colonial. S Including 3 colonial tirms, employing 283 persons. 2G4 METHODS OF REMUNERATION. As the figures stated in the two Tables just set forth show, the Profit-sharing system has, so far as infor- mation is avaihible on these points,* been applied in the British Empire in 170 cases, and in a great variety of undertakings in many diiferent trades. The total number of British firms, by which Profit- sharing has been adopted, but has subsequently, for one reason or another,t been abandoned, J is 7o ; the period during which, in these cases, so far as the particulars are known. Profit-sharing was in operation before its discontinuance, was 23 years in one case; 21 years in one case; at least 17 years in one case; 15 years in one case; 12 years in two cases; 11 years in one case ; 10 years in two cases ; 9 years in three cases ; 8 years in four cases ; 7 years in one case ; 6 years in six cases; 5 years in two cases ; 4 years in eight cases ; 3 years in ten cases ; 2 years in twelve cases ; 1 year or less in fourteen cases. § The number of the British firms at present practising Profit-sharing * It cannot be doubted that there are a not inconsiderable number of cases, in which Profit-sharing has been adopted by British firms, but as to which it has not, so far, been found possible to obtain, or to publish particulars. t As to the causes of the cessation of Profit-sharing in diti'erent cases see post, p. 280. I In addition to the cases in which Profit-sharing was introduced and subsequently abandoned, details in regard to four cases, in which an attempt to introduce a j^rofit-sharing scheme was ineffectual, are given in the Labour Department Beport on Frojit-shariiifj, 1894, pp. 43, 83, 98, 123, 124. § The details as to the duration of Profit-sharing in the cases, in which this method is no longer in operation, are compiled from the Report on Vrofit-sharing of 1894 and subsequent information given in the Labour Gazette, July, 1895, July, 1896, and July, 1897. PROFIT-SHAKING IN PRACTICE. 2G5 (including, hoAvever, o as to wliich no recent details have been obtained, and which may possibly have ceased to practise Profit-sharing) is 97, of which, as the first of the two foregoing Tables shows, 30 adopted this system before 1889, 43 in the years 1889-91, and the remaining 24 since the latter year. While our experience of Profit-sharing goes back for a good many years, and has extended to a fairly large number of cases, the different types of Profit- sharing, which have been applied in different instances, have included most of the main forms in which it is possible to introduce the method. So various, indeed, have been the schemes adopted in different cases, that all that can be done in these pages, with a view to giving the reader some idea of their nature, will be to state, in bare outhne, their general features.^ First, as to the character of the contract between employers and employed ; in a certain number of cases the right to share in profits jiccorded to the employees is a strict legal right ; in many others the bonus is declared to be given '' gratuitously," or the profit-sharing scheme is expressly declared to confer no legal rights. t With respect to the profits, a share in which is allotted to the employees, these are nearly always the profits of the concern as a whole ; but in certain instances different parts of one business are treated as separate undertakings, the persons employed in each * Examples of profit-sharing schemes of different types are set forth in Appendix B., post, pp. 380-404. t See poxt, pp. 804, 305. 266 METHODS or REMDNEHATION. separate departuieni sharing in the profits earned in that department.* With regard to the methods adopted in determining the proportion of profits allotted to the employees as bonus, a great number of different plans are in force. In calculating the profits, out of which bonus is to come, such outgoings as rent, rates, taxes, and all working expenses, including wages and salaries, are first deducted from the gross revenue; and in most cases a minimum rate of interest on capitalt is also set apart in priority to all claims to bonus, while a fund has also usually to be provided to cover depreciation of plant, &c. J ; and in some cases provision is made for maintaining reserve funds. In a few cases the employees take a specified share in the net revenue concurrently with the ordinary capital, and without any prior deduction in respect of interest. With respect to the minimum rate of interest payable before any sum is available for bonus, this is in some instances cumulative ; that is to say, if not paid in any one year, it must be made good out of the earnings of subsequent years ; in other cases it is provided that, if the capital become * See ante, p. 243 ;(. t The minimum rate of interest varies very greatly in ditteren teases, being, in some of the cases described in the Labour Department Beport of 1894 as low as 4 or 4J per cent., in many cases 5 per cent., in others 6, up to 10, and in one case 15 i^er cent. \ The percentage on the value of plant, &c., set aside to cover depreciation appears to vary considerably ; in one case mentioned in the Report above referred to it is 2i for plant, 5 for machinery and fixtures ; in another, 5 ; in two others, 6 ; and in one, 10 per cent. PEOFIT-SHARING IN PRACTICE. 267 impaired, the loss must be recouped before any division of subsequent profits takes place. In many instances, as for example in the case of joint-stock companies, all charges for management must have been paid before any distribution of bonus can take place ; while a private employer will either allow himself a claim for a certain salary by way of remunera- tion in respect of the work done by him in relation to the management of the business,"^ such claim ranking in priority to bonus, or will take his remuneration wholly in the form of profit. A plan often adopted is to set aside out of the revenue of the business a fixed miniiiium amount, frequently spoken of as the '^reserved limit,'' which is fixed at a sum sufficient to include all charges for interest, depreciation, salaries of partners, &c., taking priority to bonus, and provides for the employer a minimum rate of profit which he reserves to himself in any event, the participation of the em- ployees commencing only after the jDrofits of the year have exceeded the reserved limit. At what figure the reserved limit shall be fixed, depends, naturally, upon the circumstances of each case. In some cases the reserved limit has been fixed at the amount of the profits earned in the last year, or at that of the average profit of a number of successive years im- mediately preceding the adoption of Profit-sharing ; but the employer is in some cases stated to have fixed his reserved limit so low as to allow the participation * This remuneration for management is in some cases included in the minimum interest on capital. 268 METHODS OF REMUNERATION. of the employees to begia at a point below the average profits of preceding years.^ When wc come to ask, what is the share in the total fund available for distribution as bonus which is allotted to the employees, we find that in many cases the share of the employees is a specified fraction of the surplus profits (in excess of the ininimum reserved in priority to bonus), a fraction varying widely in different cases ; while in some instances the employer offers to give up to his employees so much of his surplus profits as shall suffice to pay them a bonus at the same rate per cent, on their wages as the dividend earned by the capital, or a bonus at a fixed rate, uniform from year to year ; f or the surplus profits are divided rateably on the capital and the total amount of the year's wages. But, indeed, the variety of methods of division obtaining is so great, that any attempt to describe in detail the different plans adopted would be altogether impracticable in this place; and the reader anxious for fuller information on this point must be referred to the Labour Department Report on Profit-sharing of 1894 already mentioned. In some instances the accounts of a profit-sharing- firm are submitted to a public accountant, to whom the basis adopted in regard to the division of the * As to the proportion of cases in which (whether under the " reserved limit" plan or other forms of Profit-sharing) participation is allowed to begin at a point below the average profits of preceding years, see some remarks by Mr. T. W. Bushill, Appendix to Evidence before the Labour Commission sitting as a loltole, p. 210. t See ante, pp. 258, 259. PROFIT-SHARIXG IN' PRACTICE. 269 profits is communicated, and who certifies what is due to the employees in respect of their share. The next point for considei'ation is the conditions attached to participation in profits. In some cases all the employees without distinction are allowed to share in the bonus fund ; but in many instances participation is confined to persons who possess Certain qualifications, the most frequent of which is a certain minimum length of service with the firm, which is in many cases six months' or twelve months' continuous employment, though in a few cases a shorter, and in some instances a much longer period of service, extending to eighteen months, two years, three years, and in exceptional cases to even a greater number of years, is required as a qualification. In a few cases persons below a certain age are excluded. With one company the persons who are to participate in profits are selected from the general body by the directors, acting on the recommendation of heads of departments and of the managers. In the case of certain other firms it has been left to committees consisting wholly or mainly of employees to decide what shall be the qualifications for partici- pation in profits."^ A few firms have made it a con- dition of participation in profits that the employees shall undertake to serve them for a certain term (six months, or twelve months). One company makes it a condition that the participant shall not be a member of his trade union ; while one employer will admit to * In one case, in which Profit-sharing was afterwards abandoned, this method of selection was found to cause much friction. 270 METHODS OF RKMUNEUATKJN. share in his profits none but members of the trade union. In a certain number of firms the employee, in order to participate in profits, must be a member of a sick or other provident club or institution. Some profit-sharing firms exclude from participation particu- larclassesof employees, such as pensioners, persons paid wholly or partly by commission, and piece-workers.* In a few cases it is made a condition of participa- tion in profits, that the employees shall, by taking shares in the business, or by depositing money with the firm, contribute to the capital of the undertaking. As an example of this latter type of Profit-sharing may be mentioned the scheme in force with Sir W. (x. Ainiistrong, Whitworth & Co., Limited, ordnance manufacturers, and iron and steel shipbuilders, a firm employing about twenty-one thousand persons. Under this scheme deposits of not less than Is, and not more than £1 of the depositor's weekly wages are received from persons in the employ of the com- pany each week (officials paid quarterly being allowed to deposit up to £2 per week), the maximum amount which ma.y be deposited being £200 (£400 for those paid quarterly). The deposits carry a fixed interest of 4 per cent., and, in addition, are entitled to a bonus declared each year equal to half the difference between this fixed rate and the dividend payable on * In connection with tlie (juestion of the number of persons admitted to pavticiiDation, it shoukl be observed that, if a small number of workmen in a large body are alone allowed to share in profits, this arrangement creates a tendency on the part of these favoured individuals to exercise a rigid supervision over the work of the non- participating employees, which these workpeople are likely to resent, and which may not improbably give rise to considerable friction. PROFIT-SHARING IN PRACTICE. 271 the shai-es of the company.'^ The protit-sliaring deposits are sometimes, as in the case just described, made on loan without security, but in other cases rank as debentures. t In regard to the pi'oportions, in which the fund available for distribution as bonus shall be divided among the employees entitled to participation, a considerable variety of methods exists. A large number of firms divide the bonus fund among the participants in proportion to the amount which each has earned in wages during the financial year. In some cases the bonus fund is divided according to the ratio between, not the amounts actually earned by the participants, but their normal or rated pay, additions to such pay in respect of overtime and piece-work being excluded from calculation. In some instances the share, which each participant shall take, is, wholly or in part, determined by the leogth of time during which he has been in the service of the firm, or by his position and the nature of the duties which he performs, provision lor giving an extra proportion to managers and foremen being not uncommonly made. In some instances the share, which shall be taken by each participant, depends iipon the ability which he has exhibited, the interest which he has displayed in his work, &c., as decided by the judgment of the employer. * See Labour Gazette, July, 1897, p. 196. t For form of Agreement in relation to profit-sharing deposits see Appendix B., post, pp. 396-402; for form of Agreement in relation to Workmen's Profit-sharing Debentures, see ibid., jw^t, pp. 403, 404. 272 METHODS OF REMUNERATION. In the large majority of cases the sums appro- priated for the benefit of the employees are paid to them in cash ; several firms, however, allow the recipients of bonus to leave the money with them on loan, while others arrange to pay the bonus, not directly to the participant, but to his credit in a savings bank account. In several instances a pro- portion, varying in different cases (in a few cases the whole) of the bonus is devoted to making pro- vision for the necessities arising from sickness, old age, and death, in some cases by being credited to a Provident Fund for the benefit of the employees generally, more often by arranging that the partici- pant's bonus shall be credited to him at once, but paid out (together with accumulated interest) only when he shall have attained a specified age, or have completed a specified term of continuous service with the firm, or under certain special circumstances, provision being made in some cases for the payment of sums on the death of the participant."^ In some cases, in which sums on account of the share in profits allotted to the employees are made payable at a future date, the employee forfeits his rights if he previously quit the employment of the firm. But in many instances special provision is made enabling the employee to receive all sums in respect of the accumulations of bonus to which he was entitled when he left the service of the firm, getting his money at once, or on giving a reasonable * In one case the firm gives security for all monies in its hands on account of the accumulations of bonus. PROFIT-SHARING IN PRACTICE. 273 notice of withdrawal, or at tlie same time as if lie had remained in tlie service of the firm."^ The cases, in which a part or the whole of the employees' bonus is devoted to taking up shares in the capital of the undertaking — shares, the ownership of Avhich carries with it, in nearly all cases, the ordiuary right to vote at the general meetings of the share- holders, thus conferring on the employees full rights of partnership — although not numerous, possess a special degree of interest. One of the most impor- tant examples of Profit-sharing plus Shareholding is the scheme in force with the South Metropolitan Gas Company, which employs some three thousand to four thousand men (according to the time of year), and which encourages its employees to become shareholders by increasing by 50 per cent, the bonus of a man who is willing to invest one-half of his bonus in stock of the company. At the half-yearly general meeting of the company in February, 1898, it was stated that "their employees were now shareholders in their company to the extent of £69, 000, t and, in addition, * It occasionally happens that employees, whose bonus is locked up in a Provident Fund, so that their only means of obtaining an early payment of the sums standing to their credit is to leave the service of the tirm, discharge themselves, or get themselves discharged, with the express object of getting this money. The Edinburgh Co-operative Printing Company (a working-class co-operative undertaking), in order to meet this tendency on the i^art of their employees, have passed a rule providing that " should any employee resign his or her situation, or so misconduct himself or herself as to render his or her dismissal expedient, with the intent to procure payment of the sum standing in his or her account, the directors may, if they think fit, postpone payment thereof for any period not exceeding two years." t Of the nominal value of about £48,000. 18 274 METHODS OF REMUNEKATIOX. the capital of the superannuation fund, wliich was established many years ago for the workmcii, was also invested in the company's stock, making together a total investment in their stock of £103,000. Beyond this, their men had £37,000 on deposit at interest with the company."* This company has obtained from Parliament authority to adopt a scheme, under which, at any time after the total investments of its employees in its stock, dating from the distribution of the first profit-sharing bonus in July, 1890, shall exceed the nominal amount of £40,000, the directors may pre- pare a scheme for enabling employees holding stock to elect one or more of their number, but not exceeding three, to be a director or directors. The scheme is to fix the qualification of an employees' director, but such director must have been at least seven years in the constant employ of the company, and must have held for not less than twelve months not less than £100 stock. Another case of great interest in regard to the form of Profit-sharing now under consideration is that of Wm. Thomson & Sons, woollen and worsted manu- facturers, of Huddersfield. Mr. George Thomson, to whom this business belonged, converted it in 1886 into a society, which was registered under the Indus- trial and Provident Societies Act. Mr. Thomson retains a complete control over the business, can only be removed from his position as manager " by the vote of five-sixths of all the members of the association, and five-sixths of all the votes capable of being given at a * Times, February 17th, 1898. PROFIT-SHAKING IN PRACTICE. 275 special general meeting," and may appoint liis suc- cessor. A large part of the capital is loan capital advanced by Mr. Thomson, while the share capital is to a great extent held by working-men, including, in addition to the employees (all of whom, about 130 in number, are shareholders), a large number of workmen's co-operative societies and the trade union organizations concerned. The committee, whose functions are mainly consultative, consists of Mr. Thomson, three of the employees of the society (a dyer, a designer, and a weaver), two representatives of co-operative societies (one a blanket raiser, representing the society which is the largest co-operative purchaser, the other a weaver, who is a member of a society holding two thou- sand shares in the concern), and two representatives of trade unionism (a working weaver and the secretary of the Weavers' Association). The surplus profits, re- maining* after paying a fixed interest of 5 per cent, on the share capital (with the proviso that, if this interest be not paid in full, the deficit is to be a first charge on the subsequent profits, but without compound interest), and providing for reserve fund and for au assurance and pension fund for the benefit of the employees, go one-half to the customers of the society and the other half to all persons employed by the society for not less than six months, as a bonus in pro- portion to wages earned, this bonus being applied in or towards purchase of shares in the society. It may be mentioned that the services rendered by Mr. Thomson, as head of the business, are so highly appreciated, that his original salary of £500 a year 27() METHODS OF REMUNERATION. has been increased by the shareholders to a very considerable extent^ while his repeated offers to sur- render the autocratic authority conceded to him by the constitution of the society have always been declined.