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U. S. DEPARTMENT OF LABOR

BUREAU OF LABOR STATISTICS
ROYAL MEEKER, Commissioner

j WHOLE
BULLETIN OF THE UNITED STATES \
BUREAU OF LABOR STATI S T I CS / " • ' ( NUMBER
M I S C E L L A N E O U S

S E R

I E S :

208

No .

PROFIT SHARING IN
THE UNITED STATES




BY BORIS EMMET

DECEMBER, 1916

W ASHINGTON
GOVERNMENT PRINTING OFFICE
1917

1 3




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A

CONTENTS.
Page.

Introduction............................................................................................................... 5-11
Object of the study............................................................................................
5, 6
Scope of the study..............................................................................................
6,7
Methods used in the study...............................................................................
7
Classification of profit-sharing plans in operation in the United States.. . .
8, 9
Extent of application of tjie profit-sharing principles in the United States. 9-11
Profit-sharing plans.................................................................................................... 11-59
Descriptive and statistical summary............................................................... 11-20
The determination of the profit-sharing fund.......................................... 12,13
Method of apportioning divisible profits between capital and labor... 13,14
Conditions of eligibility.......................... .......... •
....................................... 14,15
Basis for computing individual shares......................................................
15
Conditions of forfeiture............................................................................... 15,16
Disposition of forfeitures.............................................................................
16
16
Shares of employees laid off or sick..........................................................
Form of payment.........................................................................................16,17
Years in which the plans were established............................................
17
Location of profit-sharing establishments................................................. 17,18
Industry or business of profit-sharing establishments.............................
18
Size of profit-sharing establishments.........................................................18,19
Extent of participation...............................................................................
19
Benefits accruing to employees.................................................................
19
Cost of plans to employers.................... ..................................................... 19, 20
Occupations of participating employees...................................................
20
Detailed tables.................................................................................................... 20-24
Analysis of working of 12 typical profit-sharing plans................................... 25-59
Limited profit-sharing plans..................................................................................... 59-84
Descriptive and statistical summary of a selected group............................... 59-64
The determination of the profit-sharing fund.......................................... 59, 60
Conditions of eligibility..............................................................................
60
Basis for computing individual shares......................................................
61
Conditions of forfeiture...............................................................................
61
Disposition of forfeitures and form of payment.......................................61, 62
Years in which the limited plans were established................................
62
Location of limited profit-sharing establishments...................................
62
Industry or business of limited profit-sharing establishments...............
63
Size of limited profit-sharing establishments...........................................
63
Extent of participation...............................................................................
63
Benefits accruing to employees................................................................. 63, 64
Cost of plans to employers..........................................................................
64
Occupations of participating employees...................................................
64
Detailed tables....................................................................................................65, 66
Analysis of working of 5 typical limited profit-sharing plans........................ 66-84




3

4

CO N TE N TS.
Page.

Bonus plans commonly known as profit sharing................................................... 85-166
Plan No. 1.......................................................................................................... 86-94
History of the plan............................ .................................................... 86-87
Rules governing operation of plan........................................................... 87-92
Results of the working of the plan.......................................................... 92-94
Plan No. 2 .......................................................................................................... 94-122
The basic wage or salary..................*....................................................... 94, 95
Participation in the ‘ 1profits9 ................................................................. 96, 97
9
Determination of eligibility for participation....................................... 97-106
Extent of actual participation............................................................... 106-113
Temporary disqualifications from participation.......................... 109-113
Disposition of forfeitures.............................................................................
113
Benefits accruing to employees as shown by their daily earnings .. 113-115
Cost of the plan and its benefits to the company................................. 115-117
Changes in economic and social conditions attributable to the plan. 117-122
Plan No. 3 ........................................................................................................ 122-129
General nature of plaii............................................................................ 122,123
Distribution of building and loan association stock................................
124
Distribution of cash bonuses.................................................................. 124,125
Distribution of common stock................................................................ 125,126
Benefits of the plan to the company..................................................... 126-129
Stock subscription plans................................................................................ 129-157
Descriptive and statistical summary of a selected group of stock-subscription plans..................................................................................... 129-135
Analysis of working of 4 typical plans................................................... 136-157
Cash bonus plans based upon length of service........................................... 157-161
General nature of plans........................................................................... 157-159
Analysis of working of a selected group of cash bonus plans............. 159-161
Miscellaneous plans........................................................................................ 161-166
A so-called cooperative wage system........................................................
161
A plan based on price of product..............................................................
162
Bonus plan of sugar plantations of Hawaii........................................... 162-164
Another so-called cooperative wage system.......................................... 164-166
Discontinued plans................................................................................................ 166-168
Extent to which objects sought by establishment of profit-sharing plans have
been realized....................................................................................................... 169-171
Improvement of relations between employers and employees................. 169,170
Increased permanency of working force...................................................... 170,171
Increased efficiency...........................................................................................
171




BULLETIN OF THE

U. S. BUREAU OF LABOR STATISTICS.
W HOLE NO. 208.

WASHINGTON.

DECEMBER, 1916.

PROFIT SHARING IN THE UNITED STATES.
BY BORIS EMMET.

INTRODUCTION.
The recognition of the desirability of a distribution of the profits
of an enterprise so as to give to all the employees concerned with
their creation a fair share is by no means of recent origin. Various
reformers, some students of industrial problems, and often employers,
have from time to time addressed themselves to a consideration of
this problem with varying degrees of enthusiasm and zeal. Profit
sharing, at times, has actually been advocated as the one and only
method for the permanent solution of the*so-called labor problem.
Although most of the profit-sharing theories have been put into
operation, the appearance and disappearance of profit-sharing schemes
have been so irregular and infrequent that one may not appropri­
ately speak of a profit-sharing movement. Profit sharing, in so far
as it does exist in the United States at the present time, appears as
a component part of a larger and more significant phenomenon in
our industrial life, to wit, the tendency on the part of employers to
create conditions that would mitigate the frequent and often violent
disputes between themselves and their employees, thus fostering the
development of a larger spirit of harmony and cooperation, and result­
ing, incidentally, in greater efficiency and larger gains.
OBJECT OF THE STUDY.

The object of this study is to furnish as complete and detailed
a picture as possible of the present status of profit sharing in the
United States, presenting descriptively and statistically the following
facts: (1) Extent of the application of the principle in American
trade and industry; (2) nature or character of the existing plans
with particular reference to (a) factors determining profits to be dis­
tributed and (b) conditions under which profits are paid to employees;
(3) proportion of the total employed who participate; (4) occupa­
tions or types of employment of participating employees; (5) benefits
accruing to participating employees; (6) cost of plans to the em­
ployers; and (7) results secured through workings of the plans with
special reference to factors tending to improve relations between em­
ployer and employee and to increase the efficiency and stability of the
working force.




6

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

Although this study endeavors to throw some light on the causes
of the discontinuance of some of the profit-sharing plans known to
have been in existence, it is in no sense historical, inasmuch as it
does not concern itself in detail with the nature or character of the
discontinued plans.
SCOPE OF THE STUDY.

•In the course of this investigation all of the profit-sharing plans
known to be in operation in the United States at the present time
were carefully examined and analyzed. In addition to these, various
other plans, popularly termed profit sharing, were studied. The
latter, in the majority of instances, bear no direct relation to the
profits of the enterprises in which they are in vogue, the divisible
moneys depending almost wholly upon factors not at all in the nature
of profits; as, for example, the length of service or wages or salaries,
or both; wages or salaries and ownership of certain amounts of stock
or of a savings account; general profitableness of the business and
the skill of specific classes of employees coming under the plan; and,
in some of the so-called stock subscription plans, upon the subscrip­
tion for certain amounts of stock, the so-called profits under such
plans accruing either by reason of the fact that the stock is offered
to the employees at less than market price or through a special bonus
per share for a limited number of years, from two to five usually,
paid to subscribing employees who retain ownership of the subscribed
or paid for stock, or both.
The common feature of all of the plans described in this report is
the understanding among all concerned that the shares in the profit
or the bonuses paid to the employees are separate and distinct from
the employees' regular earnings, subject to change and withdrawal
by the employer without notice, and with the qualifications for par­
ticipation fixed at his discretion.1
1 The legal status of profit sharing, with particular reference to the rights of employees to compel employ­
ers to pay the shares as specified, after announcement, has never been definitely established by any of the
State or Federal courts of record.
A considerable number of so-called profit-sharing cases, however, were brought to the attention of some
of the justice courts in the State of Michigan. These suits were started by employees of one of the profitsharing firms, who, for some reason or other, were disqualified from participation, the plaintiffs main­
taining that the publicly announced profit-sharing plan of the establishment was equal to a contract of
employment respecting wages, applicable to all employees of a specific class, that the employer, under
such conditions, had no legal right to discriminate between different groups of employees, giving profits
to some and denying them to others. The courts, however, sustained the contentions of the defendant
to the effect that profit-sharing moneys are mere gratuities on the part of the employer, who therefore has
the sole right of determining the conditions under which they should be paid, and, furthermore, if shares
of profits were obtained in a fraudulent manner the moneys thus received may be recovered by the firm
through a civil suit.
In accord with this point of view, apparently, are the regulations of the United States Treasury Depart­
ment in the enforcement of the Federal income tax law. Under these regulations, profit-sharing or gainsharing expenditures are not considered a part of the direct labor cost of an establishment to be treated as an
expense. Such moneys are taxed in the same manner as any other income of the employer for the reason
that their disposition is considered a mere gratuity on the part of the employer.
A case bearing on a question closely resembling that of profit sharing—the right of an employee to the
amount of accrued pension money upon dismissal before reaching the specified age and service limit (McNevin v. Solvay Process Co., 32 App. Div.,610, affir. 166 N. Y . , 530)—was decided against the employee and
in favor of the comnanv.




P R O F IT SH A R IN G I N T H E U N IT E D STATES,

7

Except in a casual way, this report does not concern itself with
plans under which a part of the divisible profits are set aside as a
common fund for purposes of the general welfare of the employees,
such as, for instance, the development of recreation activities, im­
provement in the health of employees, or for the payment of sick
benefits, old-age pensions, etc.
The report, furthermore, omits altogether the consideration of any
plans under which the bonuses paid depend chiefly upon increases in
individual efficiency as shown either in the output of work or in the
amount of sales made, or upon savings individually effected in the
cost of production or in the normal expenses of operation. Whatever
the ultimate value of such plans may be, their nature is such that
they can not properly be included among plans involving the appli­
cation of the profit-sharing principle, even in the broadest sense of
the term.
METHODS USED IN THE STUDY.

In the collection of the information upon which the results pre­
sented in this report are based, personal visits were made to each
of the establishments that were reported as having profit-sharing or
stock-subscription plans in operation for the benefit of their employees.
The general nature of the plan, its object, and results achieved were
discussed in each instance at great length with persons in direct charge;
whenever possible, the originator of the plan was interviewed.
All the statistical results herein shown, particularly those indicating
the proportions of participants of the total employed, benefits ac­
cruing to the employees, cost of the plan to the employer, and the
occupations of the participants, are based upon data secured from
original records of the respective firms. Furthermore, descriptive
texts of specific plans distributed by the different companies and
said to present the essential features of their plans, were carefully
examined for the purpose of checking them with the actual facts as
found upon the examination of the actual working of their respective
plans.
As the principal aim of the study was to present a complete account
of the present status of profit sharing, properly speaking, plans other
than those properly so termed were introduced into this report either
because they were associated in the public mind with the principle of
profit sharing, i. e., the actual distribution of definite proportions of
the net profits, or because their introduction seemed to afford the
best means of indicating clearly the real nature of profit sharing,
as distinguished from ordinary bonus plans under which the so-called
divisible amounts bear no immediate relation to the profits of the
business.




B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

CLASSIFICATION OF PROFIT-SHARING PLANS IN OPERATION IN THE
UNITED STATES.

Relatively few of the plans adopted by American employers for the
purpose of giving their employees some remuneration in addition to
their regular earnings can properly be classified as profit sharing
as defined by the International Cooperative Congress.1
The following classification, based upon a close scrutiny of the
detailed features of most of the plans in operation in the United
States, was formulated and used throughout this report for conven­
ience and clearness:
I. Profit sharing—Essential features:
1. Amount to be distributed varies with and depends upon
the net profits of the enterprise or upon the amount of
dividends paid to stockholders.
2. Proportion of profits to be distributed is definitely deter­
mined in advance.
3. Benefits of the plan extended to at least one-third of the
total employed, and including employees in occupations
other than executive or clerical.
4. Method of determining individual shares is known, at least
in a general way, to the participating employees.
II. Limited profit sharing—Essential features:
1. vSame as 1 in profit sharing.
2. Same as 2 in profit sharing.
3. Benefits of the plan limited to less than one-third of the
total employed, and excluding employees other than
executive or clerical.
i The terra “ profit sharing/’ strictly speaking, was clearly defined by the International Cooperative Con­
gress, held in Paris, France, 1889. According to this definition profit sharing involves “ an agreement freely
entered into, by which the employees receive a share, fixed in advance, of the profits.”
In formulating this definition, the congress defined the term “ agreement” as covering not only agreements
binding in law, but as including also cases where the agreement is only a moral obligation, provided it is
honorably carried out.
As to the meaning of the term “ profits” in the definition of the congress, it was stated that profits should
be understood as constituting “ the actual net balance or gain realized by the financial operations of the
undertaking in relation to which the scheme exists.”
A “ share” is stated by the same congress to be “ asum paid to the employee out of the profits.” The
amount of the share, it is further stated, “ must be dependent upon the amount of the profits.”
Another feature of profit sharing that received the careful attention of the congress was the provision,
unanimously adopted, that “ the share received by the employee shall be fixed in advance.” It is not
necessary that the employee shall know all the details of the basis upon which the amount of his share
will depend. It is essential, however, that the share to be given to the employee shall not be indeterminate,
that is, itmust not be a share which an employer fixes, at the end of some period, at his absolute discretion,
as distinguished from a prearranged basis.
The relative proportion of the total working force of a specific concern that must share in the profits in
order to establish real profit-sharing conditions was stated by the same congress to be “ not less than 75
per cent.”
It is to be observed, furthermore, that the money received by an employee under any profit-sharing
plan is te be received by him strictly as an employee for services rendered; the fact that an employee holds
shares of stock or any other pecuniary interest in the business which employs him does not, in itself, con­
stitute a case of profit sharing. (Bulletin de la Participation aux B6n6fices, Paris, Tome X I X , 1897, pp.
220-222, cited by D . F. Schloss, Methods of Industrial Remuneration, London, 1898, Ch. X V II.)




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

9

III.
Bonus plans, popularly known as profit sharing, under which the
divisible fund does not depend upon or vary with the net profits of
the enterprise, but upon any one of the following factors:
1. Price for which commodity manufactured is disposed of—
the so-called sliding-scale wage.
2. Gross receipts or gross profits— a variant of the sliding
scale.
3. The estimated probable profits of the business.
4. .Wages or salaries earned and length of service.
5. Length of service and thrift, as shown by the participants
ownership of some stock of the company, or mainte­
nance of a savings account.
6. Savings of the prospective participants, as shown by a sub­
scription or ownership of a specified amount of stock of
the employing company or savings accounts.
7. Amount of savings collectively effected in production or
operation.
The major part of the subject matter of this report thus falls into
three main parts, as follows: (1) Profit sharing in the strict sense of
the term; (2) limited profit sharing; and (3) bonus plans popularly
known as profit sharing.
EXTENT OF THE APPLICATION OF THE PROFIT-SHARING PRINCIPLE IN
THE UNITED STATES.

Profit sharing, properly speaking, i. e., as confined to plans under
which distributions of specified proportions of the net profits of the
enterprise are made to at least one-third of the total employed, does
not appear to have reached any considerable proportions in the United
States. The number of such plans known to be in operation at the
present time does not exceed 60.1
The table following presents a complete list of establishments hav­
ing profit-sharing plans in operation, giving location, nature of indus­
try or business, and years of establishment of the plans.
i Mr. Aneurin Williams, honorary secretary of the Labor Copartnership Association of Great Britain, in
his volume entitled “ Copartnership and Profit Sharing,” 1913, Henry Holt & Co., New York, Ch. V II,
p. 146, gives as the reason for the slow progress of profit sharing in the United States the fact that “ the
material development of the country has been too rapid, the increase in the production of wealth too
great, and the openings for men of ability, even without capital, too tempting, for many of the most active
minds to concern themselves much with the improvements in industrial relations, and the system of
sharing wealth.”




10

B U L L E T IN OF T H E BU REAU O F LABOR STATISTICS.
ESTABLISHM ENTS W IT H PROFIT-SH ARING PLANS IN OPER ATIO N IN 1916.

Name of firm.

City and State.

American Light & Traction Co
American Manufacturing Con­
cern.
Baker Manufacturing Co........... .

New York, N. Y .
Falconer, N. Y . . .

Ballard & Ballard Co...............
Ballinger & Perrot....................
Bartley, R. A .............................
Benoit System...........................
Blood, J. B .,C o .........................
Boston Consolidated Gas C o..
Bourne Mills..............................
Burritt, A. W ............................
Cabot, Samuel............................
Carolina Savings Bank............
Chatfield Milling & Grain Co.

Louisville, K y ___
Philadelphia, P a ..
Toledo, Ohio..........
Bangor, Me............
Lynn, Mass...........
Boston, Mass.........
Fall River, M ass..
Bridgeport, Conn.
Boston, Mass.........
Charleston, S. C ...
Bay City, M ic h ...

Cleveland Twist & Drill Co..
Davis, W . B .............................
Eastman Kodak Co................

Cleveland, Ohio..
....... do....................
Rochester, N. Y .

Edison Electric Illuminating
Co.
Elliman, D. L ., & Co..................
Empire Trust Co........................ .
Farr Alpaca Co.............................
Garfield Savings Bank.............. .
Graves, H . B .; & Co....................
Guardian Savings & Trust Co.,
Harris Trust & Savings B a n k .,
Hathaway, C. F ., & Sons...........
Heebner & Sons.......................... .
Hollenberg Music Co...................
Ivey, J. B ., & Co........................ .
Krauter, C. H ...............................
Kutztown Foundry & Machine
Co.
Lever Bros. (Ltd.) i .....................
Liberty Trust Co..........................
Maxwell, A. L ., Co......................
Milmore Corporation, The.........
Miner-Hillard Milling Co............

Brooklyn, N. Y .

Minneapolis Bedding Co.............
Nelson, N. O ., Manufacturing
Co.
New Haven Gas Light Co.........
Newport Daily News................. .
Noves,Chas. F .,C o .....................
Parks, G. M .,C o ..........................
Patton Paint Co............................
Peninsular Paper Co...................
Plymouth Cordage Co.................
Record Auto Supply & Service
Co.
Sears, Roebuck & Co...................
Simmons, R. F .,C o .....................
Simplex Wire & Cable Co..........
Spencer Wire Co...........................
Stambaugh-Thomson Co............
Stevens, Samuel............................
Stern, Bernard & Son.................
Title Guarantee & Trust Co___
'Tyler, W . S.,C o............................
Underwood Typewriter Co., Inc.
Union Savings Bank & Trust Co.
United Electric & Water Co___
V itagraph-Lubin-Selig-Essanay
Co. (Inc.).
Ward Baking Co...........................

Evansville, Wis.

New York, N. Y . . .
....... do........................
Holyoke, Mass........
Cleveland, Ohio----Rochester, N . Y ___
Cleveland, Ohio----Chicago. Ill..............
Cambridge, Mass...
Lansdale, Pa...........
Little Rock, Ark___
Charlotte, N. C ____
Youngstown, Ohio.
Kutztown, P a.........
Cambridge, Mass..
Boston, Mass.........
Lawrenceville, 111.
South Bend, Ind ..
Wilkes-Barre, Pa.,
Minneapolis, Minn.
St. Louis, Mo..........
New Haven, Conn.
Newport, R. I .........
New York, N. Y . ..
Fitchburg, Mass. . .
Milwaukee, W is___
Ypsilanti, Mich___
Plymouth, Mass. . .
Washington, D. C..
Chicago, 111........
Attleboro, Mass.
Boston, Mass___
Worcester, Mass___
Youngstown, Ohio.
Columbus, Ohio___
Milwaukee, Wis____
New York, N. Y . . . ,
Cleveland, Ohio____
New York, N. Y . . . .
Cincinnati, Ohio___
Hartford, Conn____
New York, N. Y . . . ,
.do.

Industry or business.

Public utility............................................
Manufacturing wood novelties, letter
files, toys, desks.
Manufacturing windmills and gaso­
line engines.
Manufacturing—Flour milling...............
Architects and building contractors...
Mercantile..................................................
____do...........................................................
____do..........................................................
Public utility.............................................
Manufacturing cotton cloth...................
Manufacturing— Lumber mill...............
Manufacturing chemist............................
Banking......................................................
Manufacturing—Flour millers, grain
dealers, etc.
Manufacturing drills, etc........................
Mercantile..................................................
Manufacturing photographic appli­
ances and supplies.
Public utility............................................
Real estate brokers...................................
Banking......................................................
Manufacturing cotton cloth...................
Banking......................................................
Mercantile..................................................
Banking.................................................... .
....... do..........................................................
Wholesale baking.....................................
Manufacturing agricultural machinery.
Mercantile..................................................
____ do..........................................................
....... do..........................................................
Manufacturing—Foundry and ma­
chine works.
Manufacturing—Soap..............................
Banking......................................................
Mercantile..................................................
Manufacturing chemists..........................
Manufacturing— Milling, flour, meal,
grits, etc.
Manufacturing beds and bedding........
Manufacturing plumbers’ and steam
fitters’ supplies.
Public utility
Real estate brokers..
Contractors and builders.
Manufacturing paints............
Manufacturing cover papers.
Manufacturing cordage..........
Mercantile................................
.do.
Manufacturing jewelry............................
Manufacturing insulating wires and
cables.
Manufacturing wire.................................
Mercantile..................................................
. . . . d o ..........................................................
Manufacturing—Flour milling...............
Banking......................................................
Manufacturing mining screens...............
Manufacturing typewriters.....................
Banking......................................................
Public utility.............................................
Mercantile—Distributors of movingpicture films.
Bakers.........................................................

Year
plan
was
estab­
lished.

1915

1911
1904
1914
1909
1906
1889
1900
1887
1897
1906
1915
1914
1911
1910
1915
1914
1914
1915
1901
1913
1915
1912
1912
1909
1909
1906
1914
1909
1910
1915
1915
1906
1915
1907
1901
1911
1915
1910
1914
1913
1916
1916
1902
1901
1915
1912
1912
1913
1911
1914
1916
1901
1916
1915
1913

1 This is the American branch of Lever Bros. (Ltd.), London, England, and its profit-sharing plan is a
part of the profit-sharing plan of that firm.




P R O F IT SH A R IN G IN T H E U N IT E D STATES.

11

The number of establishments that share some proportion of their
profits with a few of their more important employees (limited profit
sharing) greatly exceeds the number of establishments sharing profits
with a considerable proportion of their employees (profit sharing).
On account of the relatively small proportion of the employees
affected by the limited profit-sharing plans, as shown on page 63 of
this report, it was not deemed advisable to endeavor to compile a
complete list of such establishments. The number of bonus plans
popularly known as profit sharing, particularly those involving stock
subscriptions or the payment of percentage bonuses on earnings,
based upon the length of service, is large. In view of the fact, how­
ever, that such plans do not represent profit sharing, properly speak­
ing, it was thought best to limit the discussion of them to an inten­
sive study of a few selected representative groups of such plans.
PROFIT-SHARING PLANS.
DESCRIPTIVE AND STATISTICAL SUMMARY.

This section of the report deals with profit-sharing plans in the
strict sense of the word as defined in the introductory part of this
report. The nature of the plans here described and analyzed approxi­
mates very nearly the definition of profit sharing formulated by the
International Cooperative Congress referred to in the footnote on
page 8.
In the formal announcements made regarding the establishment of
most of the plans included in this class, specific reference is usually to
be found to the fact that the arrangement is voluntary on the part of
the employer, that the management in the application of the profitsharing principle still reserves to itself the absolute right to discharge
or lay off, as well as to disqualify undeserving employees from further
participation in the benefits of the plan. In one instance only, by
reason of the contractual nature of the plan, may employees legally
claim shares in the profits on the basis of the conditions specified in
the agreement signed.
The matter of the employees’ right to participate in the divisible
profits is somewhat more elaborately specified under plans in which
individual shares are paid in stock and where therefore the principle
of labor copartnership becomes incidental to the operation of the
plan. Under such plans, more than under any of the others, the
rights of the participating employees are carefully formulated in
writing and published for the guidance of both parties.




12

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.
THE DETERMINATION OF THE PROFIT-SHARING FUND.

In about three-fourths of the plans the amount available for
distribution depends upon and varies with the net profits of the
business. By net profits, in a great majority of instances, is
meant the residuum of profits aiter all so-called legitimate ex­
penses, including depreciation and what is assumed to be a mod­
erate return on capital, have been paid, the theory being that interest
on capital is a charge similar in nature to wages to be met out of the
gross receipts. In general two distinct methods are followed in
determining the amount of divisible profits under the profit-sharing
plans herein discussed. Briefly, these methods are as follows:
(1) Specific proportion of the net profits or of the amount paid out
in dividends to stockholders.—The specific proportion of net profits
that becomes available for distribution varies greatly with the differ­
ent plans. Its range of variation is from 2 per cent (the lowest) to
100 per cent (£he highest), as is the case in the plan described in
detail on pages 37 to 44 of this report. As in many instances the spe­
cific proportion of profits to be distributed is not made public, it is
rather difficult to state exactly the average proportion of profits that
becomes available for distribution under most of the plans. It can
be stated, however, with a fair degree of accuracy that within the
range of variation just mentioned, the average for all of the plans
studied would be about 10 per cent. In plans under which the
divisible amount is dependent upon the amount paid out in divi­
dends to the stockholders the range of variation is from one-tenth to
one-third.
In one instance all of the net profit of the business over and above
what is assumed to be a fair rate of return on the capital invested is
distributed among the employees eligible to participation and the
firm on the basis of total earnings of employees on the one hand and
total interest on the capital invested on the other. In another instance
(one of the oldest plans) capital receives what is presumed to be a
fair return on the investment, the surplus of profit over and above
this return reverting to a general surplus fund out of which, in
amounts determined at the end of each year by the management,
the divisible profits are drawn for distribution in equal proportions
among the participating employees and consumers, the former shar­
ing upon the basis of their earnings and the latter according to the
gross profits on their purchases.1
(2) Rate of dividend on earnings of employees equal in whole or in
part to the rate of dividend paid on capital.—In the majority of plans
of this kind the rate of dividend, paid on the earnings of employees
varies from one-half to three-fourths of the rate of dividend paid to
the stockholders.
1 A detailed description of the workings of this plan will be found on pp. 45 to 50.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

13

The principal distinction between the different methods for the
determination of the divisible fund above described is as follows:
While in plans under which the divisible fund is dependent upon
the net profits of the enterprise, the presence of profits at the end
of the business period necessarily involves a distribution to the par­
ticipating employees, such a distribution may not always take place
under plans wherein the divisible fund depends upon dividends de­
clared. For, even with the presence of large profits, the management
may deem it more desirable to utilize them for purposes other than
the payment of dividends, namely, to extend or enlarge the sphere
of its business, in improving its physical properties, or, as it often
happens, in creating surplus or emergency funds.
M ETHOD OF APPORTIONING DIVISIBLE PROFITS BETWEEN CAPITAL AND LABOR.

Generally speaking, the method of apportioning the divisible profits
between capital and labor is determined at the outset by the em­
ployer, who in most instances announces that a certain fixed per­
centage of the profits, determined in a specified manner, will be
distributed at the end of the business year among employees eligible
to participate.
Very often, however, plans merely state that the divisible profits
will be distributed between capital and labor in proportion as the
total pay roll is to the total capital invested, it being assumed that
these two factors—total capital invested and total wages— are similar
in nature, inasmuch as the former measures the interest that capital
has and the latter the interest of labor in the undertaking. Aside
from the fact that theoretically these two factors are not at all simi­
lar—interest on capital corresponding more nearly, if at all, to wages—
the above-mentioned method of distribution usually results in a dis­
tribution of the profit-sharing fund in the ratio of about 3 to 1, to
capital and labor, respectively. For this reason the benefits accruing
to employees, even under the most liberal profit-sharing plans, are
not very large.
As opposed to the above-described basis of distribution of profits
is the underlying principle guiding the distribution of profits under
plan No. 5, described in detail on pages 37 to 44. It is the opinion of
the management of the establishment in which this plan is in
operation, that the factor in production that most nearly re­
sembles wages is not the total capital but the interest on the
same. “ The employer,” states the general manager of this firm,
“ invests his capital and labor its energy. The first gets his re­
turn in the shape of interest on the investment—the legitimate per
cent of profit, in our case 6— the second gets his return in the form
of daily or monthly wages. These two factors—interest on capital and
wages—must be paid out of the gross receipts of the undertaking. The




14

B U L L E T IN OF T H E B U REA U OF LABOR STATISTICS.

remainder 6f the gross profits after allowing all the other legitimate
expenses constitutes the net earnings of the business^, created jointly
by capital and labor, to be distributed in proportion to the relative
interest in the business of each of the two partners, namely, amount
of interest on capital and wages. ”
The following example based upon actual facts relating to the
capital invested, wages, interest, etc., of this company will illustrate
the difference in the results obtained under the two methods dis­
cussed, namely, the distribution of the divisible profits according to
(a) the ratio of total capital to wages (method 1) and (b) the ratio of
interest on capital to wages (method 2).
Assuming that the total capital invested in the undertaking during
a specific year is $500,000, that it is understood that the fair interest
on the same is 6 per cent, that the amount paid out in wages is
$100,000, and that the amount of available divisible profits is $120,000,
let us distribute the latter amount among the two factors— capital
and labor— on the two bases indicated above and termed method 1
and method 2.
Method 1.—Basis: Ratio of total capital to wages.
Share of capital equals, under this method:
120,000 X 500,000 £ 1QQ QQQ
500,000+100,000 - ® 1UU>
WU-

Share of labor then would be equal to :
120.000 X 100,000
500.000 + 100,000 ~ $20>
000'

Method 2.—Basis: Ratio of interest on capital to wages.
As, at 6 per cent, interest on capital will amount to $30,000, the
equations will be as follows:
Share of capital equals, under this method:
120,000X30,000

100.000 + 30,000 ~ ^
Share of labor then would equal:

120,000X100,000
100,000 + 30,000
The difference in the two methods explains the unusually high
profit-sharing dividends on wages paid under the profit-sharing plan
described in detail on pages 37 to 44.
CONDITIONS OF ELIGIBILITY.

In only one of the profit-sharing plans studied are all employees with­
out exception allowed to participate in the distributed profits. In one
case also the benefits of the plan are confined to employees signi­




PR O F IT SH A R IN G I K

T H E U N IT E D STATES.

15

fying their intention to participate proportionately in the possible
losses of the business. In nine-tenths of the plans, however, the
main condition of eligibility for participation is the permanency of
affiliation with the employing company, as shown by a specific length
of continuous service. This minimum of continuous service varies
from three months to three years, the length of time required in
more than one-half of all the plans being one year or less. Thus all
the plans, with one exception, exclude from participation the so-called
shifting part of their working organization, confining the benefits to
their more or less permanent employees.
In about one-eighth of the plans in operation employees to partici­
pate must file a written application especially provided for that pur­
pose. The nature of such applications, in most instances, is simply
a perfunctory statement signed by the employee to the effect that
he promises to do faithful work and be loyal to the company. In one
instance employees contractually obligate themselves to share in the
possible losses of the year’s business in proportion to their earnings,
but not to exceed 10 per cent. Under the latter plan 10 per cent of
the weekly earnings of each of the participating employees is retained
by the company until the end of the distribution period, when the
amounts thus retained are returned to the employees together with
their share of profits for the year.
BASIS FOR COMPUTING INDIVIDUAL SHARES.

In the great majority of the plans studied the basis for computing
individual shares is relatively simple; namely, the amount of earn­
ings of the participants. The individual shares in such instances are
determined by dividing the employees’ part in the divisible fund
by the-aggregate of wages of the participants in order to obtain
what is usually called the profit-sharing dividend, and then multi­
plying this dividend by the respective earnings of each of the par­
ticipants. In all of the plans the rules and regulations governing
the distribution of the profits are relatively simple, the employees
thus being enabled to know in advance the conditions of eligibility
for participation, the basis upon which individual shares will be
determined, and the circumstances under which shares in the profits
may be forfeited.
CONDITIONS OF FORFEITURE.

In all of the plans except one, discharge and leaving employment
act automatically as causes for forfeiting the share of profits for the
current year. The one plan provides specifically that only a dis­
charge for cause results in forfeiture; other discharges, being more
in the nature of permanent lay offs on account of lack of work, do
not deprive employees of their proportionate share of the profits.
Some of the plans under which shares of profits are paid in stock or in
the form of savings accounts penalize those leaving employment more
severely than those who are discharged, it being specified in these




16

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

few instances that employees leaving forfeit some part of the share
of the profits of the previous year—usually from one-fifth to onethird—in addition to the share of the current year’s profit.
The provision that death shall be a cause of forfeiture occurs only
in about one-half of the plans; in the other plans it is specified that
the pro rata share of the deceased employee shall be paid to his family
or dependents.
DISPOSITION OF FORFEITURES.

In profit-sharing plans under which the shares of profits constitute
some proportion of the dividends paid on capital the amounts of for­
feited shares are usually retained by the employer. In other plans
the amounts forfeited do not revert to the employer, but are appor­
tioned among the participating employees. The reason for the
difference in the disposition of forfeitures under the two groups of
plans is explained by the fact that under the former plans the total
amount to be distributed varies with the aggregate earnings of the
participants, while under the latter the amount to be distributed is a
definite proportion of the profits, which is fixed in advance.
SHARES OF EMPLOYEES LAID OFF OR SICK.

The majority of plans in operation specifically provide that em­
ployees temporarily laid off by the management, but otherwise
eligible and ready to return to work upon call, be not barred from
participation. Their shares in such instances are based on their
actual earnings. In one-third of the plans, it appears, cases of lay
off are treated “ each upon its own merits.”
The same treatment as that of employees laid off is accorded to
those taken sick, provided the sickness does not ex;tend “ over an
unreasonably long period” —usually not over six months. Under one
plan only is it specifically stated that sickness of an employee carries
with it a forfeiture of his share of the profits. In this instance, how­
ever, the company maintains a special fund for the benefit of its sick
employees.
FORM OF PAYMENT.

The forms of payment of individual shares of profits under 42 of the
plans examined were found to be as follows:
Under 32, or over three-fourths of those reporting, the shares in
profits were paid fully in cash. Five reported as paying in “ part
stock or savings account or common fund and part cash.” Of these
the following proportions were paid in cash: One, 99 per cent; one, 90
per cent; one, 85 per cent; one, 80 per cent; and one, 10 per cent.
Under two plans the shares of profits were credited to a common fund,
which was utilized to create a pension reserve which was to be made
up in equal parts of the shares of profits and contributions by the
employees. In two cases the profits were found to be credited to
savings accounts, and in one case the payment was all in stock.




17

PR O F IT SH A R IN G IN T H E U N IT E D STATES.

In plans under which the larger proportion of the individual
shares are paid in stock numerous provisions exist to prevent em­
ployees from disposing of their profit-sharing stock in a hasty or
improvident manner, it being the idea of the employers that a
profit-sharing plan can not successfully be operated unless the par­
ticipants retain a pecuniary interest in the business. In two of the
plans employees are specifically enjoined from disposing of their
stock because the management looks upon the scheme as a means for
creating for the benefit of the employees an annuity to provide
against old age and general disability.
YEARS IN W HICH THE PLANS WERE ESTABLISHED.

In the following table the profit-sharing plans in operation in the
United States are classified by year of establishment:
T a b le

1 .—Y E A R S IN W H IC H PROFIT-SH ARING PLANS W E R E EST ABL ISH ED .

Number
of plans.

Year.

2
1
1
1
2
1
4

1886.................................
1887.................................
1889.................................
1897 ...............................
1899.................................
1900
. .
1901 ..............................

Year.

1902.................................
1904.................................
1906.................................
1907.................................
1909.................................
1910 ..............................
1911...............................

Number
of plans.
1
1
4
1
4
3
4

Year.

Number
of plans.

1912.................................
1913.................................
1914.................................
1915.................................
1916

___________

4
4
7
11
4

Total...................

60

From the above table it may be seen that the profit-sharing plans
in operation in the United States at the present time are of compar­
atively recent origin, only seven of them, or about one-ninth, having
been established prior to 1900. Twenty-nine, or almost one-half, have
been established since 1911. Slightly under one-third of the plans
have been in operation 10 years or longer. Over two-thirds of them
have been in operation less than 10 years. Of the latter group, 21, or
more than one-third of all, were put into effect in 1914, 1915, and 1916.
LOCATION OF PROFIT-SHARING ESTABLISHMENTS.

The geographical location of the establishments having profitsharing plans in operation at the present time may be seen from the
following table:
T a b le

2 .—LOCATION OF PROFIT-SH ARING ESTABLISHM ENTS.

State.

Arkansas
.................
Connecticut..................
District of Columbia..
Illinois...........................
Indiana
Kentucky
.............
Maine.............................

Number
of estab­
lish­
ments.
1
3
1
3
1
1
1

State.

Massachusetts..............
Michigan
...............
Minnesota .................
Missouri.........................
New York
....
North Carolina............

56831°—Bull. 208—17------2




Number
of estab­
lish­
ments.
13
2
1
1
12
1
10

State.

Number
of estab­
lish­
ments.

P ennsylvania...............
Rhode Island...............
South Carolina.............
Wisconsin.....................

4
1
1
3

Total...................

60

18

B U L L E T IN OF T H E B U REA U OF LABOR STATISTICS.

The interesting feature of the above-presented geographical distri­
bution of the profit-sharing establishments is the fact that over sixtenths of all these establishments are located in three States—Massa­
chusetts, New York, and Ohio— and that more than half of them
are in the North Atlantic States.
INDUSTRY OR BUSINESS OF PROFIT-SHARING ESTABLISHMENTS.

The nature of the industry or business in which establishments
having profit-sharing plans in operation are engaged is shown in the
table presented below:
T a b le

3 .—IN D U STR Y OR BUSINESS OF ESTABLISH M ENTS H A V IN G PR O FIT-SH A R IN G
PLANS.

Industry or business.

Manufacturing...............................................
Mercantile......................................................
Banking........................................................ .
Public utilities
Building and contracting............................

Number
of estab­
lish­
ments.
26
14
8
5
2

Industry or business.

Number
of estab­
lish­
ments.

Real-estate brokers.......................................
Wholesale baking.........................................
Newspaper publishing................................

2
2
1

Total.....................................................

