interest. How much more difficult must it be to keep them together when the very first conditions are the difficult virtues of self-denial and mutual trust and a frank confession that here, at least, one man is not as good as another. Citizens of a republican country like our own, who do not thoroughly realize the inevitable limitations of political freedom, furnish poor material for a so-called "industrial democracy," the continuance of which would demand an ungrudging recognition of natural aristocracy in the control.

The cases in which the difficulties of coöperative production have been successfully overcome are still comparatively few in this country; the "History of Coöperation in the United States" gives the best accessible account of many of these. The successes have been on a small scale for the most part, and, unfortunately, the history of so promising a movement as that of the Somerset Foundry Company in Massachusetts shows that years of prosperity are not proof against disaster arising from purely moral causes, — suspicion and jealousy among the workers. In the English "Coöperative News," Mr. Benjamin Jones, a person of high authority in the coöperative distributive movement, has been publishing for months a series of "Short Papers on Coöperative Production." He has given details of the history of a large number of coöperative productive enterprises in Great Britain which have come to grief within the last fifty or sixty years. Making allowance in the case of the writers in the "History of Coöperation in the United States," for a possible bias in favor of the scheme, and in the case of Mr. Jones of a possible bias against it, we may conclude with confidence from the exhibit made

in these two works that the chances of success in cooperative production, in any but modest enterprises, are slight. The scheme seems to make too severe a moral and intellectual demand upon the workman, — a demand which would scarcely be met by other sorts and conditions of men generally supposed to be better trained than the average wage-earner.

The hopes of John Stuart Mill with respect to coöperative production have been shown by time to have been too sanguine. The permanent acceptance of the ordinary and unmodified wages system is not, however, the only alternative. Referring the reader to the chapter on "The Wages System in its Various Forms," in my work on profit sharing, for a vindication of this system against various crude thinkers, I repeat the expression of my belief that it needs a gradual modification in the direction of equality and democracy. Mr. David F. Schloss has thrown much light upon numerous approved variations of the pure wages system in his recent valuable volume. Having, myself, given considerable time to the study of a modification of the wages system which seems to me more important than most of those ably expounded by Mr. Schloss, I will turn from the general suggestions of this chapter to a reconsideration of a special problem. Other modifications of the simple day-wage or piece-wage system, such as the offering of prizes for extra quality of work, or for economy in production; the payment of a percentage on sales in addition to salary or wages; "progressive wages;" and the premium system in all its varieties, including "gainsharing," have undoubtedly a large field for their profitable application. For the general principle of profit sharing, as well, a case has been fully made

out.

The extent to which the principle is applicable is the matter now to be tested by experience.

An important argument for the wider extension of profit sharing, thoroughly approved in a number of instances, is its value as a training school for coöperative production. Numerous years' experience as an employee in a profit-sharing house supplies precisely that tuition in the knowledge and the virtues of business needed by the average workman. Great commercial establishments like the Maison Leclaire, the Godin foundry, the Coöperative Paper Works of Angoulême and the Bon Marché, have enforced upon large bodies of people in a leading handicraft, in two prominent manufactures and in a great distributive concern the truth that success in trade and production demands more than the strict application of the democratic principle. These four concerns are virtually coöperative; certainly, they secure to the employees and stockholders the substantial benefits of purely coöperative productive enterprises, while they are still, logically, profit-sharing establishments. There has been a process of development in them, out of profit sharing on the basis of the ordinary wages system into profit sharing on a basis of modified coöperation. In this slowness of growth and in the education which it implies reside the strength and the promise of permanence of these houses.

The unmodified wages system compensating the employee according to his hours or the actual amount of work accomplished; various modifications of it like "progressive wages;" profit sharing, inclining to coöperative production; and coöperative production itself, though in a less degree than the preceding methods, are the probable forms of the labor contract

in the near future. There is no necessity for attempting to predict the proportion in which these systems will divide the industrial field among them ten years or a hundred years hence. It seems to me probable, however, that, with a steady progress in intellectual enlightenment and moral ability, such modifications of the wages system as profit sharing will be widely extended, and that they will lead, in the course of time, to a much larger practice of coöperative production proper than we now see.

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CHAPTER IX.

INDUSTRIAL PARTNERSHIP.

I. WHAT PROFIT SHARING MEANS.

THE position to which a careful study of the record of the system of dividing the profits leads many I have thus stated: "Profit Sharing, the division of realized profits between the capitalist, the employer and the employee, in addition to regular interest, salary and wages, is the most equitable and generally satisfactory method of remunerating the three industrial agents."1 Subsequent observation and reflection have strengthened my belief in the soundness of this view. Profit Sharing has attracted much attention in the last four years; there has been a substantial increase in the number of firms practicing it, and a considerable public opinion in favor of it has been developed. It is by no means a cure-all, even for troubles specifically industrial; much less is it a panacea for the many distresses of our time not due to industrial causes. To aid the movement toward a rational evolution of the wages system, I would here supplement the exposition and the argument of my detailed work on the subject. The present chapter considers with some fullness two or three leading objections made to the method, and states compactly the advance which profit sharing has made in the last 1 Profit Sharing, p. 412; 1889.