* It may bo mentioned that, while in the instances just cited, the profit-sharing scheme provides for the employees having-, as shareholders, a voice in the management of the business, in other cases, in which no such arrangement exists, a special consultative committee, composed of representatives of both em- ployers and employed, is formed, which assists the employers with its advice in carrying out the profit- sharing scheme. The general outlines of the various schemes, under which the profit-sharing method has been applied having- now been explained, it remains to inquire how far these attempts to improve the ordinary wage- system have met with success, whether from the point of view of the employers or from that of the employees. To one important question — the extent of the addition, which the bonus paid under profit-sharing schemes has made to the wages of the participating employees — the best answer will be given by the figures, compiled from statistics published by the Labour Department, which will now be stated. Dealing, in the first place, with the firms which furnished information on this point for the Report oti Profit-sharing of 1894, we find that the ratio, which * In this factory an eight hours day has for some time been in force, and time-wages have been substituted for piece-work. PKOFIT-SHAKING IN PRACTICE. L(i the bonus of the employees bore to theix' wages on the average^ taking one year with another, from the time when these employers began to practise Profit- sharing to the end of 1893^ was, so far as could be ascertained, as follows. Out of the eighty-three cases to which this information relates (some few firms counting as more than one case because of their having separate profit-sharing systems in force in difierent branches, e.g., on different farms), there were eleven cases in which no bonus at all had been paid ; five in which the bonus averaged under 1 per cent, on wages ; twenty-two in which the average bonus was 1 and under 3 per cent. ; thirteen cases of o and under 5 per cent. : twelve cases of 5 and under 7 per cent. ; eight cases of 7 and under 9 per cent. ; five cases of 9 and under 1 1 per cent.; four cases of 11 and under 13 per cent.; two cases of 13 and under 15 per cent. ; and one case of 15 and under 16 per cent. If we take all these eighty-three cases together, we have a mean ratio of bouus to wages of 4*4 per cent; while, if we regard only the seventy-two cases in which a bonus was paid, we find that the bonus was in these cases at the mean rate of 5'1 per cent, on wages.^ With regard to the bonus paid in each of the years 1894-1890 inclusive, the following information is available. t * For more detailed information see lleport on Projit-sliaring, 1894, pp. 152-154. t See TJiirtl Atiniud Ecport of tlie Labour Deport iiient of the Board of Trade, p. 142, and Fonrtli Annual Report, p. 144. 278 METHODS OF REMUNERATIOX. Ratio of Bonus to Wages in 1894-96. Number of Kumber of cases ' in wliicli the lioniis given in Col. 1 was pairl. Eniployoes Number of Ratio of Bonus to Wages. of Firms referreil to in Col. 2. t Participants in Bonus. (1) (2) (3) (4) r' Nil 25 3,053 1,814 1,443 1 1 Under 1 per cent 3 1,613 1,192 1 and under 3 per cent. . . . 12 3 „ 5 „ 9 4,444 2,148 1894 -j ! 5 „ 7 „ 17 5,154 3,960 1 7 „ 9 „ 3 100 85 9 „ 11 „ 11 1,966 889 15 „ 16 „ 2 1,879 1,696 I 17 per cent. 1 83 10 Total 83 19,936 11,593 ( Nil 18 8,092 _ Under 1 per cent 2 1,322 4,975 1,205 1 and under 3 percent.... 17 3,243 3 „ 5 „ 6 2,430 1,548 5 „ 7 „ 13 6,467 3,787 1895 - i 7 „ 9 „ 9 „ 11 „ 5 4 273 757 202 651 11 „ 13 „ 2 37 31 13 ,, 15 „ 2 195 199 15 „ 16 ,, 1 17 16 1 21 ,, 22 „ 1 1,792 1,792 - ^ 36 ,, 37 „ 1 85 15 Total 72 21,442 12,689 f Ml 23 3,654 1,238 1 Under 1 per cent 2 1,233 1 and under 3 per cent.... 8 1,714 1,349 3 „ 5 „ 3 238 218 5 „ 7 „ 14 4,435 2.633 1896 - 7 „ 9 „ 6 4,559 2,704 9 „ 11 ,, 9 1,167 965 11 „ 13 „ 4 460 434 15 „ 16 1 22 22 27 „ 28 „ 1 86 23 28 „ 29 ,, 1 2,466 2,461 Total 72 20,039 12,042 * t '*''? ojyponite. profit-shaking in tkactice. 279 Mean and Average Bonus in 1894-96. 18!>4. 1805. 1S90. per cent. per cent. per cent. Mean Bonus in all cases 40 4-7 4-9 Average Bonus in the cases in which bonus wasjiaid, taking into account the number of participants in eacli case... 6-1 6-7 10-3 In relation to the figures which have just been set forth in regard to the ratio, which the bonus paid to the employees of profit-sharing firms has borne to the wages of these workpeople, the question naturally arises, whether in all cases the bonus paid under profit-sharing schemes represents a clear addition to wages, or whether the employees do not in some cases consent to receive lower w^ages than they could other- wise obtain. I have known one instance, in which a firm explained an exceptionally high bonus by the fact that their employees had not received an advance in wages which the firm would otherwise have had to grant ; but, on the whole, I believe that, so far as this country is concerned, cases, in which the employees of profit-sharing firms receive lower wages than they would have obtained if no profit-sharing scheme were in force, are not very common. With regard to the degree of success attained by the profit-sharing method, the facts in relation to * In a few cases, in wliich the bonus is calculated separately for distinct branches of a business, the ratios are stated separately for each branch. t The numbers employed by some of the firms vary, from seasonal and other causes. The figures given in col. 3 of the Table are a mean between the 7)iaxivium and the minimum numbers employed. 280 METHODS OF KEMUNEKATION. those firms, by wliicli the system has been trietl, but subsequently given up, are of no little intei'est ; and the Table whicli follows, sunmiarising the various reasons which have led to the cessation of profit- sharing schemes in different cases will be useful.* Causes of Cessation of Pkofjt-sharixg. Causes (if Ci^ssatiiin. Xuiiiljin- of Cases. Death of employer Job finished 2 2 Enterprise abandoned Liquidation or difesolution Changes in, or transfer of business Losses or want of success 2 12 3 13 Diminution of profits 2 Apathy of employees Dissatisfaction of employees and grant of increased wages 4 1 Disputes with employees 3 Dissatisfaction of employers with results Grant of shorter hours 18 1 Substitution of fixed rate of interest Special circumstances Cause not known 1 4 5 Total 73 It will be seen that in nearly one-half of the cases, in which a firm has introduced a profit-sharing scheme and subsequently given up the system (thirty-six out of seventy-three), the abandonment of Profit-sharing has been due to either the death of the employer, the close of the business to which the scheme related, whether by the liquidation of the concern or otherwise, * This Table is reprinted from the Fourth Annual lieport of the La!)our Department of the Board of Trade, p. 144. PEOFIT- SHARING IN PRACTICE. 281 to a change in the business, or to losses, want of success, or diminution of profits;'^ while in twenty-six cases the employers abandoned the method either because they found the employees apathetic or dis- satisfied, or because they had disputes with their employees, or were not satisfied with the results obtained by the iutroduction of Profit-sharing. It will be clear that Profit-shariug has, in a large proportion of the cases in which this method has been adopted, failed to secure the good results which its advocates claim that its introduction is likely to secure. The truth of the matter seems to be that, while the eff'ect of the introduction of a profit-sharing scheme has in many instances, especially for some little time after the adoption of the novel method and before familiarity with the receipt of bonus has bred contempt or apathy, been to induce the em- ployees, or at an}^ rate, the more willing and intelligent members of the staff, to do their w^ork with greater zeal and care than before, yet the fact that a firm shares its profits with its employees is not able in all cases to secure the exhibition of more than normal assiduity and carefulness. t * Of the eases in which Profit-sharing was brought to an end owing to the want of success, losses incurred by, or winding-up of tlie undertaking, twenty-one at least may be classed as businesses initiated and carried on by social reformers — businesses which may be considered to stand on a different footing from ordinary commercial undertakings. t Full details as to the effects produced by the adoption of Profit- sharing, in regard to both abandoned and existing schemes, wull be found in the Labour DeiDartment Report on Profit -aharUui. 282 METHODS OF REMUNERATION. Witli regard to the question, in what measure the adoption of the profit-sharing system has tended to the maintenance of industrial peace, it is not easy to give a precise answer. In the well-known case of the Briggs Collieries, in which a scheme on profit-sharing lines was introduced in 1865, the business being, at the same time, turned into a limited company, in which a large number of the workmen held shares, and on whose Board of Management the employees were represented by one out of five directors, it had been hoped by Messrs. Briggs that Profit-sharing would be accepted by their workmen as a substitute for trade union organization, they, on their part, abstaining from joining any combination of employers for the regulation of wages. This hope, however, was not fulfilled ; the men stuck to their union, and in 1874, on the announcement made by Messrs. Brig'gs, in common with the other employers of the district, that they intended to reduce their men's wages, their employees resisted the reduction by striking. In consequence, the shareholders put an end to the profit-sharing scheme early in 1875. Messrs. Fox, Head & Co., iron manufacturers, of Middlesbrough, introduced a scheme of Profit-shar- ing in 1866, making it a condition of participation that the men should not belong to any trade union, while the employers agreed not to belong to any association of employers. When the system was first introduced, the firm found that it " awakened among the better class of workmen a feeling of esprit de corps, which enabled their employers to PROFIT-SHAKING m I'lJACTfCE. 283 bid defiance to the threats and attacks of the trade unions;'^* but after the scheme had been for some years in force, their puddlers (about one-third of the total number of workmen) gave up their bonus and joined the union. This scheme came to an end in 1874. Very similar was the experience of another Middles- brough firm, the North of England Industrial Coal and Iron Company, Limited, which in 1870 adopted a system similar to that in force in the Briggs Collieries. This company, as they wrote to me in 1889, "had to give it [Profit-sharing] up after a few years' trial . . . as we found the workmen Avere quite williug to share profits, but, when there was a strike in the district, our employees would not remain at work, but threw in their lot with the trade unionists when the latter called upon them to strike work.'' On the other hand, we have in the case of the South Metropolitan Gas Company, already referred to, an instance, in which Profit-sharing, having been introduced for the purpose of avoiding a strike which was thought to be impending, and although its intro- duction was resisted by a severe labour conflict, has succeeded in securing during the whole period — over eight years — which has elapsed since its adoption, the complete preservation of industrial peace. It is, indeed, scarcely too much to say that the arrange- ments made in this case have made the occurrence of any attempt on the part of the employees of this * Boehmert, Profit-sharinr}, French translation, p. 354. 284 METHOJiS OF KKMUNEKATION. company to obtain l)y oi'ganized resistance any alteration in existing conditions of labour an all but impossible contingency. The agreements, whicli the workmen are required to sign as a condition of participation in profits, while pledging them not to be members of the trade union, bind them to serve the company for a long term (twelve months in the case of all but the men employed only in winter, who sign for from three months to six). Care has been taken to make the agreements signed by the workmen expire at different dates for diiferent men; and since the breach of these agreements would, it must be remembered, be liable to be punished by legal pains and penalties of a vigorous character,* any such simultaneous cessation of work by the whole body of employees as is involved in a strike would entail almost insuperable difficulties. At the same time, the important development of the profit-sharing scheme, which has resulted in the whole of the permanent staff becoming partners in the concern, has, as it was intended that it should (see^josi, pp. 358, 359) placed these men in such a position that any suggestion of their taking part in a strike against the company would necessarily cause them no little embarrassment. While it cannot with truth be asserted that the adoption of the profit-sharing method can in all cases * Persons employed in gasworks, such as those of this company, who break a contract of service can, under certain circumstances, be punished by fine or imprisonment under the Conspiracy and Protec- tion of Property Act, 1875. PKOPri'-SKAKING IN PRAC'l'ICE. 285 be relied upon to counteract the influence of trade unions or to render impossible the occurrence of labour disputes^ the available evidence points, on the whole, to the conclusion that Profit-sharing, as a rule, is accompanied by the existence, whether as a direct consequence of the adoption of this method or not, of friendly feelings between employers and employed; and in some cases the employers, who have introduced profit-sharing schemes, state that they get " a better choice of hands," and that their employees manifest less disposition to leave the service of the firm than of old* • In the account here given of the results obtained by the intro- duction of Profit-sharing the experience of British firms only has been referred to. With respect to the " deferred " type of this method, which owes its development to the late managing director of the Compagnie d'Assurances Generales, we learn from Mr. Gilman that •' This life, fire, and marine insurance company formerly suffered much from the competition of newly-formed companies, which drew away its best men by the jDromise of a larger salary. In 1850, M. de Courcy proposed a scheme for the establishment of a Provident Fund, which should have the effect of retaining in the service of the Company all its employees whom it desired to keep " {Profit-sUariufj, jd. 159). No employee receives any advantage from this Provident Fund until he has worked twenty-five years for the house, or is sixty-five years old. The result has been that " the company has succeeded perfectly in holding its servants throughout their working career" {ih'uL, p. 160). Deferred Participation, which is now in force, in a more or less com- plete form, in numerous Continental profit-sharing establishments, can hardly be said to have, as yet, had an adequate trial in this countrv CHAPTER XXI. THE EELATION OF PEOFIT-SHAEING TO THE WAGE-SYSTEM. The theory and tlie practice o£ Profit-sharing having now been set forth, it will be proper to offer a few observations upon the position occupied by this method of remuneration in relation to the ordinary wage- system, and to consider in what respects this method appears capable of effecting an improvement on that system, whether from the point of view of the interests of the employers or from that of the intei*ests of the employees. At the outset, it may be well to examine the objec- tions made to, and the claims made for the profit- sharing method on the grounds of general equity. Perhaps the most frequent of the criticisms passed upon Profit-sharing, regarded as a means of promoting the interests of the employer, is the observation that it is unfair to give the employees a share in profits, while they are allowed to remain free from any obliga- tion to bear any part of the losses incidental to PROFIT-SHARING AND THE WAOE-SYSTEM. 287 business transactions. In answer to this objection it might be urged, that, assuming the accepted theory of Profit-sharing to be correct, the employees of a profit- sharing firm are, in fact, to a certain extent (quite apart from any provision that may be, and, as has been seen, sometimes is made for retaining* a part of their bonus in order to build up a Reserve Fund to meet future losses) virtually liable to share in any losses which may be made by their employers. For, under the accepted theory of Profit-sharing, the bonus is not a free gift, but a quid yro quo. Now, if at a time when losses are incurred and when, consequently, no bonus can be distributed, the employer continues lo get his quid, whether in the shape of increased zeal displayed by his employees, or in '' holding " the employees in his service, or in detaching them from the trade union, or otherwise, then, since the employer will be getting this quid without the payment of any quo, to that extent his employees will, in effect, be bearing a share in the losses of the firm. Certainly, when we remember that, as has been laid down by Mr. Sedley Taylor, the " expectation, that a direct interest in ultimate results will stimulate to improved exertion, and thus open an entirely new source of profit, is the economic basis in which the participating system rests,''* the proposition, not uncommonly advanced, that where there is Profit- sharing, there should also be Loss-sharing, in other W'ords, that an employee, who has been induced by the hope of receiving bonus to give to his employers, * Report ef Industrial Reiauneration Conference, p. 256. 288 METHODS OF KKMaXKIIATlON. say, one shilling-'s worth of work for every tenpence paid to him in wages, ought, in addition to losing his bonus in a bad year, to give up part of his earnings as a contribution towards meeting losses incurred by his employers, will scarcely appear altogether equitable. If, however. Profit-sharing is to be regarded, not (as it is viewed by the accepted theory of the method) as a system under which extra zeal is purchased by the promise of a bonus, but as a system under which the employer, by generous gifts in good years, allows his men to share in the windfalls of industry, then it can scarcely be denied that arrangements ought, in fairness to the employer, to be made for the employees to contribute towards meeting losses. But, at the same time, it is impossible to ignore the fact that, if working-men are desirous of benefiting by the fluctuations of commerce, this is a desire for the fulfilment of which the non-co-operative wage- system offers opportunities at the least as advanta- geous as any, which are likely to accrue from the adoption of this proposed system of co-operative Profit-and-Loss-sharing. By means of the ingenious automatic machinery of the sliding-scale, the miner, although a " mere wage-earner,'^ is enabled to share in the prosperity which " good times '' confer upon the trade. The sliding-scale may or may not be an ideal arrangement from the point of view of the wage-earner; but it posseses one conspicuous advantage over any form of Profit-sharing. For, while under Profit-sharing the employee of an unfortunate or a badly-managed business, may, even in the best of times, fail to receive PROFIT-SHARING AND TFIE WAGE-SYSTEM. 