60

The above table shows that the largest single group of profit-shar­
ing plans, 25, or 45 per cent of all, were in operation in establishments
engaged in manufacturing, 12, or 21 per cent, in mercantile institu­
tions, 8, or 14 per cent, in banking houses, and 4, or 7 per cent, in
organizations engaged in public service.
SIZE OF PROFIT-SHARING ESTABLISHMENTS.

The size of 38 profit-sharing establishments, as indicated by the
average numbers employed during a representative distribution
period, is shown in the following table:
T a b le

4 .—NUM BER AN D PER CENT OF PROFIT-SH ARING ESTABLISH M ENTS H A V IN G
EACH CLASSIFIED NUM BER OF EM PLO YEES.




Establishments.
Classified number of employees.
Number. Per cent.
Under 100.........................................................
100 and under 300...........................................
300 and under 500...........................................
500 and under 1,000........................................
1,000 and under 3,000.....................................
5,000 and under 10,000...................................

13
14
1
5
4
1

34.2
36.8
2.6
13.2
10.5
2.6

Total...........................................................

38

100.0

P R O F IT S H A R IN G IN T H E U N IT E D STATES.

19

Of the 38 establishments having profit-sharing plans in operation
71 per cent employed less than 300 people. The proportion of them
that had 1,000 employees or more was very small— 13.1 per cent.
EXTENT OF PARTICIPATION.

Of the 37 establishments reporting the proportion of the total
employed who participated in the distributed profits 19, or 51.4 per
cent, reported 80 per cent and over participating; 13, or 35.1 per
cent, reported 60 and under 80 per cent participating; 4, or 10.8 per
cent, 40 and under 60 per cent; and only 1 reported 20 and under 40
per cent of all the employees sharing in the profits.
BENEFITS ACCRUING TO EMPLOYEES.

The benefits accruing to the participating employees as a result of
the operation of the profit-sharing plans during one representative
distribution period, in terms of a percentage of the regular earnings of
participants, are shown in the following table:
T a b le

5 .—PER CENT OF EARNING S PAID AS DIVID EN DS IN 34 PROFIT-SH ARING
ESTABLISHM ENTS.

Classified per cent of earnings paid as
dividends.

Under 2...........................................................
2 and under 4 ..............................................
4 and under 6 ................................................
6 and under 8 ................................................
8 and under 10
10 and under 15
.......................................
15 and under 20.............................................

Number
of estab­
lish­
ments.
1
6
4
7
5
5
1

Classified per cent of earnings paid as
dividends.

Number
of estab­
lish­
ments.

20 and under 30.............................................
30 and under 40 ...........................................
40 and under 50.............................................
50 and over....................................................

1
2
1
1

Total.....................................................

34

Under almost one-third of the plans the profit-sharing dividend on
the regular earnings of the participants was less than 6 per cent.
Slightly over one-third of the establishments paid dividends varying
from 6 to 10 per cent. The remaining third of the establishments
paid dividends of 10 per cent or more. Of the latter, 5 establish­
ments paid profit-sharing dividends of 20 per cent or more.
COST OF PLANS TO EMPLOYERS.

In view of the fact that in the great majority of the establishments
not all of the employees were eligible for participation, the cost of
the plans to the employers, in per cent of the total labor pay rolls
was considerably smaller than the relative benefits accruing to their
employees as shown above. The table following shows the cost of
the profit-sharing plans to the employers for one representative dis­
tribution period.




20

B U L L E T IN OF T H E B U REA U OF LABOR STATISTICS.

T a b le 6 .—COST OF P R O FIT-SH AR IN G PLANS TO 34 EM P LO Y E R S, IN PE R CENT OF
T O TAL P A Y ROLLS.

Classified per cent of pay rolls paid as
dividends.

Under 1...........................................................
1 and under 2 ................................................
2 and under 4 ................................................
4 and under 6 ................................................
6 and under 8 ................................................
8 and under 10...............................................

Number
of estab­
lishments.
1
4
7
7
7
1

Classified per cent of pay rolls paid as
dividends.

Number
of estab­
lishments.

10 and under 15.............................................
15 and under 20.............................................
20 and over.....................................................

1
1
5

Total....................................................

34

The cost in more than one-half of all the establishments was less
than 6 per cent of their respective annual pay rolls. In 7 of the
establishments, or 20.6 per cent, the plans necessitated an additional
expense of from 6 to 8 per cent of the total pay rolls. The proportion
of plans in which the additional expense attributable to the operation
of the profit-sharing plans amounted to 20 per cent or more was.
14.7 per cent.
OCCUPATIONS OF PARTICIPATING EMPLOYEES.

The following table shows the occupations or types of employment
of the participating employees of 34 establishments at the end of one
distribution period:
T able 7 .—NUM BER AND PE R CENT OF PARTICIPATING EM PLO YEES IN EACH OCCUPA­
TION GROUP.

Participating
employees.
Occupation group.
Number. Per cent.
Executive....................
Clerical.........................
Sales..............................
All others............. ..

1,326
783
266
11,553

9.5
5.6
1.9
82.9

Total.................

13,928

100.0

The table shows that 82.9 per cent of all the beneficiaries belonged
to the classification of “ all others/’ that is, were engaged in occupa­
tions other than executive, clerical, or sales. Only 9.5 per cent of
the participants were holding executive positions.
DETAILED TABLES.

The two tables which follow show in detail, for each establishment,
the principal part of the data shown in summary form in the tables
preceding.




21

P R O F IT SH A R IN G IN T H E U N IT E D STATES.

T ab le 8 .—NUM BER OF EM PLO YEES, PROPORTION PARTICIPATING IN PROFITS,
D IV ID E N D S TO EM PLO YEES, AND COST OF PROFIT-SH ARING PLANS TO EM PLOY­
ERS, IN 38 ESTABLISH M ENTS H AV IN G PRO FIT-SH ARIN G PLANS.

Establishment
No.

Dividend
period ending—

Employees
participat­
ing in
Aver­
profits.
age
num­
ber of
em­
Per
ploy­ Num­ cent
ees. ber.
of
total.

Pay roll of par­
ticipants.
Total
pay roll.
Amount.

1

Dec. 31,1914................... 2,575 2,265

88.0

$1,550,000

2

Dec.
Dec.
Dec.
Dec.
Dec.
Dec.

56
60
60
64
64
68

58.9
61.9
60.0
65.3
66.7
80.0

59,165
59,747
64,478
68,477
65,832
59,539

31,1910...................
31,1911...................
31,1912...................
31,1913...................
31,1914...................
31,1915...................

95*
97
100
98
96 .
85

Dividends to em­
ployees.

Per
Per
Per
cent
cent cent of
of Amount.
of
Pay
total
total roll of
pay partici­
roll. pants.
SK

$1,250,000

80.6

$99,000

6.4

0)
(*)
0)
0)

2,557
3,100
2,896
2,364
1,744
2,400

4.3
5.2
4 .5
3.5
2.6
4 .0

83.3
80.4

4,011
3,802

1.9
1.7

2.3
2.1

63,523 100.0

9,528

15.0

15.0

C
1)

(l)
0)
C
1)
C
1)
0)
C
1)

C
1)

7.9

C
1)

i1
)
0)
C
1)
C
1)
0)

3

Jan. 1,1914......................
Jan. 1,1915......................

131
141

130
140

99.2
99.3

210,000
230,000

4

Dec. 31,1915...................

100

100 100.0

63,523

5

Feb. 11,1916...................

75

51

68.0

0)

1,605

6

Mar. 31,1914...................

274

217

79.2

32,928

26,050

79.1

1,704

5.2

6.5

7

June 30,1911...................
June 30,1912...................
June 30,1913...................
June 30,1914...................
June 30,1915...................

)
0)
)
C
1)

0)

0)
C
1)

C
1)
)

0
29

0)
0)
93.5

29,892
32,683
38,293
14,527
46,521

18,360
20,566
22,087
25,675
27,950

61.4
62.9
57.7
57.7
60.1

918
1,234
1,767
2,054
2,236

3.1
3.8
4.6
4 .6
4 .8

5.0
6.0
8.0
8.0
8.0

1907 to 1909......................
1910...........................
1911.....................................
1912.....................................
1913.....................................
1914.....................................
1915.....................................

0)
111
153
173
180
178
168

0)
111
153
173
180
178
168

100.0
100.0
100.0
100.0
100.0
100.0

92,482
115,866
135,625
145,850
152,250
132,962

92,482
115,866
135,625
145,850
152,250
132,962

100.0
100.0
100.0
100.0
100.0
100.0

( 1)

C
1)

5.0
6.0
6.0
8.0
8.0
8.0
8.0

129,530

118,482

91.5

1,147

.9

1.0

(x)
C
1)

0)
37,927
69,547
80,432
61,900
70,169
38,565
38,336

(l )

4.0
1S.0
25.0
30.0
20.0
20.0
10.0
10.0

8

0
0

31

(l)

0

)

0)

175,000
185,000

C
1)

0)

0)

5,549
6,952
10,850
11,668
12,180
10,637

9

Dec. 31,1915...................

172

146

84.9

10

1896 to 1904......................
1905.....................................
1906.....................................
1907.....................................
1908.....................................
1909.....................................
1910.....................................
1911.....................................
1912.....................................

0)

0)
353
384
395
436
476
518
530
534

(l)

451
541

67.7
74.0

298
297
322

58.5

350,371

204,812

58.5

65.3
67.8

56.9

226,800
237,975
248,775

63.9
70.3

308

354,935
338,360
373,995

66.5

19,902

33
32
35

71.7

18,224
19,333
19,453
19,946

16,979

93.2

17,074
16,799

88.3

86.486.1

886
662
727
1,127

1913.................................
1915 2 ............................................
11

12

13

<7
(x)
C
1)

(i)
C
1)
)
C
1)
651

0

731

Dec.
Dec.
Dec.
Dec.

31,
31,
31,
31,

1912..................
1913..................
1914.................
1915.................

509
455
475
541

Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.

31, 1903.................

46
48
44
48
54
51
51
52
56
54
53
54

31,
31,
31,
31,
31,
31,
31,

1904...................
1905...................
1906...................
1907...................
1908...................
1909...................
1910...................

31,1911..................
31, 1912..................
31, 1913.................
31, 1914.................

Apr. 3 0 , 1915............
1Not reported.




31

36

34
42
44

V)

C
1)
0)

C
1)
(x)
(x)
C
1)

66.7

79.5
75.0
63.0

82.4

0)

C
1)
C
1)

i1)
(|)
(i)
(i)
)
0)
0)

0

20,723

C
1)

252,846
278,188
268,106
309,500
350,845
385,650
383,360
433,075
369,570
388,680

17,182
16,682
19,036

(!)
C
1)

C
1)
C
1)
C
1)
C
1)
C
1)
C
1)
0)

4.9
3.4

5.2
3.9
4.3
6.6
6.2
5.2
6.2
7.1

3.7

1,319
1,265
1,409
1,322
23,613

44.7

87.0

88.7
83.3

24,110
24,497
27,833

31 100.0

52,778

52,778 100.0

1,336

2 No distribution made for 1914.

15.0
10.0
10.0
8.0
8.0
8.0
8.0

5.7
5.0
4.6
5.6
6.2
5.5
5.2
5.8
4.8

19,769
21,090
20,942
22,564

(1)

4.7
5.1
5.6
5.3

984
1,175

23,970

18,716

0
0
0

1,038

82.1

46
47
47
45

19,038

(l)
)
)
)
C
1)
0)
C
1)

80.5

86.3
73.1

18,926

16,385
18,144

0)
C
1)
0)

89.6
89.4
87.4
82.5
87.5
85.5
81.1

21,249
21,175
21,410

38

64,961
36,957
38,868

6.0
6.0
8.0
8.0
8.0
8.0

:

6.7
6.0
6.7

5.9
44.7

22

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

T a b le 8 .—NUM BER OF EM PLO YEES, PROPORTION PARTICIPATIN G IN PROFITS,
D IV ID E N D S TO EM PLO YEES, AN D COST OF PROFIT-SH ARIN G PLANS TO EM PLO Y ­
E R S, IN 38 ESTABLISH M ENTS H A V IN G PROFIT-SH ARIN G PLANS—Continued.

Establishment
No.

Dividend
period ending—

Employees
participat­
ing in
Aver­
profits.
age
num­
ber of
em­
Per
ploy­ Num­ cent
ees. ber.
of
total.

Pay roll of par­
ticipants.
Total
pay roll.
Amount.

Dividends to em­
ployees.

Per
Per
Per
cent
cent cent of
of
Amount.
of
pay
total
total roll of
pay partici­
roll. pants.
8K

Dec. 31,1899..................
Dec. 31, 1900..................
Dec. 31,1901..................
Dec. 31, 1902..................
Dec. 31, 1903..................
Dec. 31, 1904..................
Dec. 31,1905..................
Dec. 31,1906..................
Dec. 31, 1907..................
Dec. 31, 1908..................
Dec. 31, 1909..................
Dec. 31, 1910..................
Dec. 31,1911........
Dec. 31, 1912..................
Dec. 31, 1913..................
Dec. 31, 1914..................

55
55
65
100
79
90
96
120
142
138
153
161
154
149
154
161

34
45
55
53
51
64
64
64
72
97
98
106
124
116
117
113

61.8
81.8
84.6
53.0
64.6
71.1
66.7
53.3
50.7
70.3
64.1
65.8
80.5
77.9
76.0
70.2

(x)
(*)
$45,355
55,341
43,967
44,076
50,569
75,685
80,403
72,617
101,944
110,309
107,935
104,131
115,848
124.118

$23,545
30,337
33,120
30,601
24,442
35,056
32,021
39,834
42,661
49,553
60,989
63,780
74,610
76,295
81,250
74,152

C
1)
C
1)
73.0
55.3
55.6
79.5
63.3
52.6
53.1
68.2
59.8
57.8
69.1
73.3
70.1
59.7

$14,198
25,088
24,443
30,126
16,885
9.981
29,176
47,800
42,660
38,652
60,988
63,781
35,067
57,221
56,875
66,736

C
1)
53.9
51.4
38.4
22.6
57.7
63.2
53.1
53.2
59.8
57.8
32.5
55.0
49.1
53.8

60.3
82.7
73.8
98.4
69.1
28.5
91.1
120.0
100.0
78.0
100.0
100.0
47.0
75.0
70.0
90.0

June 30,1905.................
June 30,1906.................
June 30, 1907.................
June 30, 1908.................
June 30, 1909.................
June 30, 1910.................
June 30,1911.................
June 30,1912.................
June 30, 1913.................
June 30, 1914.................
June 30,1915.................

182
190
202
210
215
200
201
236
240
245
255

114
119
116
133
145
134
131
142
140
147
178

62.6
62.6
57.4
63.3
67.4
67.0
65.2
60.2
58.3
60.0
69.8

141,000
150,000
151,000
162,000
163,000
166,000
165,000
175,000
190,000
205,000
225,000

94,300
104,800
105,000
114,600
116,500
120,500
121,500
124,900
139,900
150,500
156,700

66.9
69.9
69.5
70.7
71.5
72.6
73.6
71.4
73.6
73.4
69.6

4,839
5,197
1,096
4,534
5,367
4,159
2,715
10,487
6,682
10,251
13,681

3.4
3.5
.7
2.8
3.3
2.5
1.6
6.0
3.5
5.0
6.1

5.1
5.0
1.0
4.0
4.6
3.5
2.2
8.4
4.8
6.8
8.7

16

Dec. 31,1914.................

43

34

79.1

52,873

39,873

75.4

2,506

4.7

17

Dec. 31,1914.................

18

16

88.9

9,954

8,704

87.4

675

6.8

6.3
e
7.8

18

Jan. 1,1915....................

600

401

66.8

281,317

234,936

83.5

32,963

11.7

14.0

19

Dec. 10,1898.................
June 9,1899...................
Dec. 8,1900...................
June 7,1901...................
Dec. 13,1902.................
June 12,1903.................
Dec. 10,1904.................
June 2,19062.................
June 8,1907...................
June 6,1908...................
June 5,1909...................
June 4,1910...................
June 3,1911...................
June 1,1912...................
May 31,1913.................
June 6,1914...................
June 5,1915...................

390
332
353
485
671
640
629
600
661
692
717
709
692
717
705
715
716

267
222
274
327
409
450
259
442
473
531
551
517
539
545
546
589
624

68.5
66.9
77.6
67.4
61.0
70.3
41.2
73.7
71.6
76.7
76.8
72.9
77.9
76.0
77.4
82.4
87.2

127,546
128,951
150,058
201,04a
278,297
259,368
99,876
186,432
269,970
281,922
286,554
274,299
264,854
279,927
314,240
312,400
306,299

86,909
80,564
103,397
130,181
172,162
175,295
42,085
132,715
196,069
214,656
215,465
203,599
207,282
218,900
249,497
266,778
268,271

68.1
62.5
68.9
64.8
61.9
67.6
42.1
71.2
72.6
76.1
75.2
74.2
78.3
78.2
79.4
85.4
87.6

2,069
2,561
3,445
3,159
5,448
4,009
1,407
5,256
7,842
4,878
5,931
7,110
5,150
6,573
6,835
8,658
8,736

1.6
2.0
2.3
1.6
2.0
1.5
1.4
2.8
2.9
1.7
2.1
2.6
1.9
2.3
2.2
2.8
2.9

2.4
3.2
3.3
2.4
3.2
2.3
3.3
4.0
4.0
2.3
2.8
3.5
2.5
3.0
2.7
3.2
3.3

20

Dec. 31,1915.................

66

36

54.5

52,147

37,794

72.5

1,890

3.6

5.0

21

Oct. 1,1915....................

270

125

46.3

250,000

148,000

59.2

7,000

2.8

4.7

125

86

68.8

62,921

46,975

74.7

1,175

1.9

2.5

14

15

22

Dec. 28,1914.................

23

Dec. 31,1902.................
Dec. 31,1903.................
Dec. 31,1904.................
Dec. 31,1905..................
Dec. 31,1906.................
Dec. 31,1907.................
Dec. 31,1908.................
Dec. 31,1909.................
i Not reported.




m
m
95.0
95.0
V
1)
w
I1)
fl)
95.0
(v
(n
95.0
s1)
(1)
95.0
w
95.0
(*)
vv
(i)
(i)
95.0
(v
95.0
C
1)
0)
0)
2No distributions made between

(})

m
(i)
2,881
m
3,600
C
1)
m
3,606
w
(1)
4,501
C
1)
(i)
7,594
0)
m
8,284
0)
(i)
6,329
0)
7,032
C
1)
C
1)
Dec. 10,1904, and June 2,1906.
111,621
140,155
132,937
146,577
208,284
235,233
158,223
175,808

2.6
2.6
2.7
3.1
3.6
3.5
4.0
4.0

PR O F IT SH A R IN G IN T H E U N IT E D STATES.

23

T ab le 8 .—NU M BER OF EM PLO YEES, PROPORTION PARTICIPATING IN PROFITS,
D IV ID E N D S TO EM PLO YEES, AN D COST OF PR O FIT-SH AR IN G PLANS TO E M PLO Y­
ERS, IN 38 ESTABLISH M ENTS H A V IN G PRO FIT-SH ARIN G PLANS—Continued.

Establishment
No.

Dividend
period ending—

Employees
participat­
ing in
Aver­
profits.
age
num­
ber of
em­
Per
ploy­ Num­ cent
ees. ber.
of

Pay roll of par­
ticipants.
Total
pay roll.
Amount.

total.

Dividends to em­
ployees.

Per
Per
Per
cent
cent cent of
of
Amount.
of
Pay
total
total roll of
/
pay
partici­
roll.
S3E pants.

V
23

Dec. 31, 1910..................
Dec. 31, 1911.................
Dec. 31, 1912..................
Dec. 31, 1913.................
Dec. 31, 1914.................

249
252
279
283
278

239
244
270
275
272

96.0
96.8
96.8
97.2
97.8

$173,123
177,746
171,889
181,113
160,452

$171,341
176,321
170,285
180,216
159,383

99.0
99.2
99.1
99.5
99.3

$6,854
7,053
6,811
9,011
4,781

4.0
4.0
4.0
5.0
3.0

4.0
4.0
4.0
5.0
3.0

24

Dec. 31, 1901..................
Dec. 31, 1902..................
Dec. 31, 1903.................
Dec. 31, 1904..................
Dec. 31, 1905..............
Dec. 31, 1 9 06...-...........
Dec. 31, 1907..................
Dec. 31, 1908..................
Dec. 31, 1909.................
Dec. 31, 1910..................
Dec. 31, 1911.................
Dec. 31, 1912.................
Dec. 31, 1913..................
Dec. 31, 1914.................

158
169
218
227
288
371
313
222
341
425
387
428
567
456

52
71
71
78
101
116
98
116
139
139
152
156
184
225

32.9
42.0
32.6
34.4
35.1
31.3
31.3
52.3
40.8
32.7
39.3
36.4
32.5
49.3

68,304
82,718
103,489
101,573
133,379
164,872
138,602
115,329
152,791
198,090
182,018
218,391
309,346
263,371

27,299
38,031
39,638
40,730
57,606
66,595
57,036
64,222
78,018
81,386
88,477
96,456
137,730
164,360

40.0
46.0
38.3
40.1
43.2
40.4
41.2
55.7
51.1
41.1
48.6
44.2
44.5
62.4

3,107
5,679
4,891
3,023
7,336
12,287
10,408
6,274
7,400
8,551
8,253
10,992
18,688
16,743

4.5
6.9
4.7
3.0
5.5
7.5
7.5
5.4
4.8
4.3
4.5
5.0
6.0
6.4

11.4
14.9
12.3
7.4
12.7
18.5
18.2
9.8
9.5
10.5
9.3
11.4
13.6
10.2

25

Dec.
Dec.
Dec.
Dec.

1912.................
1913..................
1914..................
1915..................

99
103
101
106

91 91.9
100 97.0
95 94.1
106 100.0

74,077
88,452
91,340
99,133

71,742
85,363
85,215
93,347

96.8
96.5
93.3
94.2

5,575
23,293
11,183
20,050

7.5
26.3
12.2
20.2

7.8
27.3
13.1
21.5

26

Sept. 1, 1914...................
Sept* 1, 1915...................

86
85

75
74

87.2
87.1

74,896
76,325

66,900
68,452

89.3
89.7

6,690
2,054

8.9
2.7

10.0
3.0

27

Dec. 31, 1914..................

900

813

90.3

795,800

716,000

90.0

49,300

6.2

6.9

28

Apr. 1, 1913...................
Apr. 1, 1914...................
Apr. 1, 1915...................

63
62
62

49
52
51

77.8
83.9
82.3

60,538
59,186
60,068

55,290
56,892
58,564

91.3
96.1
97.5

18,441
20,880
17,632

30.5
35.3
29.4

33.4
36.7
30.1

29

Jan.
Jan.
Jan.
Jan.
Jan.
Jan.

1910...................
1911...................
1912..................
1913...................
1914...................
1915...................

161
160
178
193
204
183

47
49
61
62
68
64

29.2
30.6
34.3
32.1
33.3
35.0

132,328
136,946
128,394
147,866
151,478
132,148

41,420
43,310
47,340
48,960
60,290
58,160

31.3
31.6
36.9
33.1
39.8
44.0

2,649
1,933
1,833
3,691
4,012
796

2.0
1.4
1.4
2.5
2.6
.6

6.4
4.5
3.9
7.5
6.7
1.4

30

Dec. 31,, 1910..................
Dec. 31;, 1911..................
Dec. 31,, 1912..................
Dec. 31,, 1913..................
Dec. 31., 1914..................

76
83
91
101
105

68
64
68
78
82

89.5
77.1
74.7
77.2
78.1

67,526
67,751
71,031
87,315
86,100

41,403
42,642
43,207
53,855
55,622

61.3
62.9
60.8
61.7
64.6

7,179
5,463
6,662
6,200
5,951

10.6
8.1
9.4
7.1
6.9

17.3
12.8
15.4
11.5
10.7

31,
31,
31,
31,

30,
30,
30,
30,
30,
30,

31

Dec. 31.,1915...................

11

11 100.0

16,031

16,031 100.0

6,252

39.0

39.0

32

March,
March,
March,
March,
March,
March,

16
18
18
17
18
19

16
18
18
17
18
19

100.0
100.0
100.0
100.0
100.0
100.0

12,964
15,352
14,289
15,229
16,200
16,486

12,964
15,352
14,289
15,229
16,200
16,486

100.0
100.0
100.0
100.0
100.0
100.0

1,944
1,919
708
1,218
805
1,154

15.0
12.5
5.0
8.0
5.0
7.0

15.0
12.5
5.0
8.0
5.0
7.0

33

Dec.
Dec.
Dec.
Dec.

1911..................
1912.................
1913..................
1914.................

6,349
8,177
8,447
7,348

4,001
4,712
5,676
6,466

63.0
57.6
67.2
88.0

4,547,102
5,791,017
6,744,883
6,449,871

3,319,287
4,069,370
4,929,125
5,364,430

73.0
70.3
73.1
83.2

238,387
281,878
343,741
266,513

5.2
4.9
5.1
4.1

7.2
6.9
7.0
5.0

Dec. 31, 1915..................

25

18

72.0

0)

C
1)

0)

480

0)

June 30 1911.................
890
June 30> 1912................. 1,186
,
June 30i, 1913................. 1,045
1 June 30I 1914................. 1,062
,

574
591
585
665

64.5
49.8
56.0
62.6

C)
1

0)

I1
)
I1)

48,225
50,892
50,743
50,840

?}

34
35

1908...................
1909...................
1910...................
1912...................
1913...................
1915...................

31,
31,
31,
31,




(1)
0)
(!)
1 Not reported.

I 1)
b)

<
l

C
1)
C
1)

i1
)
9.0
9.0
9.0
8.0

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

24

T a b l e 8 . —NU M BER OP EM PLO YEES, PROPORTION PARTICIPA TIN G IN PROFITS,
D IV ID E N D S TO E M PLO Y EES, AN D COST OF PR OFIT-SH ARING PLANS TO EM PLO Y­
ERS, IN 38 ESTABLISH M ENTS H AV IN G PROFIT-SH ARING PLANS—Concluded.

Establishment
No.

Dividend
period ending—

Employees
participat­
ing in
Aver­
profits.
age
num­
ber of
em­
Per
ploy­ Num­ cent
ees. ber.
of
total.

Pay roll of par­
ticipants.
Total
pay roll.
Amount.

Dividends to em­
ployees.

Per
Per
Per
cent
cent cent of
Amount.
of
of
pay
total
total roll of
partici­
rSh
rolK pants.

Aug. 1,1913..................... 2,034 1,835
Aug. 1, 1914..................... 1,899 1,649
Aug. 1, 1915..................... 1,810 1,567

90.2
86.8
86.6

$839,148
822;809
833,199

$766,177
758,294
782,770

91.3
92.2
93.9

$15,324
15,166
15,655

37

Dec. 31, 1913................... 1,244

529

42.5

1,340,685

925,759

69.1

38

Dec. 31, 1912...................
Dec. 31, 1913...................
Dec. 31,1914...................

0)
C
1)
C)

C
1)
C
1)
0)

73,372

0)

0)
C
1)

(l )

(l )

36

(*)

282

299

219,001
235,344

1.8
1.8
1.9

2.0
2.0
2.0

24,879

1.9

2.7

2,464
5,938
5,712

3.4

2.7
2.4

0)
C
1)

1 Not reported.
T ab le 9 .— NUM BER OF E M PLO YEES, PROPORTION PAR TICIPATIN G IN PR O FITS, AN D
N U M BER A N D PER CENT OF PARTICIPANTS IN EACH SPECIFIED OCCUPATION
GROUP, IN 34 ESTABLISH M EN TS H A V IN G PRO FIT-SH ARIN G PLANS.

Dividend
period ending-

Establishment
No.

Dec.
Dec.
Jan.
Dec.
Feb.
Mar.
June
Mar.
Dec.
Dec.
Dec.
Dec.
Apr.
Dec.
June
Dec.
Dec.
Jan.
June
Dec.
Oct.
Dec.
Dec.
Dec.
Dec.
Sept.
Dec.
Apr.
Jan.
June
Dec.
Mar.
Dec.
Dec.

Employees
Occupation groups of participants.
Av- participat­
ing in
erage
Executive.
Clerical.
num­
All others.
profits.
ber of
em­
Per
ploy­ Num­ cent Num­ Per Num­ Per Num­ Per Num­ Per
ees. ber.
of
ber. cent. ber. cent. ber. cent. ber. cent.
total.

31.1914.
31.1915.
1.1915..
31.1915.
11.1916.
31.1914.
30.1915.
31.1915.
31.1915.
31.1915.
31.1915.
31.1914.
30.1915.
31.1914.
30.1915.
31.1914.
31.1914.
1.1915..
5.1915..
31.1915.
1.1915..
28.1914.
31.1914.
31.1914.
31.1915.
1.1915..
31.1914.
1.1915..
30.1915.
30.1915.
31.1915.
31.1915.
31.1914.
31.1915.

2,575 2,265 88.0
85
68 88.0
141
140 99.3
100
100 100.0
51 68.0
75
274
217 79.2
31
29 93.5
168 100.0
168
172
146 84.9
731
541 74.0
541
308 56.9
54
45 83.3
31 100.0
31
113 70.2
161
255 4 191 74.9
34 79.1
43
16 88.9
18
401 66.8
600
625 87.7
713
66
36 54.5
125 46.3
270
125
86 68.8
272 97.8
278
225 49:3
456
106 100.0
106
74 87.1
85
813 90.3
900
51 82.3
62
64 35.0
183
108
73 67.6
11
11 100.0
19 100.0
19
7,348 6,466 88.0
25
18 72.0

1Included in sales force.
2 Including clerical force.
* Editors and reporters.




2
11

15

22

19
a 16
4
15
13
35
15
11

25
14
14
28
12
8
33
14
5

11

5
3
895

1.3
14.7
14.3
4.0
5.9
3.7
6.9
6.5
10.3
4.1
6.2
35.6
12.9
13.3
6.8
17.6
’ *8.'7

2.4
30.6
20.0
16.3
5.1
12.4
11.3
10.8
4.1
27.5
7.8
15.1
45.5
15.8
13.8

21

0)
120

4
7
17
27
19
13
81
78
3
19
6
41
26

2

60
5
4
14

21
19
50
32
16
11

6
2
(5)

0)

0.9

97.7

72.5

92
4
192

92.0
7.8
88.5

131
118
407
211
92
106

78.0
80.8
75.2
68.5
57.8
25.8
81.4
55.5
5.9

4.2

8.8

87.' 5
5.6

3.1
41.5

6.2

62.7
25.0
15.1
54.5
10.5

2,214
6

16.2

” 37

76.5

'5.7

2 52
85.7
4.0
13.7
7.8
93.1
11.3
8.9
15.0
25.3
6.7
61.3
5.3
21.5
76.5
12.5
15.0
.8
11.1
11.2
9.3
5.5
16.0
19.8
25.7

1.7
*9*4
3

(6
)

15.8

2 18 100.'o'

306
605
19
86
64
243
154
29
47
716
5
37
51

76.8
96.8
52.8
68.8
74.4
89.3
68.4
27.4
63.5
88.1
9.8
57.8

11
65,571

57.9
86.2

* Includes 13 executive employees not shown in Table 8.
6 Included in “ all others.”
6 Including the clerical and sales forces.

P R O F IT S H A R IN G IN T H E U N IT E D STATES.

25

ANALYSIS OF WORKING OF 12 TYPICAL PROFIT-SHARING PLANS.

In this section of the report are given detailed accounts of the
essential features involved, the details of administration, and the
results of the operation of a limited number of the better known profitsharing plans in operation in the United States at the present time,
it being the intention to present to the consideration of those inter­
ested careful analyses of plans that may be considered as typical, and
in a certain sense, successful. The 12 plans described in the fol­
lowing *pages, although involving in a general way the same princi­
ple—the sharing of some proportion of an employer’s profits with his
employees—reveal the great variety of methods used by employers
in arriving at the same end.
Plan designated as No. 1 is herewith presented largely on account
of the comprehensiveness of the rules and regulations that govern
the distribution of the profits. Except for the uncertainty due to
the fact that the management reserves to itself the right to discon­
tinue the entire arrangement at pleasure, employees under this plan,
by referring to the printed rules and regulations, may ascertain the
exact nature of the privileges accorded to them. The settlement of
disputes that may arise under the provisions of the plan, including
disqualifications from participation, is not wholly in the hands of the
employer, for the latter in his decisions is also guided by the formu­
lated rules. Changes in the latter are usually made one year in
advance, upon consultation with and with the approval of a com­
mittee representing the employees—a permanent advisory board
selected by the employees themselves for the specific purpose of
assisting in the administration of the plan.
The plan is also interesting because it shows clearly the method
used in adjusting the proportion of the profits to be distributed to the
constantly increasing number of participants due to either the growth
of the organization or the extension of the benefits of the plan to
employees originally excluded.
PLAN NO. 1.

A brief summary of the origin and history of this plan was given by
the president of the company and originator of the plan in a paper
read at the May, 1913, meeting of the Electrical Manufacturers’ Club,
at Hot Springs, Va. After stating that prior to the introduction of the
plan investigations were made by the company of similar plans
already in operation, he says:
The reports of these various experiences encouraged us to make the experiment,
but we felt that our plan must differ to a degree from any we had heard of, and our
scheme was developed in accordance with the following considerations:
As it was a doubtful experiment, it was confined to our factory employees, leaving
out clerks and salesmen in our main office.




26

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

Realizing that the results must be a question of judgment, rather than of definite
figures, and wishing to be assisted in our judgment by the opinion of our two factory
superintendents, whom we had interested in the experiment, we increased their
salaries instead of making them profit sharers, in order that their judgment might not
be biased by their own interest.
We expected the best results, and wished particularly to benefit certain old and
faithful employees, while from recent employees, and particularly those who were not
likely to stay with us long, we expected very little, and we had very little interest in
them, so that it seemed to us necessary to make a distinction, and this was accom­
plished by the requirement that no one should be eligible to benefit until he had been
in our employ for at least one year.
On the principle that no partner has a right to any part of profits earned before he
comes into the partnership, we decided that a profit sharer must be informed of his
status, and must work as such for the full year before he is entitled to any profits.
In order to provide ample time to make up the books of the company, and to deter­
mine the profits, we set the time of payment as March 1, or two months after the close
of the year.
To further extend the time of service it was decided that no profit sharer should
benefit who leaves our employ before the dividend date of March 1.
To give our people the greatest stimulus it was necessary that the amount of their
dividend should be absolutely dependent on the profits of our business for any given
year, and that as nearly as possible the profits for each year should be separately
determined so that no man should either gain anything from profits of the year before,
nor lose anything from profits carried into the succeeding year when he may have left
our employ.
At the outset we were confronted with the difficulty that being a private corporation
we were absolutely unwilling to make any statement from which the amount of our
profits could be determined, which would certainly be the result should we announce
the percentage of our profits which we proposed to pay, and later told what this per­
centage amounted to.
To obviate this trouble we refrained from stating the percentage of the profits which
we proposed to pay, saying simply that such percentage was fixed in advance, although
not published.
At the beginning of the first year, in order to give our people some idea of the prob­
able result, we advised them that the percentage as fixed was sufficient to justify
the expectation that the dividend on their wages would be at least 5 per cent, provided
the profits of that year were as large as those of the year preceding.
In order that the administration of the profit sharing should be absolutely fair, we
have at the beginning of each year posted a set of rules which we have been able to
keep down to one typewritten page, and have administered each year strictly accord­
ing to rule.
On January 1, 19—, we assembled our entire force and carefully explained the
profit-sharing scheme to them, immediately after which the preliminary list and the
rules for that year were posted.
While our people were evidently pleased that something good was coming to them,
it looked rather a long way off and comparatively few seemed to really understand
the scheme.
A repetition of the address in January, 19— , still left the matter somewhat hazy in
their minds, and the results for 19—, while visible, were not as great as had been hoped.
The actual payment of the first dividend, about March 1,19—, had a great effect and
ever since the results have been much more satisfactory than before.
We express the hope that our people will make wise use of the dividend, and if they
wish to make a deposit, we allow them to go to the savings bank on our time.




P R O F IT SH A R IN G IN T H E U N IT E D STATES.

27

However, as the money belongs to them, we do not presume to dictate what they
shall do with it, except to insist that any man shall be severely disciplined who uses
his money in such a way as to interfere with his regular work.

The following is the text of rules and regulations governing the
administration of the plan at the present time:
PROFIT-SHARING RULES, 1914.
THOSE INCLUDED.

All employees except those specially excluded.
PR ELIM INARY LIST.

This includes only those who have been continuously in our employ since January
1, 1913. (See list of names in each department.)
PROFIT SH ARERS.

This includes only those whose names are on the preliminary list, who shall remain
continuously in our employ until March 1, 1915, and whose services shall be satis­
factory. Anyone now on the preliminary list who may be discharged, or who may
leave our employ before March 1, 1915, will lose all share, even though he may be
employed again later on, and his share will be divided among those remaining.
Y O U R SH ARE.

We propose to divide among the profit sharers a definite percentage of the profits
of our business for the year 1914, and this percentage is the same as for the year 1913,
except that it has been increased proportionally to the increase in pay roll due to
including the employees of our--------------- office this year for the first time.
The actual amount of money to be divided will depend entirely on the amount
of our profits for 1914. Each profit sharer will share in proportion to the wages he
receives during the year. Under no condition shall we be expected to pay any profit
sharer more than 20 per cent on his wages for the year.
SICKNESS AN D INJURY.

Cases of absence due to sickness shall be decided at our discretion, but no dividend
shall be paid on wages not actually received.
In case of injury, a profit sharer shall be considered as having received his regular
weekly wages for such weeks as he receives compensation, but such wages shall not be
assumed at more than $20 per week nor for more than 50 weeks.1
DEATH B E N E F IT. 1

In case of death during the year of anyone in good standing on the preliminary
list, a death benefit will be paid and deducted from the fund. The amount of the
death benefit shall be at our discretion but shall not exceed the dividend rate for
1913 on his estimated wages for the whole year of 1914.
L A Y OFFS. 1

Any employee who may be laid off shall be considered as no longer in our employ
unless he returns to work within six weeks.
1 Not in rules of previous years.




Suggested by committee of factory employees.

28

B U L L E T IN OP T H E BU REA U OF LABOR STATISTICS.
LE AV E OF A B SE N C E . 1

Leave of absence for more than six weeks shall be granted only to those who have
been in our employ for two years, and only upon application approved by the presi­
dent, vice president or treasurer.
ASSIG NM ENT OP W A G E S .

Receipt by us of notice of assignment of wages will cause the individual concerned
to lose at least one-third of his profits for the year.
TIME OF DISTRIBUTION.

The profit-sharing dividend will be paid March 1,1915, or at our earliest convenience
thereafter.

The specific proportion of the net profits of the business to be
distributed among the employees under this plan is fixed one year
in advance, and although this proportion is unknown to the rank
and file of the profit sharers, it is communicated to the accounting
staff of the establishment. Since the introduction of the plan the
relative proportion of profits to be distributed was increased three
times. These increases were due wholly to the fact that gradually
the plan was extended to include employees who did not benefit
under it as originally constituted. In 1904 the foremen and super­
intendents of the factory were brought under the plan; in 1910, the
general, clerical, and commercial forces of the home office of the
company; and, finally, in 1913, the general, clerical, and commercial
employees of the branch office of the firm. Increases in the propor­
tion of net profits to be distributed were in accordance with the
relative proportional increases in the number participating and in the
aggregate of the participating pay roll, due to the extension of the
plan.
A few points of this plan, it is thought, need somewhat further
elaboration: The preliminary list referred to in the text of the plan
is made up one year in advance, for instance, for 1914 it is made up
on January 1, 1914. On it are listed all employees who have been
continuously in the service of the company for one year prior thereto.
From this list an estimate is made of the probable total earnings
of the prospective profit sharers for the coming year. This estimate
is arrived at by multiplying earnings of the participating employees
for one normal week by 52. The object of this estimated pay roll
is to determine in advance whether an adjustment in the propor­
tion of profits to be distributed should be made, it being the idea of the
management that the individual shares of profits of the older employ­
ees ought not to be decreased on account of the extension of the
plan to a larger number of the working force. By comparing the
preliminary or estimated pay roll with the profits of the past year
1Not in rules of previous years. Suggested by committee of factory employees.




P R O F IT S H A R IN G IN T H E U N IT E D STATES.

29

the management is able to determine one year in advance what it
should fix as the proportion of the profits to be distributed during
the coming year.
Fourteen months after the preliminary pay roll is made up the
final list of participating employees is compiled. At the same time
the actual earnings of the employees on the final list are computed.
The aggregate of the earnings of the employees on this list is known
as the actual pay roll and serves as a basis for the distribution of the
year’s profits.
The number of employees on the final list and the size of the actual
pay roll, as compared with the preliminary list and the estimated
pay roll, are considerably smaller, inasmuch as during the intervening
year some of the employees leave or are discharged. The difference
between the estimated pay roll and the actual pay roll is thus due
largely to (1) differences in the amount of production, (2) differences
in rates of wages and in number employed during the two years.
The per cent of wages to be paid as profits is then determijied by
dividing the amount of profits available for distribution by the actual
or participating pay roll, the share of each individual then being
computed by multiplying the earnings (earnings for overtime work
included) by this percentage or dividend.
Conditions of participation as well as of forfeiture of shares in
- profits by employees are carefully formulated and described, all
employees being informed of the exact nature of these conditions one
year in advance.
This plan seems to contain relatively little of what might be termed
arbitrariness; the rules governing its administration are framed with
the assistance of a committee of employees selected by themselves
annually. No changes are made in the plan without consultation
with and approval by this committee.
Employees under the plan may secure leave of absence from the
company. Such leave of absence does not disqualify them from fur­
ther participation, provided they register with the company before
leaving.
As stated above, one year in advance of the actual distribu­
tion of profits a preliminary list of profit-sharing employees is
made up. This list is revised one year afterwards to eliminate
those of the employees on the preliminary roll who for some reason
or other have forfeited their shares, by either leave or discharge.
The table following shows the differences in the aggregate pay-roll
amounts and in the number of participants on the preliminary and
actual or participating rolls, as compared with the entire pay roll
of the establishment and total employed on the distribution date.




30

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

1 0 .—NUM BER AND PER CENT OF EM PLOYEES ON TH E P R E L IM IN A R Y R O LL
AND ON TH E PAR TICIPATING R O LL AN D AM OUNT OF SUCH ROLLS COMPARED W IT H
T O TA L P A Y R O LL , B Y Y E A R S , 1901 TO 1914.

T a b le

Employees Employees
on prelimi- on partici­
naryroll. pating roll.
Total
'em­
ploy­
ees.

Year.

Preliminary
pay roll.

Participating
pay roll.

Per
Per Total pay
Per
Per
cent
cent.
roll.
cent
cent
of
of
of
of
Num­ total Num­ total
Amount.
ber.
total Amount. total
ber.
em­
em­
pay
ploy­
ploy­
roll.
ro I
P
ees.
ees.

1901............................................
1902............................................
1903............................................
1 904./........................................
1905............................................
1906............................................
1907s...........................................
1908............................................
1909............................................
1910............................................
1911............................................
1912............................................
1913............................................
1914________________________

158
169
218
227
288
371
313
222
341
425
387
428
567
456

67
91
97
103
128
141
168
134
165
172
194
178
229
278

42.4
53.8
44.5
45.4
44.4
38.0
53.7
60.4
48.4
40.5
50.1
41.5
40.4
61.0

52
71
71
78
101
116
98
116
139
139
152
156
184
225

32.9
42.0
32.6
34.4
35.1
31.3
31.3
52.3
40.8
32.7
39.3
36.4
32.5
49.3

$68,304
82,718
103,489
101,573
133,379
164,872
138,602
115,329
152,791
198,090
182,018
218,391
309,346
263,371

$36,500
47,600
50,180
56,030
68,796
78,411
93,023
79,230
92,074
100,420
114,504
113,880
159,160
198,960

53.4
57.5
48.5
55.2
51.6
47.6
67.1
68.7
60.3
50.7
62.9
52.1
51.5
75.6

Average..........................

326

153

46.9

121

37.2

159,448

92,055

57.7

$27,299
40.0
38,031
46.0
39,638
38.3
40,730
40.1
43.2
57,606
66,595 • 40.4
41.2
57,036
64,222
55.7
78,018
51.1
41.1
81,386
88,477
48.6
44.2
96,456
137,730
44.5
62.4
164,360
74,113

46.5

For the period covered by the figures shown in the preceding
table, representing the entire life of the plan, the average proportions
of the total employed and of the total pay roll that appeared on the
preliminary profit-sharing roll were 46.9 per cent and 57.7 per cent,
respectively. By postponing the actual participation date one year,
the above-given proportions were reduced, on the average, about
one-fifth, to 37.2 per cent and 46.5 per cent, respectively. The table
shows that at no time during the existence of the plan did the pro­
portion of the total employed that participated in the distributed
profits exceed 52.3 per cent. The average proportion that partici­
pated during the entire period was slightly above one-third of all
employed, namely, 37.2 per cent.
Since the introduction of the plan in 1901, the following profitsharing dividends on the earnings of the participants were paid:
T a b le

1 1 .— PER CENT OF EARNINGS OF PARTICIPANTS PAID AS PROFIT-SHARING
DIVIDENDS, B Y Y E A R S , 1901 TO 1915.




Year.

1901.........
1902
1903.
1904
1905.

Dividend
(per cent
of earn­
ings).
11.4
14.9
12.3
7.4
12.7

Year.

1 9 0 6 ....
1 9 0 7 ....
1 9 0 8 ....
1 9 0 9 ....
1 9 1 0 ....

Dividend
(per cent
of earn­
ings).
18.5
18.2
9.8
9.5
10.5

Year.

1 9 1 1 ....
1 9 1 2 ....
1 9 1 3 ....
1 9 1 4 ....
1 9 1 5 ....

Dividend
(per cent
of earn­
ings).
9.3
11.4
13.6
10.2
8.3

P R O F IT S H A R IN G IN T H E U N IT E D ST/lTES.

31

The highest dividend paid under the plan since its inception in
1901 was 18.5 per cent, in 1906; the lowest, 7.4 per cent, in 1904.
The average dividend during the entire period was about 12 per
cent.
The profit-sharing plan of this company was copied and, with a
very few modifications, put into operation in 1915 in the establish­
ment of th e --------- Co., with the following res.ults of the first year's
operation of the plan:
(1) Proportion participating—per cent of total employed, 54.5;
(2) pay roll of participating employees—per cent of total pay roll,
72.5; (3) amount distributed—per cent of total pay roll, 3.6; (4)
amount distributed—per cent of pay roll of participating employees, 5.
PLAN NO. 2.

The distinguishing features of the plan designated as No. 2 are:
(1) The participation of representatives of the employees in the admin­
istration of the plan, as shown in provisions 5 and 6 of the text given
below, and (2) the privilege granted to employees to verify the profit
accounts of the company through the naming by them of an account­
ant, the expense of the hiring of which is to be borne jointly by the
management and the employees, as shown in provision 4 of the plan.
The plan was put into operation in 1*914. As a result of its work­
ings during the following year a profit-sharing dividend of 1 per cent
of the earnings of the participants, 84.9 per cent of all employed,
was declared.
The text of this plan is herewith reproduced fully:
We, the stockholders of th e --------------- Co., hereby offer and propose:
1. That after paying all salaries and wages as heretofore and paying all stockholders
7 per cent annually on book value of the stock of th e ---------Co., and after creating
a sinking fund equal to 5 per cent of our outstanding preferred stock annually (as per
our constitution and by-laws), and after taking off a reasonable amount for wear and
tear on buildings and machinery, said amount not to be in excess of 5 per cent of the
book value of same, we will then take the profits of the said---------Co. and its branches
and divide between the stockholders and the employees of said company according
to the ratio that the total pay roll bears to the total capital invested. So that an indi­
vidual employee earning $1,000 a year would share equally with the stockholder
whose stock has a book value of $1,000.
2. These profits are to be paid to the employees of said corporation annually, only
those employees participating who shall have put in at least nine months of service
during the 12 months just previous to the end of the fiscal year.
3. The share of the profits that would accrue to the transient labor shall be used
for shop betterment, and if found necessary both the employees and the stockholders
will be expected to contribute their share for additional shop betterment from time
to time. But no more than 10 per cent of said profits shall be employed in additional
shop betterment in any one year.
4. It is understood that the employees are to have the sole naming and employing
of a chartered accountant to ascertain the actual profits from year to year. The ex-




32

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

pense of said accountant to be paid (from profits) before a division is made. In case
that for any reason there are no profits to divide, the report of the above-mentioned
accountant shall be to the effect that there will be no profits this year for division.
5. The employees of sa id --------- Co. shall elect a committee of three from each
of the following departments to act as a general committee representing the em­
ployees:
(a) From the mattress-making department and feather room; ( b ) from the tickmaking department; (c) from the office and shipping department; (d) from the ironbed department and machine shop; (e ) from the first floor woodworking, couch-mak­
ing, and spring-bed department other than the Way Sagless; ( / ) from the Way Sagless
department; (g ) from the brass-bed department; (h) from the traveling men and
branch managers.
6. No foreman is eligible to a place on this committee, but the foremen will be
invited in by the management at all conferences. Committees for safety and shop
betterment will be selected from time to time to cooperate with the general committee.
PLAN NO. 3.

Plan No. 3 contains a peculiar provision for the determination of the
individual shares in the divisible profits, the method of determining
such shares being rather arbitrary, at the discretion of the employer,
there appearing no rules formulated in advance as to how the indi­
vidual shares will be computed.
Under this plan, the employees selected to participate are given
profit-sharing certificates stipulating the total number of shares out
of the distributable net profits (the divisible fund consisting of 3,000
shares) to which they are entitled. In April of each year a general
account of the profits of the business is made and out of the net earn­
ings, after deducting the usual depreciation, dividend, and interest
charges, at least one-fourth is set aside for distribution among profitsharing employees in such proportions as their respective holdings
bear to the total number of shares issued. Those holding certificates
less than a year receive a share in the profits proportionate to the
length of time they have held their certificates.
Certificates must be surrendered and all benefits cease upon the
death of the employee or upon his leaving the service of the com­
pany, whether he leaves voluntarily or is discharged, even without
justifiable cause, or upon the withdrawal of the certificate from him
by the company without the holder ceasing to be an employee. A
share of the profits proportionate to the part of the year during which
the certificate has been held is given, however, in the event of the
death of a shareholder, to his personal representative; or to the
employee upon terminating the employment by discharge not for
justifiable cause, or upon withdrawal of a certificate by the company.
The results of the operation of the plan in 1914 were as follows:
Per cent of total employed participating, 66.8; profit-sharing divi­
dend on the regular earnings of the employees, 14 per cent; cost of
the plan to the employer in terms of the entire pay roll of the estab­
lishment, 11.7 per cent.




P R O F IT S H A R IN G IN

T H E U N IT E D STATES.

33

The following is the original text of this plan in full:
First. The company agrees, during the continuance of this agreement, to set apart
for division among its employees an amount equal to not less than one-quarter of the
net profits of said business; such profits to be determined as hereinafter provided.
The amount assigned for distribution is hereinafter called the distributable profits.
Second. The rights to the distributable profits as determined by the company shall
be divided into three thousand (3,000) or more shares to be issued from time to time,
each share entitling the person who at the close of the profit year is the owner thereof
to that proportion of the distributable profits which one bears to the total number of
shares issued; and in case such share has at the close of the profit year been held less
than a year, to that proportion of one share of such distributable profits which the part
of the year subsequent to the date of the issue of the certificate to him bears to a full
year.
Third. The distribution of the profit shares shall be made by the company to the
employees in such proportions as the company deems advisable. The number of profit
shares to be issued may be increased from time to time as the company may deem
advisable. The company may at any time in its discretion withdraw profit shares
from any holder thereof, even though he remains an employee.
Fourth. Every employee entitled to profit shares shall receive a certificate specify­
ing the number of shares to which he is entitled.
Fifth. Every owher of one or more shares provided for in article second shall have
by virtue thereof the following rights and none others, and be subject to the following
obligations:
1. The owner of each share on the first day of the profit year (which shall begin some
day in April) shall upon the distribution of profits hereunder for the profit year ending
the day preceding, receive that proportion of the distributable profits as specified
which one bears to the total number of profit shares issued; or,-if he has then held the
share for less than one year, that fractional part of such distributable profits incident to
one share which is proportionate to the part of the year subsequent to the date of issue
2. Every shareholder shall be bound to accept the determination of the distribu­
table profits made by the company as final and conclusive, and shall have no right to
an accounting or to recovery of any profits except such as the company shall determine
to be the profits distributable to him.
3. The ownership of each share shall cease upon the death of the owner or upon his
otherwise actually ceasing for any cause to be in the employ of the company, whether
such owner has voluntarily left the employ or has been discharged, even without justi­
fiable cause; or upon the withdrawal of the share from him by the company without
the holder ceasing to be an employee: But upon the death of a shareholder his per­
sonal representative, and upon termination of employment by discharge not for justi­
fiable cause, or upon such withdrawal of the share by the company, the employee
shall be entitled at the next distribution of profits to receive for each share represented
by such certificate the part of the distributable profits incident to one share as deter­
mined for the profit year-current at the termination of his ownership proportionate to
the part of such year during which such employee held such share. Upon termination
of employment otherwise than by death or discharge not for justifiable cause, the em­
ployee shall not be entitled to any part of the profits for the then current profit year,
but may be given such part, if any, as the company thinks fit.
4. Each owner of a share and the personal representative of each deceased share­
holder shall upon the termination of his ownership at once surrender his certificate
to the company.
5. No share shall be transferable by the owner. •
6. The right of a shareholder to receive profits shall not be assignable, and no pay­
ment shall be made in accordance with any assignment or order by way of anticipation;
56831°—Bull. 208—17------3




34

B U L L E T IN OP T H E B U REA U OP LABOR STATISTICS.

nor shall any profits be payable for any year unless the profit-sharing certificate is pre­
sented to the company with request for such payment, not later than three months after
the profits are payable, unless otherwise directed by the company.
Sixth. All shares issued to employees shall upon the termination of ownership as
above provided revert to the company and shall thereafter be treated as unissued
shares, subject to reissue by the company from time to time.
Seventh. For the purpose of this agreement a general account of the profits of
the business shall be made up each year as of some day in April. The profits of the
company, of which at least one-quarter is to be set apart for the employees, shall
be taken to be the net earnings of the company ascertained in the customary manner,
and after deducting also the customary depreciation charge, the dividend paid on the
preferred stock, and the interest on outstanding scrip.
Eighth. The company reserves among other things the full right to make such modi­
fication in the salaries of employees as it sees fit, not inconsistent with the by-laws,
and to increase or diminish the number of employees.
Ninth. All property and assets employed or to be employed in the business shall
remain the sole and exclusive property of the company, and it shall have full authority
and entire control in all matters relating to the business.
Tenth. The company shall have the right to make from time to time such modifi­
cation in the terms of this plan and agreement as it shall deem fit, and may at any time
terminate the agreement and all right to share in the profits. If notice to terminate
is given in any year before July 1, it shall operate as of the commencement of the profit
year. If such notice is given after July 1 it shall take effect at the close of the then
current year.
Eleventh. The rights herein reserved to said company shall inure to and be exer­
cisable by its successors and assigns.
PLAN NO. 4.

Plan No. 4 has been in operation several years and is interesting
chiefly because of the method used in apportioning the divisible
fund to the various groups of the participating employees. Under
this plan 52 per cent of the net profits of the business over and
above what is assumed to be a moderate return on the investment
becomes available for distribution. Over four-fifths of this fund,
however, goes to the executive employees— 13 in number and about
6 per cent of all employed— the remaining one-fifth being distributed
among the rank and file of the working organization. The result
of this method of distribution has been that while profit-sharing
dividends on regular earnings averaged about 100 per cent for the
executive group, these dividends averaged only about 5 per cent for the
rank and file of the employees.
Originally the plan applied only to head workmen and a few of the
higher executives. In 1892 the plan was extended to cover the
clerical employees of the company, and shortly after the productive
force was brought under it.
At the present time the company, after paying all the legitimate
expenses of the undertaking, including 6 per cent on the capital
invested, distributes the remaining net profits as follows:
1.
Of the remaining net profits 42J per cent is paid to a group of
executive employees numbering 13, the specific proportion assigned




P R O F IT S H A R IN G IN T H E U N IT E D STATES.

35

to each member of this group depending entirely upon the relative
importance of his or her position. Of the 13 employees mentioned,
seven receive 5 per cent each; one, 2 per cent; two, If per cent each;
and three, two-thirds of 1 per cent each of the divisible profits.
2. Ten per cent is divided among the entire working organization,
exclusive of the employees above described, the basis of the distribu­
tion being the annual earnings of each one of them.
3. The remaining 47§ per cent is paid in extra dividends to the
stockholders of the company.
The employees referred to in the first group are chiefly heads and
assistant heads of departments and technical men who are selected
for participation because of the importance and responsibility of the
positions they hold, and because it is thought that upon their indi­
vidual efforts, more than any other factor, depend the profits of the
concern.
All salaried employees become eligible to share in the profits one
year after entering the employ of the firm. All other employees
must be in the service of the company at least two years before
becoming eligible for participation.
The table given below shows the aggregate salaries and shares of
profit of the executive employees and of employees other than
executive, by years, since 1905.
T a ble 1 2 .—

EARNING S AN D SHARES OF PROFITS OF E X E C U T IV E EM PLO YEES A N D
OF O TH ER EM PLO YEES, B Y Y E A R S , 1905 TO 1915.

Executive employees.

Employees other than
executive.

Profit-sharing
dividend.

Year.
Salaries.

Profit-sharing
dividend.
Wages.

Amount.

1905......................................................................
1906......................................................................
1907 ....................................................................
1908 ....................................................................
1909......................................................................
1910....................................................................
1911......................................................................
1912....................................................................
1913......................................................................
1914......................................................................
1915________ ______________________________
Averace

Per cent
of
salaries.

$20,700
19,200
21,000
19,350
15,900
16.500
16.500
20,100
20,100
22,500
33,300

$17,423
17,668
3,835
14,965
13,420
12,063
7,875
32,510
20,721
36,931
58,830

84.2
92.0
18.3
77.3
84.4
73.1
47.7
161.7
103.1
164.1
176.7

$94,300
104,800
105,000
114,600
116.500
120.500
121,500
124,900
139,900
150,500
156,700

$4,839
5,197
1,096
4,534
5,367
4,159
2,715
10,487
6,682
10,251
13,681

5.1
5.0
1.0
4.0
4.6
3.5
2.2
8.4
4.8
6.8
8.7

20,468

21,476

104.9

122,655

6,273

5.1

Amount.

Per cent
of
wages.

The average profit-sharing dividend for the executive employees
for the last 11 years of the operation of the plan was 104.9 per cent
of the average amount paid as salaries; i. e., they received more in
profits than in salaries, the dividends of individual years varying
considerably, from 18.3 per cent of the salaries in 1907, to 176.7 per
cent in 1915.




36

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

The average profit-sharing dividend of employees other than
executive for the years 1905 to 1915 was 5.1 per cent of the wages
received, the dividends of specific years varying from 1 per cent of
the wages in 1907 to 8.7 per cent in 1915.
The relative numerical strength of the two groups of participants
is shown in the following table, by years:
T able 1 3 .—N UM BER AND PER CENT OF EM PLOYEES PARTICIPATING IN PROFIT
SHARING, AND NU M BER AND PER CENT OF PARTICIPANTS BELONGING TO EACH
SPECIFIED CLASS, B Y Y E A R S , 1905 TO 1915.
Employees participating in profits.

Total
employ­
ees.

Year.

Executive employ­
ees.

Employees other
than executive.

Total.

Number.

Per cent
of total
partici­
pating.

Number.

Per cent
of total
partici­
pating.

Number.

Per cent
of total
employ­
ees.

1905...................................................
1906...................................................
1907..................................................
1908...................................................
1909...................................................
1910...................................................
1911...................................................
1912..................................................
1913...................................................
1914.......... , ......................................
1915........................... ......................

182
190
202
210
215
200
201
236
240
% 245
255

9
9
10
10
8
8
8
10
10
11
13

7.3
7.0
7.9
7.0
5.2
5.6
5.8
6.6
6.7
7.0
6.8

114
119
116
133
145
134
131
142
140
147
178

92.7
93.0
92.1
93.0
94.8
94.4
94.2
93.4
93.3
93.0
93.2

123
128
126
143
153
142
139
152
150
158
191

67.6
67.4
62.4
68.1
71.2
71.0
69.2
64.4
62.5
04.5
74.9

Average................................

216

10

6.6

136

93.4

146

67.6

Since 1905 the ratio of participating executives to participants in
all other occupations was, on the average, 6.6 to 93.4, the annual
variations presenting no violent fluctuations from the stated mean.
During this period an average of 67.6 per cent of all employees par­
ticipated in the profit sharing.
The following table shows how the divisible fund has been appor­
tioned among the two groups of participants since 1905, by years:
T able 14=.—AMOUNT AND PER CENT OF TO TAL PROFIT-SHARING FUND RECEIVED B Y
EACH CLASS OF EM PLOYEES, B Y Y E A R S , 1905 TO 1915.

Year.

Total
fund.

Received by execu­
tive employees.

Received by all
other employees.

Amount. Per cent. Amount. Per cent.
1905.........................................................................................
1906.........................................................................................
1907.........................................................................................
1908.........................................................................................
1909.........................................................................................
1910.........................................................................................
1911.........................................................................................
1912.........................................................................................
1913.........................................................................................
1914.........................................................................................
1915.........................................................................................

$22,262
22,865
4,931
19,499
18,787
16,222
10,590
42,997
27,403
47,182
72,511

$17,423
17,668
3,835
14,965
13,420
12,063
7,875
32,510
20,721
36,931
58,830

78.3
77.3
77.8
76.7
71.4
74.4
74.4
75.6
75.6
78.3
81.1

Average......................................................................

27,750

21,476

77.4




$4,839
5,197
1,096
4,534
5,367
4,159
2,715
10,487
6,682
10,251
13,681
6,273 |

21.7
22.7
22.2
23.3
28.6
25.6
25.6
24.4
24.4
21.7
18.9
22.6

PR O F IT S H A R IN G IN T H E U N IT E D STATES.

37

The annual divisible profits for a period of 11 years were appor­
tioned among the two principal groups of participants—executives
and “ all others” —on the average in the ratio of 77.4 to 22.6.
The results of the working of the plan as a whole for a period of 11
years may briefly be summarized as follows: The executive group of
employees—on the average 6.6 per cent of all participating, received
over three-fourths of the entire divisible fund, while all other profit
sharers, numbering over 90 per cent of the total force, received, on
an average, slightly less than one-fourth of the fund, the so-called
profit-sharing dividends on annual earnings of the respective groups
having been 104.9 per cent and 5.1 per cent, respectively.
PLAN NO. 5.

Under plan No. 5 all the net profits of the business over and above
a 6 per cent return on the capital invested is distributed between the
participating employees and the firm on the basis of the earnings of
the employees and the interest on the capital invested. The object of
the plan, however, is not to augment the current earnings of the em­
ployees, but rather to create for the participating employees an
annuity to become available at the time when their productive powers
begin to decline.
This company was organized in 1873, but the subject of profit
sharing, although under discussion for some years, was not formally
brought to the attention of the stockholders until their annual meet­
ing of January 31, 18— , when the matter was discussed and a special
committee of three appointed to draw up such a plan for consideration
at the next meeting of the stockholders, to be held one week later,
February 7, .18— . The appointed committee on profit sharing then
submitted a plan which was, after considerable discussion, adopted by
a vote of 653 to 321. At this meeting it was also unanimously decided
to pay each man who had been in the company’s employ during the
previous year, in cash, 10 per cent of his annual earnings for the year.
On February 24, 18— , there was held a special meeting of the stock­
holders at which it was voted to increase the capital stock of the com­
pany to $300,000, $200,000 of which was to be known as preferred
and fully paid up, and $100,000 as common stock to be issued on a
profit-sharing plan to capital and labor. At the beginning of each year
an inventory was to be taken showing all assets and liabilities, and the
net amount by which the assets exceeded the liabilities was to be con­
sidered the net gain or profit of the business for the preceding year.
Ten per cent of this net profit was to be set aside as a sinking fund,
and the remainder to be divided, the individual shares of the employees
to be paid 15 per cent in cash and 85 per cent in the common stock of
the company, only those of the employees to participate in the profits
who were in the company’s employ for at least two years. This plan




38

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

was unanimously adopted and constitutes the first real profit-sharing
plan adopted by the company, the mentioned distribution of 10 per
cent on the earnings of the preceding year having had no direct
relation to the profits of the business.
No changes of any significance were made in this plan until 1904
when the relative proportions of each share of an employee’s profits
to be paid in cash and stock were changed from 15 and 85 to 10 and
90, respectively.
In 1910 the plan was again revised, the new amendments prohibit­
ing employees from disposing of their profit-sharing stock to outsiders
before offering it to the company on conditions stipulated in
paragraphs 26 to 40 of the plan reproduced below.
The provision of the so-called purchase contract prohibiting the
sale of profit-sharing stock to outsiders was due chiefly to the fact that
some of the employees were in the habit of selling their stock far
below its real value, a fact resulting, it was said, in (1) outsiders get­
ting hold of stock of the company in which they had only a speculative
interest— a very undesirable fact from the point of view of the man­
agement, and (2) great benefits to these outsider^ because the stock,
intrinsically, was worth more than the amount sold for by the em­
ployees. Outsiders thus “ were getting profits that they did not
help to make.” By prohibiting such sales the company prevented
stock of the company from falling into hands of “ absentee owners”
and appropriated for the benefit of the organization profits that
would otherwise have gone to outsiders.
The following is a brief summary of the principal features of this
plan:
“ Partial” wages are paid to factory employees weekly and to the
office staff monthly; the “ remaining” wages are paid to “ honorary”
employees in the manner outlined below. 1 Honorary ’1employees are
i
those who have been continuously in the employ of the company for
4,500 hours (2 years), and who have contractually agreed to deposit
with the company all stock they may receive as remaining” wages.
“ Partial” wages are here understood to be the customary wages paid
to the same kind of labor in similar establishments; the “ remaining”
wages, which seem to be regarded by the firm as being in the nature
of deferred wages, are to be considered the share in profits.
To determine the profits and the “ remaining” wages of the year,
an inventory is taken on January first of each year, of all assets,
excluding accrued interest, and all liabilities, including stock-purchas­
ing fund 1 and sinking fund, and the face value of stock outstanding.
In case of a loss it is to be drawn from the sinking fund. Profits are
to be distributed in the following manner:
1 The money set aside for the stock-purchasing fund is only temporarily withheld from being paid in
remaining wa^es and extra preferred dividends. Whatever is taken from the purchasing fund to buy
stock Is distributed at the end of the year in remaining wages and extra preferred dividends.




P R O F IT SH A R IN G IN

T H E U N IT E D STATES.

39

(1) A dividend of 5 per cent, payable in advance out of the sinking
fund, is received by the preferred stockholders; thus the first charge
is used to recoup the sums taken out of the sinking fund for dividends
on preferred stock.
(2) Five per cent dividend is then to be paid on the common stock.
(3) Five dollars are paid into the stock-purchasing fund for every
share of stock on deposit with the company.
(4) Ten per cent of the amount then remaining is paid into the
sinking fund.
(5) The other 90 per cent is paid to the preferred stockholders as
an extra dividend and to the “ honorary” employees as remaining
wages, the amounts paid to each individual being in proportion to
his dividends or his “ partial” wages, as the case may be. Ninetenths of such extra dividends or “ remaining” wages is paid in com­
mon stock, the remaining one-tenth in cash, on December 1 following.
If, in any year, the amount of the extra preferred dividends and
“ remaining” wages is greater than the regular 5 per cent preferred
dividend and the “ partial” wages, such surplus goes to the stockpurchasing fund.
An employee ceases to be an “ honorary” employee and thereby
relinquishes his claims upon “ remaining” wages if he sells his stock
or draws it out of deposit, leaves the employ of the company, or is
discharged, or is absent for a week or more without leave. He also
forfeits the cash part of his bonus if he leaves the service of the com­
pany or is discharged before October 1. If an employee is engaged by
a competitor or works for himself or for others for five years, his stock
may be purchased by the company without his consent.
After 25 years of service employees may retire; such employees
may retain their shares as long as they are on the retired list and
continue to receive the sum of $5 per share annually, in addition to
dividends, toward the purchase of the same. Payments are made out
of the stock-purchasing fund and must not exceed 15 in number.
Only active employees may deposit their stock with the company
under the purchase contract. Employees permanently injured or
contracting a fatal illness may not deposit their stock after such
injury or after the beginning of such illness.
The profit-sharing plan as outlined above applies only to em­
ployees working in the main factory at ----------------, and does not
include salesmen or employees away from the main plant. A similar
but less liberal form of profit sharing is practiced at the branch
houses of the firm.
Herewith is reproduced in full the text of this plan:
(1)
Resolved , That the preferred stock be paid a 5 per cent annual dividend quar­
terly in advance on the 1st day of January, April, July, and October, the same to be
taken from the sinking fund.




40

B U L L E T IN OP T H E B U REA U OP LABOR ST ATISTICS.

(2) That the employees of the factory proper be paid partial wages weekly and
office employees partial wages at the end of each month, which shall be full com­
pensation for their services until they are entitled to remaining wages (see pars. 9,
20, 21, and 22); the remaining wages of the honorary employees to be fixed at the
end of each year after the results of the year are known.
(3) To determine the remaining wages an inventory shall be taken January 1 of
each year of all assets, excluding accrued interest, and all liabilities, including stockpurchasing fund (see pars. 7, 10, 11, 12, 32, and 34) and sinking fund (see par. 8) and
the face value of stock outstanding without deducting the indorsements on stock on
deposit.
(4) In case the liabilities exceed the assets, the loss shall be drawn from the sinking
fund; but if the assets are greater than the liabilities the excess shall be used as follows:
(5) 1. To replace the amounts taken from the sinking fund during the year for
preferred stock dividends. (See par. 1.)
(6) 2. To pay a 5 per cent annual dividend on common stock; the same to be paid
quarterly on the 1st day of March, June, September, and December.
(7) 3. To pay into a stock-purchasing fund $5 for every share of stock on deposit
with the company January 1, subject to the purchasing contract. (See par. 26.)
(8) 4. Ten per cent of the amount yet remaining shall be added to the sinking
fund. Nothing shall be drawn from the sinking fund except to pay preferred stock
dividends and losses in a year’s business.
(9) 5. The other 90 per cent shall be paid to the preferred stockholders as an extra
dividend, and to the honorary employees of the company December 31 (see pars.
20, 21, and 22) as remaining wages; the amounts going to the several individuals to be
proportional to their 5 per cent dividend on their preferred stock and their wages as
honorary employees at their partial hourly wage rates. Nine-tenths of the -total amount
paid as extra preferred dividend and remaining wages shall be paid in common stock,
figured at par as soon as possible after the inventory is completed and the other onetenth shall be paid in cash on December 1. (See par. 24.)
(10) In no year shall the amount paid in extra preferred dividends and in remaining
wages exceed the partial hourly wages and the regular 5 per cent preferred dividends.
If the amount to be paid should be greater, the excess shall be added to the stockpurchasing fund.
(11) The stock-purchasing fund shall be increased by the amount each purchase of
stock by the company is less than par. •
(12) The stock-purchasing fund in excess of five times the last annual indorsement
on retired employees’ stock (see par. 32) may be used to purchase stock on deposit.
(See par. 34.)
(13) The stock-purchasing fund shall not be used for other purposes than described
in paragraphs 12, 32, and 34.
(14) No stock certificates shall be issued for less than $100. The fractional amounts
due in stock, which can not be issued in full shares, shall be known as stubs and com­
bined into whole shares and sold at the annual meeting to the employees, owners of
preferred stock, and the company.
(15) The number of shares so sold shall be the sum of the stubs divided by 100, less
the decimal.
(16) Each bid shall be in writing and give the name of the bidder, the number of
shares he will purchase, and the price he will pay per share.
(17) The highest bidder shall be awarded the number of shares he has bid for; the
next highest bidder his, and so on, until all the shares are disposed of. Should there
not be sufficient bids to take all the stock, then more bids shall be asked for and the
directors may instruct the secretary then to put in a bid for the company. The bidding
shall continue until all the shares are sold.




PR O F IT S H A R IN G IN T H E U N IT E D STATES.

41

(18) The proceeds of the sale shall belong to the company and they shall pay the
Btub owners such a per cent of the face of their stub as the total amount received for
the stub shares bears to the total face value of the stub shares sold.
(19) On March 1 the stub shares shall be issued and payment for them received by
the company and amounts due the owners on stubs paid.
(20) Any person who has been continuously in the employ of the company at the
factory for 4,500 hours and has contracted to place on deposit with the company sub­
ject to the purchase contract (see par. 26) all stock he may receive as remaining
wages shall thereupon become an honorary employee.
(21) Any person shall be deemed to have quit the employ of the company who has
absented himself from his work for one week or more, without first obtaining leave of
absence from the superintendent.
(22) Any person who shall sell any of his stock or draw it out of deposit (see par. 35),
who quits the employ of the company or who has been discharged ceases to be an
honorary employee and is not entitled to remaining wages for that year unless rein­
stated by a vote of the directors.
(23) The fixing of all partial wages and salaries, and the hiring and discharging of
employees shall be done by the general manager, superintendent, or such other officer
as the company may designate.
(24) Any person who shall quit the services of the company or be discharged prior
to October 1 in any year shall forfeit the cash due him on December 1 for remaining
wages. (See par. 9.) This does not apply to persons going onto the retired list.
(25) Any employee whether at the factory i n ---------------or elsewhere may deposit
his stock with the company and receive the benefits resulting from so doing by signing
the following contract:
PURCHASE CONTRACT.

(26) Contract between t h e ---------Co. o f ---------- , hereafter designated as the com­
pany and---------o f ----------, hereafter designated as the owner.
(27) This certifies that the owner has deposited with the com pany------shares of
th e ---------Co.’s common stock herewith attached under the following conditions:
(28) The owner agrees that when he sells this stock, he will sell to the company at
the market price less all indorsements 1 made on it.
(29) The market price shall be determined by the directors by adding together the
amounts received for the last 100 shares of the stock sold for cash, the price of which is
definitely known, and dividing b y 100.
(30) The owner agrees that the company may, by vote of the directors, purchase
this stock without his consent at the market price when he enters the employ of a
competitor or has engaged actively in work for himself or for others for five years.
(See par. 39.)
(31) If the owner works for the company until he retires and does not again actively
engage in work for himself or for others, then the company may not purchase the
stock without the owner’s consent so long as he lives.
(32) In consideration of placing this stock on deposit under contract to sell, the
company agrees to pay March 1 of each year from the stock-purchasing fund (see pars.
7, 10, 11, 12) to the owner, after he is retired and so long as the owner’s name con­
tinues on the retired list, $5 per share toward the purchase of the same, but the com­
pany will not make more than fifteen payments or a total of $75 per share.
(33) In case the stock-purchasing fund is not sufficient to indorse $5 on every share
entitled to the indorsements, the directors shall decide what shares shall be skipped.
(34) The* company agrees to purchase this stock whenever the owner requests it at
the market price, less the indorsements if the market price is not above par, and if
they have money in the stock-purchasing fund to purchase W'th.
i B y “ indorsement/' as stated in par. 28 of the plan, is meant the $5 per share mentioned in par. 32.




42

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

(35) In case the owner makes a written request to the treasurer for the company to
purchase this stock and the company does not purchase in thirty days, then the owner
may take the stock out of deposit by paying back to the company the indorsements
and $5 per share.
(36) If the market price at the time this stock is sold is less than the indorsements,
it shall not be necessary for the owner to refund anything to the company.
(37) The fact that indorsements have been made on the stock, even the full amount
of $75, shall not prevent the owner from drawing his full common-stock dividends nor
voting his shares.
(38) When the owner has worked for the company 25 years, he may retire and his
name shall be placed on the retired list and can not be removed so long as he does not
again engage actively in work.
,
(39) This matter of again engaging actively in work is to be decided by the directors
on the merits of the case. In general, a man who earns annually less than one-half
the living expenses of himself and those dependent on him shall not be considered
engaging actively in work.
(40) Persons who have been in the employ of the company 20 years, persons 60
years old, and persons who have been injured at the company’s work to such an
extent that they can no longer earn a living may be retired and their name placed on
the retired list by the directors.
EX PL AN AT IO N .

As an example of what the new resolution will do for employees, suppose a man begins
to work when he is 28 and gets his first stock when he is 30 years old. If for 25 years he
receives an average of three shares of stock a year he will when he is 55 have $7,500
of stock. If he then retires his income from the dividends on the stock will be $375 a
year and from the $5 a share indorsements it will also be $375 a year or a total of $750 a
year. This will continue for 15 years or until he is 70 years old, when the indorsements
will cease but the $375 dividends will continue as long as he lives.
The money set aside for the stock-purchasing fund is only temporarily withheld
from being paid in remaining wages and extra preferred 'dividends. Whatever is
taken from the purchasing fund to buy stock is divided up at the end of the year in
remaining wages and extra preferred dividends.
The interest on the $5 indorsements, from the time they are made until the stock
on which they are made is bought is a drain on the annual division, but it is proba­
ble the profit in purchasing stock below par will offset this several times.
It is not expected that the purchase fund will be more than sufficient to pay the
indorsements on retired employees’ stock and to purchase stock thrown on the market
through death and broken health. Stock thrown on the market by able-bodied men
quitting, panicky times, and bad years in our business, will have to be purchased
with the company’s other resources, withdrawn from deposit and sold outside, or
remain unsold. When there is stock waiting to be purchased and the purchase fund
is not sufficient to purchase all of it, then naturally the stock with the most indorse­
ments would be purchased first.
After bad years in our business and in panicky times probably much stock will
be on the market. Then outside buyers will be scarce and offer less than the prices
determined according to paragraph 29. This price will therefore then be higher than
the true market.
The company does not bind itself to buy stock except when there is money in the
purchasing fund with which to buy. (See par. 33.)
If there is nothing in the purchasing fund to purchase with, then the company
may, if they see fit, use such other funds as they may have to purchase stock on or
off deposit and offer any price they may see fit.
If the company were to buy all of its stock at par it would have to sell all its notes,
mortgages, bonds, merchandise, buildings, and land and go out of business.