28 any bonus (the firm by which he is employed having earned no profits), under the sliding-scale, on the other hand, the miner is entitled to receive an increase in remuneration proportionate to the rise in prices which has taken place, even though the par- ticular coal-master by whom he is employed has, by making imprudent contracts for " forward delivery," at old, low prices, lost the benefit of the rise. Even where no sliding-scale exists, the same result is arrived at by the workmen demanding and obtaining a general rise in wages as soon as the state of trade leaves the employers " a good margin." * On the whole, it is beyond question that the method of Profit-sharing, if it is to be looked upon as a means of making the remuneration of labour correspond with the fluctuations of commerce, is infei'ior in point of equity and expediency to the ordinary, non-co-operative wage-system. While the contention commonly put forward by hostile critics of the profit-sharing method, that the participation of employees in profits is necessarily unfair to their employers, seems untenable, the claim, which the advocates of Profit-sharing so frequently make, that the employee is in all cases entitled, as a matter of equity, to share in the profits of his employer, is one which can scarcely be considered altogether easy to substantiate. The employee, we are told, helps to make the profits; therefore he ought to share * As to the manner in which in some cases profits are, in practice, taken into account in fixing piece-wage prices, see cvite, pp. 71 ", 72 n. 19 200 METHODS OF KEMUNKUATION. in tlio profits. The se([ueiice is not cleai". 13y the joint efforts of employer and employed wealtli is pro- duced; and if the employee urge that he ought in equity to receive a fair share in this wealth, no one will gainsay him. But if the arrangement be that this share shall take the form of wages and wages alone, as is the case under the ordinary wage-system, on what grounds can this arrangement properly be stigmatized as inequitable ? The fact seems to be that those, who claim for the employee the prescriptive right to share in profits, do so from a conviction that there is some- thing essentially degrading in the receipt of '^ mere wages." '^All wages are charity," ^fr. Holyoake, the historian of the British co-operative movement, once said to the writer; and Mr. Sedley Taylor speaks of the '' moral gain to the workman in passing from the position of a mere wage-earner to that of an associate in profits."^ What seems to lie at the root of this deprecation of wages as the remuneration of labour and this aspiration after "higher things" in the shape of a so-called "industrial partnership," is some sort of not very clearly thought out idea that, since in a democracy all men, whether employers or employed, ought to be treated alike, without invidious distinctions, therefore the old plan, under which the form of the employer's remuneration (profit) differs entirely from that of the employees (wages), must be given up, and workmen must be * Beimrt of Industrial Remuneration Conference, p. 256. riiOFlT-SHARING AND THE WAGE-SYSTEJI. 291 placed on a level with, tlieir master by an arrange- ment, under wliicli a part, at any rate, of tlieir remuneratiun shall in future take the shape of profit. Into abstract considerations of this nature we shall not enter in this place. But, since the most earnest advocate of the inalienable right of every employee to share in the profits of his employer would (it is to be presumed) hesitate to press this claim, unless it were reasonably certain that the position of the employee will be better under Profit-sharing than under the ordinary, non-co-operative wage-system, it appears proper, in relation to this matter, to inquire, to what extent this novel method offers to the employee advantages practically superior to those attainable under the wage-system. With regard to all forms of " deferred " participa- tion (in which the employee's bonus is retained by his employers, and is forfeited if he quit their service before the expiration of a specified term of years), it is possible to entertain a certain degree of doubt as to whether it is an unmixed advantage to a servant to be bound in this manner to his master. In the typical case referred to above (p. 285 n.) we have seen that the object, with which Profit-sharing in the deferred form was adopted in the French Insurance Office, in which this system was originated, was that of pre- venting rival companies from drawing away its best men by the promise of a higher salary. But is it not a disadvantage to a man to be fettered by the fear of forfeiting his claims under a Provident Fund in such a manner that he is prevented from increasing his 19 * 292 MKTiroD.s OP remuneration. salary by either insisting- that tliis sahxry shall be raised by his present employers, or else seeking employment on bettor terms elsewhere? Again, can we lose sight of the possibility of a man's being deprived of all his claims on the provident fund by a capricious dismissal, an occurrence which is — as I happen to know — by no means unheard of in the French insurance companies by which a system of this nature has been adopted ? And is it wise for a man to put himself under pledges to suffer without a murmur any amount of persecution which may 1k> inflicted upon him by his official superiors ? Of course, so far as the share in profits given to the employee is a free gift, the maxim " beggars must not be choosers " will apply ; the employee must take his pension on the terms on which it is offered, or not at all. But so far as this share in profits is given either in exchange for a special degree of assiduity exhibited by the employee, or in lieu of that increase in salary, which by reason of the competition among employers for his services he might and would other- wise have obtained, it would not be unreasonable if he were to take objection to a system which forces him to leave his deferred pay in pawn, to answer for his complete and perpetual subservience to the will of his present masters. That a system, under which a part of the employee's remuneration remains ^in the hands of his employers, liable to forfeiture if he quit their service, must render any attempt to improve existing conditions of employment by combination difficult if not rKOFlT-«HAKING AND THE WAGE-SYSTEM. 21)3 impossible will readily be conceded;'^ and with respect to all forms of Profit-sharing, the tendency of which is to detach the employee from his allegiance to, or to prevent him from joining the trade union organization, it may well be considered open to question, whether, in the long run, the advantage which employees derive from the receipt of a share in profits, may not, to a greater or less extent, be counterbalanced by their being deprived of those benefits which it is claimed that trade union combination is capable of securing. Nor should it be forgotten that, even in cases, in which the profit- sharing scheme has not been introduced with a view to weakening the influence of the trade union, and does not contain any of those special provisions which have in some cases been inserted with this object, the inevitable tendency of all exceptional methods is to get the men working under them out of line with their fellows. No one, who possesses the smallest degree of familiarity with trade combinations, can doubt the importance of this last objection. Every combination, whether of masters or of men, exists for the pui-pose of securing the best terms available, and of securing the same terms for all its members, private arrange- ments between particular masters and particular sets of men being strongly discouraged as contrary to the * " We think it will ever be difficult to consolidate organization in any body where a system of deferred pay, either in the form of perqui- sites or pensions, prevails " (Report of the PurUumenturij Committee of the Trades Union Congress, 1890, p. 24). 29-4 JMK'riiODS <)|.' Iv'KMUNKUATIOX. spirit, and inconsistent with tlie success of the organi- zation. Just as a masters' association, if it is to be successful^ must be supported by all employers alike, even by those who arc on the best of terms with their men^ and just as a masters' association expects one of its members to assist it, if a general lock-out is declared, by discharging his workpeople, even though this employer may have no dispute with his employees; so too, if a trade union is to be successful, it must be vigorously supported by all the men in the trade, all of whom must not only keep up their subscriptions in time of peace, but must join in any general strike which may be declared. Thus, it seems not improbable that, under existing circumstances, the adoption of Profit-sharing in any form may have a certain tendency to weaken the power of trade union combination, especially in trades and districts where trade unionism does not at present possess much strength. So far as concerns the efficacy of the profit-sharing method in promoting the maintenance of industrial peace, the sanguine expectation, entertained by not a few" enthusiasts, that the introduction of Profit- sharing is likely to suffice for the prevention of labour disputes, appears by no means certain of realisation. Such, at any rate, is the opinion of Mr. Denny, an employer of more than ordinary acuteness, who, in the preface to his Wo7-tJi of Wages, says, "Industrial Co-partnerships have been much praised, and are with some people confounded with co-operative pro- duction. To me they seem utterly hopeless, and they PROFri'-SHAh'ING AND TIIK WAGE-SYSTKM. 205 have certainly so far not been successful. They contain the germ of the old dispute of how much the workman is to get and how much the master^ and the contest over this is simply transferred from the trade in general to the firm in particular" (p. t)). And the facts which have been set forth in the preceding- chapter (pp. 282, 283) unquestionably tend to show that Profit-sharing is no sure pi-eventive of industrial conflicts. Indeed, while it does not seem highly probable that the introduction of Profit-sharino* will be able to secure the avoidance of labour disputes of the ordinary type, the nature of the profit-sharing method is such that its general adoption, so far from decreasing* the occurrence of industrial strife, might quite con- ceivably multiply the causes of difference between employers and employed. Profit-sharing implies that the employee shall receive, in the first place, as the remuneration of his labour in so far as that labour is of its normal efficiency, his usual rate of wages, and, in addition, as the reward of a special degree of efficiency, exhibited by him under the stimulus of Profit-sharing-, or in exchange for some other advan- tage which his employer hopes to secure by reason of the introduction of this method, a share in the profits. What, then, is to happen if the employer announces that he intends to reduce wages ? It may be that the employees are satisfied that the market value of their labour has gone down, and that, in con- sequence, they accept the reduction without complaint. But in many cases they will be likely to take a 296 METHODS OF KEMUNERATION. different view, and tliou tlie usual means for resisting the reduction will probably be taken. But over and above any dispute about tlie rate of wages, is it altogether unlikely that the employees, becoming dissatisfied with the amount of their bonus, may go out on strike in order to obtain an increase in their share in profits ? So long as Profit-sharing is adopted by a few firms only, the bonus will be regarded as a generous gift and accepted without its amount being too severely criticized ; but if this form of remunera- tion were to become common, it is certainly not improbable tbat the employees would, before long, take to looking the gift-horse in the mouth ; and then to the all too lengthy list of " causes or objects '' of indus- trial disputes we shall have to add the novel category — " strikes to obtain a larger share in profits/' * Whatever may be the efficacy of the profit-sharing method as a means of securing industrial peace, the * In addition to the question what share in profits the workmen are to have, there are other matters, concerning which disputes might easily arise between profit-sharing firms and their employees. Take, for example, the question, What are the divisible profits of a given year ? which may be briefly illustrated by the Briggs case already re- ferred to (rt»?e, p. 282). There the employees were to get one-half of the net profits remaining after the shareholders had received 15 per cent. In 1873 the fund available for distribution as bonus was decreased, because £30,000 out of the earnings of the last year was invested in a mine, the shareholders getting new shares, but the employees losing £15,000 of bonus. In this case also "in addition to the sums divided [as profits], large amounts were placed to depreciation and reserve funds, altogether out of proportion to what is usual, and the men were thereby deprived of the share which ought to have come to them as bonus " (Co-operative Production, by B. Jones, p. 497). PEOFIT-SHAKING AND THE WAGE-SYSTEM. 297 chief merit universally claimed for Profit-sliaring by its advocates is the stimulus which it affords to the display by the employees of a more than normal degree of activity and usefulness. Let us, then, investigate the supposed superiority of Profit-sharing to the wage-system as a means of calling forth and of rewarding special efficiency, whether in the form of intensity of exertion or of the avoidance of waste. The economic basis of " stimulus participation," as we have already seen {ante, ip-p. 255, 256) is the assumption that the increased zeal, which the workmen are induced to display, " enables profits to be obtained under a participating system which would not accrue under the established routine." What, then, is the share in profits which the theory of this method proposes should be allotted to the employees ? To this im- portant question the advocates of Profit-sharing have furnished only a very imperfect answer. For they have told us the maximiLm, but not the minimum, share which is to be allotted to the employee. The total amount paid away in bonus is in no case to exceed the money value of the abnormal, additional services which the hope of earning this bonus may be expected to induce the profit-sharing employees to render to their employer.* In the emphatic and precise words of Professor Nicholson, " Under the stimulus of Profit-shariue: the workers must create * " The fund on which participation draws is the surplus profit, reahsed in consequence of the enhanced efficiency of the work done under its stimulating influence" (Sedley Taylor, Projlt-shariiig, p. 41). 298 MKTHODS OF K KMUN KKATION. the additional profits which they are to receive" {Gontemiwrarij Beview, January, 1890, p. G8). Profit- sharing, therefore, is a method under wliicli the employee is asked to do, say 20 per cent, more work than at present, while the employer offers that, if the profits of the Imsincss shall allow it, the remuneration of the employee shall be increased by an addition in the shape of bonus to the extent of not more, in any case, than 20 per cent., and to the extent in most cases of very much less than 20 per cent. For Mr. Sedley Taylor expressly states that, as a rule, a part only of the extra profits created by the stimulus of Profit- sharing is given up to the employees [Profit-sharhig, p. QQ). At the same time, no exponent of this indus- trial method has yet laid down any rule as to the smallest share in these extra profits which the profit- sharing employer shall give to his workmen. If he can get a sovereign's worth of extra zeal by paying a bonus of ten shillings, or even of two shillings, then the employer will be able to adopt this course, with the satisfaction of knowing that he is acting in perfect consonance with the theory of Profit-sharing — a method which, to use the lucid language of Mr. Gilmau, "keeps the interests of the employer in view throughout" {Profit-sharing, p. 436). That, in cases suitable for its application (for there are many kinds of labour, to the remuneration of which this method is not well adapted, because all that is required from the employee is a certain regular minimum of work, his due performance of which is easily ascertainable, and is capable of being- secured PROFIT-SHARING AND THE WAGK-SYSTEM. 299 b\' tlic fear of dismissal) Profit-sharing may promote the interests of the employer, seems clear. Profit- sharing supplies an inducement to men on time-wage not to dawdle over, and to men on piece-wage not to scamp their work, while waste of material is discouraged. Thus, it lias been shown that if the workmen of the South Metropolitan Gas Company see coals spilt, they say, " That will not do ; that goes against our Profit-sharing.^' * This example is especially interesting, because it well displays the influence of that element to which Profit-sharing owes so great a part of its success — the element of collectivity. Each employee has a direct interest, not only in doing his own work well, but in seeing that his fellow-workmen do their work well. Each man thus becomes a foreman in relation to every other man. Even the regular superintendents of labour are themselves superintended by their sub- ordinates ; and I have known workmen in a profit- sharing house to report a foreman to the heads of the business for neglect in the discharge of his duties. Under circumstances such as these, the claim which is made for the method of Profit-sharing, that the extra efficiency, which the system induces the workers to exhibit, augments the normal gains of a business to an extent amply sufficient to cover, or more than cover, the amount paid away in bonus, is shown to be well founded. But the important question remains to be considered, whether the increased efficiency and * See Evidence before Labour Conunission, Group C. , Vol. III., pp. 241, 242. 300 METHODS OP KEMUNEKATION. economy, whicli this nictliod claims to produce, might not in many cases be equally well produced by some form of the existing wage-system, and that with greater advantage to the employee than is likely to accrue to him under the novel co-operative plan, which proposes the partial substitution of profits for wages as the remuneration of labour. Let us test the matter by a concrete instance. Here is a pair of boots, the ordinary piece-wage for making which is 8s. I want my workman to take especial care with this pair, which will involve his spending fifteen hours instead of twelve over the job ; as he would say, I want " more work put into the boots'^ to the value of 2*'. I tell the workman that I expect to be able to sell the boots at a net profit of 10s, and I ask my man whether he will have (in addition to his ordinary wage) 26- when he " shops " the boots, or 20 per cent, of my (expected) profits at the end of the year. Can anyone doubt the answer ? The workman knows that I may fail to realise my profit of 10s for many reasons, all of them matters with which he has nothing to do. I may have given too much for the raw material ; I may have designed the boots badly, so that no purchaser will look at them ; or I may be foolish enough to trust an insolvent purchaser ^y]lo cannot be induced to pay for the boots. One would hardly think of asking the tanner to forego part of the price of the leather in consideration of a promise of part of the profits to be realised on the sale of the finished article. Why should the workman make a bargain of this nature ? PROFIT-SHARING AND THE WAGK-SYSTEM. 