PR O F IT SH A R IN G IN

T H E U N IT E D STATES.

43

Each share bought reduces the size of the company $100. They must make improve­
ments and they should use so much of their annual gain for improvements and expan­
sion as seems wise, and only what is left to buy stock. At present the purchasing
fund provided for by the by-laws seems to be all that should be set aside annually
for that purpose. It can be increased or diminished as future experience seems to
indicate.
It should also be observed that only that part of the purchase fund in excess of
five times the last annual indorsement on stock on deposit can be used to purchase
stock.
Should it happen for a series of years that the company did not make even enough
to pay its common-stock dividends, yet the purchase fund would be sufficient to pay
the indorsements on retired employees’ stock for about five years and maybe much
longer as the company might, during this time, accept some desirable bargains in stock
and pay for them with funds other than the stock-purchasing fund and whatever the
purchase was below par would be added to the purchase fund and make more indorse­
ments possible on retired employees’ stock.
Only active employees may deposit their stock with the company under the pur­
chase contract. Employees permanently injured or contracting a fatal illness may
not deposit their stock after such injury or after the beginning of such illness.

The following table shows the profit-sharing dividends on earnings
paid to participating employees since 1899, by years:
T able 1 5 .— PER CENT OF EAR NING S PAID AS DIVID EN DS IN PR O FIT-SH AR IN G P L A N ,
B Y Y E A R S , 1899 TO 1914.

Year.

Dividend
(per cent
of earn­
ings).

1899...................
1900...................
1901...................
1902...................

60.3
82.7
73.8
98.4

Dividend
(per cent
of earn­
ings.)

Year.

1903.................
1904.................
1905.................
1906.................

69.1
28.5
91.1
120.0

Year.

1907...................
1908...................
1909...................
1910...................

Dividend
(per cent
of earn­
ings).
100.0
78.0
100.0
100.0

Dividend
(per cent
of earn­
ings).

Year.

1911.................
1912...............
1913.................
1914.................

47.0
75.0
70.0
90.0

The lowest dividend paid, 28.5 per cent, was paid in 1904, while
the highest, 120 per cent, was paid in 1906. Fourteen times out
of sixteen the percentage dividend on wages exceeded 60 per cent
of the regular earnings of the participants.
The table following shows the proportion of the total employees
participating in the profits each year since 1899:
T a b l e 1 6 . — N UM BER

Year.

AN D PER CENT OF EM PLOYEES PARTICIPA TIN G IN PROFITS, B Y
Y E A R S , 1899 TO 1914.

Total em­
ployees.

Employees partici­
pating in profits.
Year.
Number.

1899............................
1900............................
1901............................
1902............................
1903............................
1904
1905
1906 .




55
55
65
100
79
90
96
120

61.8
81.8
84.6
53.0
64.6
71.1
66. 7
53.3

Employees partici­
pating in profits.
Number.

Per cent.

34
45
55
53
51
64
64
64

Total em­
ployees.

1907............................
1908............................
1909............................
1910............................
1911............................
1912............................
1913............................
1914............................

142
138
153
161
154
149
154
161

Per cent.

72
97
98
106
124
116
117
113

50.7
70.3
64.1
65.8
80.5
77.9
76.0
70.2

44

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

The percentage of the total employed that participated in the
distributed profits during the period of 1899 to 1914 varied from
50.7 (the lowest) in 1907 to 84.6 (the highest) in 1901. In the dis­
tribution of 1914, 113, or 70.2 per cent of the total employed, parti­
cipated. Over 80 per cent of the participating employees during
that year were engaged in mechanical and manual occupations.
On December 31, 1914, as a result of the working of the plan,
employees of the company held 67.8 per cent of the entire common
stock, being in the possession of 54.1 per cent of the entire capitaliza­
tion of the concern.
PLAN NO. 6.

Under the plan presented below it is the usual practice of the man­
agement to invest the accumulated shares of profits of the individual
participants in the common or preferred stock of the company at
the prevailing market quotations.
The bonus, or “ premiu;m” as it is called, credited to employees is
a percentage of their total salaries or wages for the past year equal to
the rate of interest paid on capital for the same year.
Whenever the accumulated “ premiums” are sufficient to buy one
or more preferred shares of the capital stock of the employing com­
pany at the then market price, the president of the company may
either (1) pay to the employee in cash the amount of such premium
or premiums, or (2) may purchase one or more such preferred shares
for the employee; the latter form of “ premium” payment is invari­
ably adopted. Any balance remaining to the credit of the employee
after such shares have been purchased bears 4 per cent interest.
Only those employees who have been in the employ of the com­
pany for one -year before the beginning of any fiscal year take part in
the apportionment which is made; thus an employee must be two
years with the company before he receives any part of the profitsharing fund.
The directors, with the advice of foremen and “ others in a position
to judge,” determine which of the employees are entitled to receive
premiums, which should include those who have shown “ the greatest
regularity, intelligence, and energy in the company’s business” ;
likewise the board of directors reserves the right to fix at their dis­
cretion the number of profit sharers.
The company believes that these restrictions are very necessary
to the success of the scheme, as they prevent “ the employees from
accepting the apportionment merely as an increase of their salary,
instead of a reward for actual merit applicable only to the best
employees.”
Employees, discharged or voluntarily leaving the service of the com­
pany before the end of the fiscal year forfeit their rights to premiums




PR O F IT S H A R IN G IN T H E U N IT E D STATES.

45

for the current year, but receive any balance due them for premiums
of the previous year.
Shares bought for employees are their absolute property, and they
may sell them at any time. An employee intending to sell his shares,
however, is obliged to notify the company in writing on a blank
especially designated for that purpose, and if the sale does not meet
with the approval of the directors, the employee selling the stock may
be dropped from the list of profit sharers for at least one year.
Additional cash payments toward the purchase of the stock may
be made by the employee, such payments drawing 4 per cent interest.
In 1911 the company invited the nomination, on the part of the
profit-sharing employees, of a representative of their own selection
to serve on its board of directors.
Since the date of the origin of the plan, dividends on annual earn­
ings ranging from 7 per cent (the lowest) to 9 per cent (the
highest) have been paid. No figures showing extent of participation
from the inception of the plan to 1910 are available. The following are
the percentages of total employed that have participated in the divis­
ible profits since 1910: In 1911, 64.5 per cent; in 1912, 49.8 per cent;
in 1913, 56 per cent; and in 1914, 62.6 per cent. As a result of the
workings of this plan for a period of eight years, 1907 to 1914, 3,147
shares of common stock of the company, valued at over $280,000,
have been acquired by the employees.
PLAN NO. 7.

The founder and principal owner of the business in which plan No.
7 has been in operation for more than 25 years is considered one of
the foremost students of the problem. His plan is said to embrace
the most successful method used in the application of the profitsharing principle in business and industry.
The plan as it stands at present— 1915— contains the following
principal features: (1) Capital receives only what is considered a
moderate return; (2) the surplusage of net profits over and above the
return on capital is to be distributed to participating employees and
consumers, but this surplusage does not automatically go to the
beneficiaries of the plan. It goes instead to a so-called surplus fund
out of which the moneys to be distributed, in amounts to be deter­
mined at the end of each year by the president of the company, are
taken. As a result the fact that as a rule not all the available profits
are distributed, the amount of money that has accumulated in the
fund mentioned is at the present time equal to about one-half of the
entire capitalization of the company. This fund presumably belongs
to the company. Thus, as a matter of actual practice, not all of the
profits of the company over and above the specified return on capital
are utilized for profit-sharing purposes.




46

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

The original plan of this company provided that after allowing 7
per cent interest on the capital invested the remaining profits should
be divided between capital and labor on the basis of the total capital
invested and the total amount of wages paid, each employee's share
being in proportion to his earnings for the year. Only employees
who had been in the company's employ six months or more were
to share.1
Originally the shares of profit were paid in cash or, at the option of
the employee, stock was issued to hinl. After three years the rule
was adopted by the company to pay the whole share in stock, which
system is still in vogue. Dividends on profit-sharing stock are paid
in cash. This applies to stock certificates as well as to stock for which
no certificate has as yet been issued.
The most important change of all in the general nature of this plan
occurred in 1905 by the elimination of extra dividends above 6 per
cent to capital and the substitution of profit sharing for consumers
on the basis of the gross profits on the purchases of the individual
consumer during the year.
Under the plan as amended in 1905 and still in force, capital is to
receive a fixed rate of interest, 6 per cent; provision is made for de­
preciation, bad debts, and the creation of a surplus fund out of which,
at the discretion of the firm, shares of profits are to be paid to employ­
ees and consumers on the basis specified in the preceding paragraph.
Employees' shares of profits under this plan are termed “ dividend,
credit balance." Since 1905 the profit-sharing balances accumulating
during the first three distribution periods are being transferred to the
employees in common stock of the company*in amounts corresponding
to accumulated profit-sharing dividends. Thus an employee receiv­
ing his share of profits for the first time in January, 1911, would get
only credit balances on the books of the firm until January, 1914,
when a certificate of stock would be given to him for the accumu­
lated amount. During these three years, if he leaves the service,
voluntarily or by discharge, he loses all the profit-sharing credit
balances accumulated during the entire periods, retaining, however,
the cash dividends of 6 per cent which are paid to him on blocks of
stock corresponding from time to time ,to his credit balances. Em­
ployees leaving the employ of the firm after having been under the
plan three years or more retain their acquired stock and may dispose
of it at pleasure.
Originally shares of profit were paid all in cash, but since the second
year, in order “ to make the profit-sharing plan assure an increasing per­
manency of the working force," shares are being paid all in stock. As
1 At the present time the teamsters employed by this company in connection with its main commercial
office are excluded from the benefits of the plan because through unionization and subsequent strikes
their wages are “ unusually high.”




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

47

stated, after three years certificates of stock are issued to employees
in amounts aggregating accumulated profit-sharing dividend balances
up to even hundreds of dollars. Balances above even hundreds are
credited subsequently to employees’ accounts for a year or two and
frequently canceled—that is, forfeited, as far as employees are con­
cerned. It must be stated, however, that before any part of the socalled credit balance is canceled, the employee is given an opportunity
to pay in the additional amount up to $100 that will buy a share of
common stock of the company at par. As a matter of practice, if
the balance to be paid in cash by the employee is not over $25 or $30
he pays it, thus acquiring an additional share of stock. If the amount
to be paid in cash is over $25 or $30, employees usually prefer to
forfeit the balance. The common stock of the company in which
shares of profits are paid is not listed on any stock exchange—that is,
is not on the market. It is issued to participating employees at par,
$100, and bears 6 per cent interest. Its actual value at the present
time, based upon assets of the corporation, is about $160.
One of the recent provisions of this plan prohibits employees while
still in the employ of the company from selling their profit-sharing
stock. In cases of real urgency and upon application made by indi­
vidual employees, the company sometimes buys the employees’ stock,
in whole or in part.
Although, in a general way, all the details of the plan were formu­
lated in 1905, as a matter of practice the one factor definitely fixed
is that specifying that after all expenses, including 6 per cent on
capital, are paid the remaining net profits are to go to a surplus fund,
which is cumulative from year to year and out of which the divisible
profits are to come. The specific amount to be distributed is
determined by the company at the end of each distribution period
and depends chiefly upon “ general prosperity of the business.” As
a matter of fact, the management in determining the amount to be
distributed is usually guided by the profit-sharing dividend paid the
year before. At times, when the company, on account of a poor
business year, can not pay a considerable dividend, the surplus
moneys accumulated in the above-mentioned fund may be utilized
to augment the dividend of the current year. As will be shown below,
this was done in 1904. It was stated, however, that the fund is to be
utilized only to the extent of about one-tenth of the total contem­
plated distribution for any specific year.
Since 1905 only about two-thirds of the nominally divisible profits
were actually paid out to participating employees and consumers.
There thus remains on hand a surplus fund of $750,000, equal to about
one-half of the total capitalization of the company. This fund, ac­
cording to the statement of the company, may be utilized in the
manner following.




48

B U L L E T IN OF T H E B U REA U OF LABOR STATISTICS.

1. To meet general emergencies— commercial, financial, or other­
wise.
2. To augment the available amount of money for purposes of
distribution among employees and consumers.
That the former utilization of this fund seems to be the paramount
one may be inferred from the fact, mentioned elsewhere, that in 1914,
with this fund amounting to over half a million of dollars, the annual
profits of the company were not considered sufficiently large to war­
rant a profit-sharing distribution.
No statistical data illustrating the workings of the plan between
the year the plan was put into operation and 1896 were available.
In the first year employees of the company were notified that the net
profits of the business, “ after allowing a commercial rate of interest on
capital,” would be apportioned equally between capital and labor,
“ to the first upon the basis of the investment and to the second upon
the basis of the earnings of the participating employees.” Owing to
the big strike on the railroads the first year proved to be a very
lean one and the profits made during that year allowed a profitsharing dividend to the employees of only 5 per cent. The next year &
dividend of 10 per cent was paid. It was then announced that there­
after profit-sharing dividends would be paid in common stock. The
dividends continued at from 8 to 10 per cent until 1892, when they
fell to 4 per cent. Because of the disturbance of business due to the
panic of 1893 no profits were paid till the end of 1904, when a retro­
active 4 per cent dividend on the earnings of employees for the period
of 1896 to 1904 was declared. The following table shows the profitsharing dividends paid to participating employees under the plan
since 1905:
T able 1 7 .—PER CENT OF E A R N IN G S PAID AS D IV ID E N D S U N D E R
SHARING P L A N , B Y Y E A R S , 1905 TO 1915.

Divi­
dends
(per cent
of earn­
ings).

Year.

1905..........................
1906..........................
1907..........................
1908..........................
1909..........................

Year.

Divi­
dends
(per cent
of earn­
ings).

15
25
30
20
20

1910..............................
1911..............................
1912..............................
1913..............................
1915 1
............................

T E E P R O FIT-

10
10
15
10
10

i No dividend paid in 1914.

The highest per cent of dividend ever paid under the plan, 30 per
cent on the annual earnings of the participants, was distributed in
1907. During the year 1914 the profits of the business were not con­
sidered sufficiently large by the management to warrant a profitsharing dividend. In 1915 a profit-sharing dividend of 10 per cent
was distributed.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

49

The records of the company, with the exception of those for the
years 1913 and 1915, do not permit any detailed analysis of the extent
of participation in all of the branch establishments of this company,
located in different parts of the United States. For the above-mentioned two years the percentages of the total employed that partici­
pated in the distributed profits were 67.7 and 74, respectively. Slightly
over three-fourths of the participants in 1915 were engaged in occupa­
tions other than executive, clerical, or sales— that is, belonged to
the mechanical and manual forces of the organization.
The following table shows the extent of participation in the com­
mercial and manufacturing departments of the main plant of the com­
pany during the five years ending December 31, 1915, and in the
establishment as a whole for 1913 and 1915:
T a b l e 1 8 . — NU M BER

AND P E R CENT OF EM P LO Y E E S IN T H E M AIN P L A N T PARTICI­
PATING IN PROFIT SH A R IN G , B Y D EP A R T M E N T S, A N D PER CENT OF T O T A L EM­
PL O Y E E S PAR TICIPA TIN G , B Y Y E A R S , 1911 TO 1915.

Main plant.
Commercial department.

Manufacturing department.

Participating in
Average
profit sharing.
number
em­
ployed. Number. Per cent.

Participating in
Average
profit sharing.
number
em­
ployed. Number. Per cent.

Year.

1911..................................................
1912..................................................
1913..................................................
1915 2................................................

138
137
142
140

1 Not reported.

117
114
99
117

84.8
83.2
69.7
83.6

269
267
244
216

239
231
224
210

88.8
86.5
91.8
97.2

Per cent
of total
em­
ployees
partici­
pating.

C)
0)
67.7
74.0

2 No dividend paid in 1914.

The proportion of the total employed in the commercial department
of the main plant that participated, clerical and commercial em­
ployees mostly, varied from 69.7 per cent (the lowest) in 1913, to 84.8
per cent (the highest) in 1911. The proportions in the manufacturing
department participating— all manufacturing employees—were con­
siderably larger, the lowest having been 86.5 per cent in 1912, and
the highest 97.2 per cent in 1915. In 1914 no dividends were paid.
The relatively larger permanency of the manufacturing employees,
as shown by the higher proportion of participants among them—the
only prerequisite for participation being continuous service for six
months—may be accounted for by the fact that the company in con­
nection with this manufacturing department is carrying on numerous
schemes of welfare work and cooperation for the benefit of the em­
ployees, the city in which the plant is located being one of the very
few cooperative colonies in existence in the United States at the
present time.
56831°—Bull. 208—17------ 4




50

B U L L E T IN OF T H E BU REA U OF LABOB STATISTICS.

For the years 1913 and 1915 the extent of participation in the
establishment as a whole is shown, no complete data being available
for other years. The proportions participating were somewhat lower
than in the commercial department of the main plant and considerably
lower than in the manufacturing department of that plant. Over
two-thirds of the total employed participated in the profits distributed
during the year 1913 and nearly three-fourths during 1915.
The following table shows the respective proportions of the out­
standing common and preferred stock of the company that were
owned by employees, chiefly as a result of the operations of the profitsharing plan, on December 31, 1915.
T able

1 9 .—AM OUNT AN D PER CENT OF STOCK O W N ED B Y E M PLO YEE S.

Stock owned by em­
ployees.
Outstanding
value.

Kind of stock.

Amount.

Common.....................................................................................
....................................................................................
Preferred

$1,019,800
133,800

$269,150
16,275

Per cent
of total.
26.4
12.2

Number
of em­
ployees
owning
stock.

355
65

Of the total issued common stock 26.4 per cent, and of the total
issued preferred stock 12.2 per cent, was in the possession of em­
ployees of the company on December 31, 1915. Of the total number
employed 420, or about 60 per cent, were stockholders of the com­
pany on the mentioned date. Employees thus owned and con­
trolled 24.7 per cent of the total capitalization of the company.
Inasmuch as preferred stock may not be acquired as shares in the
profits (all such shares being paid in common stock) the proportion
of the total capital of the company acquired by its employees through
the operation of the profit-sharing plan is 23.3 per cent, or nearly
one-fourth.1
PLAN NO. 8.

The significance of plan No. 8 lies in the fact that it is the only
plan in operation in the United States at the present time under
which the participating employees have to obligate themselves to
participate in the possible losses of the business, the entire arrange­
ment taking the form of a legal obligation on the part of all concerned.
In order to insure the covering of the possible losses the agreement
provides that participating employees are to permit the company
to retain 10 per cent of their regular earnings until the end of the
distribution period, when the results of the year’s business may be
determined. In the opinion of the management, the latter provision
i In 1915 the founder of this concern and originator of the profit-sharing plan above described established
in New Orleans a u Grocery and balling cooperative association.” The employees of this association
were put on a profit-sharing basis: Twenty-five per cent of all the net profits of the business, apportioned
upon the basis of earnings, are to be distributed to them at the end of each business year.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

51

eliminates from participation employees earning less than $600 per
year, inasmuch as such employees can not afford to have one-tenth
of their income retained for a period of 12 months. On the other
hand, "employees earning, say, over $1,200 do not take any interest
in the plan because the possible profits do not appear large enough
to them.” Thus the operation of the plan has been confined chiefly
to employees whose earning power is somewhere between $600 and
$1,200 per year, to the more skilled members of the manufacturing
force, to foremen, and to clerical employees.
In order to ascertain the net profits, all expenses, including depre­
ciation of buildings, tools and machinery, and bad debts are deducted
from the gross profits of each year; 6 per cent interest is then paid
on the capital invested, and the balance is divided between the com­
pany and the participating employees in such proportions as the
total capital invested bears to total wages, the share of each employee
being in proportion to his earnings.
In case of a net loss (dividend on capital not being figured) it is
to be shared between the company and the participating employees
in the same manner as profits are shared, but under no circumstances
is any participating employee responsible for an amount greater than
the amount reserved from his wages.
Employees may withdraw from the agreement or from the com­
pany’s employ at any time, but in such instances the company
reserves the right to hold the wage reserve fund until the end of the
year, such employees sharing in the profits or losses. The com­
pany may at any time discharge an employee and require him to
surrender his contract, but the employee is given the option to with­
draw his reserve wages or leave them to participate in the results of
the year. Should there be shortage of work, employees signing the
agreement are not to be laid off, but the hours of labor are to be
reduced.
With certain restrictions employees may, through a public account­
ant, inspect the books of the company.
The profit-sharing dividends received by employees under the plan
since 1910 were as follows: In 1910, 6.4 per-cent; in 1911, 4.5 per cent;
in 1912, 3.9 per cent; in 1913, 7.5 per cent; in 1914, 6.7 per cent;
and in 1915, 1.4 per cent of the earnings. At no time during the
existence of the plan did the proportion of participating employees
exceed 35 per cent of the total employed. Over one-half of the
participants in 1914 belonged to mechanical and manual occupations.
The agreement drawn up between the company and its profitsharing employees is herewith reprinted in full.
This article of agreement, made and entered into this ------ day of ——— , one
thousand nine hundred and —■ ■ by and between t h e -------- - Co., party of the first
—,
part, and the signers hereto, all employees of said company, party of the second
part, witnesseth as follows:




52

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

First. It is agreed that the party of the first part and the party of the second part
shall share the profits and losses of the business of the ---------Co. so long as they
are both parties to this agreement.
Second. The profit shall be ascertained as follows: The inventory of the 1st of
February past shall be taken as the starting point, and an inventory shall be taken
in the same form on February 1 each year thereafter. From the gross results thus
obtained shall be taken all expenses of every kind, including depreciation of build­
ings, tools and machinery, and bad debts, and the results of the above shall be con­
sidered the net gain or loss, as the case may be. If the result thus shown shall be
gain, the capital actually invested, as shown by the inventory at the close of each
year, shall first draw 6 per cent interest (or in case there is less than that amount,
shall draw what net gain there is in liquidation of its claim), the balance then re­
maining shall be divided between the party of the first part and the party of the
second part in such proportions as the actual capital invested in the business be^ars
to the total wages of the party of the second part for each current year. The total
amount coming to the party of the second part shall be divided among its individual
members as the year’s earnings of each bear to their total earnings.
Third. For each current year one-tenth of ,the wages of each of the parties of the
second part shall be withheld by the party of the first part weekly; and in case there
has not been a net loss on the entire business of the year this reserved money, together
with his share in any accrued profit as figured above, shall be paid to each of the
parties of the second part on or before March 1 of each succeeding year.
Fourth. In case there should be a net loss made on the business of the year with­
out figuring any dividend for capital as above provided, this loss shall be divided
between the party of the first part and the party of the second part in the same manner
as described for dividing profit; but the party of the second part in no case shall
become responsible for losses greater than the amount reserved from his wages.
Fifth. Other employees of t h e ---------Co. may become parties to this agreement
after this date on invitation of the party of the first part; but the computation of their
share shall be figured only on wages earned after the date of their signature. Any
party of the second part may withdraw either from this contract or from the com­
pany’s employ at any time, but the party of the first part holds the right to retain
his reserve until the expiration of the current year; and if said reserve is held its
owner shall share in profits or losses at the expiration of said current year, but in no
case can any party of the second part share in the profits or losses unless his reserve
has been retained until the end of the year except as provided in article seventh.
Sixth. The party of the first part can at any time discharge any party of the second
part from its employ and require him to withdraw from this contract; but in such
case said party of the second part shall have the option to withdraw his full reserve
or to leave it until the end of the year to share in results as above described.
Seventh. It is further agreed by the party of the first part that no party of the
second part shall be temporarily retired from work so long as the party of the first
part has any work of the kind said party of the second part is accustomed to do; but
if there should be a shortage of work in the hands of the party of the first part it shall
reduce the hours of work and so divide the work between the parties of the second
part. If at any time any party of the second part should become sick or incapaci­
tated to perform his duties, and has the certificate of a reputable physician that he
is so incapacitated, after two weeks’ duration of said sickness said party can draw
on his reserve wages at a rate not greater than $6 per week without affecting his inter­
ests in the profits at the end of the year. Further, if any party of the second part
should become injured on account of any accident while in the employ of the party
of the first part, said party of the first part shall, at its own expense, provide him
with a competent physician or surgeon after application is made to it stating that
such services are needed.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

53

Eighth. If any of the parties of the second part wish to inquire into the accuracy
of the annual report made to them by the party of the first part, the books of the
party of the first part shall be opened for inspection by any reputable public account­
ant employed by the party of the second part, provided such accountant will agree
to confine his report to the statement that the company’s report was or was not cor­
rect; and if not correct, shall fully define its error.
Ninth. It is agreed that all differences and disputes resulting from the operation
of this contract shall be settled by arbitration.
PLAN NO. 9.

Under the following plan employees, aside from participating in
one-fourth of the net profits over and above a specified return on
the investment, are also permitted to invest their small savings in
the business and receive dividends on their investment equal to the
dividends paid on the other capital invested. For the latter purpose
the company issues at par to its employees so-called profit-sharing
certificates in denominations of $50 under the following conditions:
Certificates are to draw interest at the rate of 6 per cent per annum,
payable semiannually, and to be subject to redemption and recall,
upon the written notice of the corporation to the owners, at par,
plus interest at 6 per cent from date of last interest payment. The
certificates must be surrendered by employees whenever they ter­
minate their connection with the company.
In addition to the rate of interest upon the so-called profit-sharing
certificates, the holders of such certificates and all other employees of
the company as well, provided they have been in the service of the
company continuously at least six months, are to share in the net
profits of the business, the profit-sharing fund to be determined as
follows: After paying all the legitimate expenses of the business, in­
cluding a dividend of 10 per cent on the total capital invested and
on the surplus account, and after paying the above-mentioned per­
centage on the so-called profit-sharing certificates, the remaining net
profits are to be distributed among the following participating ac­
counts in the proportion that each of these is to the aggregate amount
of the accounts that are to participate: (1) Total capital invested,
(2) surplus account, (3) total amount of outstanding profit-sharing
certificates, and (4) wages and salaries of profit-sharing employees.
The basis of the issue of the above-mentioned certificates is de­
termined in each and every instance by the management. Such
certificates may be acquired only for cash, and this in practice limits
the amount for which an employee may subscribe. Employees hold­
ing such certificates receive double shares in the divisible profits, as
holders of certificates on the value of such certificates and as partici­
pating employees on the basis of thoir earnings. All shares are paid
in cash.
The plan was put into operation as of the business year ending
February 18, 1914. The distribution of the first year was made




54

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

exclusively on the basis of earnings, inasmuch as no profit-sharing
certificates were as yet issued. A profit-sharing dividend of 20 per
cent on the annual earnings of the participants was paid at the end
of this year. No profits were available for distribution during the
second year, but a substantial distribution is expected at the end
of 1916.
PLAN NO. 10.

The establishment in which profit-sharing plan designated as No.
IQ has been in operation for several years had in 1914 an average num­
ber employed of over 7,000 and is the largest establishment having a
profit-sharing plan. Under the plan, eligible employees receive a
share of the profits equal to one-third of the dividend paid on the
common stock of the company over and above 10 per cent. It is
apparent, therefore, that in a business earning smaller profits the
application of the principle of this plan could hardly result in the pay­
ment of considerable amounts to the participating employees.
The wage-dividend (profit-sharing) plan of this company, as stated
by the secretary of the welfare fund of the company, is as follows:
The plan is based on the assumption that dividends to common
shareholders up to 10 per cent are the equivalent of the employee's
fixed wage and that cash dividends in excess*of that figure may.be
fairly considered as extraordinary. The plan devised, therefore, pro­
vides that the dividend to wage earners shall be based upon such
extra cash dividends paid to shareholders. In arriving at the pro­
portion (in the absence of any established standard) all of the factors
bearing upon the problem, including length of service, have been
taken into consideration, and it has been finally decided to fix the
percentage of the wage dividend at 35 per cent of the percentage of
the extra cash dividends paid to holders of common stock, same to
be divided and applied on a period of five years.
The extra cash dividends paid to holders of common stock in the
year 1914 having been 20 per cent instead of 30 per cent, as illustrated
below, the wage dividend rate was reduced proportionately from 2.1
per cent to 1.4 per cent.
Only employees who are on the pay roll at the time the wage
dividend reports are prepared and who worked the full calendar year
preceding the payment of the dividend are considered, and continuous
service only is recognized. That is to say, any employee who during
the previous five years left and reentered the service of the company
participates only from the time of reentry. Fractions of years over
one year are counted. Pieceworkers participate on the same basis
as those receiving fixed wages or salaries. Bonuses paid for efficiency
are counted as wages, but payments from the welfare fund are not
so treated.
No person having authority to engage labor for the company is
permitted, in fixing wages, to take into account any wage dividends
which may have been or may be received by the employee.
The trial of this plan does not commit the company to its contin­
uance, but it may be assumed that if it is continued the wage divi­
dend will be proportioned to the extra cash dividends paid on com­
mon stock.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

55

The following is an illustration of the method employed in deter­
mining amounts of individual shares:
In 1911 the common-stock holders of the company received a 30
per cent dividend over and above the stipulated 10 per cent. Thirtyfive per cent of the amount representing this additional 30 per cent
dividend was then set aside for purposes of profit sharing—for labor
dividends, as the company calls them. Thirty-five per cent of 30 is
10.5, the dividend on wages paid to employees with the longest term
of service—five years and over— that is, such employees received as
their labor dividend an amount equal to 10.5 per cent of their com­
bined earnings for the five years preceding and including the distri­
bution year. The amount in labor dividends paid to employees with
the shortest length of service eligible under the plan—one year—
was

or 2.1 per cent, as no employees with a record of service
o
shorter than one year are eligible for participation. An employee
who was in the service 1 year and 10 months and has earned, for
instance, $400 in the first period and $500 in the second, although
not receiving anything on the earnings of the first 10 months before
becoming eligible, gets a dividend after the second period on the
earnings of both periods, that is, on $400 and $500, or on a total of
$900.
The highest amount upon which dividends may be paid during any
one year is the aggregate earnings of the employee during the last
five years, including the distribution year.
Aside from the minimum qualification of length of service, em­
ployees, in order to participate in the labor dividend, must comply
with the following conditions: (1) Appear on the list of those in
employ of the company on December 31 of the distribution year;
(2) appear on the final dividend list on March 1 of the year following
the distribution period; and (3) be in the employ of the company on
the distribution day, July 1, following December 31 of the distribution
period.
The percentages of the total employed that received profit-sharing
dividends under this plan were as follows: In 1911, 63 per cent; in
1912, 57.6 per cent; in 1913, 67.2 per cent; and in 1914, 88 per cent;
the dividends on earnings paid during the same years having been
7.2 per cent, 6.9 per cent, 7 per cent, and 5 per cent, respectively.
Over 85 per cent of all the participants in 1914 were engaged in
mechanical and manual work. The cost of the plan to the company,
in terms of a percentage of the pay roll of the organization, was: In
1911, 5.2 per cent; in 1912, 4.9 per cent; in 1913, 5.1 per cent; and
in 1914, 4.1 per cent.
The table following shows the total number employed and the
number and per cent participating for each year since 1911.




56
T

able

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.
2 0 . — N UM BER

AN D PER CENT OF EM PLO YEES PARTICIPATING IN THE PR O FITSHARING, B Y Y E A R S, 1911 TO 1914.

Total em­
ployees.

Year.

Employees partici­
pating in profits.
Number. Per cent.

1911..................................
1912..................................
1913..................................
1914..................................

6,349
8,177
8,447
7,348

4,001
4,712
5.676
6,466

63.0
57.6
67.2
88.0

The above table shows that the proportion of beneficiaries under
the plan of this company has been on the increase since 1911 with the
exception of one year, 1912, when the proportion participating
decreased by about 6 per cent.
PLAN NO. 11.

The shares of profits paid to employees under plan No. 11 depend
upon: (1) Dividends over and above 6 per cent declared on capital,
and (2) length of continuous service of the employees, employees
with a service record of three years or more receiving the maximum—
a dividend on wages equal to the extra dividend paid on capital.
Employees in service less than six months do not participate in the
benefits of the plan.
The following are the essential features of this.plan as originally
announced to the employees on January 1, 1915:
There will be allowed 6 per cent interest on the capital stock.
After the above 6 per cent interest on capital stock has been paid,
all cash dividends will be divided between stockholders and employees
as follows:
All employees who have been in the service of the company con­
tinually for three years or more, same percentage as to stockholders.
All employees in the service for two years but less than three years,
two-thirds of the rate of cash dividends.
All employees in the service for six months but less than two years,
Qne-third of the rate of cash dividends.
Dividends to employees will be based on the total amount of wages
paid each employee for the year ending December 31.
This will apply to all persons in any department or capacity who
have served the company six months or over within the year except
those dismissed or discharged.
Employees voluntarily leaving the service of the company, or
dismissed or discharged, will forfeit their right to share in any
dividends.
Should employees be laid off owing to lack of work, they will be
entitled to their share of the dividends based on the wages received
by them during the year.
In the announcement of the plan it was specifically stated that
“ the directors reserve the privilege to change this plan as they may
consider advisable for the best interests of the organization.”




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

57

Over nine-tenths of all employed participated in the distributed
profits at the end of the first year’s operation of the plan. Eightyeight per cent of all the participating employees belonged to mechan­
ical and manual occupations and were engaged in the actual processes
of manufacturing. The average profit-sharing dividend on wages paid
at the end of the year was 6.9 per cent, the cost of the plan to the
management having been 6.2 per €ent of the total pay roll of the
establishment.
PLAN NO. 12.

Plan No. 12 represents a phase of profit sharing that, in view of
the tendency manifested of late by employers to engage in so-called
welfare work, is apparently destined to become more and more popular
among them. Plans such as this are technically known as “ deferred
profit sharing,because the payments of the individual shares are
deferred in order to accumulate an amount sufficient to constitute a
pension for the participant after the expiration of a certain period
of service. The pensions accumulating under such plans, however,
are contributory, inasmuch as one of the main prerequisites for par­
ticipation is that the participating employee deposit with the com­
pany, at regular intervals and for a certain specified length of time,
stipulated amounts, these amounts in conjunction with the profitsharing fund of the company being deemed sufficient to constitute
at the end of a specified period a moderate pension for the employee.
The plan, which was established in 1916, provides that, subject to
restrictions, employees may contribute 5 per cent of their monthly
salary and the firm will contribute 5 per cent of its earnings (without
reduction for dividends paid to stockholders) to a fund held by trus­
tees, who will invest the money and have general administration of
its benefits. The following is the text of this plan in full:
PURPOSE.

In order that employees may share in the profits of this business, and to encourage
the habit of saving, the company has decided to contribute annually a sum equal to 5
per cent of its net earnings (without deduction of dividends to stockholders), as shown
by the annual audit of its books, to an employees’ savings and profit-sharing fund, as
explained below, which will go into effect commencing July 1,1916.
It is intended that this plan will furnish to those who remain in the employ of the
company until they reach the age when they retire from active service a sum sufficient
to provide for them thereafter, and that even those who achieve a long service record,
but who may not remain with the company all of their business life, will have ac­
cumulated a substantial sum. This savings and profit-sharing fund will enable an
employee to secure an income for himself after the close of his active business career
or, in case of his death, for his family.
ELIGIBILITY.

1. Participation will be entirely voluntary.
2. Every employee o f ---------Co., regardless of position, will, after three years of
service, be eligible to participate in this fund, so long as he remains an employee.




58

B U L L E T IN OF T H E BUREAU OF LABOR STATISTICS.
CONTRIBUTIONS TO THE FU N D.

1. An employee in order to participate must deposit in the fund 5 per cent of his
salary. The company will contribute a sum equal to 5 per cent of its net earnings
(without deduction for dividends paid stockholders), as shown by the annual audit of
its books. As this fund starts July 1, the company will for the year 1916 contribute
5 per cent of one-half of the profits of the entire year.
2. No employee may deposit more than 5 per cent of his salary, and in no case more
than $150 per annum; this limit being deemed advisable so that the higher salaried
employees may not too largely participate in the fund.
PARTICIPATION IN THE PROFITS.

1. The contributions of the company will be made annually as soon after the first of
each year as an audit of the books will permit, and will be credited pro rata to partici­
pating employees in the proportion which the amount deposited by each employee
during the preceding year for which the company has contributed bears to the total
amount deposited by all employees duriftg such year.
2. So that every employee eligible to participate may have ample opportunity to
carefully consider its advantages and to enter at its inception, all those joining prior to
September 1,1916, may, by paying into the fund 5 per cent of their salary from July 1,
1916, share in the fund from its inception as of July 1, 1916.
W ITH D R A W ALS.

1. A depositor who has completed 10 years of seisrice will be entitled to withdraw all
money credited to his account, including the company’s contributions.
2. A depositor who has not completed 10 years of service will be entitled to withdraw
only the amount he has deposited, plus interest at 5 per cent per annum, compounded
semiannually, and no more; except in the case of a woman depositor who, after five
years’ service, leaves to become married, in which case she will be entitled to her
full share in the fund, including the portion contributed by the company; and ex­
cept in the case of the death of a depositor Awhile in the service of the company, in
which case his estate will be entitled to the full amount credited, including the con­
tributions of the company, and the money due will be paid to his legal representatives.
3. A depositor shall withdraw upon ceasing to be an employee of the company, or
upon failing to regularly make his deposit.
4. A depositor who once withdraws can not reenter the fund.
5. In any case of withdrawal where a depositor is entitled to share in the contribu­
tions of the company, he will receive the full amount to his credit, as shown by the
accounting for the preceding year, plus interest at the rate of 5 per cent per annum
and plus such sums as the depositor may have deposited since December 31 of the
preceding year, with interest at 5 per cent per annum.
6. Loans will be made to depositors in cases of actual necessity and when in the
opinion of the trustees the circumstances warrant it.
M AN AG E M E N T.

1. The fund will be handled, intrusted, and invested under the direction of a board
of five trustees, to be selected by the board of directors of the company, three to be
officers or directors and two employees (not officers or directors) o f ---------Co.
2. It is intended that so far as practicable and advisable the fund will be invested
in shares of stock of the company, to the end that the depositors may, in the largest
measure possible, share in the earnings of the company.
3. The board of trustees may, from time to time, adopt rules to carry out the pur­
poses of this plan, and may adopt amendments to the plan; but no change shall be
made in the plan as above outlined unless the same is ratified by the vote of a majority
of the depositors. All questions of interpretation of this plan, or amendments thereto,




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

59

or the rules pertaining thereto, or relating to any matter of accounting, values, profits,
or any other matters or differences which may arise, shall be determined solely by the
board of trustees, and the decision of the board shall be final and conclusive upon all
concerned.
DISCO N TIN UANCE.

The fund may be discontinued at any time by announcement of the company,
made at least six months before its final yearly contribution. After such announce­
ment no new depositors will be eligible to join, and upon the payment into the fund
of such final contribution the fund shall be distributed among all the depositors pro
rata in proportion to their interests as ascertained by the board of trustees.

LIMITED PROFIT-SHARING PLANS.
DESCRIPTIVE AND STATISTICAL SUMMARY OF A SELECTED GROUP.

The number of establishments sharing some proportion of their
profits with a few of their more important employees is known to be
very large. Very frequently such profit sharing serves as a satis­
factory automatic substitute for increases in the salaries of those
in immediate charge of the operation of the business, for the pur­
pose of offering them substantial inducements to remain in the
service. In view, however, of the relatively small number of people
affected by such plans it was deemed sufficient to limit the study of
this phase of profit sharing to an intensive examination of a selected
group of such plans, the basis of selection having been the relatively
large (for limited profit-sharing plans) sphere of application, the
greater part of the plans examined extending their benefits to the
bulk of the executive, administrative, and supervisory employees,
and in some instances also to a part of the higher paid employees of the
manufacturing force.
THE DETERMINATION OP THE PROFIT-SHARING FUND.

The method of determining the proportion of the net profits to
be distributed varies greatly under the limited profit-sharing plans
studied, the usual practice prevailing, in over one-half of those ex­
amined, being the setting aside, at the discretion of the employer, of
an arbitrary percentage of the profits after meeting all the legitimate
expenses, including interest on the investment. The specific propor­
tion of the profits thus set aside for the benefit of the employees
varies greatly with the individual plans, its range of variation being
from one-twentieth to one-half, with an approximate average of
about one-fifth for the entire group of plans.
Under two plans dividends on wages varying with the amounts of
net profits of the firm are paid. Under one plan the divisible fund
is arrived at in the following manner: After meeting all the legiti­
mate expenses of the company, including a dividend of 4 per cent on
the preferred and of 6 per cent on the common stock, the surplus earn­
ings are divided among three so-called participating accounts, as
follows: (1) Account of bonus fund for employees (profit-sharing




60

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

fund); (2) account of dividends; and (3) account of sinking fund.
The proportionate share of the surplus profits going to each of the
three mentioned accounts is as each single or participating account
is to the total of all participating accounts. The specific instances
covered by these accounts are: Total wages of participants, amount
of dividends paid, and amount to be allowed for depreciation, respec­
tively.
Under another plan the divisible fund consists of the aggregate of
dividends accruing on a specific number of shares of the capital stock
of the company, set aside for that purpose, the shares themselves
remaining all the time the property of the concern. Still another
specifies a minimum amount of net profits that is to be earned before
specific amounts (on a scale announced in advance) become available
for profit-sharing purposes, the amounts distributed varying with
the profits of the business over and above the stipulated minimum.
As a rule, the relative proportion of the profits available for dis­
tribution under these plans seems to be considerably larger than
under the profit-sharing plans described in the preceeding pages of
this report. ' This relative liberality of employers, coupled with the
fact that the numbers of those participating are much smaller,
account for the larger benefits accruing to the beneficiaries of the
limited profit-sharing plans. Such results are naturally to be
expected in view of the fact, mentioned elsewhere, that one of the
principal objects of the limited profit-sharing plans is to furnish a
method that would tend to encourage the more important policyforming, executive, and supervisory employees to remain in the
service of their respective employers permanejitly.
CONDITIONS OF ELIGIBILITY.

Seven, or slightly over 40 per cent, of 17 limited profit-sharing
plans examined specify a minimum length of service—from one to
five years— as a condition for participation. Almost all the plans
bar from participation the wage-earning or manual workers, con­
fining the benefits of the plan primarily to their executive, super­
visory, and commercial employees, including in a few instances the
regular clerical force.
One of the plans confines its operation to “ employees of the com­
pany who have authority to formulate policies, make commitments,
engage employees, and approve expenditures.” The merit of
service as established by the judgment of the employer seems to be
one of the factors prerequisite to participation in a great majority
of these plans. Two of the plans specify that only employees earn­
ing $100 per month be allowed to participate; one confines its opera­
tion to “ all employees, except pieceworkers, with an earning capacity
of at least $780 per year.”




PR O F IT SH A R IN G IN T H E U N IT E D STATES:

61

BASIS FOR COMPUTING INDIVIDUAL SHARES.

In the majority of the plans— those in operation in the smaller
establishments mostly— the prospective beneficiary is informed in a
general way of the method by which his individual share of profits
will be computed. In a considerable number of the remaining plans,
however, those chiefly in operation in organizations of considerable
size, the method of determining the individual shares is unknown to
the employees, such shares being determined usually by a special
committee appointed by the management, individual shares varying
with the reported efficiency as well as with the relative importance
' of the positions held by the prospective beneficiaries. Under such
plans beneficiaries sometimes, under the penalty of dismissal or loss
of favor with the company, are enjoined from communicating to each
other the amount of their respective shares.
In only six of the plans are individual shares of profits based wholly
upon salaries or earnings.
CONDITIONS OF FORFEITURE.

In every one of the limited profit-sharing plans examined dis­
charge and voluntary leaving of employment act as automatic causes
for forfeiture of profits of the current year. In one instance volun­
tary leave causes forfeiture of 25 per cent of the share of profits of
the previous year, in addition to profits of the current year.
DISPOSITION OF FORFEITURES AND FORM OF PAYMENT.

Twelve of 17 limited profit-sharing plans examined specifically
provide that amounts of forfeited shares be distributed among the
other participating employees. Under four plans, or less than onefourth of all studied, in view of the fact that profit sharing under
them takes the form of a percentage dividend on earnings (a prin­
ciple that does not involve the setting aside in advance of a definite
amount for profit-sharing purposes), forfeited shares revert to the
company. The remaining plans in most instances make no specific
provision with reference to the disposition of forfeited shares, all
of them reporting that “ each case is settled on its own merits."
Under the limited profit-sharing plans investigated, as under the
profit-sharing plans described above, shares of profits, in the majority
of instances, are paid in cash. This is true of 10 of 17 plans ex­
amined. Of the remainder, in 4, or 23.5 per cent, they are paid
wholly in stock, and in three,, or 17.6 per cent, in part stock or savings
account and part cash. As in 2 of the latter not less than half
of each share is paid in stock, the prevailing forms of payment under
the limited profit-sharing plans for all practical purposes may be
stated to be about 60 per cent all in cash and the remainder, 40 per
cent, in stock.




B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

62

Those of the limited profit-sharing plans under which shares of
profits are paid in full or in part in stock were apparently designed for
the purpose of inducing the more valuable employees to remain in the
service as long as possible. That this was the intention of the man­
agement may be inferred from the provisions specifying conditions
under which the stock in which the profits are paid may be disposed
of by the beneficiaries. Thus in two plans the selling of the profitsharing stock by an employee disqualifies him from further partici­
pation in the benefits of the plan. In one plan the profit-sharing
stock is not transferred to the employee for a period of at least five
years after distribution and in still another the stock due to the em­
ployee is transferred to him gradually, 25 per cent after the first year,
25 per cent after the second, and the remainder after the third.
YEARS IN W HICH THE LIMITED PLANS WERE ESTABLISHED.

The following table shows the years in which 17 limited profitsharing plans studied in this report were established:
T able

2 1 .—Y E A R S IN W H IC H T H E LIM ITED PR OFIT-SH AR IN G P L A N S W E R E
EST A B L ISH E D .

Year.

1900...................
1905...................
1906...................
1909...................
1910
1911...................

Number
of plans.
1
3
1
1
1
1

Year.

Number
of plans.
4
1
2
2

1912.....................
1913.....................
1914....................
1915.....................
Total

17

As can readily be seen from the above table, none of the plans
date back prior to 1900. Over one-half of them have come into
existence during the last four years.
LOCATION OF LIMITED PROFIT-SHARING ESTABLISHMENTS.

The geographical location of the establishments in which the plans
studied were in operation is shown in the following table:
T able

2 2 .—LOCATION OF LIM ITED PRO FIT-SH ARIN G E STABLISH M E N TS.

State.

Indiana...........................................................
Massachusetts................................................
Michigan ....................................................
New Jersey....................................................
New York.......................................................

Number
of estab­
lishments.
2
2
1
1
7

State.

Number
of estab­
lishments.

Ohio.................................................................
Pennsylvania................................................

3
1

Total.....................................................

17

As in the case of the profit-sharing plans described elsewhere in
this report, the bulk of the limited profit-sharing plans examined—
considerably more than one-half—were in operation in establishments
located in a very small number of North Atlantic States.




PR O F IT SH A R IN G IN

T H E U N IT E D STATES.

63

INDUSTRY OR BUSINESS OF LIMITED PROFIT-SHARING ESTABLISHMENTS.

The nature of the industry or business of the establishments with
limited profit-sharing plans is as follows:
Eleven of 17 limited profit-sharing plans examined were found in
establishments engaged in manufacturing; 2 in mercantile establish­
ments; 2 in establishments of building contractors; and 2 were un­
classified.
SIZE OF LIMITED PROFIT-SHARING ESTABLISHMENTS.

In the table presented below is shown the size of the establish­
ments in which the 18 plans examined were in operation, as indi­
cated by the average number employed during a representative
distribution period:
T able

2 3 .— NUM BER OF LIM ITED PROFIT-SH ARIN G ESTABLISH M ENTS H A V IN G EACH
CLASSIFIED N UM BER OF EM PLO YEES.

Classified number of employees.

Under 100.......................................................
100 and under 300.........................................
300 and under 500
1,000 and under 3,000...................................

Number
of estab­
lish­
ments.
4
4
4
3

Classified number of employees.

Number
of estab­
lish­
ments.

3,000 and under 5,000............................
5,000 and under 10,000.................................

» 1
2

Total.....................................................

18

Two-thirds of the 18 establishments for which information was ob­
tained employed less than 500 employees; nearly half employed less
than 300; one-third employed 1,000 people or more.
EXTENT OF PARTICIPATION.

The proportion of the total employed that participated in the
distributed profits under the 18 plans examined was as follows:
Under only two limited profit-sharing plans did the proportion
participating exceed 40 per cent.1 In four establishments the pro­
portion was from 20 to 40 per cent; in two it was 10 and under 20 per
cent; in five the proportion was 5 and under 10 per cent; and in the
remaining five establishments less than 5 per cent of the employees
participated in the benefits of the plans.
BENEFIT ACCRUING TO EMPLOYEES.

Below is given a table showing the benefits accruing to the partici­
pating employees, in terms of .per cent of their regular earnings.
T able

2 4 .—PER CENT OF EARNINGS PAID AS DIVID EN DS IN 16 ESTABLISHMENTS
H AV IN G LIMITED PROFIT SHARING PLANS.

Classified per cent of earnings paid as
dividends.

Number
of estab­
lish­
ments.

Under 2...........................................................
4 and under 6 ................................................
6 and under 8 ................................................
8 and under 10..............................................
10 and under 15.............................................
15 and under 20.............................................

1
1
2
2
2
1

Classified per cent of earnings paid as
dividends.

Number
of estab­
lish­
ments.

20 and under 30.............................................
40 and under 50.............................................
50 and over.....................................................

5
1
1

Total.....................................................

16

i Except for the arbitrary methods of determining the shares of the individual participants these two
plans might have been classified as pure profit sharing.




64

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

In one-half of the plans the profit-sharing dividend on the regular
earnings of the participating employees was 15 per cent or over. In
over two-fifths of them it was 20 per cent or more. In over onethird of the plans the profit-sharing dividend was less than 10 per cent.
COST OF PLANS TO EMPLOYERS.

The following table shows the cost of the plans to the employers
in per cent of the total pay rolls of their establishments:
T able

2 5 .—COST OF LIMITED PROFIT-SH ARING PLANS TO 16 EM PLO YER S, IN P ER ­
CENT OF TO TAL P A Y ROLLS FOR ONE Y E A R .

Classified per cent of pay rolls paid as
dividends.

Number
of estab­
lish­
ments.

Under 1 .........................................................
1 and under 2 ..............................................
2 and under 4
4 and under 6...............................................

1
6
5
1

Classified per cent of pay rolls paid as
dividends.

Number
of estab­
lish­
ments.

6 and under 8 .................................................
15 and under 20.............................................

2
1

Total.....................................................

16

In 15 of the 16 establishments the cost was less than 8 per cent on
the total pay rolls of the respective establishments. In three-fourths
of the plans it was less than 4 per cent. In one instance only was the
cost of the plan more than 15 per cent.
OCCUPATIONS OF PARTICIPATING EMPLOYEES.

The following table shows the occupation groups of the partici­
pating employees under 18 limited profit-sharing plans:
T a b l e 2 6 . — NUM BER

AN D PER CENT OF PARTICIPATING EM PLO YEES IN EACH OCCU­
PATION GROUP.

Participating
employees.
Occupation group.
Number. Percent.
Executive....................
Clerical.........................
Sales..............................
All others.....................

1,078
272
171
532

52.5
13.2
8.3
25.9

Total..................

2,053

100.0

The table shows that 74 per cent of all the participating employees
belonged to the group of executive, clerical, and sales occupations.
As would be expected in establishments with limited profit sharing,
more than half of the participants belonged to the executive force.
Only 25.9 per cent were in the group “ all others,” which includes the
mechanical and manual occupations.




P R O F IT SH A R IN G IN T H E U N IT E D STATES.

65

DETAILED TABLES.

The principal part of the data which is shown in summary form in
the preceding tables of this section of the report is shown in detail
in the two tables which follow.
2 7 .—NUM BER OF EM PLO YEES, PROPORTION PARTICIPATING IN PROFITS, D IV ­
IDENDS TO EM PLO YEES, A N D COST OF PROFIT-SH ARIN G PLANS TO E M P LO Y ER S,
IN 18 ESTABLISH M ENTS H AVIN G LIM ITED PROFIT-SH ARIN G PLANS.

Table

Establishment
No.

1
2
3
4

5
6
7

8

9

10
11
12
13

14
15
16
17
18

Dividend period
ending—

Dec. 31,1913.............
Dec. 31,1914.............
June 30,1914.............
June 30,1915.............
Dec. 31,1911.............
Dec. 31,1912.............
Dec. 31,19142...........
June 30,1911.............
June 30,1913 *............
June 30,1914.............
June 30,1915.............
Dec. 31,1914.............
June 30,1914.............
Dec. 31,1912.............
Dec. 31,1913.............
Dec. 31,1914.............
Dec. 31,1915.............
June 1,1911...............
June 1,1912...............
June 1 ,1914&.............
June 1,1915...............
Dec. 31, 1909.............
Dec. 31,1910.............
Dec. 31,1911.............
Dec. 31,1912.............
Dec. 31,1913.............
Dec. 31,1914.............
Dec. 31,1915.............
Dec. 31,1912.............
Dec. 31,1914.............
Feb. 1,1916...............
Dec, 31,1907.............
Dec. 31,1908.............
Dec. 31,1909.............
Dec. 31,1910.............
Dec. 31,1912 6...........
Dec. 31,1913.............
Dec. 31,1914.............

Employees
participat­
Aver­
ing in
age
profits.
num­
ber
of
Per
em­ Num­ cent
ploy­ ber.
of
ees.
total.

3,414
3,354
2,271
2,686
251
292
339
225
325
275
225
206
8,716
9,300
2,700
2, 700
2, 700
2, 700
1,778
-1,767
1,678
1,612
0)
(1
)
O)
(J
)
0)
410
400
456
38
225
C
1)
0)
C
1)
0)
15
18
19
115
70

June 1,1915...............
Dec. 31,1915.............
Dec. 3 1 ,1 9 1 4 ...............
67
Dec. 31,1 9 1 4 ............... 9,645
Dec. 3 1 ,1 9 1 4 ..............
448

72
75
153
139
5
0
5
13
14
13
14
46
837
860
190
202
210
228
39
37
33
38
12
12
12
145
151
180
180
38
11
29
3
4
4
4
4
4
4
4

2.0
1.7
1.5
5.8
4.3
4.7
6.2
22.3
9.6
9.2
7.0
7.5
7.8
8.4
2.2
2.1
2.0
2.4
0)
0)
0)
0)
0)
43.9
45.0
8.3
28.9
12.9
(x
)
C
1)
0)
26.7
22.2
21.1

Total
pay roll.
Amount.

$2,842,116
2,941,671
2,112,061
2,531,519
160,983
182, 502
213,071
202,927
296,130
251, 730
203,145
202,208
6,719,276
7,216,843
1,995,980
2,025,955
2,028,297
1,968, 560
725,572
711,306
816,338
802,632
0)
i1
)
(x
)
C)
1
0)
355,000
350,000
374,870
25, 773
171,887
C
1)
C
1)
(x
)
C
1)
18,841
26,502
28,242
78,906

7

3.5
10.0

31

46.3

104,168

271

2.8

8,283, 426

91

20.3

336,120

1 Not reported.
2 No distribution made in 1913.
a Less than one-tenth of 1 per cent.

56831°—Bull. 208—17------5




2.1
2.2
6.7
5.2

Pay roll of
participants.

C
1)

Per
Per
Per
cent
cent of centof
of pay
total Amount. total roll of
roll partic­
ipants.

$311,000
352,500

10.9
12.0

0)
272,340
10,080
11,184
11,900
21,057
21,614
24, 768
26,289
68,863
1,048,259
1,052, 538

0)
10.8

453,027
513,754
511,160
517,289
52,270
53,190
50,150
58,672
8,000
8,000
8,500
45,500
52,000
65,000
65,000
56,200
10,504
% 50,514
9,000
11,200
12,000
12,000
12,900
12,900
12,900
7,800
19,240
72, 438

0)
102, 406

Dividends to employees.

6.3
6.1
5.6
10.4
7.3
9.8
12.9
34.1
15.6
14.6
22.7
25.4
25.2
26.3
7.2
7.5
6.1
7.3
0)
0)
0)
C)
1
(x
)
18.3
18.6
15.0
40.8
29.4
0)
0)
C
1)
C
1)
68.5
48.7
45.7
9.9

$42,600
87,500
23,098
43,693
2,243
3,012
88
73 i
8,941
3,810
2,120

1.5
3.0
1.1
1.7
1.4
1.7
(3)
.4
3.0
1.5
1.0

0)
87,061
84, 763

0)
1.3
1.2
7.6
9.2
6.3
6.5
2.1
.7
1.6
1.5

150, 890
186,040
127, 790
128,840
15,500
5,200
13,100
12,100
2,500
2,500
2, 500
6,500
9,000
9,200
9,500
12,509
828
3,031
1,662
1,362
888
1,333
947
1,582
1,617

C)
1
C)
1
(!)
C)
1
C)
1
2.6
2.7
3.3
3.2
1.8
0)
(x
)
C
1)
C
1)
5.0
6.0
5.8

13.7
24.8
0)
16.0
22.3
26.9
.7
3.5
41.4
15.4
8.1
C)
1
8.3
8.1
33.3
36.2
25.0
24.9
29.7
9.8
26.1
20.6
31.3
31.3
29.4
14.3
17.3
14.2
14.6
22.3
7.9
6.0
18.5
12.2
7.4
11.1
7.3
12.3
12.8
79.9

0)

6,231
8,862

0)

46.1

69.5

20,140

19.3

27.8

0)

271,166

3.3

5,000

1.5

30.5

7.9

4 No distribution made in 1912.
6 Data for 1913 not reported.
8 No distribution made in 1911.

0)
4.9

66

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

2 8 .—NUM BER OF EM PLO YEES, PROPORTION PARTICIPATING IN PROFITS, AN D
NUM BER AN D PER CENT OF PARTICIPANTS IN EACH SPECIFIED OCCUPATION
GROUP, IN 18 ESTABLISH M ENTS H AVIN G LIM ITED PROFIT-SH ARING PLANS.

T able

Occupation groups of participants.
Aver­ Employees
participating
Esage
in profits.
tabnum­
Executive.
Clerical.
Sales.
All others.
lish- Dividend period ending— ber
ment
of emPer
No.
Num­ cent Num­ Per Num­ Per Num­ Per Num­ Per
of
ber. cent. ber. cent. ber. cent. ber. cent.
ber.
total.

pi°y-

Dec.
July
Dec.
June
Dec.
June
Dec.
June
Dec.
Dec.
Dec.
Feb.
Dec.
June
Dec.
Dec.
Dec.
Dec.

31.1914
1.1915
31.1914
30.1915
31.1914
30.1914
31.1914
1.1915
31.1915
31,1912
31.1914
1,1916,
31.1914
1.1915
31.1915
31.1914
31.1914
31.1914

3,354
2,686
339
225
206
9,300
2,700
1,612
400
456
38
225
19
115
70
67
9,645
448

75
139
5
14
46
860
210
38
180
38

11
29
4
4
7
31
271
91

2.2
5.2
1.5

6.2

22.3
9.2
7.8
2.4
45.0
8.3
28.9
12.9
21.1
3.5
10.0
46.3
2.8
20.3

75
139
5
14
11
317
48
38
40
38

100.0
100.0
100.0
100.0
23.9
36.9
22.9
100.0
22.2
100.0

11

100.0

29
4
4
5
3
271
26

100.0
100.0
100.0
71.4
9.7
100.0
28.6

65.2
16.3
17.6

30
140
37

3.5
56.2

11.1

'

40.'7

10.9
43.4
3.3
6.7

28.6
35.5

25.8
37

5
373
7
120

30
118

10

29.0

11.0

i9.8

ANALYSIS OF WORKING OF FIVE TYPICAL LIMITED PROFIT-SHARING
PLANS.

As compared with the profit-sharing plans described in the pre­
ceding sections of this report, the distinguishing feature of the limited
profit-sharing plans is the limited extent of their application, the
majority of them having been devised, apparently, either for the
benefit of the executive and supervisory employees, as in plans 1, 2, 3,
and 4 described below, or for the benefit of the better paid employees,
as in plan No. 5.
Aside from the relatively small proportion of beneficiaries and the fact
that only the executive and supervisory or better paid employees are
allowed to participate, these plans in many instances are to be noted
for the lack of any definitely announced rule for the computation of
individual shares in the divisible fund. From this point of view plan
marked No. 1 is considered as typical. Under its provisions none of
the employees of the company are informed as to the method by
which their shares will be determined; they are furthermore specifi­
cally prohibited from communicating to the other employees the
amounts received by them under the penalty of such an action on
their part resulting “ to the disadvantage of the employee involved."
As far as it could be ascertained, the main principle guiding the
determination of individual shares under such plans is that the more
important the position of the employee, as shown naturally in the
amount of salary he receives and in the desire of the company to
retain his services, the larger his proportion in the divisible fund.
The working of this principle is clearly shown in plan designated as
No. 3.




P R O F IT SH A R IN G IN T H E U N IT E D STATES.

67

PLAN NO. 1.

This plan has been in operation since 1910 and is applicable only
to “ officers and employees occupying semiofficial positions,” mean­
ing by this classification managers, superintendents, and other im­
portant employees engaged in “ directing the affairs of the company,
including officers.” Not all of the employees engaged in the abovementioned occupations, however, are allowed to participate. The
plan, as announced, is addressed to “ the officers and those occupying
semiofficial positions—to whom this letter [announcing the plan] is
officially delivered.”
Although the specific proportion of the profits that is to be dis­
tributed is announced in advance, the determination of the amount
of individual shares is left to the discretion of the management. It
was stated by officers of the company that the amount of individual
shares depends chiefly “ upon the relative importance of the position
occupied by a specific employee,” and the merit of his service, although
“ salaries, in a general way, are taken into consideration,” the higher
the salary the larger, apparently, the share of profits awarded.
The basis of determining individual shares is not communicated to
any of the profit-sharing employees. In fact, as stated in the last
paragraph of the text of the plan reproduced below, “ it is the desire
of the board that there shall not be any discussion among the em­
ployees as to the amounts received under the distribution,” and any
such discussion coming to the knowledge of the special committee
“ will operate to the disadvantage of the employee involved.”
No profits were available for distribution during 1911 and 1912.
In 1915, $42,600 and in 1914, $87,500 were distributed. In 1913, of a
total of 3,414 employed, 72, or 2.1 percent, shared in the distributed
profits. In 1914, 2.2 per cent of the total employed benefited by the
operation of the plan. The profits distributed amounted to 13.7 per
cent of the earnings of the participants in 1913 and to 24.8 per cent
in 1914. The cost of the plan to the company in per cent of the
total pay roll of the entire organization amounted to 1.5 per cent
and 3 per cent in 1913 and 1914, respectively.
The text of this plan is herewith reproduced in full:
To the officers and those occupying semiofficial positions , and managers o f t h e --------Co. and its subsidiary companies , to whom this letter is officially delivered:

The company desires those within the above class, upon whose efforts much of the
success of the business depends and who are engaged in directing and managing the
affairs of the company and operating the properties, to share with the stockholders in
any profits made after a certain amount of net earnings shall have been reached. To
this end the following plan has been adopted:
Twelve per cent upon the outstanding capital stock of the company is sufficient to
allow the payment of a 7 per cent dividend whenever that course may be deemed wise
and the application of a reasonable sum for betterment or toward surplus. It is
believed that the business is capable of earning a sum each year much in excess of said
12 per cent. The company proposes to divide among the officers and those occupying




68

B U L L E T IN OF T H E BU EEA U OF LABOR STATISTICS.

semiofficial positions and managers to whom this letter is officially delivered, a per­
centage of the increased earnings over and above 12 per cent on the amount of the
capital stock from time to time outstanding, the amount to be thus divided to be
decided each year by the board of directors. The present intention of the board is
to distribute a sum (in stock of the company) equal to 25 per cent of the increased net
earnings of the company over and above said 12 per cent. Said amount to be dis­
tributed is to be paid out by direction of the board of directors at the end of each year,
in such amounts and to such persons as a special committee appointed by the board of
directors shall determine. The distribution recommended by such special committee
will be made amongst the class above specified and in the proportions fixed by that
committee. The special committee shall make no award to any member of that com­
mittee, but if any member thereof shall be within the above class, the amount of the
award, if any, to such member shall be fixed by the board of directors and not by the
committee, and such award shall be subject to the same provisions applicable to the
awards made by the special committee. The stock will be distributed on a basis of
value to be fixed by the board. In making the distribution one-half will be distributed
at the end of each year and the other half held in the hands of a trustee or trustees from
time to time selected by the board of directors; and the stock so issued to, or transferred
to said trustee or trustees, will be delivered to the beneficiary at the end of five years
from the beginning of the year in which the profits are earned. Each man will receive
a certificate for his interest, the certificate to recite amongst other things:
(a) That if he remains continuously in the service of the corporation, or one or
another of its subsidiary companies, for five years from the beginning of the year in
which the profits are earned and during all of said time shall have rendered faithful
and satisfactory service to the company, or one or another of its subsidiary companies
the stock is to be delivered to him and that he may do as he likes with it after delivery:
( b) That if he dies or becomes totally and permanently disabled while in the employ
of the corporation, or one or another of its subsidiary companies, the stock will be
delivered to his estate or to him;
(c) That he can draw the dividends declared on the stock while it is held in trust
for his account and he remains in the employ of the corporation, or one or another
of its subsidiary companies, until such shares have been delivered to the participant
or shall have been forfeited as herein provided;
(d) That if, without the consent of the corporation, for any cause, he shall have
quitted the service of the corporation, or one or another of its subsidiary companies,
except as provided in (6), or shall be discharged, and except when voluntary retire­
ment may be made under any general pension scheme which may hereafter be
adopted, he shall forfeit all right to said stock, and in such case it will be held in a
fund which at the end of five years from the beginning of the year in which the profits
are earned will be divided among such of the above-mentioned class of the series of
that year as shall have complied with all the conditions;
{e) That neither it, nor any right thereunder, shall be assignable or transferable by
the beneficiary, nor shall same be encumbered either by act of the party or b y opera­
tion of law without the written consent of the company, and in the event of the viola­
tion of this provision he and his successors in interest shall forfeit all right to said stock
and every right thereunder, if the corporation at any time shall so elect. Provision
against assignment by operation of law shall not be deemed to prohibit beneficiary’s
estate from receiving the stock if he dies while in the employ of the corporation.
Until such time as the stock is issued in the name of the certificate holder and delivered
to him, he shall have no interest therein which will entitle him to vote thereon, but
the voting power under said stock, if any, may be exercised by the trustee or trustees.
Thus 50 per cent of the amount set aside in this profit-sharing plan for one year will
be held in the shape of stock and will be given only to such of the members of that




P R O F IT SH A R IN G IN T H E U N IT E D STATES.

69

series, and at the end of the period next mentioned, as shall have been continuously
in the employ of the company, or one or another of its subsidiary companies, for five
years from the 1st day of January of the year in which such profits are earned.
The board in carrying out this plan may decide to make the distribution so that as
to the one-half distributed at the end of the year the employee may receive all cash
or all stock, or part in each, and the other half that is to be received and held by the
trustees may be all cash or all stock, or part in each. Neither the company nor any
trustee shall be required at any time to deliver any fractional share of stock, but the
trustee or trustees shall have the right and will for any fractional share to which the
participant would appear to be entitled and which may not be delivered to the partici­
pant at the time the stock is deliverable, pay to the participant in cash the pro rata
price for the fraction of a share not delivered, computed on the price per share which
the trustee or trustees paid for the stock. The trustees shall be authorized to sell and
transfer the said stock and to invest and reinvest same as they may elect, subject to
the approval of the board of directors, and the certificate of interest herein mentioned,
and all the provisions thereof shall be deemed to apply as well to such cash or securities,
if any, in the hands of the trustees, as it does or would have applied to stock of the
company.
It is not intended to have the distribution made pro rata according to salaries
received, but same is to be made as a reward for efficient services. Profits obtained
by individual departments, reduction of cost at the factories, closing of contracts of
special importance, harmonious relations with other branches, and all other matters
of benefit to the company will be taken into consideration by the special committee.
Applicants for the benefits of this plan shall sign and forward to the treasurer of the
......... Co., a form which is herewith inclosed, in which the party states that it is his
intention to remain permanently with the company, or one or another of its subsidiary
companies, and that he will use every possible endeavor to maintain harmonious
relations with other branches, and to unify the company’s interests and to increase in
every legitimate way its profits, both in his own department and by suggestion where
it may benefit departments other than his own. This form will insure all of the names
of those eligible to participate being before the special committee at the distribution
period.
While it is the purpose of the company to inaugurate for the 1913 series the foregoing
plan on April 1, 1914, treating the year in which the share of profits will be computed
as commencing January 1, 1913, and will probably continue this plan annually there­
after with new series, from each January 1, it has been thought best not to have
this arrangement in any year take any form which would create a contract obligation
on behalf of the company, prior to or except as the delivery of stock or certificates of
interest create same, and therefore this plan is one merely of a declaration of intention.
The question of what constitutes profits shall be determined solely by the board of
directors.
None of the class above mentioned and none sharing in the distribution, nor anyone
in anywise interested under this plan, shall have any right to demand an accounting,
and the distribution to be made by the special committee is to be made wholly within
its discretion, subject to ratification by the board of directors, and no right attaches to
the fund or any share in it on the part of an employee, and the committee reserves the
right to withhold participation in part or entirety from anyone, the selection of par­
ticipants resting solely upon the judgment of the committee, and all other questions
affecting the applicants or rights of certificate holders shall be determined solely and
finally by the special committee as it may from time to time be constituted b y direction
of the board of directors, and its rulings must be accepted as conclusive.
It is the desire of the board that stock so distributed shall not be sold but shall be
held by the employee as his own, thereby increasing his interest in the welfare of the




70

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

company, and any sale of such stock will be considered a matter of bad faith, and will
militate against the employee in any distribution in a subsequent year.
It is also the desire of the board that there shall not be any discussion among the
employees as to the amounts received under the distribution, and any such discussion
coming to the knowledge of the special committee will operate to the disadvantage of
the employee involved.
Neither this plan nor anything growing out of it shall be construed to be a contract
of employment.
PLAN NO. 2.

Plan No. 2 seems to be in a class by itself. Unlike most of the
plans, profit sharing, bonus or gain sharing or otherwise, described
in this report, its main provisions are embodied in the articles of
incorporation of the company of 1911. Under these articles the
authorized capital of the company is divided into first preferred stock
($4,500,000), second preferred stock ($50,000), and industrial part­
nership stock ($1,050,000).
First preferred stock consists of all converted common stock, carries
a fixed cumulative dividend with preference in assets and dividends,
but no rights to accretions. The rate of dividend (8 per cent) was
chosen to represent what was considered a fair return on the capital,
at the time of reincorporation, invested in the concern.
Any profits remaining after these dividends have been fully paid
are invested in the business, and against them is issued yearly the
so-called industrial partnership stock.
Only to ‘ ‘ principal employees,” such as sales managers, senior
salesmen, department heads, foremen, etc., is industrial partnership
stock issued. “ Principal employees” includes only those who have
at least seven years of service and an annual remuneration of at least
$ 1,200, or six years’ service and a remuneration of $ 1,500, or five years’
service and a remuneration of $1,800, and wiio have contracted in
writing for the stock. Remuneration for overtime work or piece­
work or commissions is not to be included in the above earnings.
Individual shares of profit are based exclusively upon the salaries of
the participating employees.
To ascertain the amount of net profits to be divided among partici­
pating employees, termed industrial partners, not less than 6 per
cent is allowed for depreciation; 8 per cent, cumulative dividend, is
paid on first preferred stock; next a cumulative dividend at a rate
determined by the by-laws (but in no case to be less than 4 per cent)
is paid on second preferred stock; 5 per cent of the remaining net
profits are then set aside for the purpose of buying shares of first
preferred stock at the discretion of the directors; out of one-half of
the remaining net profits, dividends, not to exceed 20 per cent, are
paid to holders of industrial partnership stock; the other half of the
remaining net profits, subject to provision being made for a reserve
fund, is apportioned to “ principal employees,” upon the basis of




PR O F IT S H A R IN G IN T H E U N IT E D STATES.

71

their earnings, in shares of industrial partnership stock issued at par.
Beginning with January 1, 1913, no further issue of industrial part­
nership stock can be made unless at least a 5 per cent dividend is paid
on the outstanding industrial partnership stock.
Until industrial partnership stock to the amount of $1,000,000 is
issued the entire voting power of stockholders is vested in the holders
of the first preferred and industrial partnership stock, each holder of
the former being entitled to one vote for each share held and each
holder of the latter being entitled to one vote for each 10 shares held.
At the next annual meeting after industrial partnership stock to
the amount of $1,000,000 shall have been issued, the entire voting
power will rest with the holders of that stock, unless: (a) For any 12
months dividends on first preferred stock average less than 4 per
cent; (b) if for any 24 months such dividends average less than 6
per cent per annum; (c) if for any 36 months such dividends average
less than 7 per cent; or (d) if for any period of four years all cumu­
lative dividends have not been paid in full. The voting power reverts
to the preferred stockholders in cases (a) and (b) temporarily, and
in cases (c) and (d) permanently.
All shares of industrial partnership stock are nontransferable and
nonassignable except to the company itself. When a holder of such
stock, from whatever cause, ceases to be an employee, no dividends
thereafter accrue from his stock, and he or his legal representative
must resell his shares to the company at par or, at the company’s
option, exchange them for second preferred stock.
Employees contracting for industrial partnership stock have no
right to any accounting by the company concerning its business or
profits. They are subject to the rules and discipline of the company
and to discharge like other employees, but with the right of appeal­
ing in writing to the directors, whose decision is final.
RESULTS OF THE W ORKING OF THE PLAN.

The percentage of the total employed that participated in the dis­
tributed profits during the period of existence of the plan, 1912 to 1915,
varied from 7 (the lowest) in 1912 to 8.4 (the highest) in 1915.
Over one-half of all the participants in 1914 were associated with the
selling end of the business in the capacity of directors of sales, dis­
trict managers of sales, and ordinary salesmen. Slightly over onefourth of the participants held executive and supervisory positions
in the manufacturing departments of the business. The remainder
of the participants occupied clerical positions of various kinds. In
this connection, however, it is interesting to note that although con­
stituting only 8.4 per cent of the total employed in 1915, the partici­
pating group received 26.3 per cent of the total pay roll.




72

BULLETIN" OF T H E BU REA U OF LABOR STATISTICS.

The following table shows the annual salaries of the employees
participating in the profit sharing during the year 1914:
Salary.

Number.

$1,200 to $1,500.............................................................................
$1,500 to $1,800..............................................................................
$1,800 to $2,000.............................................................................
$2,000 to $3,000..............................................................................
$3,000 to $5,000.............................................................................
$5,000 to $10,000............................................................................
$10,000 and over............................................................................

55
45
35
43
22
6
4
210

Thus it may be seen that about two-thirds of the participants
received less than $2,000 per year, less than one-third from $2,000 to
$5,000, and only 10, or 4.8 per cent, of all participants received an
annual salary of over $5,000.
The amounts distributed as profits constituted the following per­
centage additions to the ordinary earnings of the participants: In
1912, 33.3 per cent; in 1913, 36.2 per cent; in 1914, 25 per cent, and in
1915, 24.9 per cent.
The cost of the plan to the company in terms of per cent of the
total pay roll was: In 1912, 7.6 percent; in 1913, 9.2 per cent; in 1914,
6.3 per cent, and in 1915, 6.5 per cent.
The following table shows the number of participating employees
who have left the employ of the company since the inception of the
plan and the causes for leaving:
T a b l e 2 9 . — PARTICIPATING

EM PLOYEES L EAVIN G EM PLOY OF COMPANY, B Y Y E A R S
AND CAUSES.

Year.

1912.........................
1913.........................
1914.........................

Death.

Dis­
charge.

1
1
2

2
3
2

Volun­
tary
leaving.

2
7

Other
causes.

Total.

2
2
2

5
8
13

Out of a total of slightly over 200 industrial partners during each
of the years of the existence of the plan the following numbers left the
employ of the company for causes stated below: In 1912, 5; in 1913,
8; in 1914, 13, making a total of 26 in three years. The following are
the causes of their withdrawal from employment: Voluntarily, 9;
discharged, 7; death, 4; other causes, 6.
As noted elsewhere, the divisible profits are reinvested in the busi­
ness of the company, the specific annual amounts being capitalized or
converted into industrial partnership stock to be distributed to par­
ticipating employees—the industrial partners—on the basis of their
respective salaries.