301 The workman sells bis labour as the tanner sells his leather, for better or for worse, at a fixed price. The price of the craftsman's labour is his wages. Profits are the price of another kind of labour — labour in which the employee takes no part. Profits are the piece-work remuneration of management and enterprise. The main test of the all-round efficiency of any method of industrial remuneration is generally admitted to be found in the degree in which it succeeds in securing a due proportion between the price of labour on the one hand, and the quantity and quality of that labour on the other, including in the elements which go to make up the quality, not alone careful workmanship, but also the avoid- ance of waste. In short, the object aimed at is the perfection of payment by results. Now, all forms of piece-wage involve payment by results, the remuneration of the workman being proportionate to the quantity of the work performed, and also to its quality, so far as this quality can be ascertained by the critical inspection of an experienced foreman. If, however, either because the employer fears that his men may be induced to maintain a rate of speed incompatible with careful execution, or for any other reason, it be considered undesirable to put them upon simple piece-wage, then the operatives may be employed under some form of progressive wages,'^ receiving, in addition to a fixed time-wage, a supple- * See ante, Chapters VII. and X. 302 MKl'llODS OF l.'K.MUNEKATION. mentj the amount of which is contingent upon the ofticiency, quantitative, qualitative, or both, of the labour performed, while the avoidance of waste can, in like manner, be pi'omoted by prizes for economy in the use of material."^ Observe, that the ordinary, non-co-operative wage- system, whether in the form of simple piece-wage or of progressive wages, can be applied, not alone to men working single-handed, but also to men working in * The plan of giving extra-wages for special services can be applied in a great variety of forms. Thus, while, one of the principal merits claimed for Profit-sharing is that (as in the Maison Godin, see Ciilman, Profit-sharing, p. 180) this system stimulates the work- men to invent new tools, appliances, and methods of working, that the same result can be produced, without adopting any form of Profit-sharing, by offering prizes for inventions, is shown by the case of Denny's ship-building workmen. After a system of giving rewards for inventions had been in force for seven years, Mr. Denny stated " that in that time as many as 196 awards had been given for inven- tions which were thought useful to adopt, that three times that number had been submitted for consideration, and that besides being beneficial in causing so many useful improvements to be made, the scheme had the effect of making the workmen of all departments into active thinking and planning beings instead of mere flesh and blood machines " (Conteviporary Socialism, by John Eae, second edition, p. 322) ; for a later account of the working of this system, see The Engineer, January 6th, 1893. The Yale and Towne Manufacturing Company (see ante, pp. 137, 138) have " a system of premiums paid for valuable inventions, which the company reserves the right to purchase. In 1888 fourteen premiums were awarded, aggregating eOOdols. [£125]. In 1889 the result was similarly successful " (Sixth Report of Connecticut Bureau of Labour Statistics, p. 227). An account of a system of rewarding inventions in force with Messrs. Jardine, manufacturing engineers, of Nottingham, will be found in Printing and Kindred Trades Monthly Advertiser, February 1st, 1895. I'HOFIT-SHAKING AND 'lilE WAGE-SYSTEM. 'SO'6 groups, the method of collective wages possessing to the fullest extent that important element of mutual supervision, to which, as already remarked, the method of Profit-sharing owes so much of its efficacy ; for under any and every system of collective wages, whether progressive or simple, each member of the group is under a strong incentive to do his best to induce his neighbours to exert their utmost en- deavours in order that the amount of the joint remuneration may bo as high as possible. (" Hurry up, do you think I am going to carry you on my back ? " is a form of remonstrance which I have known to be used by an indignant member of a group of workmen employed on collective piece-wage to his less active mate.) Nor should it be forgotten that in one impor- tant respect the mutual supervision of the employees by each other can be far more efficaciously promoted under the wage system than under the method of Profit-sharing. For experience proves tbat, if you want to secure that this kind of mutual supervision shall be exercised in a vigorous manner, you must make the groups, to which the collective system of remuneration is applied, fairly small (compare ante, pp. 124-12(3 and 146). This, of course, you can do under a system of collective wages ; but under a profit- sharing scheme the group-unit is the Avhole body of employees — a body so large that, since no one can be sure that, while he is doing what he can to increase the profits of the firm by the display of special activity and carefulness, a number of his co-employees, employed perhaps in a distant part of the factory, 804 MKTHODS OF REMUNERATION. are not taking' things easy, and leaving it to him to earn a big bonus for them, it is in the highest degree probable that many men will not trouble themselves to work with more than normal diligence. It should also not escape attention that, as experience proves, the sooner after a job is completed that you can pay your bonus, the more efficient will this premium be as a stimulus. Where, however, the employees have to wait for their bonus until the end of the financial year, as is the case under Profit-sharing, the strength of the incentive to activity, which the hope of earning bonus affords, is seriously impaired by the delay in its payment. One not altogether unimportant advantage, which an ordinary wage-contract possesses over a profit- sharing agreement, is the superior legal efficiency of the former arrangement. If an employer withhold wages due, including, of course, any sums due in respect of a premium on production, the employee can obtain the assistance of the law. But if the share in profits, to which a man is entitled under a profit- sharing scheme, is unpaid, can he recover it by legal proceedings ? Most profit-sharing schemes expressly stipulate that the bonus is to be a mere gratuity, no legal rights in respect thereof being conferred upon the employee. In France it has been held that^ under circumstances such as these, an employee cannot invoke the aid of the law in order to obtain his bonus; and it would appear from the remarks of Mr. Rawson that in his opinion an employee would, under any scheme PKOFIT-SflAKIXG AXlJ THE WA3-|. METHODS OF KEMUNERATION. The next class of co-operative associations, which it is our duty to examine, is the Corn Mills ; these are consumers^ associations — in the main, federa- tions of store societies ; and no attempt is made to allow their employees to control the management of these concerns, of which one only allots to its work- ])eople any share in its profits, this exception being the Colne Vale, which, in 1891-96, paid a bonus equivalent to 2*2 per cent, on wages,"^ The twenty-two co-operative societies classed as "Consumers' Baking Societies" are concerns, in which the workmen employed have, as a rule, little, if any, voice in the management, though in the case of one society special arrangements for giving the employees a share in the control of the society's affairs have been made. This is the United Baking Society, of Glasgow, whose employees have formed a Bonus Investment Society, to which they hand over money which has been received by them as_ bonus out of the profits of the United Baking Society, to be invested by the new association in the shares of that society. The Baking Society, at the end of 1891, altered its rules so as to allow the Investment Society to become federated with it, and | to have one vote by virtue of membership, and one ^additional vote for each £80 of capital invested with it by this association. By virtue of these arrangements, the employees of this society possess a share, although only a very small share, in the management of its * See Co-openitice Congress RcjJorts, 1892-37. , PKACTICE OF C()-0PE1:ATI0N. OOO affairs.* The bonus paid to its employees by the United Baking Society — the only one of these twenty-two consumers' baking- associations which shares its pi'ofits with its employees t — has, in the period, 1 890-96, been at the average rate of 8 per cent, on their wages. J The fifty-six Irish dairying societies mentioned in the Tables set forth at pp. 322, 323 above provide by thi'ir rules for the allotment to their employees of a share in their profits. So far as can be seen from the Returns published in successive Oo-operatirt; Conf/res.'i Reports by the Co-operative Union, the extent, to which the employees of these dairying societies have benefited by these arrangements * The latest available figures (August, 1897) show that of the 830 workpeople employed by the United Baking Society, 275 had become members of the Investment Society, and that the amount invested by this society in shares of the United Baking Society was £2,900 {Co- operative Workshops in Great Britain, 1897, by Thomas Blandford, p. 53), According to the Co-operative Congress Report, 1897, the United Baking Society, at the end of 1896, had as its members, in addition to the Investment Society, seventy-five other societies, and its sales for that year were £220,530. Each of these seventy- five societies has one vote in right of membership, and one additional vote in respect of every £100 of purchases made by it from the Baking Society. f Of the two other baking societies, which from the figures given in the Co-operative Congress Report, 1897, appear to practise Profit- sharing, one — Hamilton Baking — abandoned Profit-sharing in Sep- tember, 1896, while the other — Kettle Baking — does not practise Profit-sharing, the sum stated in this Report to have been paid by this society as "bonus to labour" being (as indeed an analysis of the columns of the Report will suggest) stated in error. :J: See Co-operative Congress Reports, 1891-9T. 336 METHODS OP REMUNERATION. appears to be inconsiderable. Out of this total of fifty-six, tlio six societies mentioned in the Table printed below are the only societies making returns to the Co-operative Union for 1896, which are shown by the Go-operative. Congress Report, 1897, to have paid bonus to their employees in 1896. The Table states, so far as the particulars can be ascertained, what has been the addition made to the wages of the persons employed by these six dairying societies by the bonus which has been paid to these employees. Profit-sharing by Irish Dairying Societies. Naiiie of Society. Ardagh Dairy Clouncagh . . . Feenagh Grange Lissarda Newcastlewest Number of Employees at end of 189t). 6 6 6 12 Average Ratio of Bonus to Wages in years specitted below. 1891 & 1896* 1893, 1895, 1896t 1892 & 18961 1893, 1894, 1896§ 1892, 1895, 189611 1895 & 1896*! Per cent. 0-8 '- 1-7 I 3-5 14.1 j- 3-3 2-5 Ratio of Bonus to Wages in ISOC. Per cent. 1-7 2-5 70 3-3 100 2-5 It is to be noted that in these Irish dairying asso- ciations the rule is, that the sums paid to the employees * Details wanting for 1892-1894 ; no return for 1895, t Details wanting for 1891, 1892 and 1894. X Details wanting for 1891, 1893 and 1894 ; no return for 1895. § Details wanting for 1892 ; no return for 1895, II Details wanting for 1893 and 1894. ^ Details wanting for 1891-94. PRACTICE OP CO-OPEKATION. 337 as bonus " shall not be paid in cash, but shall be accumulated as a loan in the society, bearing such intei'est as any genei*al meeting may determine, and shall only be withdrawable in case of distress or leaving the employment of the society." No attempt is made to facilitate the acquisition of shares by the employees ; and it may be taken, that the control of the societies' affairs rests with the farmers, by whom they have been formed, and that the few employees, who are in their service, have practically no share in the management of these undertakings. The last class of co-operative societies, with which we have to deal, is that of " Various Manufacturing Societies." Of these 112 ''productive" societies, twenty- one are concerns, which do not give any share of their profits to their employees, and make no attempt to carry out, in relation to their servants, the principles of Industrial Co-operation. Among these twenty-one non-co-operative co-operative societies is the Rochdale Manufacturing Society (see ante,ip. 312), by farthe most important of these "Various Manufacturing Societies," which for some years after its formation in 1854 practised Profit-sharing, but abandoned the system in 1862.* Taking these twenty-one non-profit-sharing societies together, we may state their total membership at the end of 1896 to be 2,560 (2,104 individuals and 456 societies) ; at the same date their aggregate capital was, share and loan capital, £186,701, reserve * The history of this cotton factory is given in Co-operative Production, by B. Jones, pp. 2G0-265. 00 338 METHODS OF K KMUNEKATION. and iusnrance fiuids, £2,672; their sales in 1806 were to the amount of £301,579 ; their profits in 1896 were £9,807 ; the number of their employees at the end of 1896 was 1,421 ; and the amount, which they paid for salaries and Avages in 1896, was £93,211.* The remaining' ninetj'-oue societies comprised in this group of "Various Manufacturing Societies" have all adopted some system of sharing profits with th"ir employees, and exhibit in their practice a certain degree, greater or less in different cases, of approxi- mation to the principles of Industrial Co-operation. The total membership of these ninety-one more or less " self-governing " workshops at the end of 1896 was 15,799 (13,515 individuals and 2,284 societies); their aggregate capital at that date was, share and loan capital, £447,330, reserve and insurance funds, £43,057 ; their sales in 1896 were to the value of £856,338 ; and their profits for that year amounted to £36,685. These societies employed in all 5,633 persons at the end of 1896; and the amount, which they paid in that year for salaries and wages, was £265,985. Although the whole of these ninety-one '^productive" associations agree in allotting to their employees some share in their profits, yet with respect to the lines, upon which the division of the profits is made, the greatest possible divergence exists between the methods adopted by different associations ; and it * For these figures and the corresponding statistics relating to the ninety-one profit-sharing " productive " societies the writer has to thank the courtesy of the Labour Department. I'llACTICK OF CO-OI'Ei;.\'l'ION. 0')d would not be feasible, witliia available limits oi space, to enumerate all the various methods of division adopted in differeut cases. As a rule, the purchaser gets back a part of the price of the goods which he has bought from the society in the shape ot: a '' dividend/^ the percentage of the profits thus sur- rendered being different in differeut cases; by some, however, of these societies the claim of the customer to share in the pi'ofits is entirely ignored. The share capital, in nearly all cases, takes a fixed rate of interest, generally from 5 to 7-J- per cent., some- times without any further right to share ia the profits; very often, however, the share capital takes both a fixed interest, and also a proportion of the profits, this proportion var3dng widely in different cases. With regard to the proportion of profits allotted to the employees, a very great variety of methods of division obtains. In some cases a specified fraction, often about 40 or 50 per cent., but sometimes more, of the surplus profits (remaining after payment of the fixed interest on capital and in many cases after providing for a Reserve Fund) is given to the employees as "bonus on wages." Sometimes, again, these profits, or a portion of these profits, are divided between shareholders and employees in the proportion which the share capital bears to the aggregate sum of the wages earned in the year by the employees, or in that which the fixed interest on the share capital bears to the total amount of the wages, rateably at so much in the pound (one-half only of the wages of employees not members of the society being in some cases thus 99 ^ 340 METHODS OF RRMUNKRATIOX. brought into the account and such employees then getting bonus at one-half the rate paid to the employees who are members), or in such proportions that the share capital takes two shares to every one share taken by the employees; in other cases they are divided between the employees and the customers according" to the relative amount of wagfes and of purchases, or between shareholders, employees and customers at an equal rate per £ on capital, wages, and purchases. In some cases, in addition to the share in profits allotted as " bonus on wages," a further share is devoted to the maintenance of a Provident Fund for the benefit of the employees."^ Certainly, the circumstances of different businesses vary so much, that it would not be reasonable to expect an uniform basis of dividing profits to obtain in all cases alike. It might, however, be expected that through all the divergent methods of division adopted in different instances, some underlying principle, governing the ascertainment of the share in profits to be assigned to the employees in accordance with the theory of Industrial Co-operation, might be traced. But any attempt to discover in the practice of Industrial Co-operation any general principle, applied, with due regard to the circumstances of each * In addition to the i^rofit-sharing arrangements for the benefit of the employees generally, it is common with societies of the type now under consideration to allot a portion of their profits to the committee of management and a further fraction to remunerating members for special services rendered to the society ; provision is also frequently made out of the profits for social and educational purposes. FKACTICE OF CO-OPKKATION. 341 case, in the rules of all tliese more or less "self- governing" associations meets with a great degree of difficulty. It remains to be added that the share in the total fund available for distribution as bonus is divided between the participants in proportion to the amount earned as Avages by each (non-member employees, as already stated, sometimes taking bonus at one-half the rate of that allotted to employees who hold shares in the society), and that, while in some societies of the type now under consideration the employees' "bonus on wages" is paid to them in cash, in numerous instances the bonus is allotted in the form of share capital; sometimes all bonus is so paid, in other cases the employee's bonus is payable in cash after he shall, by means of the bonus payments, have become the owner of share capital to a specified amount, in some cases being obliged in this manner to take up one £1 share only, in others being required to invest his bonus in shares up to an amount varying from £5 to £50. Leaving on one side the principles, upon which the method of Profit-sharing is applied in the practice of this branch of Industrial Co-operation, what, it is natural to ask, has been the actual addition to the ordinary wages of the persons employed by co- operative societies of the "self-governing" type made by the "bonus to labour," which these employees have received ? The answer to this question, so far as the very imperfect details at our disposal make it possible to supply an answer, may be gathered from 342 METHODS OF l^KMUNKRATION. the details given in the Table which is printed in Appendix C, jiosf, pp. 405-419, and which contains particnlars (names, natnre of business cai^ried on, date of establishment, amount of sales in 189G, number of employees at the end of 1896, and ratio of bonus to wages), in relation to seventy-one societies of the type noAv referred to.'