PR O F IT SH A R IN G IN T H E UNITED- STATES.

73

The following table shows the number of participating employees,
the number of shares held by them and the par value of these shares
for the years 1911 to 1915:
T a b l e 3 0 . — NUM BER

OF PAR TICIPATING EM PLO YEES AN D NUM BER AND PAR V A L U E
OF SHARES H E L D , B Y Y E A R S , 1911 TO 1915.

Year.

1911..................................
1912..................................
1913..................................
1914..................................
1915..................................

Partici­
pating
employ­
ees.
167
190
202
210
228

Shares
held.

410
15,493
34,103
46,882
59,696

Par
value of
shares
held.
$4,100
154,990
341,030
468,820
596,960

The value of the industrial partnership stock held by employees on
March 1, 1916, was $596, 960. This amount constituted slightly over
10 per cent of the entire authorized capital stock of the company and
was held by 228 employees, or 8.4 per cent of the total employed.
The text of this plan is reprinted herewith in full:
ARTICLES OF ASSOCIATION.
1. (a) Said first preferred stock may be issued in payment 'for the property and
assets, including good will (including name) of the original company, with the assump­
tion by this company of the liabilities of the original company, accrued or accruing
or arising out of the state of affairs existing at the time of such purchase.
(6) No increase of first preferred stock shall be authorized without the written
consent of the holders of three-fourths of the then outstanding stock of each of the
three classes of stock.
2. (a ) Second preferred stock may be issued only: First, in exchange for industrial
partnership stock, as hereinafter provided; or, second, for cash or property.
(6) Increases of second preferred stock may be authorized by vote of a majority
of all stock outstanding of the classes or class of stock then entitled to vote as herein­
after provided in paragraph 11.
3.1 (a) The first issue of industrial partnership stock shall be for cash to such em­
ployees of the original company as shall be designated by the directors of this new
company as having substantially fulfilled the requirements as to time and remunera­
tion of principal employees as hereinafter set forth; and each such employee may
subscribe, payable in cash, for shares, disregarding fractions, in proportion to salary.
(6)
All subsequent issues of industrial partnership stock shall be to principal em­
ployees as defined and limited in paragraph 8 of this agreement, but after January
1, 1913, no such issue shall be made unless a dividend for the preceding calendar
year of at least 5 per cent in cash on industrial partnership stock already outstanding
shall be paid or provided for.
(c) Increases of industrial partnership stock may be authorized by vote of a ma­
jority of all stock outstanding of the classes or class of stock then entitled to vote as
hereinafter provided in paragraph 11.
4. In ascertaining net profits:
(a)
The valuation of good will (including name) of the original company shall not
be increased beyond the valuation thereof at which it is taken in this company’s
1 This cash purchase applied only to an initial issue of $4,100.




The article is no longer operative.

74

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

purchase of the property and assets ’of said original company; nor shall any sum be
added for good will (including name) of this company.
(b)
The total amount allowed for depreciation since the organization of this com­
pany shall not at any time be less than a yearly allowance of 5 per cent, figured on
dies, tools, furniture and fixtures, buildings, and machinery.
5. First preferred stock shall be entitled to a preferential cumulative dividend
at the rate of 8 per cent per annum, payable quarterly as and when declared by the
directors, and shall begin to accrue as of or on December 1, 1911.
6. Second preferred stock may, as herein limited, fee issued in series under pro­
visions in the by-laws and amendments thereof: the first series to include all second
preferred stock issued until, by amendment of the by-laws, the rate of dividend is
changed; the second series to begin upon such change of rate and to include all second
preferred stock issued until another such change of rate; and so on, similarly, as to
subsequent series. But the rate so provided for any series shall always remain the
rate of dividend for that series.
The first series of second preferred stock shall be entitled, after dividends on first
preferred stock have been paid or provided as aforesaid, to a preferential cumulative
dividend at such rate (not less than 4 per cent per annum) as may be provided in
the by-laws.
The second series of second preferred stock shall be entitled to a dividend (similar
in preference to said first series dividend) at such rate as may be provided in the
amendment to the by-laws; and so on, similarly, as to subsequent series. But in
no series shall the rate of dividend provided be less than 4 per cent per annum.
7. After all first and second preferred -dividends have been provided for as above
required, there shall he set aside annually out of the remaining net profits 5 per cent
of such remainder for the purpose of buying in shares of first preferred stock as and
when the directors may deem it expedient.
Out of one-half of the remaining net profits, dividends may be declared and paid
annually to holders of industrial partnership stock. The rate shall not exceed a
total of .20 per cent for any year.
8. After all above requirements shall have been fulfilled, the remaining net profits
shall be apportioned under provisions of the by-laws to principal employees as extra
remuneration for services theretofore rendered by them, except that an amount or
amounts not at any time exceeding a total of 10 per cent of the total par value of the
then outstanding capital stock of all classes may be reserved in a suspense account
at the discretion of the directors, who may likewise dispose of the same, except as
may be otherwise provided by the by-laws.
Such extra remuneration shall be paid to each principal employee by issuing to him
for such services, out of authorized industrial partnership stock, shares of industrial
partnership stock of the total par value equal to his apportioned extra remuneration.
Principal employees shall be limited to the following:
Employees (including salaried officers) of this company, at the time any such ap­
portionment is voted, whose aggregate .service in this company (including time served
with the original company) shall amount, at the end of the calendar year for which
such apportionment is made, to the time set forth below, and whose remuneration
actually received from one or both of said companies during such calendar year (but
not counting remuneration paid for overtime work or piecework or commissions)
shall liave been as set forth below, and which rate of remuneration in this company
shall have been approved b y a two-thirds vote of all the directors, namely:
At least seven years’ service and remuneration of at least $1,200, or at least s i x
years’ service and remuneration of at least $1,500, or at least five years’ service and
remuneration of at least $1,800, and who shall have contracted in writing with this
company for extra remuneration.




P R O F IT S H A R IN G IN T H E U N IT E D STATES.

75

9. (a) All shares of industrial partnership stock shall be nontransferable and nonassignable, except to or for this company as provided below.
(b) Whenever an industrial partnership stockholder ceases, from any cause, to be
an employee, no dividends shall thereafter accrue to his stock, and he or his legal
representatives shall forthwith transfer .and assign such industrial partnership stock
at and in accordance with the request of this company, upon payment or tender by
this company of the par value thereof, or at the company’s option upon its issue or
tender (in exchange for such industrial partnership shares) of an equal number of
second preferred shares. In either case there shall also be paid in cash all declared
but unpaid dividends.
(c) No such industrial partnership shares shall be paid for in cash, however, if any
obligations due to first preferred stock remain unsatisfied or if the company’s capital
shall have or would thereby become impaired.
10. In case of liquidation or dissolution of the company or a distribution of its
assets, or in case of any sale of substantially its entire property and assets, first pre­
ferred stock shall be entitled to a preference to the extent of $125 a share and all
accrued but unpaid dividends thereon; and thereafter second preferred stock shall
be entitled to a preference to the extent of $10 a share and all accrued but unpaid
dividends thereon; and then industrial partnership stock shall be entitled to receive
$10 a share and all declared but unpaid dividends thereon—after which all surplus
value remaining shall be divided pro rata among the holders of all classes of stock
according to their total par value holdings.
11. Until industrial partnership stock to the amount of $1,000,000 in par value shall
have been issued, the entire voting power of stockholders, except as otherwise pro­
vided in subdivision (c) of this paragraph, shall vest in first preferred and industrial
partnership stock together, each holder of first preferred stock being entitled to one
vote for each share held and each holder of industrial partnership stock being entitled
to one vote for each 10 shares held, but without any fractional vote for any shares
aggregating less than 10 shares.
At the next annual meeting of the stockholders after industrial partnership stock
to the amount of $1,000,000 shall have been issued, the entire voting power of stock­
holders shall vest and remain in holders of industrial partnership stock, except that
holders of first preferred stock or holders of first and second preferred stock shall have
voting power as hereinafter provided:
(a) If for any 12 months dividends on first preferred average less than 4 per cent
per annum, except in case of destruction of any substantial part of the manufacturing
plant by fire, earthquake, or other natural calamity, or if for any 24 months such divi­
dends average less than 6 per cent per annum, then holders of first preferred stock
shall have sole voting power of stockholders, but without power to alter or amend
this agreement, except by vote of two-thirds of each class of stock, outstanding; but,
when full obligations to first preferred shall have been again earned and paid (figuring
minimum depreciation as above provided in paragraph 4), voting power shall revert
to holders of industrial partnership stock, and the original plan shall be carried on,
unless meanwhile sole voting power shall have finally vested in first preferred stock­
holders as provided in the following paragraph ( b).
(b) If for any 36 months such dividends average less than 7 per cent per annum, or
if in any period of four years the company shall not have paid all cumulative dividends
in full, so that there shall be no dividend or part of any dividend in arrears, then
sole voting power shall vest at the next annual meeting and thereafter remain in
first preferred stockholders.
(c) In case of a proposed dissolution of the company or of amendment or alteration
of this agreement, or of a sale or lease of all or such substantial part of its property as
would involve a virtual change or abandonment of the company’s business, holders




B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

76

of all classes of stock shall be entitled to vote; and such dissolution, amendment or
alteration, or sale or lease, may be voted and authorized by vote of a majority of the
outstanding stock of each class in the case of a dissolution, and of two-thirds of the
outstanding stock of each class in case of such amendment or alteration or sale or
lease.
12.
No mortgage or mortgagee for more than a total of one-half the par value of all
classes of stock then outstanding shall be given or placed upon the company’s property
or any part of it without the written consent of the holders of three-fourths of the
then outstanding first preferred stock.
BY-LAWS.
A r tic le

II.— Em ployees — Contract f o r extra remuneration — Industrial 'partnership
stock .

S e c t i o n 1. Contract f o r extra remuneration.—The directors, or any officer or officers
of the company authorized by them for such purpose, may contract in behalf of the
company in writing with employees for extra remuneration for future services, as
limited by the agreement of association and as hereinafter provided.
Sec. 2. N o right o f accounting .—It shall be agreed in each contract between the
company and any such employee that he shall have no right thereunder to any ac­
counting by the company concerning its business or profits, and that, if notwithstand­
ing such agreement it is deemed that he has any such right, he waives the same.
Sec. 3. Subject to rules , and discipline and discharge— A ppea l. —Employees holding
such contracts shall at all times be subject to the rules and discipline of the company
and to discharge like other employees, but with the right of appeal, upon discharge
or forced resignation, to the directors, whose decision shall be final; such appeal to
be made in writing and presented within 30 days from the date of such discharge or
forced resignation; and pending the appeal such employee may be suspended.
Sec. 4. A pportionm ent o f net profits— Fractional adjustment.—Such net profits as
are to be apportioned as extra remuneration for such services among the principal
employees shall be apportioned annually in proportion to the amount of remuneration
actually received during the entire preceding calendar year by such principal em­
ployees (not including any remuneration for overtime work, piecework, or commis­
sions), except that in determining such proportions all amounts in excess of $10 (the
par value of the shares of industrial partnership stock) or in excess of any multiple
of $10, up to and including $5, shall be disregarded, and all such excess amounts
from $5 to and including $9.99 shall be considered $10. In making these fractional
adjustments, amounts may be supplied from or carried to the suspense account.
The directors may likewise, at any time after January 1, 1912, apportion similar net
profits earned from the incorporation of this company to December 31,1911, inclusive.1
A r tic le

IX .— Amendment— Alteration — R epeal .

Amendm ent , alteration , repeal.—These by-laws may be amended, altered, or re­
pealed at any meeting of the stockholders, when only one class of stock is entitled
to vote, by a two-thirds vote of all the outstanding stock of such class; and, when first
preferred and industrial partnership stock are entitled to vote together, by a vote of
two-thirds in interest of the total par value of the outstanding shares of said two classes
of stock, without regard to the presence of such two-thirds of each class: Provided,
however , That the notice calling any such meeting shall contain notice of the purpose
to amend, alter, or repeal a by-law or by-laws, specifying or identifying the by-law
or by-laws to be amended, altered, or repealed.
1 For issue of industrial partnership stock for services, see Articles of Association, paragraph 8.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

77

As can readily be seen from the articles of incorporation reproduced,
the entire plan of this firm is based upon specified contractual rela­
tions. Thus each of the participating employees, or of the industrial
partners, as they are called in the plan, in order to come under the
plan, is obliged to sign the following contract:
CONTRACT W ITH EMPLOYEE FOR EXTRA REMUNERATION.
(Not a contract of employment.)

---------Co. a n d ---------- hereinafter called employee, in consideration of $1 by each
to the other paid, the receipt whereof is hereby acknowledged by each, and also in
consideration of the following promises and agreements by each to the other made,
do hereby covenant, agree, and contract as follows:
(1) That certain provisions of the agreement of association and by-laws of said com­
pany relating to extra remuneration, printed on the back of this contract, are hereby
made, and agreed to as part of this contract.
(2) That, at the date of signing this contract, said employee is within said provisions
as to time of service and rate of remuneration, which are preliminary requisites to
becoming a principal employee.
(3) That so long as said employee remains an employee of the company, and fulfills
for any calendar year all the said printed provisions requisite to becoming a principal
employee, he shall be entitled as principal employee to receive, as extra remunera­
tion for services for each such calendar year h proportional share of net profits for
each such calendar year, to be paid to h in industrial partnership stock: P ro­
vided, That at the date when the vote is passed apportioning net profits for any preced­
ing calendar year he shall still be an employee of the company.
(4) The company may terminate or modify this contract as may be required by any
alteration or amendment or repeal of said agreement of association or by-laws.
PLAN NO. 3.

In many of its essential features plan No. 3 resembles closely plan
No. 1 reproduced and described above. Its main point of distinction
is the fact that the beneficiaries are informed of the basis upon which
their shares will be computed.
The application of this plan is limited to “ men in the organization
who have authority to formulate policies, make commitments, engage
employees, and approve expenditures of money,” with the exception
of executives who have special bonus agreements with the company,
as part of their contractual salary.
For the purpose of distributing the available profits the eligible em­
ployees are classified into four distinct and separate groups, as per
section 2 of the plan, each group receiving a specific part of the total
amount available for distribution during each specific distribution
year, each group amount being apportioned among its members on a
per capita basis.
Provisions slightly different from those shown in the reproduced
text govern the distribution of the profits assigned to group 4—
plant foremen, managers of bureaus, chief clerks of departments, and




78

B U L L E T IN OF T H E BU BEA U OF LABOB STATISTICS.

assistant branch managers. The points of distinction are as follows:
(1) The form of payment of the shares is all cash in group 4,
as against part cash and part stock in the cases of the first three
groups, as per section 3 of plan; and (2) employees of group 4,
in case of leaving employment, forfeit share for current year only,
while members of the first three groups, aside from forfeiting the
shares for the current year, forfeit also one-fifth of the share paid to
them in stock (still held by the company) during the previous year.
The specific part of the divisible profits assigned to each of the
groups of participants varies from year to year, changes being made
at the discretion of the committee in charge of the plan. For 1915 the
fund was apportioned as follows: Groups 1 and 2 each received 30
per cent and groups 3 and 4 each received 20 per cent of the fund.
Of a total of 9,645 employees of the'company, 271, or 2.8 per cent
participated in the distributed profits of 1914. The number of
employees in each of the four groups were as follows: 10 in group 1,
64 in group 2, 197 in group 3, none of the employees appearing in
group 4. This is accounted for by the fact that prior to 1915 this
group had not as yet been brought under the plan. The preliminary
profit-sharing list for 1915 gives the group distribution as follows:
Total participating 314, of which 11 are in group 1, 36 in group 2,
52 in group 3, and 215 in group 4. On this basis the available profitsharing fund for 1915 will be distributed as follows:
T a b l e 3 1 . — DISTRIBUTION

OF PROFITS OF 1915.

Employees par­
ticipating.
Group No.
Number.

.......................

1
2 .......................................
3 ........................................
4

.......................

11
36
52
215

Per cent
in each
group.
3.5
11.5
16.6
68.5

Per cent
of fund
allotted.

30
30
20
20

To 85 per cent of all the participants will be allotted 40 per cent of
the profit-sharing fund, while 15 per cent of all—mostly high execu­
tives—will receive 60 per cent of all the distributed profits.
The text of this plan, as announced for 1915, is herewith reproduced
in full:
On April 6, 1915, the directors voted to continue the employees’ profit-sharing plan
for the year of 1915, making some modifications as to the grouping of participants but
not changing the total amount of the fund, and by reason of the responsible executive
position which you occupy and in the belief that your work and efforts can materially
influence the profits of the business, we take pleasure in advising you that your name
has been placed on the list of participants for this year.




P R O F IT SH A R IN G IN

T H E U N IT E D STATES.

79

This statement of intention concerning a voluntary and contingent distribution of
a certain part of our 1915 profits does not in any way constitute a contract on Hie part
of the corporation, nor alter or affect any of its contract relations, with you or other
employees. Unless we receive at once your written declination of this offer we will
understand that you accept it on this condition.
The plan is continued for the fiscal year of 1915 only, but it will be renewed from
year to year unless, in the judgment of the board of directors, it shall prove undesirable,
or experience suggests amendments or modifications.
The deductions from the total net profits referred to in the plan will amount to
approximately $2,640,000 for the year 1915, and therefore the total net profits this
year must exceed this amount before anything *will be set aside for the fund. For
example:
If the net
profits of
1915 are—

The total
fund will
be—

$2, 640, 000
3,640, 000
4, 640, 000
5, 640,000
6, 640,000
7, 640, 000
Etc.

Nothing.
$120, 000
260, 000
410, 000
560, 000
710,000
Etc.

The amount
applicable to
your group
will be
..........per
cent, or—

Nothing.

Etc.

The number of participants in your group as at present constituted i s ------men
and your share, on a per capita division, will be^----- of the amount earned by your
group. However, the finance committee reserves the right to increase or decrease
the number of participants in your group as may be necessary from time to time
which of course may slightly alter these figures.
The fund shall be known as the “ employees’ profit-sharing fund,” and it shall be
administered by the finance committee and under the following terms and conditions:
1. The fu n d .—The fund shall be computed in the following manner: From the con­
solidated net profits o f ---------and subsidiary companies as certified to by our auditors
there shall be deducted: (1) The amount of the 7 per cent dividends on the preferred
stock; (2) the amount which, under its charter, the corporation is required to set
aside annually in “ Special surplus account” for the amortization of the preferred
stock, and (3) a further amount equal to 5 per cent upon the common stock outstanding.
There shall thereafter be computed a sum arrived at by taking 12 per cent of the
balance remaining up to the first $1,000,000 thereof; 14 per cent of such balance in
excess of $1,000,000 and up to $2,000,000; and 15 per cent of the excess of such balance
over $2,000,000, which sum shall constitute the fund.
The credits to the ‘ ' Special surplus account ” for the amortization of the preferred
stock will reduce the amount of the preferred dividends, and thus increase the amount
available for the fund each year.
The total fund shall be distributed to the participants by dividing the amounts into ‘
four parts, one part for each group, by use of percentages adopted for each division
annually by the finance committee. Thereafter the amount of each group fund shall
be equally divided among the participants thereof as described below.
2. Participants .—Employees entitled to participate shall be only those holding
executive positions as described below, whose responsibilities include spending the
corporation’s money, handling its property, making commitments for its account,
and the employment and supervision of its employees.
Participants shall be divided into four groups, according to positions held, and
according to whether, and to what extent, the finance committee may deem a partici­
pant is contributing to the corporation’s profits by reason of his position, worth, and
loyalty, as follows:




80

B U L L E T IN

OF T H E BUKEAU OF LABOR STATISTICS.

Group No. 1: The principal operating heads a t ---------a n d ----------.
Group No. 2: Managers of principal departments, junior officers, managers large
branches, and general plant superintendents, a t ---------an d----- — .
Group No. 3: Assistant managers of principal departments, managers minor
branches, assistant plant superintendents, and general foremen, a t ---------an d----------.
Group No. 4: Plant foremen, managers of bureaus, chief clerks of departments and
assistant branch managers.
At the beginning of each year, the official heads of the executive, manufacturing,
sales, financial, and accounting departments shall submit a list of proposed participants
to the finance committee, from which the committee shall make selections, approve
those entitled to participate in the fiftid, and notify each person accordingly.
No director of the corporation, nor any officer or employee holding a personal bonus
contract, shall participate in the fund, unless such participation is approved by the
executive committee.
3. Distribution o f fu n d .—Within 30 days after the annual audit of the corporation’s
books shall have been completed, each participant will be notified of the amount of
bonus, if any, to which he is entitled under the plan and will receive a check for not
less th an ------per cent of the amount and subject to possible forfeiture mentioned
below, a participating certificate for the balance covering common stock of the cor­
poration, which stock will be delivered to him 25 per cent after the first year, 25 per
cent after the second year, and 50 per cent after the third year, provided he has
continued uninterruptedly in the service of the corporation. Any dividends received
upon said stock while in the possession of the corporation will be promptly paid to
participants.
Participants shall have no right to assign stock held for their account by the cor­
poration, and any attempt at assignment will give the corporation the right to remove
the person making it from the list of participants.
The finance committee shall have discretion after August 1 of each year, if the net
profits warrant it and the market price of the common stock seems favorable, to buy
common stock from time to time for the account of the fund, in order to give employees
the benefit of purchases at as low prices as possible.
4. Prom otions .—In the event of promotion no change shall be made during the
current year in the group to which a participant is already assigned.
5. R esignations .—Participants who resign from the service during the year shall
not be entitled to participate, proportionately or otherwise, in the fund of the current
year, and shall forfeit to the corporation as a penalty 20 per cent of the common stock
held for their account from the bonus of the previous year.
6. Dismissals.—Participants dismissed from the service during the year, for lack of
efficiency or because their services are no longer required, shall not be entitled to
participate, proportionately or otherwise, in the fund of the current year, but shall
receive the full amount of common stock, if any, held for their account from previous
years.
• Participants released on account of curtailment in business or shutdowns, and not
on account of lack of efficiency or conduct prejudicial to the corporation’s business,
or being officers and failing of reelection, shall be entitled to their proportionate
participation in the fund of the current year, and shall receive the full amount of
common stock, if any, held for their account from previous years.
7. Disability and death.—Participants compelled to leave the service on account of
protracted illness, disability, or old age, shall be entitled to their proportionate par­
ticipation in the fund of the current year, and shall receive the full amount of common
stock, if any, held for their account from previous years.
In case of the death of a participant having stock held for his account as above,
the corporation shall promptly deliver it to his legal representative, and as soon there­
after as determined shall deliver to his legal representative his proportion of the cash
and stock from the fund of the? current year.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

81

PLAN NO. 4.

This limited profit-sharing plan, in operation since 1912, was
framed, according to statements of the management, with two ob­
jects in view— (1) additional reward to and recognition of deserving
employees, and (2) greater and better results for the company in the
way of greater efficiency, reduced costs, and improvement in the
quality of the finished product.
Profit sharing under this plan depends, first, on the company’s
net income for the year, the rate of participation being governed by
the amount of such income in excess of stipulated requirements;
second, on the standing of the particular manufacturing or sales unit
with which a specific employee is connected; and, third, upon the
length and character of the service of the individual employee.
Individual shares of profits depend upon the net income of the
company above a certain specified minimum. When the net profits
of the business exceed the stipulated minimum, for the first $100,000
of such excess a profit-sharing dividend of 8 per cent on salaries or
wages is declared; for the second $100,000 in excess of the minimum
8.1 per cent is paid; and for each additional $100,000 above the
minimum profits two-tenths of 1 per cent is added. At a certain
point further the relative increase is changed from two-tenths of 1
per cent to three-tenths of 1 per cent. Shares or profits are paid
wholly in cash, but under certain conditions the cash received by an
employee as his profits may be used to purchase shares of common
stock of the company at par. For instance, each employee whose
dividend totals $200 or more is privileged to subscribe for whole
shares of the company’s common stock at par ($100) up to the
amount of even hundreds of his cash distribution. Such subscriptions
are entirely optional with the employee.
The plan is administered by a committee consisting of the officers
of the company and the head of each department involved.
The standing of the particular manufacturing or sales unit for pur­
poses of profit sharing is established by a very elaborate method of
accounting which takes into consideration controllable costs and
quality of finished product in the case of manufacturing units, and
increased sales, controllable sales expenses, etc., in the case of sales
units. It is to be noted that the basis of factory participation is quality
and cost of the finished product. In order to equitably determine
the eligibility of the various factories it was found necessary to adopt
“ a few arbitraries,” as detailed below.
Owing to the fact that the factories are located in different zones—
paying different prices for their manufacturing material—it was
deemed fair that all factories be charged with the same price for
their raw materials; also that the charge for depreciation be elimi­
nated from factory expenses. This is done in order to put all the
56831°— Bull. 208—17----- 0




82

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

plants on the same basis, thus holding the superintendents and their
assistants responsible only for expenses directly under their control.
By reason of the factories manufacturing different sizes and
brands, and in order to level them down to a common basis, a system
is in force whereby the average cost of the total output of each factory
is ascertained; an arbitrary figure per unit is then credited to the
factory having the lowest cost and the other factories making the same
size or brand are credited with the difference between their cost
and the lowest cost plus the arbitrary figure. All factories coming
within a fair range of best practice are eligible to profit sharing.
To cover finished product not up to the standard quality, ranging
from one-tenth to one-half of 1 per cent of their year’s output, the
factories are penalized from a minimum of 2 per cent to a maximum
of 10 per cent. Any factory exceeding one-half of 1 per cent becomes
ineligible for profit sharing that year.
The positions participating in the profit sharing of factories are as
follows:
Superintendent, assistant superintendent, head bookkeepers, in­
spectors, foremen, operators, chief engineers, chief firemen, and
chemists.
<
City Branches.

In determining the eligibility of the city salee branches, an effi­
ciency score is kept on the following lines:
Sales.—For each 1 per cent of increase, credit is given up to a
maximum of 20 points; minimum, 2 points.
Cash collections.—For each one-fourth of 1 per cent over standard,
credit is given up to a maximum of 20 points; minimum, 10 points.
Container collections.—For each 1 per cent over standard a maxi­
mum of 10 points; minimum, 5 points.
Total operating cost, <per point.—For each one-tenth of 1 per cent
decrease per point, credit is given up to a maximum of 26 points;
minimum, 2 points.
General condition of branch property.—Maximum of 8 points, mini­
mum of 3 points.
Condition of salesmen's booTcs.—Maximum of 8, and minimum of 3
points.
Condition and appearance of equipment.—Maximum of 8, and
minimum of 3 points.
This allows a possible score of 100 points. A score of 70 or more
points entitles to profit sharing.
Rents and depreciation are eliminated in establishing cost of
delivery.
The participating positions are as follows:
Superintendents, assistant superintendents, inspectors, cashiers,
and head bookkeepers.




P E O F IT SH A R IN G I K

T H E U N IT E D STATES.

83

General office and field men.

To this group of participants belong employees holding the more
important positions in the general office and some men in the field
not connected with any particular plant. All employees in the gen­
eral office receiving $2,000 or more per annum are eligible, unless in
some specific case a department head recommends otherwise. The
admission of employees receiving this salary, without regard to posi­
tion, is considered fully warranted, as under this company’s method
of advancement, it is said, it means proven efficiency as well as a
satisfactory service. When the force is augmented by outside men
at a salary of or exceeding $2,000 (which is not frequent), it is invariably
because of a technical knowledge or a special fitness which would
entitle them to profit-sharing consideration aside from salary.
Salesmen.

The eligibility of salesmen is dependent on a certain percentage
of increase in the sales of the company’s leading brand over the sales
of the previous year.
Remits o f the working of the piasi.

A total of $171,824 was distributed as profits during the first two
years of the operation of the plan, the dividends on the earnings of
the participants amounting to 8.3 per cent in 1913, and 8,1 in 1914.
No profits were available for distribution for the business year end­
ing June 30, 1915. The relative proportions of the total employed
that participated were as follows: In 1913, 837 or 9.6 per cent; in
1914, 860 or 9.2 per cent. The cost of the plan to the management,
in terms of a percentage of the total labor pay roll was 1.3 per cent
and 1.2 per cent in 1913 and 1914, respectively.
PLAN NO. 5.

The application of the following plan, No. 5, is restricted to em­
ployees earning “ not less than $780” per year. The first distribu­
tion under it will be made on February 1, 1917.
The following is the text of this plan as announced to the officers
and employees of the company on December 31, 1915:
1.
The company will distribute among the officers and employees entitled to share in
the benefits of the plan so much of its common stock as shall have been acquired by it
for the purpose by an expenditure of money equal in amount to 20 per cent of its net
profits for the year 1916 remaining after making certain deductions, as hereinafter de­
fined and explained. Net profits remaining after such deductions shall mean the net
profits remaining after deducting from the consolidated-net profits of the company for
the year 1916 as determined by its auditors, whose determination shall be final—first,
the full amount of dividends on the preferred stock of the company for the year 1916
and then an amount equal to 5 per cent on its common stock outstanding at the end of
the year.




84

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

2. Only officers and employees, other than pieceworkers, who shall have been in the
employ of this company or one of its said subsidiary companies for approximately the
entire calendar year 1916 and shall remain in such employ until February 1, 1917, and
wlmse salary for the year 1916 shall have been not less than approximately $780, shall
be entitled to share in the benefits of the plan. No officer or employee shall, however,
be entitled to share in the benefits of this plan who shall have sold or otherwise dis­
posed of any stock received by him under the profit-sharing plan of 1915, or who shall
have sold or otherwise disposed of or attempted to sell or otherwise dispose of any
stock in anticipation of the receipt of such stock by him under this plan for the year
1916, unless the committee mentioned in paragraph 4 of this plan shall consent in
writing to any such sale or other disposition.
3. Subject to the right of such committee to exclude any officer or employee for any
cause which it deems proper, the stock to be distributed under this plan for the year
1916 shall be distributed among the officers and employees mentioned in the preceding
paragraph 2 as nearly as may be pro rata upon the following salary basis: The full
salary received for the year 1916 by each officer and employee entitled to share in the
benefits of the plan, who shall have been so employed approximately from January 1,
1915, to February 1, 1917, and one-half of the salary received for the year 1916 by each
officer and employee entitled to share in the benefits of the plan so employed for a less
period, but not less than from approximately January 1, 1916, to February 1, 1917,
shall be taken as the basis for distribution.
4. The determination of what officers and employees shall be entitled to share in the
benefits of the plan, the amount of their salaries to be taken for the purposes of the
plan, all matters to be determined under the plan, including adjustments as to frac­
tional shares, and all details of the plan and its operation shall rest with a committee
of the board of directors of this company, consisting at present of Messrs.---------, --------- ,
an d---------, whose determination shall be final.
5. Nothing in the plan contained shall be deemed to limit the power of this company
or of its said subsidiary companies to discharge any officer or employee at any time,
with or without cause, and any officer or employee so discharged shall not be entitled
to share in the benefits of the plan. This company reserves the right to dispose in
whole or in part of its interest in any subsidiary company at any time, in which event
the officers and employees of such subsidiary company shall not be entitled to partici­
pate in the benefits of the* plan, except to such extent, if any, as the committee of
directors above mentioned may deem proper.
6. The provisions of paragraph 2 of this plan that no officer or employee who shall
sell or otherwise dispose of his stock shall be entitled to share in the benefits of the plan
unless the committee shall consent to such sale or other disposition, were inserted in
furtherance of the fundamental idea of the plan that the officers and employees of this
company and its subsidiaries would be included among its permanent stockholders
and as part owners of its business and properties be directly and vitally concerned in
its continued prosperity and success. To the extent therefore, that officers and em­
ployees sell or otherwise dispose of their stock, the real purpose of the plan is defeated.
The retention of their stock by officers and employees from year to year will result in
constantly increasing benefits and advantages to such officers and employees and to
the company alike, and in this way the fundamental purposes of the plan can be ac­
complished. The committee will be glad, however, to consider and pass upon the ap­
plication of any officer or employee of this company, if unusual circumstances at any
time exist.
7. This plan is applicable only to the calendar year 1916. It is the intention of the
company, however, to continue such plan from year to year, unless in the judgment
of its board of directors it shall prove unsatisfactory or experience suggests amendments
or modifications.




PR O F IT SH A R IN G IN

T H E U N IT E D STATES.

85

BONUS PLANS COMMONLY KNOWN AS PROFIT SHARING.
The term “ profit sharing” has been extended in popular usage to
include several bonus plans, the essential features of which are clearly
outside of a correct interpretation of the term. These schemes,
although providing a supplementary remuneration to the ordinary
earnings of employees, do not involve a direct or definite relation to
the net profits of the enterprise.
In examining the profit-sharing system of an establishment little
concern is generally given to the theoretical conceptions of the em­
ployer who formulated it. Interest lies rather in the fact that the
employer is willing to share a part of his profits with his employees.
This interest is heightened in some cases by the fact that the amount
thus distributed is considerable, presenting a marked augmentation
to the ordinary earnings of the employees.
In many instances, profit sharing (as popularly understood) takes
the form of a simple bonus in terms of a percentage on earnings which
is given to employees at the end of the business or calendar year, the
percentage varying with the length of service. In most of these in­
stances the bonus is a mere gift which is not guaranteed and bears no
direct relation to the profits realized, even if the amounts distributed
vary more or less with the general prosperity of the business. In one
notable instance, one of the most widely known, the profits likely
to accrue within the year are estimated, about one-half of this esti­
mated amount being distributed among the employees of the concern.
The distribution under this plan takes the form of a guaranteed
minimum wage per day, graded according to skill.
Profit sharing, properly speaking, should clearly be distinguished
from those related forms of remuneration in addition to ordinary
wages which do not depend directly or vary with the net profits of
the enterprise. Whatever merit the plans presented in the follow­
ing section may have, they can not be classified as involving the ap­
plication of the principle of profit sharing. Inasmuch, however, as
many of such plans are commonly thought of and discussed as profit
sharing, it was deemed desirable to give complete accounts of the
workings of the more notable types of such plans in operation in the
United States at the present time.
The main interest of the plans described in this section lies in the
factors which determine the bonuses to be distributed and the condi­
tions which determine participation. In plan No. 1, presented below,
the amounts to be distributed depend upon the length of service and
a subscription for a specified amount of stock of the company. In
plan No. 2 the distributions depend wholly upon the skill of the em­
ployees, as indicated by the rate of wages received and upon a mini­
mum length of service. In plan No. 3 the conditions under which the




86

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

various bonuses are paid are the nature of the work and the merit of
service. In the various stock subscription plans, types of which are
shown on pages 136 to 157, the extra remuneration depends upon
subscriptions for stock, while in the various so-called cash bonus
plans based upon the length of service, the extra remuneration depends
upon both the earnings of an employee and his length of service; the
plan on pages 158 and 159 is presented as typical of the latter
group. In the plan described on page 161 the hourly rates of wages
paid vary with the gross receipts, while in the plan given on
page 162 the daily wage varies with the price for which the manu­
factured commodity is sold. Finally, under the plan described
on pages 164 to 166 the bonus dividend on the earnings of the em­
ployees depends upon the savings collectively effected in a specific
department over and above an established standard.
PLAN NO. 1.
HISTORY OF THE PLAN.

This plan, which was established in 1887 and revised last in
January, 1913, is applicable only to employees who earn $1,500 or
less per year, excluding salesmen and traveling representatives. It
provides that an employee in order to be eligible to participate in the
benefits of the plan must either own or subscribe for an amount of
common stock of the company equal to one year’s salary, neither
more nor less.
Upon application and after approval by the company, the required
amount of stock is issued at its market value and held for the em­
ployee by three trustees selected by the board of directors of the
company from its officers, directors, or employees. A cash payment
of
per cent of the cost price of the stock is required at the time
of subscription, and a yearly cash payment of at least 4 per cent of
the total amount of subscription must be made until the stock is
paid for in full. Three per cent interest is charged on the unpaid
balances in the meantime.
Immediately upon payment of the first installment of the purchase
price, each employee receives a “ trust receipt pass book,” containing
the formal contract between himself and the company, called a
“ trust receipt.” This trust receipt entitles the holder to a dividend
at the rate of 16 per cent upon the amount of his wages for the year, in
addition to the regular dividend on the common stock that he holds.
Both these dividends are applied toward the payment of the stock,
but trust receipt dividends are credited to the employee only if he
has been in the employ of the company continuously during the
preceding half year, dividends being paid on January 1 and July 1
of each year.




P R O F IT SH A R IN G I K

T H E U N IT E D STATES.

87

After the stock has been paid for in full, the employee’s “ trust receipt
pass book” is exchanged for a “ paid-up trust receipt” and all further
stock dividends, as well as “ trust receipt dividends,” are paid in cash.
If the employee chooses, however, to withdraw from the plan before
he has been a participant for two years, all trust receipt dividends
which have been credited to him are deducted from the amount due
him.
After an employee has been a participant in the benefits of the plan
or an owner of common stock for five years, he may increase his
common-stock holdings to 125 per cent of his annual earnings and
receive trust receipt participation dividends at the rate of 20 per
cent. After 10 years he may increase his holdings to 150 per cent
of his annual wages and receive trust receipt dividends at the rate
of 24 per cent, the maximum.
Employees are prohibited by the company from assigning or trans­
ferring trust receipts or any interests represented thereby.
An employee may, by giving notice at any time, withdraw from the
scheme and surrender his holdings; if he decides to withdraw before
being a participant at least two years, or before his credits from all
sources equal 35 per cent of his subscription, he forfeits all dividends.
If he withdraws from the scheme after having been a participant for
two years or more and the amounts credited to his account from all
sources equal 35 per cent of his total subscription, he may, at the
option of the company, and under certain provisions, be paid dividends
on his stock, and also receive trust receipt dividends. In this case,
he is debarred from further participation in the benefits of the plan.
After having been a participant for two years or more and having
paid his stock subscription in full, an employee giving notice of
withdrawal has the option of receiving either stock certificates or the
cash, equal in amount to his credit from all sources. As in the case
of the other employee he forfeits the right to again participate in
the benefits of the scheme.
The rules governing the operation of this plan since January 1, 1913,
will be found in the following text of the revised plan, issued in pam­
phlet form by the company:
RULES GOVERNING OPERATION OF PLAN.

PLAN FOR TRUST RECEIPT DIVIDENDS FOR EMPLOYEES THROUGH
STOCK OWNERSHIP.
APPLICATION.

/

Any employee of t h e ----- — Co. (hereinafter called “ the company” ), earning an
amount not exceeding $1,500 a year, excluding, however, salesmen and traveling repre­
sentatives, may upon application to the treasurer of the company and after approval
by the company, have purchased for his account, at its market value at the time of
application, an amount of common stock of the company equal to his annual wages,
but neither more nor less, except as hereinafter provided.




88

B U L L E T IN OP T H E BU EEA U OF LABOR STATISTICS.
TRUSTEES.

The stock so purchased for an employee shall be held for the benefit of the employee
by three trustees to be appointed from time to time by the board of directors of the
company, which trustees may be selected at the board’s discretion from its officers,
directors, or employees.
PAYM ENTS, CREDITS, AND INTEREST.

Such employee shall pay in cash toward the purchase of stock at the time of the
approval of his application for its purchase not less than 2| per cent of the cost price
thereof. He shall also pay in cash during each year succeeding the day of purchase,
until the stock is fully paid for, not less than 4 per cent of the total amount of his sub­
scription.
All dividends declared upon the stock so purchased for an employee and all trust
receipt dividends due such employee, as hereinafter provided, shall be credited
upon his unpaid balance until said stock and all interest payable are fully paid.
Upon the unpaid balance which remains after crediting cash payments, dividends
on stock, and trust receipt dividends, the company shall charge the employee interest
at the rate of 3 per cent per annum; when, however, the stock subscribed together
with all interest due have been fully paid, trust receipt dividends and dividends
upon the paid-up shares of stock shall be paid in cash to the employee subject to the
conditions hereinafter provided.
TRUST RECEIPT PASS BOO KS, PAID-UP TRUST RECEIPTS, AND TRUST RECEIPT DIVIDEND S.

Immediately upon the first payment on the part of the employee on account of the
purchase price of the stock, the trustees shall issue to the employee making such
payment a trust receipt pass book, containing the formal contract, called the trust
receipt, between the company and the employee and stating the amount of stock
bought and the amount of money paid on account of such stock, and guaranteeing to
the holder of the trust receipt, dividends upon it, at the rate of 16 per cent per annum
upon the amount of wages actually earned by him during each year or part thereof,
subject to the following conditions:
(а) Trust receipt dividends shall be payable semiannually January 1 and July 1,
and shall be credited on those dates on the employee’s unpaid balance as hereinbe­
fore provided.
(б) Said trust receipt dividends shall be credited to the employee only in case he
is in the employ of the company on the dates said dividends become payable, and
shall have been in the employ of the company continuously during the semiannual
period just preceding or from the date of his trust receipt pass book, if same was issued
during the previous semiannual period.
(c) Should the employee leave the employ of the company or make application for
withdrawal from this plan during the said semiannual period, he shall not be entitled
to receive or be credited with any trust receipt dividend whatsoever on the wages
earned by him during any portion of such period.
(d) When the purchase price of the stock subscribed by any employee, together
with all interest payable, are fully paid as hereinbefore provided, then the trustees
shall recall the trust receipt pass book and shall issue to the employee instead thereof
a paid-up trust receipt, and all further trust receipt dividends, as well as dividends
on the stock held for him under this plan, shall be paid to the employee in cash,
subject to all conditions herein stated, and subject in particular to the further con­
dition that if the employee should make application for withdrawal from this plan
before he has been a participant under same for two years, all trust receipt dividends
that have been paid to him in cash shall be deducted and retained by the company
from the cash returnable to him.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

89

Neither trust receipt pass book nor paid-up trust receipt, nor any interest therein
nor any stock represented thereby, can be assigned or transferred by the employee,
and the company will not recognize any such assignment or transfer from the name
of the original holder.
The trust receipt pass book or paid-up trust receipt shall be surrendered to the
company whenever its holder has demanded and received a certificate or certificates
of the common stock of the company therefor, or has been paid or tendered the value
of his interest in such stock; or after termination of his employment, upon payment
or tender to him of the value of his interest in any such trust receipt pass book or
paid-up trust receipt on the date of the termination of his employment, according
to the provisions of this plan.
The trustees, from time to time, as dividends or payments are credited or interest
charged for the account of the employee, shall have proper entries made in his trust
receipt pass book.
INCREASE OF HOLDINGS AFTER FIVE Y E A R S .

After an employee has been a shareholder of the common stock of the company for
a term of five years, he may, upon written application to the treasurer of the company,
increase his holding of stock under this plan by an amount equal to 25 per cent of
his annual wages at the time he makes application for such increase, and thereafter
while he remains an employee receive a trust receipt dividend at the rate of 20 per
cent per annum upon his wages, subject, however, to conditions (a), (6), (e), and (d)
hereinbefore stated. The additional stock so purchased for his account shall be held
by the trustees subject to all provisions and conditions herein contained.
INCREASE OF HOLDINGS AFTER 10 Y E A R S .

After an employee has been a shareholder of the common stock of the company for
a term of 10 years, he may, upon written application to the treasurer of the company,
increase his holding of stock under this plan to an amount equal to 150 per cent of
his annual wages at the time he makes application for such increase, and thereafter
while he remains an employee, receive a trust receipt dividend at the rate of 24 per
cent per annum upon his wages, subject, however, to conditions (a), ( b), (c), and (d)
hereinbefore stated. The additional stock so purchased for his account shall be held
by the trustees subject to all provisions and conditions herein contained.
An employee holding a paid-up trust receipt who increases his subscription under
any of the provisions of this plan shall have issued to him a trust receipt pass book
for such increase. When the amount of this additional subscription, together with
all interest thereon, is paid in full, a new paid-up trust receipt covering both amounts
will be issued to him in exchange.
INCREASE OF HOLDINGS UPON AD VAN CE IN W A G E S .

An employee receiving an increase in his annual wages—such wages, with increase,
however, not exceeding $1,500 per annum—may, upon approved application to the
treasurer of the company, have purchased for his account, subject to all the condi­
tions of this plan, an additional amount of the common stock of the company at its
then market value equal to the increase in his annual wages. Until such application
is actually made to the treasurer of the company and approved the basis upon which
trust receipt dividends are payable to the employee shall remain unchanged.
Any employee under this plan whose wages are increased to a sum in excess of $1,500
per annum, and whose trust stock has not been paid for in full, may retain his stock
under this plan, provided he shall continue to pay annually on account thereof an
amount equal to the 4 per cent per annum payment required under this plan, plus a
further amount equal to the annual dividends previously credited to his account until
same is paid for in full.




90

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

Any employee whose wages are increased beyond $1,500 per annum, who has paid
for his stock in full, shall receive at once certificates of stock covering the full shares
and cash for any fraction thereof to which he may be entitled, on surrender of hia
paid-up trust receipt. Refund for any fractional interest shall be based upon the
then market value of the stock.
W ITH D RA W AL.

An employee may at any time surrender his trust receipt pass book or his paid-up
trust receipt and withdraw his interest thereunder, subject to the terms and condi­
tions stated below:
Notice and surrender.—He shall give notice in writing to the treasurer of the com­
pany of his desire to receive such money or stock as may be due him, and shall, with
said written notice, surrender his trust receipt pass book or paid-up trust receipt.
Withdrawal before participation f o r two years.—An employee who has been a holder
under this plan of either a trust receipt pass book or a paid-up trust receipt for a period
of less than two years prior to the date of his written notice of withdrawal shall have
refunded to him only such an amount as he actually has paid in cash.
Withdrawal before payment in f u l l .—In the event of an employee giving written notice
of his desire to withdraw from this plan before the amount of his cash payments, divi­
dends on stock and trust receipt dividends less interest payable, equal 35 per cent of
the total amount of his subscription, there shall be refunded to him only such money
as he has actually paid in cash toward the purchase of his stock. He shall not derive
the benefit of any dividends of any kind whatsoever which may have been credited.
In the event of an employee who has been a holder of a trust receipt pass book for
a period of two years or more giving written notice of his desire to withdraw from
this plan, after the amount of his cash payments, dividends on stock and trust receipt
dividends less interest payable, equal or exceed 35 per cent of the total amount of his
subscription, he shall receive within 90 days thereafter, at the company’s option, an
amount equal to the money paid by him toward the subscription price of his stock, plus
the dividends on his stock and trust receipt dividends credited, less interest payable,
subject to all conditions and provisions herein stated: Provided , That this privilege
shall not be given to anyone who, to bring the total amount of his net credits to 35 per
cent, has paid more than 5 per cent of his total subscription within 60 days next pre­
ceding his notice of withdrawal. The employee so withdrawing, upon receiving the
value of his interest in this plan, either in the common stock of the company or its
money equivalent as provided, shall surrender all rights hereunder and shall be
debarred from further right to subscribe for stock or to have or enjoy any of the privi­
leges of this plan. He shall not be entitled to receive any trust receipt dividends upon
wages earned after date of written notice of his desire to withdraw, nor shall anyone
receive any such trust receipt dividends who is not the rightful holder of a trust
receipt pass book or paid up trust receipt.
Withdrawal after payment in f u l l. — If an employee who has been a holder of a trust
receipt for two years or more, and *who has paid his subscription in full with interest,
should desire to withdraw the paid up stock held in trust for him under this plan, or
its money equivalent, he may do so by giving 90 days’ notice in writing to the company
of his intention so to do.
At the end of 90 days, or before at the option of the company, there shall be deliv­
ered to him certificate or certificates of the common stock of the company representing
stock paid for under this agreement, or its money equivalent, based upon the market
price of the stock on date of written notice of withdrawal, and subject to all condi­
tions and provisions herein stated: Provided , however, That the total cash payments
made by the employee during the 60 days immediately preceding the date of his
written notice of withdrawal be not in excess of 10 per cent of the total amount of hia




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

91

subscription, in the manner stated in the preceding clause entitled “ Withdrawal
before payment in full.
No certificate shall be demanded or issued for a fractional
share of stock.
An employee receiving such stock or its money equivalent as provided shall sur­
render all rights and privileges under this plan, as stated at the close of the preceding
clause entitled “ Withdrawal before payment in full.”
Withdrawal or discharge o f em ployee .—The fact that an employee is taking advantage
of and is receiving the benefits of this plan, shall not deprive the company of the
right at any time to discharge such employee and thereby terminate his participation
under the plan. Should the employee be discharged or should he leave the employ
of the company for any cause, he shall within three *days thereafter, make written
application for the withdrawal of his interest under this plan. In the event of his
failure to do so then his participation in the benefits of the plan shall cease and deter­
mine upon the termination of his employment, and settlement shall be based on the
status of his account on said date of termination, subject to the conditions and pro­
visions herein stated.
SETTLEMENT UPON DEATH OF EM PLOYEE.

In the event of the death of an employee participating in this plan, there shall be
paid to his estate all money paid by him on account of his subscription to stock
under the plan, together with all dividends credited upon the purchase price of said
stock less the amount of interest, if any, remaining unpaid. In addition, his estate
shall receive in cash the benefit of any increase in the market value of his investment
over and above its purchase price.
This arrangement shall be effective regardless of the amount paid toward the origi­
nal subscription.
G U A R A N T Y.

If, on the date of the signed application of an employee for withdrawal of his interest
under this plan, the market value of the total stock held for him is less than the total
of his subscription in money, there shall be refunded to him, without deduction, all
money paid and dividends credited, less interest payable, subject however to all
conditions governing withdrawal before or after payment in full.
Any increased value of the employee’s stock on the date of his application for
withdrawal shall accrue to him only in the event that his subscription shall have been
paid in full, and subject in particular to the conditions governing withdrawal after
payment in full.
All stock held by an employee under this plan shall be considered as a whole, and
fractional additions made from time to time, as the result of salary increases or for
other reasons, shall not be considered in making refunders as [sic] separate sub­
scriptions.
STOCK INCR EASES.

If at any time common capital stock is issued to stockholders for cash, then a holder
of stock under the trust receipt plan will have added to his account a pro rata portion
of such increase less such an amount which, sold at the current market, will produce a
sum sufficient to pay for his pro rata allotment, and the remaining amount of stock
shall be added without cost to the account of the trust receipt holder.
Any increase in the common capital stock distributed to common stockholders as
a dividend shall be added to the account of a trust receipt holder in his proper pro­
portion, without charge or deduction in amount, and such stock dividend may not
be sold or otherwise disposed of, but must be added to the account of the employee
until such account is terminated in accordance with other sections of this plan.




92

B U L L E T IN OF T H E BTJKEATJ OF LABOK STATISTICS.
PASS BOOKS AN D TRUST RECEIPTS— PROPERTY OP THE COMPANY.

Trust receipt pass books and paid up trust receipts shall belong to the company
and shall be surrendered to it whenever a holder, after paying for the interest repre­
sented by such receipt or pass book, has demanded or received a certificate or certifi­
cates of the common stock of the company therefor or has been paid or tendered the
value of such interest; or after termination of the employment of the receipt holder,
upon payment or tender to him of the value of his interest in such receipt according
to the provisions of this plan.
TERMINATION OF PLAN.

The company reserves the right as against any or all employees to terminate this
plan altogether at the end of any fiscal year, and in such event settlement with each
trust receipt holder will be made according to the condition of his individual account
at such time and under the aforementioned conditions governing withdrawal.
RESULTS OF THE WORKING OF THE PLAN.

The following table shows in detail, by distribution periods, since
1903, the number and per cent of employees participating, dividends
to employees, and the cost of the profit-sharing plan to the company
in terms of a percentage of the total pay roll of the establishment.
3 2 .—N U M BER OF EM P LO Y E E S, PR OPO R TIO N PAR TICIPA TIN G , PAR TICIPA­
TION D IV ID E N D S TO E M PLO Y EES, AN D COST OF PR O FIT-SH AR IN G PLAN TO
EM P LO Y E R , B Y D IST R IB U T IO N PER IO D S, 1903 TO 1915.

T able

Employees
participating
in profits.

Dividend period end­
ing—

Dec. 31,1903....................
June 30,1904....................
Dec. 31, 1904.....................
June 30,1905....................
Dec. 31,1905.....................
June 30,1906....................
Dec. 31,1906.....................
June 30,1907....................
Dec. 31,1907....................
June 30,1908....................
Dec. 31,1908....................
June 30,1909....................
Dec. 31,1909....................
June 30,1910....................
Dec. 31,1910....................
June 30,1911....................
Dec. 31,1911.....................
June 30,1912....................
Dec. 31,1912....................
June 30,1913....................
Dec. 31,1913.....................
June 30,1914....................
Dec. 31,1914.....................
June 30,1915....................
Dec. 31,1915....................

Total
em­
ployees.

940
952
987
1,043
1,098
1,157
1,175
1,540
1,544
1,980
1,986
2,040
2,082
2,601
2,640
2,687
2,711
2,840
2,852
2,963
2,980
2,994
2,915
2,912
2,898

Per
Num­ cent
ber.
of
total.

458
476
474
499
529
531
527
535
525
551
537
599
584
647
726
778
795
859
950
1,122
1,272
1,474
1,653
2,003
1,991

48.7
50.0
48.0
47.8
48.2
45.9
4,4.9
34.7
34.0
27.8
27.1
29.4
28.0
24.9
27.5
29.0
29.3
30.2
33.3
37.9
42.7
49.2
56.7
68.8
68.7

Pay roll of par­
ticipants.

Total pay
roll.
Amount.

$243,060
238,904
250,698
270,140
273,039
289,050
292,797
380,582
385,997
479,999
485,406
515,855
523,684
722,284
734,984
752,871
763,566
824,728
832,880
926,136
937,877
992,328
1,003,280
984,241
997,756

$134,762
141,551
149,307
155,279
161,668
166,693
170,034
171,043
171,901
166,511
168,759
174108
188,325
199,483
228,557
236,632
251,073
280,595
283,405
340,807
395,112
443,581
495,899
590,133
648,444

Por
cent
of
total
pay
roll.

57. 6
59.3
59.6
57.5
59.2
57.7
58.1
44.9
49.7
34.7
34.8
33.8
36.0
27.6
31.1
31.4
32.9
34.0
34.0
36.8
42.1
44.7
49.4
60.0
64.9

Dividends to employees.

Amount.

$16,178
16,993
17,924
18,841
19,408
20,004
20,405
20,526
20,629
20,252
21,200
22,310
23,955
25,384
29,319
30,619
32,030
35,522
36,140
57,660
67,805
75,557
84,176
99,549
109,671

Per
Per cent
cent of pay
of
roll
total
of
par­
tici­
pants.
6.9
7.1
7.1
7.0
7.1
6.9
7.0
5.4
5.3
4.2
4.4
4.3
4.6
3.5
4.0
4.1
4.2
4.3
4.3
6.2
7.2
7.6
8.4
10.1
11.0

12.0
12.0
12.0
12.1
12.0
12.0
12.0
12.0
12.0
12.2
12.6
12.8
12.7
12.7
12.8
12.9
12.8
12.7
12.8
16.9
17.2
17.0
17.0
16.9
16.9

Since 1903 the proportion of the total employed that participated
in the benefits of the plan varied considerably—from 24.9 per cent




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

93

for the distribution period ending June 30, 1910, to 68.8 per cent for
the period ending June 30, 1915. The average proportion partici­
pating for the entire period was slightly over 40 per cent of the total
employed.
The size of the participation dividend, as might be expected, did
not vary as much as the proportion of employees participating. The
lowest average dividend paid to an employee— 12 per cent—was dur­
ing the first years of the operation of the plan, while the highest
average dividend— 16.9 per cent—was paid at the end of the period
ending June 30, 1915.
Below is presented a table showing the occupation groups of the
participating employees for one representative distribution period,
ending December 31, 1915:
T a b l e 3 3 . — NUM BER

AN D PER CENT OF PAR TICIPATIN G EM PLO YEES IN EACH OCCU­
PATIO N GROUP, FOR T H E D IST R IBU T IO N PERIOD EN D IN G DEC. 31,1915.
Employees.
Occupation group.
Number.

Per cent.

Executive and supervisory..................
Clerical......................................................
Manufacturing.........................................

38
506
1,447

1.9
25.4
72.7

Total...............................................

1,991

100.0

The provisions of the plan, as described in detail above, exclude
from the benefits of the plan employees whose earnings exceed $1,500
per year; this accounts for the small number of executive and super­
visory employees that participated in the distribution of December 31,
1915, namely, 1.9 per cent. All of the latter were foremen. As the
table shows, over 70 per cent of all the participants belonged to the
group of mechanical or manual occupations, skilled and unskilled.
The following table shows the changes in the total number em­
ployed and the number participating, 1904 to 1915:
T able 3 4 .—NUM BER AND PER CENT OF EM PLOYEES PARTICIPATING IN PROFITS,
BY Y E A R S , 1904 TO 1935.




Year.

Total em­
ployees.

Employees participat­
ing in profits.
Number.

1904......................................
1905......................................
1906......................................
1907.....................................
1908......................................
1909......................................
1910......................................
1911......................................
1912.....................................
1913......................................
1914......................................
1915......................................

970
1,071
1,166
1,542
1,983
2,061
2,621
2,699
2,646
2,972
2,955
2,905

475
514
529
530
544
592
687
787
905
1,197
1,564
1,997

Per cent.
49.0
48.0
45.4
34.4
27.4
28.7
26.2
29.2
3i. 2
40.3
52.9
68.7

94

B U L L E T IN OF T H E BU REA U OF .LABOR STATISTICS.

On December 31, 1915, 1,997, or 68.7 per cent of all the employees
of the company, with the aid of the plan, were holding 3.2 per cent
of the total number of shares of common stock of the corporation,
and 2.8 per cent of the number of shares of common and preferred
stock of the concern combined. The 4,378 shares of common stock
held by them on the above-mentioned date had a market value of
over three million dollars. The aggregate amount of money paid in
by them to cover their subscriptions since 1903 was $543,616. No
modifications in the essential features of the plan as outlined above
are contemplated in the near future.
PLAN NO. 2.

The relation of the amount of money distributed as “ profits”
under this plan to the actual profits of the company is discretionary.
It is stated by the company to be as follows:
The amount of the profits to be distributed among the employees
will be determined yearly and will be- based upon the result of the
company's business during the previous year, together with an esti­
mate of what the profits wm be during the year to come. The amount
of profits to be distributed, once determined, will not be changed,
however, during the year.
The plan went into operation January 12, 1914, and since that
date the participation rates as described below have undergone no
change. Inasmuch as it can hardly be assumed that the profits of
the company have undergone no variation during this period, it can
not be said that there is an immediate relation between the net
profits of the business and the amounts distributed to employees
under this plan. For this reason, whatever of intrinsic value the
plan may have, it may not properly be classified as profit sharing,
for, as pointed out in this report, one of the essential principles of
profit sharing is that the amount distributed to participating em­
ployees shall depend upon and vary with the net profits of the
enterprise.
Under this plan the so-called share of profits that each employee
receives although paid at the same time as his wages is yet separate
and distinct. The detailed provisions governing the plan seem to
indicate that the design is to give to the employee who is getting the
least wages the largest share of the “ profits.” This can readily be
seen from the text on page 99 showing rates of wages, participation
rates, and total daily income of specific classes of employees.
THE BASIC W AGE OR SALARY.

Before the introduction of the plan in 1914 an effort was made
by the management to determine and establish what would be an
equitable basic wage for specific grades of work, the elemental basis
for such classification being the relative amounts of skill required in




95

P R O F IT SH A R IN G IN T H E U N IT E D STATES.

specific grades of work. Accordingly , such, a classification was worked
out from a general survey of the entire operating force.
As a standard of comparison for the individual skill of each operative
the established shop rate of the plant was taken. This shop rate
for any particular operation was derived from the machine produc­
tion, as rated by the records of the specific shop, less a percentage
deduction for the human element and the necessary stoppages of
the machine. For each operation in the shop the human equation
has been based on what was considered “ the best possible production
of a skilled employee determined by actual trial.” It was decided
that all shop emplo}rees should be classified as to occupation into
five general divisions: (A) mechanics and subforemen; (B) skilled
operators; (C) operators; (D) helpers; (E) laborers; and (F) a special
class composed of women, messengers, etc. The five major classes
just mentioned were each further divided into: (1) First-class work­
men; (2) men of average ability; and (3) beginners. Thus an em­
ployee rated as A -l would be a first-class mechanic, while a man
rated as D-3 would be a helper and a beginner.
Rates of pay on a per hour basis were then determined and adopted
according to the following table:
T able 3 5 .—CLASSIFICATION OF E M P LO Y E E S A N D W A G E SCH ED U LE M ADE EFFE C­
T IVE OCT. 1, 1913 (COMPILED A U G . 1, 1913.)
[Key: A —Mechanics and subforemen. B—Skilled operators. C—Operators. D—Helpers. E —Laborers.
Sorvice—Employees in service continuously for 2 years and over. 1—First-class workmen. 2—Men ol
average ability. 3—Beginners.]

Number of employees having a wage-rate range of—

Skill rate.

59-60 52-58 46-50 42-45 38-41 34-37 29-33 I26-28 23-25 20-22
For­ Pres­ cents. cents. cents. cents. cents. cents. cents, cents. cents. cents.
mer ent
hir­
per
ing hour
Condensed to—
rate. rate.

Total.

54
48
65
38
34
60
43
30
26
23
cents. cents. cents. cents. cents. cents. cents. cents. cents. cents.
A - X X ......................
A - X .........................
A - l ...........................
A-2-...........................
A -3 ...........................
B-Service................
B - l ...........................
B -2...........................
B -3...........................
C-Service................
C -l............................
C - 2 ..........................
C-3...........................
D - l ...........................
D -2 ...........................
D -3 ...........................
E ...............................
Special.....................

2

23

23
23
23
20

54
48
43
43
38
34
30
38
34
30
26
34
30
26
126
23

7

9
2
45
273
51
606
1,457
1,317

19
348

2,071
4,311
31
137
416
2,003
208

2
45
273
51
G
06
1,457
1,317
19
348
2,071
4,311
31
137
416
2,003
208
13,304

1 This minimum-wage classification has been revised upward three times since Oct. 1, 1913, the mini­
mum for this and all other classes except specials since Oct. 10,1916, being 43 cents.




96

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.
PARTICIPATION IN THE ‘ ‘PROFITS.”

For purposes of participation all the employees of the company
are divided into two general groups: (A) Salaried employees—hired
and paid by the month, and including all the general executive, super­
visory, technical, commercial, and clerical employees; and (B) wageearning employees—hired by the day or hour, and engaged directly or
indirectly in the various processes of manufacturing, who may be
termed manufacturing employees. It is for the latter group chiefly
that the plan, under certain conditions, has established a minimum
of $5 for adult employees for an eight-hour day.
A. Salaried Employees.

Class 1.—Embraces the greater part of the executive and super­
visory employees of the company, from foremen up, with an earning
capacity of over $175 per month. The bonuses are paid annually,
individual amounts being determined arbitrarily by the management.
This class, it appears, was receiving these bonuses before 1914.
For purposes of bonus distribution at the end of the last fiscal year,
this class was divided into three separate divisions. The following
shows the number of employees in each of the divisions and the total
amount received by them:
Division.

Number
of em­
ployees.

Total
bonuses.

1.................................
2.................................
3.................................

79
240
1,050

$213,700
367.300
246.300

Total..............

1,369

827,300

Of the total number in this group— 1,369— 994 were also benefited
by the general plan instituted on January 12, 1914.
Class 2.— Salaried employees. Rates of participation are according
to classified basic salary, as follows:
Classified basic
salaries.

Rate per day
under plan.

$75 and under....................................................................................... $5. 00
$76 to $85............................................................................................... 5. 25
$86 to $95............................................................................................... 5. 50
$96 to $110.............................................................................................
5. 75
$111 to $120...........................................................................................
6. 00
$121 to $135...........................................................................................
6. 25
$136 to $150...........................................................................................
6. 50
$151 to $165...........................................................................................
6. 75
$166 to $175...........................................................................................
7. 00




PR O F IT SH A R IN G IN

T H E U N IT E D STATES.

97

Glass 3.—Salaried employees. Rates of participation are according
to classified basic salary, as follows:
Classified basic
salaries.

Rate per day
under plan.

$30 and under....................................................................................... $2. 00
$31 to $35...............................................................................................
2. 25
$36 to $40...............................................................................................
2. 50
$41 to $45...............................................................................................
2. 75
3. 00
$46 to $50..............................................................................................
$51 to $55..............................................................................................
3. 25
$56 to $60............................................................................................... 3. 50
$61 to $65...............................................................................................
3. 75
$66 to $75...............................................................................................
4. 00
B. Manufacturing Employees.

Rates of participation are according to classified basic wage rates.
Total income per
hour.
Skilled grade.

Basic
wage
rate per
hour.

Cents.
80
73

A ..............
X ........

1...

68

2 ............
3 ..........
B-Service.

61
54
54
48
43
38

1...

2 ............
3 ..........
C-Service.

Partici­
pation
rate per
hour.

Cents.

n
H
I
13J
1*
7
21
21
231
25f
27f

48

D-l...

2 ............
3 ..........

G i r l s " .'"

23£

43
38
34
43
38
34
34
34

1......

2 ............
3 ..........

25J
27|
28*
25f
27|
28*
28*
28*

Before
plan
became
effective.

Under
plan.

Cents.

Total income per 8-hour day.

Before
plan
became
effective.

Cents.

80
73
68
61
54
54
48
43
38
48

43
38
34
43
38
34
34
34

m
m

81*
78*
75
75
71*
68f
65|

7*
1
68f
65|
62*

6i
8
65*
62*
62*

6*
2

$6.40
5. 84
5.44
4.88
4. 32
4. 32
3.84
3.44
3. 04
3.84
3.44
3.04
2.72
3.44
3. 04
2. 72
2.72
2. 72

Under
plan.

$7.00
6.75
6.50
6. 25

60
.0
60
.0

5.75
5.50
5.25
5. 75
5. 50
5.25
5.00
5.50
5.25
5.00
5.00
5.00

Per cent
increase
per day.

9.4
15.6
19.5
28.1
38.9
38.9
49.7
59.9
72.7
49.7

59.9
72.7
83.8
59.9
72.7
83.8
83.8
83.8

As can readily be seen, the essential principle guiding the distri­
bution of “ profits” is that the largest proportion be given to the
lowest paid employees; thus an employee with an earning capacity
of 80 cents per hour receives as “ profits” only 9.4 per cent of his
wage, while the lowest paid operatives receive almost nine times as
large a proportion, namely, 83.8 per cent.
DETERMINATION OF ELIGIBILITY FOR PARTICIPATION.

Below is presented a summary of the rules governing eligibility for
participation in the benefits of the plan as in force October, 1916.
Every employee 21 years of age or over, in employ for six months,
who leads a clean, sober, and industrious life, and who can prove that
he has thrifty habits, is eligible to share in the profits.
56831°—Bull. 208—17------7




98

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

Every married man, no matter what age, in employ for six months,
who can qualify as to sobriety, industry, and cleanliness, can par­
ticipate, if he is living with his family.1
Every employee under 21 years of age, in employ for six months,
who is the sole support of a widowed mother, or next of kin, and who
#
leads a clean, sober, and industrious life, can participate.
Immediately after employing a man an investigation is started by
one of the company’s agents especially appointed for that purpose
into the economic, social, moral, etc., conditions of the prospective
participant on the theory that while an employee’s wages are his
own, the company having no concern about them, except to pay
when due, the giving of profits is at the option of the company and is
conditional upon requirements of thrift. The comprehensiveness
of this investigation may readily be seen by examining the following
three exhibits taken from the original records of the education depart­
ment of the company.
Record A .—This employee upon investigation made on January 2,
1914, was not approved for participation because “ he lived in a dirty
insanitary hut, and has a home full of boarders, who sleep three and
four in a room * * * there is no privacy. Wife looks haggard
from overwork. She and the children are as dirty as the surround­
i n g s . T h e investigator of the company advised this man “ to move
to a more sanitary neighborhood; clean up, and put in some home
comforts.’ 1
On May 23 of the same year this employee was again visited. It
was found that, acting on the suggestion of the company’s investi­
gator, he had greatly improved his home conditions, and had also
purchased a lot in the suburbs for home building purposes. He was
accordingly approved for participation.
On December 16, 1914, upon a third visit, it was found that he
had completed the payments on the purchased lot, had built a house
on it, and that he “ now has a modern 7-room house, containing a
bath and all modern improvements, occupied by the family only.
* * * He also bought new furniture.”
On August 15, 1915, upon a fourth visit the agent of the company
reported that this employee “ is making wonderful progress with his
share of the profits. His home is comfortably furnished, the family
is neat and clean. * * * They are a happy and contented fam­
ily.”
The record of investigation as kept by the company on a special
card-index form, follows verbatim:
1 Since October, 1916, every married man is approved for participation at the end of his first six months
of service, regardless of home conditions. However, he is expected to meet the expectations of the
company in matters relating to living conditions, thrift, etc.




PROFIT SH A R IN G IN
R

ecor d of

T H E U N IT E D STATES.

I n v e s t ig a t io n .

Name:
Address: ---------, 1 - 9 - 1 4 ; --------- ,
Date (factory): 1 -10-14. Date (home): 1 -9 -1 4 .
last in v.: --------Age: 30. Date of birth: 5-10-1883. Religion:
Nationality: German P ole.
Married: Yes. In Detroit how long: 6 months.

N o . ------------

99

JRecord A").

5-23-15.

Date hired: 10-1-13.
Catholic.

Date of

Speak English: No.

In U. S.: 1 year.

Naturalized:

No.

Dependents.
Name:---------.
N am e:---------.
Name:---------.
Name:---------.
Nam e:---------.

Relation: Wife. Age: 29 years. Address: Same.
Relation: Daughter. A ge: 5 years. Address: Same.
Relation: Daughter. A ge: 3 years. Address :Sam e.
Relation: Son. Age: 1^4 years. Address: Same.
Relation: Son. Age: 4 months. Address: Same.

Extent: Totally.
Extent: Totally.
Extent '.Totally.
Extent: Totally.
Extent: Totally.

Habits: Drinks and smokes. Education: Past— One year in old country; present—■
Doctor: N one; address--------Life Ins. Co. name: None. What kind: --------- Amount: --------- Premiums per
year: --------Kind of building: 2-story fra m e; poor condition. No. of rooms: 7; no bath. Occu­
pants: Male, 10; female, 1; children, 4. Light: Poor. Air: Poor. Sanitation: Very
bad. How furnished: Only bare necessities.
Neighborhood: Very bad. This is an alley with one and two story houses in poor con dition on one side only — Foreign. Rents, month: $14.
None.

F i n a n c ia l Co n d i t io n .

Property owned orbuying.

Location.

V alue.

None......................................
Buying lot............................ Jerome Park.....................
Owes shack.......................... On lot above....................
Buying home....................... — Jerome P a r k . . ______
Location.

State Savings.......................

Debts to—

Balance
this inv.

Balance
(date),
5-23-14.

Balance
(date),
12-16-14.

396

$300

$25

$1

Balance
due this
inv.

Balance
due
(date),
5-23-14.

Balance
due
(date),
12-16-14.

$900

Bn lit, shaok___

(Date),
5-23-14.

None.

On lot (v).......

$250

On shack (v )..

150

C l o t h e s for
family (v).
Moving (v )___

50

Acc’t of share of
profits.

180

$116
Balance
due
(date),
8-10-15.

$45
(Date),
8-10-15.

(Date),
12-16-14.

Acc’t of sliare
of profits.

Paid on home ( v ).

$650

Lumber debt (v )..

75

Prin. on home
(v).
Int. on home

Furniture (v )........

20

Furniture (v).

101

745
24
200

Banked ( v ) . . .

115

Bank decrease.......
From sale of shack.

5
455
275

$1,100
Balance
(date),
8-10-15.

$75
$150

Acc’t of share
of profits.

A m ’t
paid
(date),
8-10-15.

$250
225

For—

Acc’t of sliare
date.
of profits.




A m ’t
paid
(date),
12-16-14.

$700
225
3,250

Main Street.......................

Bank decrease.

A m ’t
paid
(date),
5-23-14.

Account
No.

Name of bank.

None....................................................................
Restrict Lumber Co.........................................
Peoples Furniture Co.......................................

Ain’t
paid this
inv.

521

(v).

$200
65

481

100

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

Home Condition.
Date: 5-23-14, Good.

Date: 12-16-14, Good.

Date: 8-10-15, Good.

Remarks.
This man lives in a dirty insanitary hut, and has home full of boarders, who sleep
3 and 4 in a room. There is no privacy. Some of the boarders go through the room
where man and wife sleep to reach their own. Wife looks haggard from overwork.
She and children are as dirty as the surroundings. Have advised him to get rid of
the boarders; move to a more sanitary neighborhood; clean up, and put in some home
comforts. Can not approve him for share of the profits under present living conditions.
May 23, 1914: This man has followed my suggestion made on last investigation.
He has purchased a lot in the suburbs and has built a 3-room shack on it; occupied by
his family only. The present home conditions are a great improvement on last
investigation. This is only a temporary house, but he is going to build a larger home
as soon as he gets his lot paid for. He has also enrolled in the Ford English school,
and attends three times a week. The furniture is not excellent, but it is enough for
their immediate needs. The family, as well as the home, show cleanliness.
Dec. 16, 1914: Since last investigation this man has completed payments on his
lot; had a house built on it, and turned over the deed as 1st payment. He now has
a modern 7-room house, containing bath and all other modern improvements, occupied
by the family only, which now consist of 7 members. He has a new son one month
old. He is getting along well with his studies, and can now talk fairly good Eng­
lish. He expects to graduate with the next class. Has also bought new furniture.
His home is now comfortably furnished, and very clean. The shack mentioned on
previous investigation was sold for $200.
Aug. 15, 1915: Our employee is making wonderful progress with his share of profits.
His home is comfortably furnished; the family is neat and clean. He can now speak
English, and has taken out 1st naturalization papers. They are a happy and con­
tented family.
Inf’n from: S e lf and wife: Relation: ........... Int’r: ---------. Inv’r: --------- . This
date: D isapprove.
Inf’n from: S e lf and wife. Relation: ........... Int’r: ---------. Inv’r: ---------. Date:
, A p p ro v e , 5 -2 3 -1 4 .
Inf’n from: Wife. Relation: ........... Int’r: ---------. Inv’r: --------- . Date: A p ­
prove , 12-16-14.
Inf’nfrom: W ife a n d s e lf R elation:........... Int’r : ---------. Inv’r : --------- . Date:
A p p ro v e , 8-10-15.
Approved for Share in Div. Profits.
By L. G. M . Date: 5 -2 5 -1 4 . By A . E . Date: 1 2 -1 8 -1 4 . By L. G. M. Date:
8 -13-15.
Rate: 1 -1 2 -1 4 , ......... Skill: 34 C 3. Rate: 5 -2 5 -1 4 , 62 % . Skill: 34 C 3.
Rate: 12 -1 8 -1 4 , 62V2. Skill: 34 C 3. Rate: 8 -1 3 -1 5 , 62Y2. Skill: 34 C 3.
Remarks.
Have explained profit sharing fully.
living conditions generally.

Think he understands now and will improve

Record B .—As a result of a first investigation made on December
1,
1914, this employee was approved for participation because the
investigator of the company thought “ that he will make good use
of the profits.”




101

PR O F IT S H A R IN G IN T H E U N IT E D STATES.

Upon a second visit made six months afterwards it was found
“ that the profits have been a detriment to this young man. After
getting a share of the profits he started in having a good time. He
not only spent all the profits he received, but the money he had in
the bank.” On the basis of this report the employee was disquali­
fied from further participation in the benefits of the plan.
Upon a third visit, again six months later, the investigator of the
company reported that the employee “ has realized his mistake, that
he now has a bank account and has shown thrift.” The employee
was accordingly put back on the participating roll.
The record as kept by the company is as follows:
1

N o .---------[Record B].
R

ecord

of

I n v e s t ig a t io n .

; Name: --------- Address: ---------, 1 -1 0 -1 4 .
Date (factory): 1-12-1914 . Date (home): 1 -1 0 -1 4 . Date hired: 6-2 -1 1 . Date of
last in v .: ...........
Age: 23 (v). Date of birth: July 7 , 1890 (birth certificate). Religion: Catholic.
Speak English: Yes. Nationality: American.
Married: N o. In Detroit how long: Life. In U. S.: Life. Naturalized: ......... .
Dependents.
Name: None.
N a m e :..........
Name: .........
Name: .........

Relation:
Relation:
Relation:
Relation:

....... A g e :........ Address: ........... Extent:
........ Age: ........ A dd ress:.......... Extent:
....... Age: ....... Address: ........... Extent:
....... Age: ....... Address: ........... Extent:

..........
.........
.........
.........

Habits: Good; smoJces—does not drink. Education: Past—high school; present-.—
Doctor: N on e; address: ...........
Life Ins. Co. name: Metropolitan. What kind: 20 year endow. Amount: $2,000.
Premiums per year: $65.
Kind of building: 2-story brick. No. of rooms: 9 and bath. Occupants: Male 4/
female 2 ; children 1 . Light, air, sanitation: Good. How furnished: Well.
Neighborhood: Good; Am erican residential 2-story houses in good condition. Boards,
week: $7.
None.

F in a n c ia l Co n d it io n .

Property owned or buying.

Location.

None......................................
None......................................
Buying lot............................ — Center St......................

Name of bank.

Location.

H. P. State........................... H. P ...................................
None......................................
H . P. State........................... H. P ...................................




Value.

Am ’t
paid
this inv.