^ In compiling this Table the basis taken has been the Returns published, in the Beports of the annual Co-operative Congress, by the Co-operative Union — Returns which, although the Union does the best it can with such materials as it finds it possible to obtain, are very incomplete, and occasionally inaccurate, but which still give, in regard to the ratio of bonus to wages in these associations, more and better information than can be obtained from any other source which it is possible to utilise. The figures as to the ratio of bonus to WHges are, in * All societies of the type now under consideration, which made Returns to the Co-operative Union for 1896 are included in the Table, with the exception of four associations (the Nottingham Tailors, the Rushden Trade Boot and Shoe Society, the Scottish Farming, and the Street Boot and Shoe Society), which, since the Returns were made, have passed resolutions to wind up. Since that date the Kent Brickmaking Society has caused its registration under the Industrial and Provident Societies Act to be cancelled, having now registered itself under the (Joint-Stock) Companies' Acts, and has thereby given up its profit-sharing rules, but its name is retained, because it is thought likely that the new company will revive the profit-sharing scheme. The Burnley Self- Help Society has also gone into liquidation, but is, it is understood, likely to be re-constructed on the old lines ; its name is therefore also included in the Table. The date of establishment of each society mentioned in the Table is given from the Beportx of tlie Chief RcfjUtmr af FrieiKlly Societies'. PEACTICK OF CU-OPKJiATION. 34:3 relation to each society, taken back for as many years as the details published by the Union make possible; the year 1887, however, is omitted, because no statistics as to 1887' were published, the figures beino- considered by the Union too unsatisfactory for publication. In addition to the average rate of bonus paid during this series of years, the ratio of bonus to wages in 1896 is separately stated. Summarising the figures as to the ratio, which the bonus received by the employees of the associations referred to in the Table set forth in Appendix C. has borne to their wages (figures, for which, owing to the circumstances just explained, it is impossible to claim any great statistical value, but which are given as the best available), we find the details to be as follows :■ — - Ratio of Bonus to Wages. (1) Number of Societies, in which the average ratio of Bonus to Wages in the whole period covered by the statistics was tlie percentage shown in Col. 1. (2) Number of Societies, in which the ratio of Bonus to Wages in 18^16 was the percentage shown in Col. 1. (3) Not stated, or details wanting (i 22 tJ 21 (■) 1 ;-! 1 1 2 2 20 Nil Under 1 per cent 1 and under 5 per cent 5 ,, <) ,, 15 18 G G „ 7 , 4 7 ,, 8 ,, 3 8 „ <) 1 9 ,, 10 ,, 1 10 „ 11 ,, 3 15 „ 16 „ Total 71 71 •344 .mi;thoi»s of kkmuxkkation. To put the matter shortly ; if we take the sixty-five societies, as to which tlio ratio of bonus to wages is knoAvn for the period specified in the Table pi-inted in Appendix C. (this period varying in the case of different societies according to the age of the society and the completeness or incompleteness of the Returns which it has made to the Co-operative Union), we find that, while twenty-two societies failed to pay any bonus at all, twenty-seven paid a bonus at the rate of less than 5 per cent, on wages, and sixteen paid a bonus at the rate of 5 per cent, or upwards, the mean rate in all these sixty-five cases, taken together, being 3 per cent. ; while, if we take only the forty- three cases in which a bonus was paid, we shall find that the bonus was in these cases at the mean rate of 4*6 per cent, on wages. With regard to the bonus paid in 189G, out of fifty-one societies, for which information on this point is available, fifteen failed to pay any bonus, in eighteen cases the ratio of bonus to wages was less, and in eighteen cases more than 5 per cent., the mean rate in all these fifty-one cases, taken together, being 3*G per cent. ; while, if we regard only the thirty-six cases in which a bonus was paid in 1896, we find the ratio of bonus to wages in these cases to have been at the mean rate of 5*1 per cent."^ * In reference to the figures as to the ratio between bonus and wages in the " self-governing " co-operative associations, it may be well to point out, in the first place, that, if any comparison be made between these figures and those furnished above {ante, pp. 276-279) with respect to the bonus paid by ordinary profit-sharing firms, it PKACTICE OF CO-OrERATlON. 345 In the ideal co-operative workshop the co-operative workmen are to share the profits and manage the business, uncontrolled by any " outsiders '' (not em- ployed in the workshop). What is the practice of the ninety-one co-operative '' productive " associations, which approximate more or less closely to the ideal type, in respect to Profit-sharing, has been shown. The question, to what extent the co-operative plan of the '' self-s'ovei-nment '' of the workmen is carried out in the practice of these ninety-one associations, is one, to which the available information provides nothing like an adequate answer. In the book on the Co-operative Movement,* which ought to be borne in mind tliat the figures as to the bonus paid by the co-operative associations named in the Table set forth in Appendix C. and summarised in the text do not, except in the case of the Edinburgh Printing Co., which carries the whole of the employees' share in profits to Provident Fund, include sums carried to Provident Funds (see ante, p. 340) which exist in some of these associations ; while in the figures given as to the ratio of bonus to wages in profit-sharing firms, sums credited under a profit-sharing scheme to a Provident Fund are included (together with any cash distribution) in the amount of the bonus. As to the amount of the sums allotted to Provident Funds by the societies (other than the Edinburgh Printing Co.) mentioned in that Table, from information supplied by the courtesy of the Labour Department it is possible to state that twelve of these societies allotted to Provident Funds out of their i^rofits in 1896 the total amount of £487. In the second place, it must be remembered, that the conditions of labour, both as to wages and hours, prevailing in these co-operative workshops may in many cases be taken to be, on the whole, superior to those generally obtaining in the trade. * The Co-operative Movement in Great Britain, by Beatrice Potter (Mrs. Sidney Webb), pp. 117-169. 34G METHODS OP UEMUNKltATION. Mrs, Sidney Webb ])uhli.sliL;(] iu l^'Jl, it was proved by a careful analysis of the facts, including a statement of the relative number of the employees of societies of the " self-governing " type who were, and who were not, shareholders in the societies, by which they were em- ployed, and of the relative number of the members of these societies, who were respectively employees of the several societies and " outsiders," ^' that the co- operative theory of the government of the workmen by themselves was not, as a matter of fact, carried out in the pi'actice of these associations. Only a small proportion of the shareholders in these societies (Mrs. Webb showed) were persons employed by them; comparatively few of their employees (as her figures demonstrate) were shareholders ; in many societies no member of the committee was an employee ; in numerous instances employees were forbidden to serve on the committee. Since her book was published, no attempt has, it is believed, been made to furnish any precise statement of the facts necessary to enable an accurate opinion to be formed upon the present state of this important question. But no one, who has watched the recent developments of Industrial Co- operation, can doubt that, since Mrs. Webb's acute criticism of the Co-operative Movement was compiled, a decided change in the direction of the acquisition * Also of the proportion of the capital of these societies, which was owned by employees of the societies and by "outsiders" respectively. This, however, is not a point of great importance in regard to the question of voting power, since the rule "one man, one vote" prevails (see (tnte, p. 319). I^L'ACTICK OF CO-Ul'ERATION. 347 by the Avorkinen employed in tliese co-operative asso- ciations of an increased voice in their management has taken place. True it is, as was said in his presidential address at the Co-operative Congress of 1891 by the Right Hon. A. H. Dyke Acland, m.v., that 'Hhe ideal co-operative productive society, where all the capital is owned by the workers, is admitted to be an impossibility, except in the rarest cases." ^ At the same time, an examina- tion of the share ledgers of these " self-governing " associations would, it is believed, show that the proportion of their shareholders who are persons employed by them, and the proportion of their employees who hold shares in the society in whose workshops they are employed,t is considerably larger * lleport of the Co-oj era five Coin/ress of 1891, p. 5. t The shares in our co-operative societies generally are of small amount, most usuallj- of £1 each, and can be paid up by small instalments. It is the rule in these societies (though this does not apply to the co-operative cotton mills at Oldham) that no limit shall be put to the issue of share capital, it being accepted as a principle of working-class co-operation that the share-list shall never be closed. In some cases certain restrictions exist as to who may take shares ; but in practically all cases the employees of the " self-governing " pro- ductive societies (subject, in some instances, to their proving their capacity as workmen) are allowed to take up shares, issued to them without limit, on application. In a few instances it has occurred that such employees have, without reasonable ground, been refused shares (see Co-opiTntiri' PriHlnrtion, by B. Jones, pp. 410-413) ; but this practice is now almost unheard of. It may be mentioned that a co-operative society loses its claim to exemption from income-tax (which societies registered under the Industrial and Provident Societies Act enjoy), if it limits the number of its shares (see Industrial and Provident Societies Act, 1893, sec. 24). •348 MKTIIOJ'S OV JJIOMUNKKAIION. HOW than in 1880, the year to wliirli Mrs. Webb's figures relate, and that in a greater proportion of the total number of tliese associations one or more of the employees of the society sit upon the committee. That some of the " self-governing " co-operative societies are still very far from carrying out in their integrity the principles of Industrial Co-operation cannot be denied. The Hebden Bridge Fustian Manufacturing Society, one of the most important of this group, forbids any of its employees to sit on its committee, while its rules provide — as also do those of another important association, the Leicester Hosiery Society — that the shares issued to its employees in respect of their share in the profits shall not give them a right to vote upon any question except that of the alteration of any rule relating to such shares. Among other societies, whose rules forbid their employees to sit on the committee, may be mentioned the (Manchester) Co-operative Printing- Society, a large and successful concern (which also forbids a committeeman to vote upon any question affecting a relative in the society's employ) and the Airedale Manufacturing Society, a woollen manu- facturing undertaking with a good trade."^ Still, the total number of the '' self-governing" co-operative associations, which forbid their Avorkers to sit on the committee, is not very large; and although in * In some of the cases, in which a " self-governing " society has by its constitution exchided from its committee all persons holding a place of profit in the society (this exclusion, it is to be supposed, covering the whole of its employees), it is impossible for any one PRACTICE OF CO-01'H: RATION. 349 other cases the proportion of the employee com- mitteemen is often limited by the rules {e.g., the Leicester Hosiery and several other societies allow one member only of the committee to be an employee), in many cases no restriction is made in regard to this matter; and the present tendency appears to be to accord at least a fairly liberal measure of representa- tion on the committee to the employees of a society of this type. With regard to the share in the management of a "self-governing" society possessed by its employees as ordinary shareholders, in right of shares in its capital held by them^ instances, in which any such restriction upon their full exercise of voting power as is enforced in the cases cited above (Hebden Bridge and Leicester Hosiery), are exceptional. It is, indeed, beyond question that the shares of the "self-govern- ing " societies are to a very great extent held by persons who are not employees, including a large number of "distributive" societies, which are con- stantly investing a part of their surplus capital in these " productive " associations. In but few of these " self-governing " associations, it may be surmised, would it be possible for the employees, if all the non-employee shareholders put forth their full acquainted with the facts to avoid the suspicion that this exclusion was not fully intended, and arose from the fact that a rule, originally framed with special reference to the managers of retail (store) societies, was incorporated in the constitution of the " productive " association by inadvertence, or at any rate without due consideration of the circumstances. •J50 METHODS OF i;kmlxi:i;ai'iox. voting- streng'th, to out-vote these " outsiders." On the other hand, it must not be forgotten that, with the rarest exceptions, the voting p(Aver of an indi- vidual in a co-operative undertaking is the same, whether he hold one share or one hundred shares — the rule of '' one man one vote " (as already stated) prevailing in practically all cases. Where the shares are held by a society, and not by an individual, that society (voting by delegate) is in some cases allowed more than one vote {I'.g., one vote for every two hundred or fraction of two hundred shares, or for every one hundred or part of one hundred shares, or for every fifty shares) ; but in very many cases even a society is only allowed to have but a single vote, no matter how many shares it may hold. Consequently, the small propoi'tion of the total share capital of a society held by its employees does not prevent their exercising a considerable influence in regard to the management of the society's affairs. As a fact, too, the persons present at a shareholders' meeting of one of these associations, will, as a rule, be found to consist to a large extent of its employees and partly of fellow- townsmen (very frequently personal friends of the employees, often Avorkraen in the same branch of trade) who are deeply in sympathy with these em- ployees ; for, except in the case of some urgent crisis, many of the " outsiders " do not trouble themselves to attend. Under these circumstances, since proxy voting is not, save in very rare instances, permitted by the constitution of these societies (so that the votes of those shareholders onlv who are actually PRACTICE OV CO-OPEKATION. 351 present are counted)^ the employee members will usually be found to possess a very important amount of practical control over the management of the aif airs of a society of this type. It remains to state that, while these " self-govern- ing" manufacturing associations, although very far from carrying out in any at all complete manner the cardinal principles of Industrial Co-operation, which require that the actual workers shall possess the entire management of the workshop, have in recent years displayed a decidedly increased approximation to the co-operative ideal, at the same time these associations have not alone increased in numbers, but have begun to exhibit a not inconsiderable degree of commercial prosperity. Against sixty-five " productive " associa- tions of the " self-governing " type existing at the end of 1890, and comprised in the Eeturns published by the Co-operative Union in the Go-operative Congre.s'.-i Report, 1891, with sales to the aggregate value in 1890 of about £500,000, we find, in existence at the end of 1896, ninety-one similar associations, with aggregate sales in that year to the value of between £800,000 and £900,000 (see ante, p. 338). Success, indeed, has not come to all societies of this type in equal measure ; many have altogether failed to achieve success. But, take them as a whole, the progress made by these '''self-governing" associations during the last few years has been very remarkable. CHAPTER XXIV. THE BELATION OF INDUSTRIAL CO-OPERATION TO THE WAGE-SYSTEM. Having in the preceding chapters examined first the theory and then the practice of Industrial Co- operation, we may now inquire, in what relation Industrial Co-operation, as it exists to-day, stands to the ordinary, non-co-operative wage-system. The great bulk of the businesses, which claim the title of " co-operative," exhibit, as we have seen, in regard to the method of remunei^ation adopted by them, no divergence whatever from the ordinary wage-system. The employees of the large majority of our workmen's co-operative associations are " mere wage-earners," taking no share in the profits of the enterprises which these associations carry on, and are — it is clear — as far from being "self-employed" as they would be if they were the servants of an ordinary middle-class joint-stock company. A small minority, however, of our co-operative associations, although indeed very far from carrying CO-OPERATION AND THK WAGE-SYSTEM. '6 JO out that ^^ abolition of the wage-systom/' which is contemplated by the ideal of Industrial Co-operation, yet make (as has been shown) some sort of attempt to conform to the co-operative principles, inasmuch as in the organization of societies of this type pro- vision, more or less effective in different cases, is made for granting to the persons employed by these undertakings a share in the profits and in the management of these associations. The tendency among that school of co-operators, by whom the type of Industrial Co-operation, which has just been referred to, is advocated, is to lay the stress, not so much on the practice of Profit-sharing, as on the admission of the employees to a share in control, their participation in profits being regarded as essential mainly because this participation em- phasises the fact of their enjoyment of the rights and privileges of partnership. Thus, while the hope formerly entertained, that the salvation of the working- classes would be found in the development of a system, in which the workshop should be entirely owned and managed by the persons engaged in that workshop, dividing among themselves the entire profits of the industry there carried on, has been abandoned, the goal aimed at by these co-operators of to-day is what is termed " Labour Co-partnership.^' In the statement, which this school of co-operators puts forward " of that principle in industry for which we contend," it is declared that, " we advocate the co-partnership, that is the equal partnership, of Labour with Capital, the system under which, in the 23 •301' .METHODS OF UKMUNKKATION. first place, a substantial and known share of the profit of a business belongs to the workers in it, not by right of any shares they may hold, or any other title, but simply by right of the labour they have contributed to make the profit ; and in the second place, every worker is at liberty to invest his profit, or any other saviugs, in shares of the society or company, and so become a member entitled to vote on the affairs of the body which employs him." * The definition of the principle of Labour Co- partnership just cited is, it will be observed, wide enough to include, not alone the pi'ofit-sharing, *^' self-governing" type of Industrial Co-operation, but also all middle-class profit-sharing firms, which (as is the case with our profit-sharing joint-stock companies with hardly an exception) permit their employees, in common with the rest of the public, to purchase shares, and to acquire, by virtue of their ownership of these shares, the usual right of voting at general meetings. Thus, Labour Co-partnership will be seen to cover a somewhat wide field. The suggestion, that the Avorkman shall be per- mitted and encouraged by investing his profit- sharing bonus and what money he can save from his wages in the business in which he is employed, to obtain a voice in the management of the concern, has, it will readily be allowed, its attractive side. The picture of a form of industrial organization * This statement of the meaning of " Labour Co-partnership " appears in each successive number of the monthly organ, Labour Co-partnership. CO-OPERATION AND THE WAC.E-SYSTEM. 355 in which the workman and the capitalist shall co- operate as partners in one common enterprise, while it appears to afford a pleasing prospect of the banish- ment of industrial warfare, gratifies the sentiment of the employee by holding out to him the hope of a distinct and effectual recognition of his right to a share in the control of the business in which he is employed. To what extent the modifications of the ordinaiy relations between employer and employee under the existing Avage-system, which the general adoption of this Labour Co-partnership plan would involve, would be likely to promote the real interests of the employer on the one hand, and of the employee on the other, is a question, the answer to which cannot be regarded as altogether free from doubt. This much, at any rate, appears to be certain. The advantages or the disadvantages which may be expected to arise from the introduction of the Labour Co-partnershijD plan must be considered separately, according as the concern, to which it is to be applied, is an ordinary middle-class business, or a workmen's association — a joint-stock company or a co-operative society. So far as the profit-sharing side of Labour Co- partnership is concerned, the good points and the bad points of Profit-sharing, as compared with the ordinary wage-system, have already (Chapter XXI.) been sufficiently examined; and we may pass on to discuss the question of the share in the management, which the advocates of Labour Co-partnership wish to see the working-man acquire by investing his 23 * 356 MKIIIOKS OF KKMUNEUATIOX. bonus and his savings generally in the shares of the business in which he is employed. It must be observed that, under existing circum- stances, the degree of control, which it will be possible for the employees of a modern business concern to acquire in this manner, is, in most instances, unlikely to be of a very substantial nature. For, it may be taken for granted that the middle-class capitalists, by whom, of course, the great bulk of the shai'es will in most cases be held, would not listen for a moment to any proposal that the " one man, one vote " rule, in force with our workmen's co-operative societies should be introduced^ so exposing them- selves to being swamped by the votes of their servants. The middle-class shareholders will, usually, we may be sure, insist upon a strict adherence to the ordinary joint- stock rule, according to which the voting power is in proportion to the number of shares held by each shareholder. Accordingly, since the total number of shares, which we may expect it to be possible for the employees of a business to acquire, will usually be but a small fraction of the entire share capital, it is practically certain that, upon any question involving their interests, the employees are sure to find them- selves hopelessly outvoted by the solid phalanx of capitalist shareholders."^ * Compare the case of the Briggs collieries (see ante, p. 282), in which Profit- sharing was adopted in 1865. A large number of the workmen employed by the company held shares, special arrange- ments being made for them to have shares allotted to them at less than the market value, and share clubs formed to aid workmen in CO-OPERATION AND THE WAGE-SYSTEM. 357 While the practice of investing their money in shares, if generally adopted by working-men, would seldom secure for them anything like a dominating, or even an effectual voice in the management of the concerns by which they are employed, it is impossible to forget the very serious risks which they would run by sinking their savings in a security so specula- tive as are the shares of the average joint-stock company — a security in which no ordinarily prudent middle-class man would for one moment dream of investing the funds comprised in a marriage settlement. It is, certainly, most probable that, if the Labour Co-partnership plan were extensively adopted, the small share in management, which employees are likely to obtain under this system, would, all too often, be found to have been very dearly purchased. It may be said that any share in management is better than none, and that, in order to gain even a minute share in control, a workman may well think it worth while to run the risk of losing his savings when the company smashes. But then, it must not be lost sight of that the plan, which Labour Co- partnership proposes for enabling employees to acquire a right to have a voice in the management of the enterprises in which they are employed, is not the taking up shares. The workmen were also allowed to elect, and did elect one of themselves as a director. But at no time do the work- men appear to have been able to exercise any sort of control in the management of the company, in whose affairs they had practically no voice. 3bS SIKTHODS OF HKMDNKKATION. only metliod wliicli has been proposed for attaining this object. For, under the ordinary wage-system (as has been pointed out in preceding pages) provision can be, and in some instances is made for giving to the employees a powerful means of expressing their views as to those questions which directly affect their interests, either through their trade union, or through those joint committees of employers and employees, of which mention has been made in pre- ceding chapters * — institutions, which, Avithout invit- ing the workmeu to dabble in shares, or making any pretence of giving them a right to take part in the financial control of an industrial undertaking, fully recognise their claim to be heard in regard to work- shop arrangements of every kind. It remains to consider how far this Labour Co- partnership plan is likely to succeed in promoting the maintenance of industrial peace. This important question is one, which cannot be answered with any degree of certainty. By some of those, by whom the adoption of this plan is advocated as a remedy for industrial strife, it is hoped that the workman, who has money invested in stock of the company by which he is employed, will refuse to join in any attempt to secure an advance or to resist a reduction in wages by means of a strike. Thus, Mr. Livesey, by whom (see ante, p. 273) the practice of increasing by 50 per cent, the bonus of any employee of the South Metropolitan Gas Company who invests one-half of * As to joint committees in non-profit-sharing firms, see p. 79 ; as to those in profit-sharing firms, see pp. 275, 27G. CO-OI'EKATION AND THK WAGE-SYSTEM. 359 his bonus in stock of the company was introduced, has stated that " the idea of making the workmen shareholders became a fixed purpose on reading of the Taff Vale engine-driver, who, at the time of the strike on that railway, about 1890, refused to come out, remarking that ' he could not strike against himself,' he holding," says Mr. Livesey, "if my memory is correct, £5 of the company^s stock " {Times, January 5th, 1897). Certainly, if in a case like this a large number of the company's employees held each, not £5, as here supposed, but say £100 of its stock, they might very possibly feel disinclined to join in a strike movement, which, if it succeeded in increasing their wages, might also, by augmenting the working expenses, diminish their dividends. But the men owning a really substantial sum of stock will always be a small minority, and just that minority of elder men, who, not liking to see the money of the trade union spent on strikes, for fear of possible jeopardy to the funds available for satisfying their claims in respect of sick and superannuation benefits, may usually be counted upon, under any circumstances, and quite apart from their being stockholders, to use their influence, so far as it goes, in favour of a pacific policy ; while the younger and more venturesome members of the staff, who will not as yet have acquired any considerable amount of stock, will probably put aside all thought of the risk of diminishing the dividend of the company, vote in favour of aggressive measures, and, the strike once declared, stand loyally by their trade union. Still, 360 METHODS OF IIKMUNEKATION. tlie iiitroductiou of a system, under which large numbers of working-men should become shareholders in the concerns by which they are employed, might in many cases, especially in cases in which no strong trade union feeling has grown up among the work- men, do a great deal to destroy the cohesion of trade union combination, where a union exists, and to delay or prevent the foi'mation of a trade union whore none exists, and might develop in the minds of the employees a spirit of submission, which would go far to secure the avoidance of industrial conflicts in the Labour Co-partnership companies. Whether the maintenance of industrial peace on terms such as these would, on the whole, be an advantage or a disadvantage to the working-men employed in the establishments adopting the modifi- cation of the ordinary wage-system proposed by the advocates of Labour Co-partnership, or to the working-classes in general, is a question of no little interest, which, however, it would be impossible adequately to discuss without entering upon matters altogether beyond the scope of our present subject — the method of remuneration. But without going into the wide question, whether the weakening of the power of trade union combination, which would appear to be a possible result of the extension of these Co-partnership arrangements, would tend to raise or to lower wages generally, it is proper to point out one somewhat serious danger, to which the Labour Co-partnership plan seems, of necessity, to expose the workman — the danger of his being com- CO-OPERATION AND THK WAGE-SYSTEM. 361 pelled to pay for the incompetence of liis employers. For, while the trade union policy is to insist upon the payment by all employers in a trade alike of an uniform standard miniinum wage, under the Labour Co-partnership system, on the other hand, the employee shareholders, whose savings are invested in the shares of a company which has got into fiuaucial difficulties, may find themselves obliged, in order to stave off the liquidation of the concern, to submit to having their wages reduced. Nor would the consequences of this reduction end with the loss incurred by the employees of this particular factory. It may be taken for granted that, after a few financially unsound Co-partnership firms had induced their woi'kmen to agree to their wages being reduced, other employers in the trade concerned would soon complain that it was impossible to compete with these firms while obliged to pay higher wages than their rivals, and would, in their turn, do their best to break down the standard rates.* So much as to Labour Co-partnership in ordinary joint-stock companies. With regard to the application of this principle in workmen^s co-operative societies, it may occur to many that, if the shares of middle-class * As instances, in whicli the employees of undertakings conducted on the Labour Co-partnership plan have given up their wages in order to meet financial difficulties in which these concerns had become involved, may be mentioned the case of the Cobden Memorial Mills Company, formed in 1866 at Sabden, Lancashire, where the employees in 1885 agreed to forego eight weeks' wages during the next twelve months to the amount of £2,000, this company being wound-up in 1887 without having at any time paid any bonus 362 METHODS OF REMUNERATION. companies are, as a rule, sonicwliat unsuitable invest- ments for the working'-classes, then working--men ought to bo even more strongly Avarned against putting their savings into shares in working-class co-operative undertakings. For the idea, that enter- prises owned and managed by working-men almost invariably fail, is very widely prevalent. This, liow- ever, is an idea, which the facts of the case do not altogether bear out. It is, indeed, indisputable than a large number of our working-class co-operative societies have not succeeded in attaining financial success; but the reader, who will turn back to page 322, will see that the goods sold by our workmen's co-operative societies in 189G were of the aggregate value of nearly £60,000,000, of which about £52,000,000 is the value of "distributive," and not far from £8,000,000 that of ''productive'' sales. Does this look like failure ? Even if it be alleged that those forms of Co-operation, in which the employees are allowed to share in profits and management, are the least financially successful pai't of the Co-operative Movement, it may be pointed out that, taking separately the ninety-one co-operative '' productive " (manufacturing) associations of this class comprised in our figures (many of which are, to its employees, and that of Wm. Thomson ct Sons (see «H^t^pp.274- 27(5), where the employees paid in 1890 out of their wages a considerable sum in order that the shareholders might receive in, full the dividend of 5 per cent., which they would otherwise not have received at that time, owing to the loss incurred by the business in the preceding year, and which, if unpaid, would have been a first charge on subsequent profits. CO-OPERATION AND THE WAGK-SYSTEM. 363 no doubt, of recent formation, but not a few of which have had a fairly lengthy existence), we find the sales of these societies in 1896 to have been (as the reader will remember) of the value of between £800,000 and £900,000. Would it, then, be possible to assert, without reserve, that Industinal Co-operation carried out on the Labour Co-partnership lines is a total failure ? It cannot be denied that, if co-operative societies on the Labour Co-partnership plan were to multiply extensively, the employee shareholders of these con- cerns "would, in many cases, be not unlikely to lose a considerable part of their hard-earned money. Nor, of course, will the danger, which was shown to exist in the case of middle-class Co-partnership firms, that, in order to stave off liquidation, the employees may find themselves compelled to sacrifice part of their wages, so entailing consequences most seriously pre- judicial not alone to themselves but also to workmen in the trade genei-ally, be in any less degree present in the case of co-operative societies formed on Labour Co-partnership lines.* At the same time, it must not be forgotten that, whatever risks may be incux'red by the working-classes owing to the adoption of this Labour Co-partnership plan, if a working-man invests his bonus and other earnings in the shares of a co- * In the case of the Burnley Self-Help Society, a co-operative association engaged in cotton weaving (see ante, p. 342 ?i.), the employees, under circumstances of this nature, paid, out of their wages, to make up losses, a large amount of money. See Co- oj)erativc Production, by B. Jones, Tp. 310. 364 METHODS OF EEMUNK RATION. operative society V)y which he is employed, and which is carried on upon these lines, he at any rate in many cases obtains, by means of this investment, a really considerable share in the management of the concern — a share far more substantial than he is likely to obtain in any ordinary middle-class company. That a great number of our co-operative associa- tions carried on upon Labour Co-partnership lines have met with financial disaster, no one acquainted with the facts can deny ; but that many of these societies exhibit every sign of financial prosperity is beyond question. No doubt, there exist in all under- takings, in which the employees are allowed to possess a really effective share in the management, difficulties, the serious character of which cannot be ignored. Where workmen are to a large extent their own masters, there the maintenance of discipline is, in the absence of great self-restraint and no little self-sacrifice on the part of the employees, far from easy. The directors of the concern must be selected, not for any showy gift of eloquence, but for their proved capacity ; and the unwillingness of working- men to see one of their own number raised in rank above his fellows and remunerated at a much higher rate than they can themselves command must not be allowed to prevent a proper position and an adequate salary being granted to able and honest managers, to whose directions obedience must be ungrudgingly accorded. These are among the fore- most requirements which must be met, if the principles of Labour Co-partnership are to be successfully CO-Ol'E RATION AND THE WAGE-SYSTE.At. oG5 applied in co-operative enterprises. That these requirements were seldom met in the early days of Industrial Co-operation, cannot be denied. Erjually undeniable is it that in the practice of our working- men co-operators of to-day all these necessary con- ditions of success are being- fulfilled in a much greater measure than at any previous time. To what extent we may look to the development of Industrial Co-operation of the type now under consideration for the solution of the numerous diffi- cult questions affecting the interests of labour that press for solutiou, it may be difficult to decide. In any case, these experiments are full of interest. If the gradual growth of a higher social morality shall bring with it the rise of a spirit of closer comi'adeship and the development of habits of voluntary discipline, while the general diffusion of educational facilities day by day improves the intellectual status of the working- classes, then some of the gravest of the obstacles to the successful realisation of the ideal of " self-employ- ment " will have been removed. Whatever be the future reserved for the co-operative method, it is certain that every genuine attempt to carry out this system possesses features entitling it to command our hearty sympathy. For the co-operative method, training men, as it does, to habits of self-control, developing, as it does, mutual goodwill between loyal associates, and promoting, as no other method can in equal measure claim to do, self-respect and self- reliance, merits the admii-ation of all who have at heart the welfare of their fellow-citizens. APPENDIX A. PROFIT-SHARING FIRMS. ^ PAET I. Past Pkofit-sharing. flkims in which puofit-sharing is no longer in force, t Duration 1 of Proflt- sliaring. Name and A of the above named. J PART IV. Form of Agreement in Relation to Workmen's Debentures, carrying Interest varying with Profits, in force with Messrs. Willans and Robinson, Limited."^ It is hereby agreed between Willaus and Robinson, Limited, by Charles Shrewsbury Essex, their secre- tary, of the one part, and of the other part, that in consideration of the faithful service to the Company of the said the Company will pay to the said so long as he remains in their employment, additional interest upon the debentures of the said Company, Nos. , which are held by the said (and so long only as they are held by him), over and above the interest at the rate of £5 per centum payable thereon in any case, as follows, viz., for each half- year in respect of which interest at a higher rate than * From Report on Projlt-sharing, 1894, p. 181. 26 * 404 WORKMEX's DKBKNTURKS. 5 per cent, per annum shall have been paid npou the ordinary shares of the Company, such a sum as will make np the total interest on such debentures to the same rate per cent. ])er annum as is paid upon the ordinary shares as aforesaid. Such additional interest shall be payable at the same time as dividends upon the ordinary shares of the Company for the preceding half-year. As witness the hands of the said Charles Shrews- bury Essex and of the said the day of 189 . Witness to the signature of the said Charles Shrewsbury Essex, Witness to the siofnature of the said APPENDIX C. 406 APPENDIX Bonus in '^ Seli'-Govkrning Name of Society. Nature of Business. Date of Establish- ment. Sales in Eccles Manufacturing Paisley Manufacturing Manchester Co-operative Quilts and table covers Woollen and cotton . Printing Fustian 18G1 18(52 1809 1870 1872 1873 1873 18.134 72,019 67,.'50!) Hebden Bridge Fustian Airedale Manufacturing ... Edinburgh Printing Newcastle-on-Tyne House- hold Furnishing 46,()4() 19,047 10,737 12,510 Worsted and wool ... Printing Cabinet-making * Return for 1884 not stating ratio of bonus to wages, this year is omitted from calculation. ■j- Return for 1885 not stating ratio of bonus to wages, this year is omitted from calculation. 40/ Co-operative Associations (see ante, p. 342). Number of cou- 1 ,. I ,„).: > I secutive years employees ratio of (p,„,i„,_, ,,i/,, js;., on Deo. I Honus to \^^^^ oMiittin.^' ISST) to which this average relates. Xiuiiberofj Average employees ratio of on Deo. I Honus t 31.st, ISW. Wages. 84 Per cent 0-6 320 4-8 403 2-6 331 3-8 34 2-9 84 5-21 101 Nil 13* 14 t 11 15 12 9 4§ Ratio of Bonus to Wages in Xanm of Society. 1890. Per cent. Nil Eccles Manufactiu-ing 4-2 Paisley Manufacturing 2-5 Manchester Co-operative Printing 5-0 Hebden Bridge Fustian 1-3 Airedale Manuiacturing 4-3 Edinburgh Printing Nil Newcastle-on-Tyne House- hold Furnishing :}: Adopted Profit-sharing in 188G. Eeturn for 181)5 not stating ratio of bonus to wages, this year is omitted from calculation. § Kegistered under the Companies Acts. Returns for 1891 and 1895 not stating ratio of bonus to wages, these years are omitted from calculation. 408 APl'KNDIX C. Name (if .Soeiuty. Sheffield Cutlery Walsall Padlock Leek Silk Twist Coventry Watch Leicester Hosiery Northamptonshire Productive Assington Bozeat Manufacturing Bookbinders, London Co - operative Sundries, Droylsden Keighley Ironworks Norwich Boot and Shoe ... X.nturc of Business. Cutlery Locks, &c Silk twist Watches, &c Hosiery Boots and shoes Farming Boots and shoes Bookbinding Baking powder and sundries Machines Boots and shoes Dato of Establisli- IllCIlt. 1873 1873 1874 187G 1870 1881 1883 1884 1885 1885 1885 1885 Sales ii isyo. 1,748 10,482 12,230 3,973 48,885 5,534 1,031 2,030 845 22,405 7,059 2,400 * Adopted Profit-sharing in 1887. Return for 1888 not stating ratio of bonus to wages, this year is omitted from calculation. t Eeturn for 1885 not stating ratio of bonus to wages, this year is omitted from calculation. X Return for 1882 not stating ratio of bonus to wages, this year is omitted from calculation. § There being no Returns for 1892 and 1894, these years are omitted from calculation. II Returns for 1885, and 1894 to 1896 not stating ratio of bonus to wages, these years are omitted from calculation. ?1 Returns for 1889-92 and 1895 not stating ratio of bonus to wages, and there being no return for 1894, these years are omitted from calculation. BONUS IN "self-governing ASSOCIATIONS. 409 Nninber of eiiiployces on Dec. 31st, ISOl!. Averat;e ratio of Bonus to Wages. Number of con- secutive years (ending with ISftfi but omitting 1887) to which this average relates. Ratio of Bonus to Wages in ISOG. Name of Society. 55 Per cent. 5-9 8* Per cent. 7-5 Sheffield Cutlery 251 7-3 lit 100 Walsall Padlock 71 6-1 12 7-5 Leek Silk Twist 40 4-0 m 6-3 Coventry Watch 194 0-9 11 § 1-7 Leicester Hosiery 50 10-4 9 II not stated Northamptonshire Productive 9 Nil 611 Nil Assington 30 Nil 1** not stated Bozeat Manufacturing 7 Nil 3tt not stated Bookbinders, London 63 3-9 11 6-3 Co - operative Sundries, Droylsden 35 2-4 n: 21 Keighley Ironworks 15 5-0 8§§ 3-3 Norwich Boot and Shoe ** There being no Return for 1892, and Returns for 1890, 1891, 1893, 1895, and 1896 not stating ratio of bonus to wages, these years are omitted from calculation. tt There being no Return for 1892, and Return for 1889, 1890, 1894 and 1896 not stating ratio of bonus to wages, these years are omitted from calculation. II Did not commence business until 1887. Return for 1889 not stating ratio of bonus to wages, this year is omitted from calculation. §§ Did not commence business until middle 1886. Return for 1886 not stating ratio of bonus to wages, and there being no Return for 1892, these years are omitted from calculation. 410 APPENDIX C. Name of Society Sales ill 181)0. Burnley Self-Help 188G 78,523 Finedon Manufacturing .. Boots and shoes 188G 10,412 Leicester Boot and Shoe ... Boots and shoes 1887 47,2% Eaunds Productive Boots and shoes 1887 8,310 1888 1888 1888 2,738 Bromsgrove Nail Forgers ... Nails 1,571 Co-operative Builders, Brixton Building, &c 8,510 Dudley Bucket and Fender Hardware .. 1888 14,379 Kettering Boot and Shoe ... Boots and shoes 1888 29,204 Macclesfield Silk Silk 1888 1888 30,000 Nelson Self-Help Bristol Pioneers Boot and Shoe Cotton cloth 29,029 Boots and shoes 1889 1,2(57 * Did not commence business until 1888. Eeturn for 1890 not stating ratio of bonus to wages, this year is omitted from calculation. t Returns for 1888 to 1892 not stating ratio of bonus to wages, these years are omitted from calculation. X Return for 1888 not stating ratio of bonus to wages, this year is omitted from calculation. § Ratio of bonus to wages was 15 per cent, in 1888 and in 1889. Ratio for remaining years not stated. |] Return for 1896 not stating ratio of bonus to wages, this year is omitted from calculation. U No Return for 1888, business having only just been commenced ; Returns for 1889, 1890, and 1894 not stating ratio of bonus to wages, these years (as well as 1888) are omitted from calculation. ** No Return for 1888, business having only just been commenced ; Returns i BONUS IN " SELF-GOVEKNING " ASSOCIATIONS 411 Number ot employees OH Dec. 31st, ISitii. Average ratio of IJ(miisto Wages. Number of con- secutive years (ending with ISOii but omitting 1SS7) to which thin average relates. Ratio of Bonus to Wages in 1SP6. Name of Society. 400 Per cent. 0-6 8* Per cent. Nil Burnley Self-Help 45 2-4 4it 5-8 Finedon Manufacturinf,' 302 5-1 St 9-0 Leicester Boot and Slice 33 15-0 2§ not stated Eaunds Productive 40 0-8 7 II not stated Alcester Productive 55 1-3 5«I 3-8 Bromsgrove Nail Forgers not stateil 2-8 fi** 8-8 Co-operativeBuilders,Brixtoa 72 10-0 8tt 10-0 Dudley Bucket and Fender 171 7-4 St: 8-1 Kettering Boot and Shoe 260 mi i§§ not stated Macclesfield Silk 130 Nil 3|i!: not stated Nelson Self-Help •23 0-5 4 nil not stated Bristol PioneersBoot and Shoe for 1893 and 1894 not stating ratio of bonus to wages, these years (as well as 1888) are omitted from calculation. tt Return for 1888 not stating ratio of bonus to wages, this year is omitted from calculation. + 1 Business not commenced until 1889. «!§ 1893. Details wanting for other years. Had not commenced business in 1888. There being no Eeturn for 1893, and Eeturns for 1890, 1894, 1895, and 18<)() not stating ratio of bonus to wages, these years (as also 1888, business having been commenced only in December of that year) are omitted from calculation. "T Did not commence business until 1890. There being no Eeturn for 1895 and Eeturns for 1894 and 1896 not stating ratio of bonus to wages, these years are omitted from calculation. 412 APPENDIX C. Name of Society. Burton Latimer Boot and Shoe London Bass Dressers Oxford House Eepairing and Decorating Bradford Cabinet-makers ... Delph and District Woollen Manufacturing Hinckley Boot and Shoe ... Nantwich Boot and Shoe ... Barwell Boot and Shoe London Leather Manufac- turing Sheffield Tailors St. Crispin Productive (Kaunds) Xalmo of J5usiiiess. Dato (if Establi.sli- IML'llt. Boots and shoes 1889 Bass dressers 1889 BuUding, &c 1889 Cabinet-making, *c. 1890 Worsted and wool ... 1890 Boots and shoes 1890 Boots and shoes 1890 Boots and shoes 1891 Leather 1891 Tailoring 1891 Boots and shoes 1891 Sales ill 2,377 4,288 043 5,043 1,241 6,508 4,101 6,323 8,602 551 8,071 * 1891 and 1892 not being included in Co-operative Union Eeturns, and Eeturn for 1890 not stating ratio of bonus to wages, these three years are omitted from calculation. t Returns for 1889 and 1894 not stating ratio of bonus to wages, these years are omitted from calculation. J Returns for 1890, 1892, and 1894 to 1896 not stating ratio of bonus to wages, these years are omitted from calculation. § Did not commence business until 1892. Returns for 1892 and 1893 iiot stating ratio of bonus to wages, these years are omitted from calculation, II Business not commenced in 1889. There being no Return for 1890, BONUS IN '' SELF-GOVERNING " ASSOCIATIONS 413 Xuiiiber of L-iiiployees oil Dec. 31.st, 1S96. Avei-agp Ratio of Bonus to Wages. Number of con- secutive years (ending with lSO(i but omitting 1.SS7) to winch this average relates. Ratio .,f Bonus ti) Wages ii; IS'.h;. Name of Society. Per cent. Per cent. 18 details wanting — not stated Burton Latimer Boot and Shoe 17 5-1 5* 4G London Bass Dressers 6 3-3 5t 5-8 Oxford House Kepairing and Decorating 35 Nil 3t not stated Bradford Cabinet-makers 14 Nil 3§ Nil Delph and District Woollen Manufacturing 44 2-5 5 11 21 Hinckley Boot and Shoe 42 .V(7 2*1 Nil Nantwich Boot and Shoe 46 2-6 5** 5-8 Barwell Boot and Shoe 52 3-1 3tt 2-9 London Leather Manufac- turing 7 Nil 2 ++ not stated Sheffield Tailors 32 details wanting -§§ not stated St. Crispin Productive (Raunds) and Return for 1891 not stating ratio of bonus to wages, these years are omitted from calculation. 1) Returns for 1890-1894 not stating ratio of bonus to wages, these years are omitted from calculation. ** Return for 1892 not stating ratio of bonus to wages, this year is oinitted from calculation. ft Did not commence business until 1892, which year and 1895, the Returns not stating ratio of bonus, are omitted from calculation. %l Returns for 1891, 1893, 1895, and 1896 not stating ratio of bonus to wages, these years are omitted from calculation. §§ Did not commence business until 1893. 414 APPENDIX C. Name of Society. NatuiL' iiC ]Jii.si]iess. Date of E.stablisli- lllClit. Sales in Bolton Cabinet-making ... Cabinet-making 1892 3,844 Calderdale Clog Sundries Manufacturing, Walsden Condorrat Quarry Glenfield Boot and Shoe ... Clog iron, and sun- dries 1802 2,283 OnavrvinL' 1892 2,521 Boots and shoes 1892 5,354 Higham Ferrers Boot and Shoe Boots and shoes 1892 4,377 Kent Brickmaking Brickmaking 1892 3,741 Printing 1892 2,(;59 Manchester Mat Makers ... Mats,&c 1892 1,472 Medway Shipbuilding Newcastle-on-Tyne Cabinet- makers Shipbuilding 1892 360 Cabinet-making, etc. 1892 2,275 Eothwell Boot and Shoe . . . Boots and shoes 1892 9,400 Pianofortes 1898 868 * Six weeks' business only in 1892. t Did not commence business until 1893. Beturn for 1895 not stating ratio of bonus to wages, this year is omitted from calculation. ^ Did not commence business until 1893, which year, Beturn not stating ratio of bonus to wages, is omitted from calculation. § Did not commence business until middle of 1894 ; Returns for that year and 1895 not stating ratio of bonus to wages, these years are omitted from calculation. II Did not commence business until 1893. ^ Six months' business only in 1892. Returns for 1892 to 1894 not stating ratio of bonus to wages, these years are omitted from calculation. BONUS IN " SELF-GOVEliNING ASSOCIATIONS. 415 1 Number of, omiiloyees, iin Dec. 1 31sl, 1896. Average ratio of IJoiius to Wages. Number of con- ■seeutive years (ending with ISiHi but omitting 18S7) to which this average relates. Ratio of Bonus to Wages in 1S90. Name of ^society. 36 Per cent. Nil 2* Per cent. Nil Bolton Cabinet-making 17 10 5 2-5 Calderdale Clog Sundries Manufacturing, Walsden 28 15-7 n 6-6 Condorrat Quarry 37 3-3 3: 70 Glentield Boot and Shoe 17 Xil i§ Nil Higham Ferrers Boot and Shoe 26 details wanting -II not stated Kent Brickmaking 28 4-3 21 3-0 Leicester Printing 26 Nil 3** .Y/7 Manchester Mat Makers 6 Nil 3tt .V(7 Medway Shipbuilding 19 Nil ■■■ + + not stated Newcastle-on-Tyne Cabinet- makers 80 0-8 3§§ 2-5 Rothwell Boot and Shoe 5 Nil i|l!l not stated Bristol Pianoforte ** Six months' business only in 1892. Returns for 1892 and 1893 not stating ratio of bonus to wages, these years are omitted from calculation. + t Did not commence business until 1893. Return for 1893 not stating ratio of bonus to wages, this year is omitted from calculation. XX Returns for 1894 and 1895 not stating ratio of bonus to wages, these years are omitted from calculation. §§ Did not commence business until 1894. I i; Only commenced business at end of 1893, for which year, and for 1895 no Returns were made ; Return for 189(5 not stating ratio of bonus to wages, all three years are omitted from calculation. 416 APPENDIX C. Xaine of Society. Nature of Business. Date of Establisli- iiieiit. Salps in 1S90. Ready-made clothing Boots and shoes Baking Buildin"' &c 1893 1898 189;-3 1893 1894 1894 1894 1894 1894 1894 1895 1895 1895 18,895 Leicester (Anchor) Boot and Shoe Nottingham Bakers Plymouth House Painters, &c. Co - operative Engineers, Leicester Kettering Building and Con- 4,420 991 178 Machines, d'c Building, etc 1,166 8,032 Macclesfield Fustian Cutters Penketh Productive Fustian Leather Buildin" &c 1,057 11,649 964 Sheffield Trade-Unionists' Sheep Shear Manufacturing Canterbury Tanners Cutlery Leather not stated 584 Mytholmroyd Manufacturing 1,030 Printing .., 553 * Only commenced business at end of 1893 ; Return for 1893 not stating ratio of bonus to wages, this year is omitted from calculation. t 1895. There being no Return for 1894, and Returns for 1893 and 1896 not stating ratio of bonus to wages, these years are omitted from calculation. J Only commenced business in November, 1893. § Return for 1895 not stating ratio of bonus to wages, this year is omitted from calculation. LUNUS IN " .SKLF-GOVKUNIN(i " ASSOCIATIONS. 417 Number of employees on Dec. 31st, 1890. Average ratio of Bonus to Wages. Number of con- ' secutivc years (ending with 1S96 'but omitting 1887) to which this average relates. Ratio of Bonus to Wages in 1 syti. 200 Per cent. 7-3 48 1-3 2 Nil 1 3-5 12 Nil 30 8-8 43 no details 12 9-4 8 Nil 72 3-8 6 Nil 18 Nil 6 4-2 4 It 3: 2§ 2 li 211 1 It 1 tt in Per cent. 6-9 2-5 not stated 4-0 Nil 100 not stated not stated Nil 5-0 Nil Nil 4-2 Name of Society. Kettering Clothing Leicester (Anchor) Boot and Shoe Nottingham Bakers Plymouth House Painters, &c. Co - operative Engineers, Leicester Kettering Building and Con- tracting I Macclesfield Fustian Cutter.s ! Penketh Productive Sheffield House Painters, Ac. Sheffield Trade-Unionists' Sheep Shear Manufacturing Canterbury Tanners Mytholmroyd Manufacturing Nottingham Printing II Return for 1894 not stating ratio of bonus to wages, this year is omitted from calculation. "! Did not commence business until 1895. ** Did not commence business until 1895, when nine months' business only was done. ■ft Did not commence business until 189G. \X Return for 1895 not stating ratio of bonus to wages, this year is omitted from calculation. 27 418 APPENDIX C. Name of Society. Natiiii' of lUisiiicss. Datn of Kstiililisli. ijii'iit. Sa1e» ill 189G. Blackpool Union I'rinters ... Printing 18% £ 551 Building, &e Boots and slioes 1896 431 Kettering Union Boot and Shoe 189G i,oi(; London Mat and Matting ... Mats, .to 189G (;:« BONUS IN " SKLP-GOVKRNING ASSOCIATIONS. 419 Niiiiiberof Average i., 52n., GH «., 118 «., 12()>i. "Artels," the Russian, 165 n. Ashton-under-Lyne district Weavers' Association, the, 69 n. Attewell, Mrs., 187 Australia, Seamen's Trade Union in, 232 n. Authorities, Public, see Public Authorities Aveling, E., 15 n. " Awkward Work," 45, 143 Ayrshire Coalminers, the, 30, 30 n. Bagmakers, 171 Baird, K., 30 Bakers' Society at Dublin, 36 « Baking Societies, Co-operative, 334, 335, 335 n. Bargemen, 251 ; and Watermen's Protection Society, the United, 251 v. Barrow-in-Furness, Iron and Steel Workers at, 79 Basters, 188, 202 Baum, F. C, 75 Belgium, co-operative work in coal mines in, 159 ; in docks in, 165 ii. " Bell -horses," 95 Berlin Anhalt Railway Co., the, 306 u. Bethnal Green, sweating at, 192 ; cabinet-making at, 211 Bicycle trade, the, 53 Birmingham, sweating at, 195 Birtwistle, T., 69 n. Blacksmiths, see Smiths Blackwall, Ironworks at, 137 Blandford, T., 335 n. Blaydon-on-Tyne, glass-bottle trade at, 128 n. Blowing-room Operatives, Amalgamated Society of Card and, 238 Boehmert, V., 254, 283 ». Boilermakers and Iron Ship-builders, 18 »., 230 n. ; and piece-work, 51, 74?!.; versus Shipwrights, 229 Ji. ; United Society of, 20 Bolton, cotton spinning at, 34, 35 n. INDEX. 423 Bonus-giving (Intlcterminate Profit-sharing), 245, 24G, 246h., 254 n. " Bonus on output," nee Premium on output Bonus on purchase, xce Dividend Boot and Shoe makers, Amalgamated Society of, 199 ; Co-operative Societies of, at Rushden and Street, 342 ?). Boot and shoe trade, so-called time-wage in the, 21 ». ; piece-work in the, 24 II., 45 »., 53, 58, 59, 78 ; progressive wages in the, 88, 89 ; piece-wage foremanship in the, 173 ; sub-contract and sweating in the, 188-190, 19G-199, 222; and product-sharing, 253; and pi'ofit-sharing, 300; co-operative production in the, 342 ». See also " Chambermasters," Closers, Finishers, Knifers, Lasters, Slipper-makers, Sole-sewers, and Upper-makers Booth, C, 16 n., 88, 189 «., 221 Booth, W., G9 II. Borchert Brassworks, the, 30(5 n. Boring machines, 80 Boucicaut, Veuve, 254 n. "Bounty," xec Premium on output Bow, sweating at, 192 Bowling, Mr., 192 Bradford, Labourers' Union at, 83 ; Weavers' Association at, 93 ». Brassey, Lord, 62, 157, 184, 185 Brentano, L., 318 n. Bricklayers and " Bell-horses," 95 ; and piece-wage foremanship, 169, 170 Brickmaking, 146, 342);. Briere et fils. Messieurs, 254 n. Briggs Collieries, the, 282, 296 n., 305 »., 356 ii. Bristol, sweating at, 195 Browntield's Guild-Pottery, 322 n Bruce, A. B., 162 n., 185 n. Builders' Labourers, 82, 83 Building Trades, sub-contract in the, 84«., 169-170, 174, 202 ».; " Bell-horses " in the, 95 ; piece-wage foremanship in the, 169- 170 ; piece-master system in the, 174 ; sub-contract system in the United States, 202 n. 42 t INDEX. Bulgiuia, co-operative work in, 1G5 h. Bureau, P., 305 /(. Burnett, J., 1(5/;., l.Jl »., 190, 191, 193, 194, 195;(., 20G, 217, 221, 221 «. Burnley Weavers' Association, the, 69/i., 93h.; Self-help Society, the, 342 H., 363 n. Burntisland, co-operative coal trimmers at, 1G3, 223, 234, 23/5, 23G Bushellers, 39 Bushill, T. W., 268/1., 380 n., 381 //., 386 //. " Butties," 202 Button-holers, 18H " Butty-gangs," 157, 157 //. Cabinet-makers, Alliance Association of, 75, 206 Cabinet-making trade, lump system in the, 74, 205 ; sub-contract and sweating in the, 205, 211, 218, 219 " Ca-Canny," 86 //. Cairnes, J. E., 182, 183, 184, 185, 201 Canal-making, 157, 157 //. Card and Blowing-room Operatives, Amalgamated Society of, 238 Carpenters, 232 //., 314 //. Carriage Department, the Royal, 125 Casey, Mrs., 186 Caulking, 23, 31 Cement-making, 202 Chain and Nail-makers, 206 " Chair " in the Glass trade, 115 " Chambermasters," 198 Champion, H. H., 215 Chargeman, see Foreman " Chasing," 72, 73, 83, 95 Chevallier, E., 91 //. Civil Service Stores, the, 191 Clerks, 107 //., 140 »., 214 Clicker (printing trade), 231 INDEX. 425 Cloak-making, 17 Closers (boot trade), 198 Clouncagh Co-operative Dairy, the, 33G Coal and Iron Co., the North of England Industrial, '283 Coal Masters' Association, the South Staffordshire and East Worcester- shire, 29 ; the Lanarkshire, 30 Coal Miners in Staffordshire, 29 ; in Lanarkshire, 29 ; in Ayrshire, 30 ; in Northumberland and Durham, 32, 32 /;., 33 ; in Belgium, I'A) ; County average in Northumberland and Durham, 40 ; and piece-work, 69 ; and the butty-system, 202 ; and trade unionism, 232 ; and sliding scales, 288, 289 Coal Trimmers' Association Burntisland, the, 104 ; co-operative gang- work of the, 103, 104, 1()5»., 234, 235. Coat-makers, 16, 17 Cobden Memorial Cotton Mill, Sabden, the, 301 h. Coffee Carriers, 62 Cokemen, the Durham, 36 Colebrookdale, 184 Collective Gain-sharing, 100 »., 104, 108; examples of, 137-142; advantages of, 142-146 Collective Piece-wage defined, 9 ii., 11, 115 ; examples of, in various trades, 115; methods of division of, 116-117 ; and the remunera- tion of foremen, 117 ; advantages of, 118 ; how formerly worked in the Eoyal Dockyards, 118-124 ; its defects, 124-126 ; superin- tendence under a system of, 168-09 Collective Progressive Wages defined, 9 ii., 11, 127 ; examples of, in various trades, 127-131 ; inter-departmental gain-sharing, 132-133 ; methods of dividing premiums under, 133-134; in the docks, 135-130 ; in the Yale and Towne works, 137-138 ; in Willans and Robinson's, 138-140 ; in the Thames Ironworks, 140-141 ; table of rates of bonus under, 142 ; some advantages of, 144 ; superintendence under a system of, 144-145, 108 Collective Task-wage defined, 9 ii., 11, 114 Collective Wages, 4 ; compared with profit-sharing, 302-304 Collet, C. E. 194 n., 195 n. Colne Vale Co-operative Corn Mill, the, 334 42(5 INDEX. Colonies, profit-sharing firms in the 15ritish, 2(>2«., 2(j:iii. Commission on Sales, 94 j;., 97, 98, 131, 327 Compagnie cV Assurances G6ncrales, France, 285;/. "Companionship" (printing trade), 231 Compositors, 9"., Ki, 17, 71".; the London Society of, 199, 231. Sec aha Printing Trade Confectionery makers, 71 /(. Consmners' Baking Societies, the, 325, 334, 335, 335 ii. Contract work defined, 9 »., 12, 147 ; examples of, in various trades, 148-150; three forms of, 150-151; why operatives are paid more under, 151-153 ; not generally objected to by workpeople, 153-154 ; superintendence under a system of, 171-172 Co-operation, the various forms of, 6, 319, 324-325 ; origin of, 312 ; objects of, 7, 228, 238, 239, 312 ; effect of, 8 ; and profit- sharing, 239-241, 310, 311, 327, 329-345 ; and the self-governing workshop, 346-351 ; " Productive," 312-318, 324-330 ; " Distribu- tive," 324-326 ; and the wage-system, 352 ; and Labour Co- partnership, 353-365. See aho Industrial Co-operation Co-operative Aid Association, the, 234 ; Central Board, the, 329 ii. ; Congress, the, 237, 317 "., 320 »., 326, 342, 347 ; Union, the, 316, 317 "., 327 "., 329 "., 335, 336, 342, 342 ii., 343, 344, 351 ; Union of Productive Societies in France and Italy, 314 u. Co-operative work defined, 9 n., 11, 155 ; its advantages, 156 ; some examples of, in various trades, 156-165 Copper Mines in Spain, 160 Corn Mills, the Co operative, 325, 334 Cornish Tin Mines, 158, 158 n., 250. Cotton-spinners, the Lancashire, 32 /;., 69 h. ; piece-work system of, 33-.S5, 41, 42, 57, 58, 78 ; piece-wage foremanship among, 167 ; and piecers, 202 ; and trade unionism, 232 Trade, 93, 93 n. ; Co-operative Mills in the, at Oldham, 319, 337, 347 «.; at Kochdale, 237 ». ; at Sabden, 361 ». Weavers, the Lancashire, bounty system among, 68, 69, 93, 93 ". ; piece-work system of, 78 ; piece-wage foremanship of, 167 Countermen, 94 ii. County Average, the, in the coal trade, 32, 33, 36, 40 INDEX. 427 Coventry, A., 51 Cridgc, It., 84 H., 235 ». Crompton, H., 205 Crossley and Co., Messrs., 210 Cushraan and Co., Messrs., 254 n. Dairying Societies, the Irish, 325, 335, 330 Dalla Volta, Professor, 15 ii. "Darg" (the coahniners'), 29, 30, 30 i>. " Day," Kee " Potter's day " '• Day's Work," 27 De Courcy, M., 285 ii. Delft, Co-operative Congress at, 241 Demarcation disputes, 22!) ii., 232 >i. Denny. W., 161, 184, 185, 201, 201 n., 294, 302 u. Devonport, sweating at, 196 Devonshire Paper Mill, a, 128 Diamond workers, 59 ?(. Director of Dockyards, the, 121 «., 125 Dividend on purchase, 310, 317, 326, 327, 332, 339 Dock, Wharf, Riverside and General Labourers' Union, the, 38 »., 117 »., 236 Dock Labourers, 38 ; and irregular work, 60 ; the National Union of, 86 n., 165; London and "Plus," 1.35; and the Joint Docks Committee, London, 136 ; the strike of, in London (1889), 135, 136, 215 n., 223 ; and co-operative gangwork, 162, 163, 165 ii. ; and foremen, 232 n. Dockyards, a workman in the Pioyal, 80 ; collective piece-work in the Koyal, 118, 124 " Doffing," 34, 34 a. Dognin, the Maison, 100 n. Dolge, A., 100 II. Donovan, -J., 235 n. Draughtsmen, 107 »., 140 n. "Draw," 34, 34 ». 428 INDEX. Drew, W. U., 'Xi ii. K)? (/. " Dropping tinio," 70 Drummond, C. J., VM) Drumw'omen, 128 Drydock woi'kmen, 142, 142 n. Dublin, Bakers' Society at, 30 n. Dumbarton, Shipbuiklinfj; at, 101, 201 Dundee and District Mill and Factory Operatives' Union, the, 214 Durham, Coalmincrs in, ;52, 33 ; Cokemen in, 30 East and West India Dock Company, 131 h. Economy prizes, i)5, 90, 302 Edinburgh, Co-operative Printing Society at, 273 n., 344 ii. Eight hours' day, the, 85, 80, 270 n. Einhauser, 11., 201 lu Elswick Works, the, 15 n. Employers, functions of, 2, 3, 5, 12, 14, 209, 210, 240 ; and co- operation, 240, 310-312, 354, 355 ; and profit-sharing, 240, 255, 250, 285-287, 301, 308, 309 Engine-cleaners, 90 Engine-drivers, 359 Engineering trade, 15 n., 52 »., 71 «., 90 »., 110 »., 142 ; piece- work in the, 25, 51, 03 «., 04, 05, 05 n., 79 ; " nibbling " and " chasing " in the, 73, 95 ; time-wage piece-work in the, 88 ; gain- sharing schemes in the, 99-113 ; contract work in the, 148, 149, 150, 151, 152, 153 ; co-operative work in the, 101 English Wholesale Co-operative Society, the, 325, 328 »., 331, 331 )i. Equitable Pioneers of Kochdale, the, 312 Erectors, 107 Eston, Iron and Steel Works at, 79 Exertion money, 90, 91 Fabrique d'appareils electriques, 254 h. Fairbrook, Hop-pickers at, 74 n. INDEX. 420 " Farming; " (in tlie printing trade), 199 Farming Society, the Scottisli Co-operative, 342 ;/. Farrer, T. C, 97 n. Farriers, the London, 28 Fcenagh Dairy, the, 'SSii " Fellowships," 116 it. Fife and Kinross Miners' Association, the, 202 n. Fillers, in the coke trade, 36 Financial Secretary to the Admiralty, the, 122 n., 124 Finishers (boot and shoe trade), 189, 190, 197 ; (slipper-making trade), 198 Fishermen, 252 Fishing-net makers in France, 91 ". Fitters (engineering trade), 107, 139, 232 ii. ; (tailoring trade), 191 Fives Lille Co., 254 ?;. Flint Glass-makers, 27, 27h., 71 /(., 115 Flood r. Allen, case of, 229 ". Footmakers, 115 "Forcing the Line," tl5 Foreman, functions of, 2, 5, 15, 44 ; in a co-operative group, 12, 115, 116, 117, 134, 144-146, 161, 162 ; piece-wage, 5, 166-179, 220, 222-226 ; paid by poundage in cotton trade, 69, 167 ; of uphol- sterers, 75-76 ; under bonus system, 110, 111 ; in dockyards, 122-123 ; in contract work, 147-154 ; in co-operative work, 155, 161-163 ; in the building trade, 169, 170, 174, 176 ; the piece- master, 172-176; controlled by the trade union, 231-233; under profit-sharing, 271-299 Forge-men, 142 Forwood, Sir A. B., 122 n., 124 Foundry Workmen, 107, 110 /(., 138, 139 Fox, Head and Co., Messrs., 282 France, overtime in, 37 h.; time and piece-work in, 43 n. ; progres- sive piece-wages in, 90, 91, 91 «. ; premiums in, 97 n. ; co-opera- tive piece-work in the printing trade in, 161, 161 ».; profit-sharing in, 2G0, 304 ; Co-operative Union of productive societies in, 314 )(. 430 INDEX. French Insniance Oiiices, the, 291, 292 French-polishers, 84 /(. Frommer, H., 247 ». Fustian Manufacturing^,' Society, the Plebden Bridge, 348, 349 Gaffer, 115 Gain-sharing, 4, 99,100; Mr. Halsey's plan of, 99-103; Messrs. Willans and Robinson's plan of, 103-111 ; objections to, 111-113. See itUo Collective Gain-sharing Gangers, .sec Foreman Gangwork abroad, 38, 39, 165 n. Garret-masters, 211, 218, 221 ??. Gas Company, the South Metropolitan, 273, 283, 299, 358 Gasworkers, 18 Gashion, Miss, 188 Gee, Allen, 46 n., 79 Germany, Textile Trades, in, 91 n. Gilman, N. P., 133 »., 254, 254 «., 260, 285 «., 298, 302 »., 306 h. Glasgow, plasterers' dispute at, 23, 82 ; watch repairers at, 173 ; sweating at, 195 ; United Baking Society at, 334, 335 n. Glass Bottle-makers, 28, 116"., 128, 128 n., 129; and co-operative production, 83 ». See aho Flint Glass-makers Glazier, Mrs., 187. Globe Tobacco Company, the, 254 n. Godin, the Maison, 302 n. Good Fellowship scheme of the Thames Ironworks Company, the, 137, 140-144 Grange Dairy, the, 336 Gray, J. C, 317 n. " Greeners," 217 Greening, E. 0., 130 Grinders, 107, 139 Gun Factory, the Royal, 52 n. Gunton, G., 71 ». Hackney, sweating at, 192, 197 INDEX. 431 llalsey, F. A., 100, 101, 102, 103 Hamilton Baking Society, the, 335 n. Hammermen, 200 Haiclie, J. Keir, 30 Harvest work, 156 Hat manufacture, 78 Havre, Society du Grant! Corps at, 165 n. Hayes, Mrs., 186 Haymaking, 156 Hebden Bridge Fustian Manufacturing Society, the, 348, 349 Helbronner, Jules, 100 «., 159 Helps, Sir A., 157 »., 184 n. Hills, A. F., 51 Hirsch, Mr., 189 Hitchin, co-operative work in railway making at, 157 Hoare, Mr., 213 Hoeing, 156 Holders, 39 " Holer's day," 29, 29 ?i. Holmes, D., 09h., 93 n. Holyoake, G. J., 240 »., 245 n., 290, 312 jk, 315,315»., 316 ». Hosiery trade, the, 78 ; co-operative society in the, at Leicester, 348, 349 Howell, George, 82 Hop-picking, 74 n. Huddersfield, co-operative woollen factory at, 274 Hughes, T., 317 n. Hull, shipbuilding at, 22, 51 ImpMeuse, the, 120 Indeterminate profit-sharing, 245, 246, 254 )i. Individual Wages, 4, 11 Industrial Co-operation, 7, 8 ; compared with profit-sharing, 240-241, 310-312 ; theory of, 312-318 ; practice of, 319-351 ; and the wage- system, 352-365 432 INDKX. Insuranco OfTflccs, the French, 201, 292 Intcr-depaitnicntal (lain-shaiing, l;^2, 133 Invention prizes, 802 n. Ipswich, Co-operative Congress at, 237 Irish Co-operative Dairying Societies, the, 325, 330, 330 ; Co-operative Agency, the, 325 ; Co-operative Agricultural Societies, the, 32f5 ti. Iron and Steel trades, 79, 199, 200 ; Workers' Society, the Associated, 79 ; moulders, 201) Iron-shipbuilders, xee Boilermakers Italy, gangwork in, 165 )i. ; Co-operative Associations for production in, 314 II. Jardine, Messrs., 302 ii. Jelliffe, Mr., 75 Jewish Immigrants, 189 ; Branch of the Amalgamated Society of Tailors, the, 191 Jones, Benjamin, 19 "., 237, 296 n., 316, 320 ;;., 337, 347 v., 363 ii. Kaufbauern Cotton Mills, the, 306 n. Kent, Hop-picking in, 74 n.; Co-operative Brickmaking Society, the 342 71. Kerry, W., 200 n. Kettle Baking Society, the, 335 v. Killick, Mrs., 186 Kingman & Co., Messrs., 254 n. " Knifing " (boot trade), 189, 190 Labour Commission, evidence before the, cited, 18, 28, 29, 30, 36, 46?;., 51, 65»., 69)?., 71v., 79, 84 «., 93».,116»., 120»., 121 ?;., 122 «., 125?/., 167 H., 183, 200 «., 202?;., 235 7i., 237?(., 251 «., 299 Labour Co-partnership, 353-355, 357, 358, 360, 361, 363, 364 INDEX. 43:3 Labour Department of the Board of Trade, the, 17 »., 2G, 31, 33 n.. 3'), 43, 103 7j., 133 n., 100, 189 n., 260, 261, 264 it., 2G() ;;., 276, 277 ».. 280«., 314 II., 320, 321, 322 //., 326 ii., 330 »., 338 n., 344 /;. Labourers, 107 ; Union of at Bradford, 83 Lakenian, Mr., 198 ii. Lanarkshire Coal Miners, 29 ; Coal Masters' Association, the, 30 Lancashire Cotton Trade, xce Cotton ; <^lass trade, .tec Glass Bottle- makers Laroche-Joubert, E., 133 Lasters (boot trade), 173, 173 n., 189, 196, 197 ; (slipper trade), 198 Lawlor, Mr., 36 ;i. Leading-hand, see Foreman Learners, !fee Masons 442 INDKX. Storekeepers, 107 »., 140 if. Street, Boot and Shoe Co-operative Society at, 342 n. Strike of tailors at New York, 17 ; of plasterers at Glasgow, '2H ; of bakers at Dublin, 3G n.; of dockers, 39, 135, 215 n., 223 ; of hop- pickers, 74 n. ; of French-polishers, 84 ;;. ; of masons at Sheffield, 230?;.; about demarcation of work, 232 ?i.; in profit-sharing firms, 280, 296, 359 ; of miners, 282 ; of ironworkers, 283 ; at South Metropolitan Gas-works, 283 Strikers for smiths, 107, 154 n. Stroud, sweating at, 195 Sub-contract, 59, 60, 169, 170, 171, 174, 177 ; and the Sweating System, 179, 202-204, 208, 211-217 ; sub-contractor a subordinate employer, 181 ; opinions of McCulloch on, 181 ; Cairnes, 182-185 ; Thornton,, 183-185; Lord Brassey, 184-185; Mr. Denny, 184- 185 ; the Lords' Committee on the Sweating System and, 185 ; in various trades in East London, 186-193 ; in the 2)rovince3, 193-196 ; in the boot trade, 197-199 ; in printing, 199 ; in the iron trade and others, 199-202 ; the extent of, 202-204 ; the meaning of, 208-211 ; stringency of superintendence under, 217-219 ; compared with piece-wage foremanship, 220-222, 224- 226 ; in the docks, 223 Sun Mill, the, 320 Superintendent, .st'e Foreman Surveyors, the Admiralty, 51 Sweating, 175, 176, 177, 186, 197, 198, 202, 211, 212 Sweating system, the, 5, 174 ; and sub-contracting, 179, 185, 202-204, 208-211; definitions of the, 205-208; does it exist? 211-217; harsher conditions under small employers, 217-218 ; and piece- wage foremanship, 220-226. See also Sub-contract. Sweating System Committee, evidence before cited, 76 7i., 131 n., 151 n., 194, 196, 197, 201, 202, 203, 206, 207, 208, 213, 221, 236 Swingers, 39 Taff Vale engine-driver, the, 359 INDKX. 443 Tailoring trade, the ready-macle, 10 ; the bespoke, 26 ; strike in New York, 17 ; in East London, ISO, 187, 188, 190, 191, 192, 225 u. ; and sweating, 200, 208, 209, 219 ; in Nottingham and co-opera- tion, 342 )i. Tailors, 191 ; Machinists' Society, the, 191 "Taker-in," 115, 225 ». Tangyes, Messrs., 254 ;;. Tanners, 300, 301 Taper-making, 128, 202 Task-wage defined, 9, 9 «., 10 ; distinguished from piece and pro- gressive wages, 48-49 ; how adopted, 49 ; disliked by workpeople, 49. See (iho Collective Task-wage. Taylor, F. W., 91 ». Taylor, Sedley, 254, 256, 259, 287, 290, 297 n , 298 Tea trade, the, 61 Team system in the boot trade, the, 58 Telegrai^h Construction Works, 94 Textile trades in Germany, the, 91 )t. Thames Iron-works and Shipbuilding Co., Ltd., the, 51, 137, 140-14'2 ; and Mersey, bargemen on the, 251 ». Thames Ditton, 103 Thode Paperworks, the, 306 ;/. Thomas, Mr., 79 Thomson, G., 274, 275 ; and Sons, Messrs. Wm., 274, 322 n., 361 n. Thornton, W. T., 62, 82, 183, 245 jl, 311 it., 312, 313 «., 315 Tillett, Ben., 38 »., 117 »., 236 Time and a quarter, Time and a half, etc., 19, 25, 63 »., 67, 71 »., 151, 152 Time-basis of piece-wage explained, 24-30 ; examples of in various trades, 25, 26, 31-35 ; sometimes fictitious, 26, 27, 28-30 Timekeepers, 107"., 140;;. Time-wage defined, 9, 9 »., 10; piece-basis of explained, 13-16; examples of in various trades, 17-24 ; extent of, 43 ; when pre- ferred, 43-45 ; sometimes hour-wage, 46, 47 Time-wage piece-work, 48, 87-89, 97 Time-work, extent of, 43 ; when preferred, 43-45 ; some objections of workpeople to, 56, 57 444 iNUKX. Tin miners, the Cornish, 250 Tinplate workers, 86 /(. Toad Lane Htore, Rochdale, the, 812 Tookey, J., 251 h. Towne, Henry 11., '.)'.) ii. Src also Yale and Towne Trade Unionism and Co-operation, G, 226-238 Trade Unions and restriction of output, 20, 22-24, 35, 36, 38 h., 63, 64 H., 80-85, 86 H. ; in the boot trade, 24 «.; and piece-work, 50, 50 »., 58, 77, 78, 7i), 88 ; and piece-wage foremanship, 134-136, 167, 168; and co-operative work, 163-165; and piece-masters, 173 ; and sub-contract, 199-202 ; and the sweating system, 205-207 ; and profit-sharing, 256, 282-285, 358-360 ; and labour co-partnership, 360-361 Trades Council, the London, 84 ». Trades Union Commission, 1867-69, the, 83 ; Congress Parliamentary Committee, the, 293 Tramcar drivers and conductors, 215 Travellers, 98 Trouser finishers, 186 Tucker, Mr., 195 Tufts, Messrs., 254 u. " Turn," 116 Turners, 107, 139 " Tutwork," 158 llnderhands (Ironworks), 200 United Baking Society, Glasgow, the, 334, 335 ;;. United Cotton Manufacturers' Association, the, 69 /(. United Kingdom, Time and Piece- wages in the, 43, 50 )i. ; Profit- sharing in the, 260, 261, 262, 263, 264, 265, 307 ; Co-operation in the, 312 United States, clothing trade in the, 17 ; pottery trade in the, 28, 202 II. ; steel trade in the, 91 ii ; lock and crane-makers in the 136 ; sub-contract in the building trades in the, 202 ii. ; profit- sharing in the. 260 INDKX. 445 L'pholsterers, 75, 7(5 ; London Society of, 7o Upper-making, boot trade, 173 »i., I'.tO, 197, 198 Vanlaer, M., 243 >i. Various manufacturing co-operative societies, 325, 337, 338 Veterinary Surgeons' and Master Farriers' Protection Society, the London, 28 Victoria, co-operative work in, 160 n. Vielle Montague, la, 100 n. Vliegen, W. H., 16 n. Wadlin, H. G., 204 ». Wages, the price of labour, 3 ; individual, 11 ; collective, 11, 12 ; common basis of all, 13, 42 ; so-called weekly, 46, 47. See also Time-wage, Task-wage, Piece-wage, Progressive Wages, Sec, &c. Wage-system, the, 1, 2, 6; co-operation and the, 227, 228, 238; and profit-sharing, 240, 241, 286-309 ; and labour co-partnership, 353 Walker, F. A., 318 n. War Office Factories, 116 )i. Ward, J., 82 «., 83 Wardwell Needle Company, the, 254 7i. Warehousemen's Society, Manchester, the, 22 Waste, .see Economy prizes " Wasters," 138 Watchmaking trade, the, 52 ; apprentices in the, 90 ; repairers in the at Glasgow, 173 Watermen and Bargemen's Protective Society, the United, 251 n. Watson, Dr. Spence, 36 Wear, engine works on the, 31 Weavers, cotton, 68, 69, 78, 93, 93 ?;., 167 ; ribbon, 46 ; woollen, 46 )!., 78, 79, 167 v. Webb, Mrs. Sidney, 16 n., 213, 219, 221, 237 v., 320 »., 330, 331 »/., 345 71., 346, 348 S. and B., 50 7i., 58 n., 154 n. 44G JNDKX. Welsh Slate Quarries, the, 182 Weir, J., 202 u. West Kiding Powcr-Loora Weavers' Association, the, KJ n., 7'.), 167 n. Wheelers, 18 White, Arnold, 207 White, J. P., 200 ». Whitechapel, sweating at, 187, l'.)2, 11)5 ii. Whitworth, see Armstrong, Whitworth and Co. Wholesale Co-operative Societies, the, 325, 328 »., 331, 331 n., 333 Willans and Robinson, Messrs., 103, 106, 107 »., 108-110, 137-139, 145, 146 ; profit-sharing scheme of, 403-404 Williamson, J., 121 «., 12.5 Williamson, Rev. H., 214 Winders, 39 Winebottlers at Rheims, 92 Women weavers and pi'ogressive wages, 91 ; workers in telegraph construction works, 94 ; in woollen yarn factory, 127 ; in match and taper-making, 128, 202 ; in the boot trade, 173, 178 n., 198 ; in East London, 173, 214, 215 ; in the tailoring trade, 186, 187, 188, 194, 213, 214 ; in shirtmaking, 186, 187, 214 ; in nail and chainmaking, 206 Woollen trade, weavers in the, 46 »., 78, 79, 167 it. ; cloth manu- facture, 82 ; yarn washers in the, 92, 127, 167 ; organization of the, 208, ^09 ; Co-operative Manufacturing Society in the at Airedale, 348 Working-class Limiteds, the, 320 " Working in Pocket," 161 Yale and Towne Works, the, 99 »., 136, 137, 138 ii., 'irA n., 302 n. Yarn washers, woollen trade, 92, 167 Y'oung & Co., Messrs., 254 n. Zadrouga, the Bulgarian, 165 n. Zeitlin, W., 191 LONDON : G. NOBMAK AKD SON, PKINTERS, FLORAL STREET, COVENT GARDEN. ^x .ae last aate stamped below OCT 9 1945 9m u mi '^ 1 ;o -D-UKL 5?bi5^ ^, »»•< Form L-9-15?n-7,'32 \ 8 AA 000 904 277 1 I PLEA'^t DO NOT REMOVE THIS BOOK CARD ' MlLlBRARYO/: ^