Am ’t
paid
(date),
7-10-14.

Am ’t
paid
(date),
12-1-14.

Ain't
paid
(date),
S-l-15.

None.
$650

None.

Account Balance
No.
this inv.

2243

Balance
(date),
7-10-14.

Balance
(date),
12-1-14.

$55
Balance
(date),
8-1-15.

$64
None.

19467

$24

$253

102

B U L L E T IN OF T H E BUREAU OF LABOR STATISTICS.
F i n a n c i a l C o n d i t i o n —Concluded.

Balance
due
(date),
7-10-14.

Balance
due
(date),
12-1-14.

None.

Balance
due
this inv.

For.

Debts to—

None.

None....................................................................

Acc’t of share This
of profits.
date.

Acc’t of share
of profits.
Bank decrease.
Can not ac­
count for any
of profits.

(Date)
7-10-14.

Acc’t of share of
profits.

$64

(Date)
12-1-14.

Acc’t of share
of profits.

$35
24
8

Insurance (v).

Clothes (v).............
Banked (v )............
Dentist (v).............

Banked (v ). . .

67

Balance
due
(date),
8-L-15.
None.
(Date)
8-1-15.
$65
55
229
349

Home condition.
Date: 7-10-14, Same.

Date: 12-1-14, Same.

Date: 8-1-15, Same.

Remarks.
This man lives with a respectable family, and has started a savings account, and I
believe will make good use of the profits, if granted.
July 10,1914: The profits have been a detriment to this young man. After getting
a share of the profits he started in having a good time. He not only spent all of the
profits he received, but the money he had in the bank as well. He has absolutely
nothing to show for the wages and share of the profits he has received since last inves­
tigation.
Dec. 1, 1914: This man has realized his mistake. He has started a new account at
the H. P. State bank; says he now stays in nearly every evening. Since he has
shown thrift with his wages since last investigation, I think he should be given
another chance.
Aug. 1, 1915: A big change has taken place in this young man. Every one around
the place where he lives speaks very well of him. He has saved his share of profits,
bought a lot, and intends to get married shortly and build a home. * He has started a
technical course in the Y. M. C. A.
Inf’n from: S e l f & Mrs. J. W. Relation: Landlady. Int’r: None. Inv’r . ---------.
This date: A pprove.
Inf’n from: S e l f & Mrs. J .W . Relation: Landlady. Int’r: None. Inv’r: ---------.
Date: D isapprove, 7-10.
In fn from: S e l f & Mrs. J .W . Relation: Landlady. Int’r: None. Inv’r: ---------.
Date: A p p ro v e , 1 2 -1 -1 4 •
Inf’n from: S e lf. Relation: ---------. Int’r: None. Inv’r: --------- . Date: A p ­
prove, 8 -1 -1 5 .

Approved for Share in Div. Profits.
By L . G . M . Date: 1-14-14- B y ---------. Date: ---------By A . E . Date: 12-5-14.
By L . G. M. Date: 8 -5 -1 5 .
Rate: 1-14-14, 6 8 % . Skill: 43 B 2. Rate: 7-1 2 -1 4 , ....... Skill: 43 B 2. Rate:
1 2 -5 -1 4 , 68% . Skill: 43 B 2. Rate: 8 -5 -1 5 , 68% . Skill: 43 B 2.
Remarks.
Have talked to this man, and he realizes the mistake he has made.
mend his ways.




Promises to

103

PR O F IT SH A R IN G IN T H E U N IT E D STATES.

Record C.—This employee, although not eligible to participate by
reason of the fact that he was under 22 years of age, was put on the
participating roll upon the recommendation of the company's inves­
tigator because it was found that he was the sole support of the
family. The father of the family, upon his death, had left it penni­
less, without any means of support.
The record follows:
N o .---------[Record C].
R ecord

op

I n v e s t ig a t io n .

Name: ---------. Address:---------, 1 -8 -1 9 1 4 , --------- , 8 -5 -1 4 , —
-------, 1-20-15.
Date (factory): 1 -9 -1 4 . Bate (home): 1 -8 -1 4 . Bate hired: 12-10-13. Date of
last i n v . :...........
Age: 20. Date of birth: 3-12-1898. Religion: Protestant. Speak English: Yes.
Nationality: American.
Married: N o. In Detroit how long: 8 years. In U. S.: Li/e. Naturalized: ...........
Dependents.
Name: ---------.
Name: ---------.
Name: ---------.

Relation: Mother. Age: 46yrs. Address: Same. Extent: Totally.
Relation: Brother. Age: 12. Address: Same. Extent: Totally.
Relation: Sister. Age: 9. Address: Same. Extent: Totally.

Habits: Good; does not smoke or drink. Education: Past— Common school. Pres­
ent— ........... D octor,---------; address: --------- .
Life Ins. Co. name: None. What kind: ........... Amount: ........... Premiums per
year: ...........
Kind of building: 1-story fram e. No. of rooms: Four. Occupants: Male, 1; female,
1; children, ,2. Light: Fair. Air: Good . Sanitation: Good. How furnished: Fairly
well.

Neighborhood: Mostly fram e cottages in fa ir condition , congested , mixed nationali­
Rent, month: $12.

ties.

F in a n c ia l C o n d it io n .

Property owned or
buying.

Location.

Value.

None......................................
Buying homo....................... 2872 Main St.....................

Name of bank.

None.

$500

Balance
(date),
8-5-14.

Balance
(date),
1-20-15.

$250

$50

Balance
due this
inv.
1-8-14.

Balance
due
(date),
8-5-14.

Balance
due
(date),
1-20-15.

$20
60

None.
$20
32

None.
$12

Balance
Account this inv.
No.
1-8-14.

Location.

11934

For—

Family Furniture Co....................................... F urniture............
D . J. Green......................................................... Undertaker............
Family Furniture Co......................................




Am ’t
paid
(date),
1-20-15.

$2,850

N one......................................
H . P. State........................... H. P ...................................

Debts to—

Am ’t
paid
(date),
&-5-14.

Am ’t
paid
this inv.
1-8-14.

Am ’t
paid
(date),
10-5-15.

$765

Balance
(date),
10-5-15.

$105

Balance
due
(date),
10-5-15.

None.

104

B U L L E T IN OF T H E BUREAU OF LABOR STATISTICS.
F i n a n c i a l C o n d i t i o n —Concluded.

Acc’t of share This
of profits.
date.

Acc’t of share
of profits.
Banked ( v )___
Furniture debt.
Funeral debt...
New furniture..

(Date)
8-5-14.

Acc’t of share of
profits.

$250
20
40
40
350

(Date)
1-20-15.

Paid on home___
Undertaker..........
Furniture.............
Insurance.............

$500
20
20
30

Bank decrease.

Acc’t of share
of profits.

570
200

Prin. on home.
Int. on home..
Banked...........
Furniture........

(Date)
10-5-15.
$265
40
55
12
372

370

Home condition.
Date: 8-5-14, Good.

Date: 1-20-15, Good.

Date: 10-5-15, Same.

Remarks.
This boy lost his father by death about 6 months ago, and the mother has had a
rather hard struggle to make both ends meet. The father did not carry life insurance,
and they are still in debt for the funeral expenses. This son is very good to his mother.
He turns his pay envelope over to her each pay day. A very worthy case. Mother
has no other means of support.
Aug. 5, 1914: This family has moved to a nice five-room flat, occupied by them­
selves only. Have bought new furniture, and everything is clean and comfortable.
They intend to buy a home of their own as soon as they have a little more saved.
Jan. 20, 1915: Since last investigation this family has purchased a nice little cottage
containing 6 rooms and bath; have all modern conveniences, including furnace, and
is in a neighborhood not very thickly settled; children have plenty of room to play
and lots of fresh air. Boy has taken out a 20-year insurance policy with the New
York Life for $1,000.
Oct. 5, 1915: This family is getting along very nicely. They are very thrifty.
The share of profits has been put to good use, and they are very happy and contented.
The boy is now 22 years old and has verified his age by birth certificate. Brother
and sister are attending school. He still lets his mother handle the money.
In f’n from: S elf
mother. Relation:........... Int’r: None. Inv’r : ----date: A pprove.
In f’n from: S e lf < mother. R elation:........... Int’r: None. In v’r : ------ .
£
A pprove , 8 -5 -1 4 .
In f’n from: S elf & mother. Relation: ........... Int’r: None. In v’r
Date: A pprove , 1-20-15.
In f’n from: Em ployee. Relation: ........... Int’r: None. Inv’r: ------ .
A pprove , 10-20-15.
Approved for Share in Div. Profits.

This
Date:

Date:

By A . E . Date: 1 -1 2 - U . By L . G. M. Date: 8 -7 -1 4 . By L . G. M. Date:
1-23-14. By A . E . Date: 10-28-15.
Rate: 1 -1 2 -1 4 ,6 2 ^ . Skill 84 C 2. Rat e; 8 -7 -1 4 , 62}4. Skill 3 4 0 2. Rate: 1 -2 3 15, 65% . Skill 38 C 3. Rate: 1 0 -2 3 -1 5 , 6 5 Skill 38 C 3.

Each of the company’s investigators devotes his entire time to
this work. He is furnished with an interpreter and an automobile.
It is his duty to learn all he can about the employees whom he is




P R O F IT SH A R IN G IN T H E U N IT E D STATES.

105

requested to investigate. He finds out, as can be seen from the blanks
here reproduced, what are the conditions in their homes, what recrea­
tions they indulge in, how much money they have saved, how much
they owe, how much they send to their friends abroad, how many per­
sons are dependent upon them, in fact, everything possible that might
assist in determining whether the employee is to participate in the
benefits of the plan. The following is a copy of an instruction sheet
for the guidance of investigators employed by the company:
To I n v e s t i g a t o r s . —The salient facts to ascertain about the three classes into
which we have divided our men are noted below. Understand that the lack of positive
information withholds all benefits from employees until all of the facts in each indi­
vidual case have been ascertained.
M a r r i e d M e n . —We must have such information as will assure us through you
that a man is married and is living with his wife. Use all the thought and ingenuity
at your command to get this information positively. We also must know about the
man’s habits.
S i n g l e M e n O v e r 2 2 . —Granting the division of the profits to them is based
entirely upon their being “ proven” thrifty. We must know through you positively
as to the conduct of employees outside of business, the extent of their indulgences
that makes for good or bad manhood.
S i n g l e M e n U n d e r 2 2 . —We want to ascertain positively whether or not these
young men have anyone dependent upon them, and whom, and to what extent.
Verify their ages positively. In case of conflict between the office records and the
man’s statements of his age, please give us your best judgment if you can not obtain
tangible proof.
G e n e r a l . —Please throw into the investigation of each case a deep, personal inter­
est and state as briefly and concisely as you can all of the facts and features necessary
for a well-rounded judgment. The honesty of a man in making frank statements,
and the home conditions particularly, are of vital importance. Get as much informa­
tion as you can in each case to cover the points gone over in talks and outlines with
you. Please remember that we want the exact truth on all phases of the situation
rather than quick returns.

It must be noted, however, that of late the principal emphasis in
these investigations is laid upon the question of thrift, the relative
importance of all other conditions described in the foregoing sections
having been greatly diminished on account of reasons stated elsewhere.
The judgment formed by the investigator, based upon the informa­
tion and figures obtained, is presented in writing with a specific rec­
ommendation. Each case, after being reported upon by the inves­
tigator, goes before a committee of the education department, which
passes a final judgment on the case, either approving or disapproving
the recommendation.
As may be seen from the foregoing records, investigations are
repeated in ordinary cases at regular intervals of about six months.
In special instances more frequent investigations are made. The
number of times that an employee may have been disapproved has
no bearing whatever upon his ultimate approval for participation.




106

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

In every instance of disapproval the employee involved is informed of
the reasons for such action and suggestions given as to how he may
qualify. The same is true of cases approved and subsequently dis­
approved; if a reinvestigation shows that the causes for the previous
disqualification have been removed the employee is put back on the
participation roll.
EXTENT OF ACTUAL PARTICIPATION.

The rules governing the participation in the. benefits of the plan are
strictly applied; the rigidity of the application, however, depends to
a very significant extent upon the character of the specific group of
employees concerned. The company pays very little attention to the
manner of life, etc., of their office employees. These are approved
for participation upon only a cursory investigation of their respective
records. It is the opinion of the company that the employees of the
commercial and clerical occupations, who mostly are native Ameri­
cans with some education, need not be told how to live decently and
respectably. For this reason most of the rules and regulations as well
as the results described in this section of the report concern chiefly the
manual and mechanical workers, many of whom are of foreign birth
and unable to speak the English language.
For conveniance of discussion, the nonparticipating employees of
the company may be classified into a “ nonparticipating but eligible”
group and a “ nonparticipating because ineligible” group. The
former embraces all the employees who for individual reasons have
not received the benefits of the plan but remain eligible to receive
them. The latter embraces all employees who, by the very nature
of the plan, can not immediately or ever come under it inasmuch as
the plan was designed to benefit only those employees who have
worked six months or more directly for the company. This group
includes all the newly-hired employees as well as people who are only
nominally employees of the company— those engaged in building and
construction, delivery and transportation work done by independent
firms under contract with the company. It also includes employees
too young to participate—under 21 years—and girls with no total
dependents.
The following table shows the extent of participation for a period
of 31 months, between April 10, 1914, and November 1, 1916:




107

PR O F IT SH A R IN G IK T H E U N IT E D STATES.

T able 36___N UM BER AND PER CENT OF PARTICIPA TIN G AN D N O N PAR TICIPATIN G
EM PLOYEES (HOME PLANT) AT SPECIFIED DATES D U R IN G 31 MONTHS E N D IN G
N O V. 1, 1916.

Participating.
Date.

Total
em­
ployed.

Nonparticipating—
But eligible.

Because ineligible.

Number. Per cent.
Number. Per cent. Number. Per cent.

Apr. 10, 1914......... ........................
July 17, 1914...................................
Sept. 2 5 ,1 9 1 4 ....;........................
Dec. 2,1914.....................................
May 12, *915...................................
Nov. 17,1915.................................
July 20, 1916...................................
Nov. 1, 1916...................................

13,251
9,917
12,123
12,700
17,765
21,808
34,490
40,075

7,567
8,332
10,039
11,125
10,595
16,225
22,156
27,492

57.11
84.02
82.81
87.60
59.64
74.40
64.24
68.60

3,729
805
683
464
491
439
418
238

28.14
8.11
5.63
3.65
2. 77
2.01
1.21
.59

1,955
780
1,401
1,111
6,679
5,144
11,916
12,345

14.75
7.87
11.65
8.75
37.59
23.59
34.55
30.80

On November 1, 1916—31 months after the inauguration of the
plan—of a total average employed of 40,075, 27,492, or 68.60 per cent,
were participating in the benefits of the plan. The 12,583 nonpartici­
pating employees (31.39 per cent of all employees) were distributed as
follows: “ Nonparticipating, but eligible,” 238, or 0.59 per cent, and
“ Nonparticipating because ineligible,” 12,345, or 30.80 per cent.
The real extent of deliberate disqualification from participation for
reasons stated elsewhere is shown in the column of the above given
table entitled “ Nonparticipating, but eligible.” The percentage this
group is of the total force has been on the decrease during the entire
period, having declined from 28.14 per cent on April 10, 1914, to 2.77
cent on May 12, 1915. The investigation made July 20, 1916, 28
months after the plan was put into effect, showed that this group
has been, reduced to slightly over 1 per cent of the total employed.
By November 1, 1916, the number of those deliberately disqualified
from participation was further reduced—to 238, or slightly over onehalf of one per cent of the total working force of the plant. The
decrease in the percentage participating between December 2, 1914,
and May 12, 1915, as shown in the table, is due largely to the influx
of a great number of new employees, the working force of the com­
pany having been increased by over five thousand between Decem­
ber 2, 1914, and May 12,1915.
Table 37 shows in detail the relative status of one of the two
groups and Table 38 the relative status of the other, on eight differ­
ent dates during the first 31 months of the operation of the plan, as
well as the causes for nonparticipation.




108

B U L L E T IN OF T H E BUREAU OF LABOR STATISTICS.

T ab le 3 7 .—NUM BER AN D PER CENT OF EM PLO YEES NOT P AR TICIPATIN G B U T ELI­
GIBLE DURING 31 MONTHS EN D IN G N O V, 1, 1916, CLASSIFIED B Y CAUSES.

Employees nonparticipating but eligible.
Apr. 10, 1914.

July 17, 1914.

Sept. 25,1914.

Dec. 2, 1914.

Num­
ber.

Cause of disapproval.

Num­
ber.

Num­
ber.

Num­
ber.

Per
cent.

Poor home conditions 1............................
Lack of thrift2............... ...........................
No proof of age...........................................
Domestic trouble.....................................
Liars............................................................
Bad habits..................................................
No proof of marriage................................
Doubtful statement and miscellaneous .

2,535
798

19.13
6.02

209
70

1.58
.53

117
3,729

28.14

Per
cent.

Per
cent.

.88

Total.................................................

Per
cent.

May 12, 1915.
Poor home conditions1............................
Lack of thrift2...........................................
No proof of age..........................................
Domestic trouble.......................................
Liars.............................................................
Bad habits..................................................
No proof of marriage................................
Doubtful statement and miscellaneous.
Total................................................. ‘

131
228
80

0.74
1.28
.45

26
14
10
2
491

428
189
134
40
14

4.32
1.91
1.35
.40
.13

74
240
327
16
15
11

0.61
3.98
2.70
. 13
. 12
.09

35
153
234
14
19
S

0.28
1.20
1.84
.11
.15
.07

805

8.11

083

5.63

464

3.65

! Nov. 17, 1915.
1

July 20, 1916.

Nov. 1, 1916.

. 15
.08
.06
.01

51
206
97
9
14
32
15
15

0.23
.94
.45
.04
.06
.15
.07
.07

13
145
140
46
34
27
4
9

0. 04
.42
.40
.13
.10
.08
.01
.03

9
87
61
40
26
13

2. 77

439

2.01

418

1.21

238

2

0.02
.22
. 15
.10
.06
.03
.003
.59

1 The following is a statement of the company bearing on this point:
Home comforts and sanitation .—Employees should not sacrifice their family rights, pleasures, and com­
forts by filling the house with roomers and boarders, nor endanger their children’s morals or welfare by
allowing them to associate with people about whom they know little or nothing.
Employees should live in clean, well-conducted homes, in rooms that are well lighted and ventilated.
Avoid the congested and slum parts of the city. The company will not approve, as profit sharers, men
who herd themselves in overcrowded boarding houses which menace their health. Select a home where
there are few boarders or roomers, the surroundings clean and wholesome, paying particular attention to
the sanitary conditions in the house.
Do not occupy a room in which one other person sleeps, as the company is anxious to have its employees
live comfortably and under conditions that make for cleanliness, good manhood, and good citizenship.
2 The following is a statement of company bearing on this point:
Thrift .—Every employee participating in profit-sharing is expected to save some part of the profits allowed
him. No hard and fast rule can be laid down or adopted in this particular, as responsibilities differ with
different persons and families. For instance, an employee with a family of wife and six children can not
be expected to save as much as one with only two or three children, or none.
The single man with no one dependent upon him is in a position to save all of his profits, and it is from
this class that the company expects the greatest gain in savings to be made.

At the end of the first 31 months of the operation of the plan the
percentage of “ nonparticipating, but eligible” employees was reduced
from 28.14 per cent to 0.59 per cent.
The two principal reasons for the existence of this group were “ poor
home conditions” and “ lack of thrift,” these two causes having
been responsible for almost nine-tenths of the group.. During the
first 31 months of operation of the plan the percentage of employees
disqualified on account of “ poor home conditions” decreased from
19.13 per cent to less than one-fourth of 1 per cent; at the same time
the proportion of disqualified because of lack of thrift decreased from
6.02 per cent to 0.22 per cent of the average total number employed.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

109

T ab le 3 8 .—NUM BER AND PER CENT OF EM PLO YEES NOT PARTICIPATING BECAUSE
IN ELIG IB LE DURING 31 MONTHS END IN G NO V. 1, 1916, CLASSIFIED B Y CAUSES.

Employees nonparticipating because ineligible.
Apr. 10,1914.

July 17, 1914.

Sept. 25,1914.

Dec. 2,1914.

Num­
ber.

Per
cent.

Num­
ber.

Num­
ber.

Num­
ber.

Too young; no total dependents.............
Girls; no total dependents.......................
Power and construction1........................
Men and teams1........................................
New men....................................................

1,955

14.75

Total.................................................

1,955

Cause of ineligibility.

(2)

Total.................................................

6.05
600
180 ' 1.82
(2)

14.75

May 12,1915.
Too young; no total dependents...........
Girls; no total dependents......................
Power and construction1......................
Men and teams1........................................

Per
cent.

780

7.87

Nov. 17,1915.

Per
cent.

Per
cent.

850
296
252
3
(2
)

7.01
2.44
2.08
.03

623
285
200
3
(2
)

4.91
2.24
1.58
.02

1,401

11.56

1,111

8.75

July 20, 1916.

Nov. 1,1916.

2.99
585
2.68
531
409
424
2.38
301
258
1.38
f...........
2.53 }
450
757
3.47
4
.02
3,501
16.06 11,249
New men....................................................
5,270
29.67

1.19
.75

425
45

32. 61

2
11,873

.005
29.63

5,144

34.55

12,345

30.80

6,679

37.59

23.59

11,916

1.06
.11

1 Construction employees and men on teams are employees of the company only indirectly, inasmuch
as they are not hired by the company, but by contractors doing work for the firm.
2 Not reported.

The relative size of the “ Nonparticipating because ineligible” group
of employees seems to have been in a constant flux during the first
31 months; in terms of a percentage of the total employed this group
was as follows: April 10, 1914, 14.75; July 17, 1914, 7.87; Sept. 25,
1914, 11.56; December 2, 1914, 8.75; May 12, 1915, 37.59; November
17,1915,23.59; July 20, 1916, 34.55, and November 1, 1916, 30.80, the
percentage on the last date being more than twice as large as that on the
first date, in spite of the fact (shown in the table) that the percentage
ineligible on account of being under 22 years of age had decreased from
14.75 to 1.06 per cent. The reason for the great increase of employees
in this group can be gathered from the table, namely, the great in­
crease in the total force of the factory during the period immediately
preceding May 12, 1915, there appearing on that date a total of 5,270
new employees; that is, employees with a service record of less than
six months and not eligible to participate.
Temporary disqualification from participation.

During the first 18 months of the operation of the plan a total of
1,293 employees were temporarily disqualified from participation in
the benefits of the plan. Of this number, 853, or about two-thirds,
have been restored to the participating roll within the same period.
The following table shows the number and per cent of employees dis­
qualified, classified by the causes for disqualification, as given by the
company:




110

B U L L E T IN OP T H E BTTBEATT OF LABOR STATISTICS.

T able 3 9 .— NUM BER AN D PER CENT OF EM PLOYEES T E M PO R A R IL Y DISQUALIFIED
FROM A N D A F T E R W A R D RESTORED TO PARTICIPATION DURING 18 MONTHS
ENDING JULY 12, 1915, B Y CAUSES.

Employees who were—
Disqualified.

Afterwards restored.

Cause of disqualification.
Number.

Number.

Lack of thrift....................................................................................
Poor home conditions.....................................................................
No proof of age.................................................................................
L ia r ............................................................... ............................ - _
_
Rehired....... ......................................................................................
Money loaned on note without security....................................
Bad habits........................................................................................
No proof of marriage......... .......... . .................................................
Living with women not their wives...........................................
Under 22 years; no total dependents..........................................
Hoarding money at home................... . ........................................
Girls; no total dependents............. ..............................................
Domestic troubles............................................................................
Stealing.......................................................................................* __
Money placed in private banks...................................................
Keeping roomers. - ......................................................................
Wife working..................................................................................
Nonsupport and desertion.............................................................
Business outside of company........................................................

532
255
152
92
59
58
45
23
19
17
13
13
4
3
2
2
2
1
1

41.1
19.7
11.8
7.1
4.6
4.5
3.5
1.8
1.5
1.3
1.0
1.0
.3
.2
.15
.15
.15
.08
.08

344
188
132
53
13
35
33
19
10
1
11
3
1
3
1
2
2
1
1

T o ta l............................................................................................

1
2
3
4
5.
6.
7
8
9.
10
11.
12.
13.
14.
15.
16.
17
18
19

Per
cent of
total.

1,293

100.0

Per
cent of
group.
64.7
73.7
86.8
57.6
22.0
60.3
73.3
82.6
52.6
5.9
84.6
23.1
25.0
100.0
50.0
100.0
100.0
100.0
100.0

853

A few notes concerning some of the causes for disqualification as
listed in the above table may be of some value as illustrating the at­
titude of the company on some of the problems involved in the ad­
ministration of the plan. Thus, “ 3. No proof of age” : This means
that employees, if unmarried, must prove in a satisfactory way that
they are over 22 in order to qualify for participation. “ 4. Liar” : By
this is meant an employee who has made misstatements to the inves­
tigator of the company with reference to age, number of dependents,
conjugal condition, etc., in order to get the benefits of the plan.
“ 5. Rehired” : This means that with refernce to participeation arehired employee is on the same basis as a newly hired one—disquali­
fied from the benefits of the plan during the first six months of ser­
vice. “ 6. Money loaned on note without security” : It is the policy
of the company to discourage indiscriminate loaning of money to
irresponsible persons. “ 11. Hoarding money at home” : The com­
pany is endeavoring to make employees keep their savings in regu­
larly incorporated banking institutions instead of hoarding them at
home or depositing them in the so-called private banks maintained
by financially irresponsible countrymen of the employees. “ 14.
Stealing” : This refers to the stealing of material, tools, etc. This
rule, however, is not in operation at the present time, as this offense,
if not grave enough to cause discharge, is not considered a bar to
participation. “ 19. Business outside of company” : This means that
no participating employee is permitted to have outside business in­




Ill

PR O F IT S H A R IN G IN T H E U N IT E D STATES.

terests; in the opinion of the management a worker cannot be efficient
if he has outside work in addition to his work in the factory.
Over 60 per cent of all the temporary disqualifications from par­
ticipation were due to two causes: (1) Lack of thrift on the part of
the employees, and (2) poor home conditions—facts demonstrating,
in the opinion of the company, that' “ the profits paid have been
wrongly utilized.” Sixty-four and seven-tenths per cent of all dis­
qualified by reason of lack of thrift and 73.7 per cent of those dis­
qualified on account of poor home conditions were put back on the
participating rolls within 18 months, the period covered by the table,
showing that the objectionable conditions responsible for the dis­
qualification had wholly or to a great extent been removed.
The following table shows the relative proportions of participating
and nonparticipating employees in the various plants of the company
in the United States on January 12, 1915, one year after the inaugu­
ration of the plan:
T able 4 0 .—NUM BER

AND

PER CENT OF EM PLO YEES PARTICIPATING ON J A N . 12
1915, B Y PLANTS.

Number of em­
ployees.

Number of emPer
cent
participating.

Total.

Participating.

Nonparticipating.

274
250
219
152
305
184

67
64
67
58
137
84

207
186
152
94
168
100

24.5
25.6
30.6
38.2
44.9
45.7

618
57
70
668
394
156
138
178
218
141
356

288
27
36
350
208
83
79
109
140
95
243

330
30
34
318
186
73
59
69
78
46
113

46.6
47.4
51.4
52.4
52.8
53.2
57.2
61.2
64.2
67.4
68.3

Location of plant.

Indianapolis...................
Cincinnati......................
Atlanta...........................
Memphis........................
San Francisco...............
Columbus.......................
Detroit (commercial
branch).......................
Charlotte........................
Louisville.......................
Long Island City(N.Y.)
Minneapolis...................
Dallas..............................
Omaha............................
Portland.........................
Seattle.............................
Cleveland.......................
Los Angeles...................

Location of plant.
Total.

cent
parPar- Non- ticitici- par- patticipating.
ing. pating.

102
32
70
Milwaukee.....................
Denver............................
252
175
77
136
41
Philadelphia..................
95
Chicago........................
410
290
120
Buffalo............................
203
57
146
71
Oklahoma City.............
53
18
139
Houston........................
104
35
16
Fargo...........................
64
48
391
105
Kansas City...................
496
21
249
Cambridge.....................
228
12
161
St. Louis........................
173
5
Pittsburgh.....................
203
198
Detroit (manufacturing
plant).......................... 14,255 10,229 4,026
772
20
792
Detroit (office)............

68.6
69.4
69.9
70.3
71.9
74.6
74.8
75.0
78.8
91.6
93.1
97.5

Total..................... 21,923 15,095 6,828

i 68.9

71.7
97.5

i August 31, 1916, the proportion participating rose to 73.5 per cent of the total number employed.

The highest proportions of participants were found in the plants
of the company located in Detroit (office), Pittsburgh, St. Louis, and
Cambridge, Mass., the specific percentages that participated in the
distributed profits in these plants having been 97.5, 97.5, 93.1, and
91.6, respectively. These high proportions of participants, as com­
pared with the other plants of the company, is to be attributed to the
fact that the plants located in the above given cities have been in op­
eration longer than any of the others and that, therefore, their rela­
tive growth has not been as rapid. Such a condition naturally leads




112

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

to a high proportion of participants in view of the fact that the largest
single cause for nonparticipation, as shown in Table 38 and in the fol­
lowing table, is the presence of new employees, six months of continu­
ous service being prerequisite for participation. The same reason is to
be given for the relatively low proportions of participants in the fac­
tories of the company located in Indianapolis (24.5 per cent), Cincin­
nati (25.6 per cent), and Atlanta (30.6 per cent)— the lowest in the
entire organization. The following table shows that in Indianapolis
94 per cent, in Cincinnati 96 per cent, and in Atlanta 95 per cent of
the total nonparticipating employees were still new— that is, with a
period of service less than six months.
T able 4 1 .—PER CENT OF NONPARTICIPATING EM PLOYEES, CLASSIFIED B Y CAUSES
JAN. 12, 1915, B Y LOCATION OF PLANT.
[All employees except those of home office.]

Per cent of nonparticipating employees, by cause.
Location of plant.
Single
New em­
ployees. under 22.

Indianapolis......................................................
Cincinnati..........................................................
Atlanta .............................................................
Merrmhis............................................................
San Francisco....................................................
Columbus...........................................................
Detroit (branch)..............................................
Charlotte............................................................
Louisville...........................................................
Long Island City.............................................
Minneapolis.......................................................
Dallas.................................................................
Omaha...............................................................
Portland.............................................................
Seattle
.........................................................
Cleveland ................................. .....................
Los Angeles.......................................................
Milwaukee.........................................................
Denver...............................................................
Philadelphia.....................................................
Chicago
.......................................................
Buffalo .............................................................
Oklahoma City.................................................
Houston
.......................................................
Fargo..............................'...................................
Kansas City......................................................
Cambridge.........................................................
St. Louis.............................................................
Pittsburgh.......................................................
Detroit (plant)..................................................

94
96
95
87
75
91
97
93
88
79
87
93
92
65
90
86
75
72
79
68
77
88
89
86
69
96
85
73

6
4
4
5
21
6
2
7
12
19
12
5
8
33
11
22
28
19
32
20
8
11
31
4
5
50
15

Home
condi­
tions.

1

Lack of
thrift.

No proof
of mar­
riage.

Miscel­
laneous.

1
4

3

4
1

2
.5

.5
2

1
2
2

10

3

3
2
1

2

4
11

5
34
40
6

5
8
20
3

3

20

8
20
3

The places of location of the various plants of the company shown
in the preceding table are arranged approximately according to the
date of their establishment—the Indianapolis plant being one of the
newest extensions of the activities of the company, and the Detroit
plant the oldest in point of existence.
The table brings out two interesting facts which throw considerable
light on the general nature and workings of the plan: First, that the
principal reasons for nonparticipation are (a) the presence of new
employees with a service period of less than six months (the minimum




P R O F IT S H A R IN G IN T H E U N IT E D STATES.

113

required for participation) due to the constantly and rapidly increas­
ing number of employees throughout the year and (b) employees
under the age of 22, not entitled to participate except under special
circumstances, namely, when they are the sole support of their
families. Second, the older the plant the smaller its relative growth
and the number newly hired, and consequently the smaller the num­
ber of nonparticipants in the benefits of the plan.
DISPOSITION OF FORFEITURES.

As originally announced the plan contained no specific provision
with reference to the disposition of the shares of those employees who
for some reason were temporarily disqualified from participation.
As the specific amount that was to be distributed under the plan
was not and is not now fixed— depending wholly upon the rates of
wages and earnings of the employees—such forfeited shares auto­
matically reverted to the treasury of the company.
A new rule dealing with this feature of the plan was promulgated
by the company on August 1, 1915. Under this rule temporarily
disqualified employees are given the opportunity to recover the for­
feited shares in whole or in part, depending upon the length of time
that it takes them to eliminate the objectionable features that were
the cause of their disqualification. Under this rule employees may
recover forfeited shares in the following proportions:
If an employee r’equalifies within one month he recovers 100 per
cent of the forfeiture; if within two months, 75 per cent; if within
three months, 60 per cent; if within four months, 40 per cent; and if
within five months, he recovers 25 per cent of the forfeiture.
If an employee does not succeed in requalifying after six months
his presence in the organization is considered undesirable and he is
therefore automatically discharged. All the forfeited moneys revert
to a special charity fund, to be used by the management for any
charitable purpose it may deem advisable. Out of this fund the
company pays $10,000 per annum to a tuberculosis sanitarium, for
the maintenance of beds and treatment.
BENEFITS ACCRUING TO EMPLOYEES AS SH OW N BY THEIR DAILY EARNINGS.

In connnection with the information presented below, it must be
noted that the entire organization of this company is operated on a
daywork basis. There is no piecework or any other individual
efficiency bonus scheme in existence.
An analysis of the actual daily earnings of the 49,870 employees of
this company made on August 31, 1916, showed that 35,250, or 70.68
per cent, were earning $5 and over per day and 14,620, or 29.32 per
cent were earning under $5. The proportion that received less than
$5 per day corresponded very closely to the proportion of employees
56831°—Bull. 208—17------8




114

B U L L E T IN OF T H E BUREAU OF LABOR STATISTICS.

not yet under the benefits of the plan—mostly new men who have
been in the service of the company less than six months.
The following two tables give the detailed figures for the employees
of the entire home plant, and for all the branch plants of the com­
pany, respectively:
T able 4 2 .—NUM BER AN D PER CENT OF FACTORY ANJ> OFFICE EM PLOYEES W H O
R ECEIVED EACH CLASSIFIED W AG E PER 8-HOUR D A Y , AUG. 31, 1916.
H O M E PJLANT.

Factory.

Office.

Total.

Classified wage per 8-hour day.
Number.

Per cent.

Number.

Per cent.

Number.

Per cent.

Under $5.......................................
$5 to $5.99.....................................
$6 to $6.99.....................................
$7 and over...................................

9,555
23,157
1,367
410

27.71
67.14
3.96
1.19

338
428
112
150

32.88
41.63
10.90
14.59

9,893
23,585
1,479
560

27.86
66.40
4.16
1.58

Total..................................

34,489

100.00

1,028

100.00

35,517

100.00

Over 72 per cent of the factory employees, and a slightly smaller
per cent of the office employees, were receiving $5 or more per day.
The somewhat smaller proportion of office employees receiving $5 or
more per day is to be accounted for by the fact that the office group
contains a considerable number of boys, under 21, messengers, errand
boys, etc, employees not old enough to reach the $5 scale.
The 9,555 factory employees who are classified as earning under $5
per day received the following daily rates:
$2.08 to $2.72......................................................................................... 7,941
$2.73 to $3.99......................................................................................... 1,459
$4 to $4.99............................................................................................
155

In view of the fact that on October 10, 1916, the minimum rate per
hour for factory employees was raised to 43 cents, the bulk of this
group—98 per cent—at the present time earn $3.44 per day.
For the home plant as a whole, the proportion receiving $5 or
more per day is over 72 per cent.
Table 43 gives the daily earnings of employees in the service of 74
branch plants of the company located all over the United States.
T able 4 3 .—NUM BER A ND PER CENT OF EM PLOYEES W H O R ECEIVED EACH CLASSIFIED
W A G E PER 8-HOUR D A Y , AU G. 31, 1916.
74 BRANCH PLANTS.

Classified wage per 8-hour day (in dollars).

Number.

Per cent.

Under $5...........................................................................................................................
$5 to $5.99.........................................................................................................................
$6 to $6.99.........................................................................................................................
37 and over.....................................................................................................................

4,727
8,657
180
789

32.94
60.31
1.25
5.50

Total......................................................................................................................

14,353

100.00




115

PR O F IT SH A K IN G IN T H E U N IT E D STATES.

Slightly over 67 per cent of all the employees of the 74 branch
plants were receiving $5 or more day. The 4,727 employees who are
classified as earning under $5 per day were receiving the following
daily rates :
Under $2................................................................................................
4
$2 and under $3.................................................................................... 4,216
$3 and under $4........................................- .........................................
426
$4 and under $5........................................................................................ 81
COST OF THE PLAN AND ITS BENEFITS TO THE COMPANY.

During the first year of the operation of the plan an average of 69.7
per cent of all employed participated in its benefits.1 The amount dis­
tributed as “ profits” during the same year was $8,434,849, on a regular
pay roll of $14,021,067, an increase in the labor cost of 60.2 per cent.2
The management is of the opinion that the operation of the plan
has resulted in numerous benefits to the company, chiefly in increased
individual and collective efficiency, development of good will and of
an esprit de corps; but, particularly, in stabilizing the working force
of the plant, which prior to the introduction of the plan was in a
constant state of flux. In support of the latter contention the man­
agement presents the following figures showing average number
employed, numbers discharged, leaving voluntarily and laid off, be­
fore and after the adoption of the plan, by years:
T a b le 4 4 . — N U M B E R L E A V I N G E M P L O Y O F C O M P A N Y F O R E A C H S P E C IF IE D C A U S E ,
B Y Y E A R S , 1913 T O 1915.

Year.

191 3
191 4
191 5
Jan.-June, 1916..

Average
Num ber
N um ber
number
leaving
employed. discharged- voluntarily.
13,623
12,115
18,028
27,490

8,490
926
27
1

39,575
5,199
2, 871
3,592

N um ber
laid off.

Total
leaving.

2,383
383
23

50,448
6,508
2,931
3,593

An examination of these figures shows that while the number em­
ployed in 1915 was almost one and one-half times as large as in 1913, the
number discharged and the number leaving voluntarily in 1913 were 314
and 14 times as large, respectively. From the figures may be derived the
following percentages of annual turnover: 1913, 370 per cent; 1914,
54 per cent; 1915, 16 per cent, a reduction of more than 90 per cent
in the annual turnover in 1915, two years after the plan was put into op­
eration, as compared with 1913, one year before the plan was announced.
Figures were compiled by the management for the purpose of com­
paring the turnover percentage of the first six months of 1913 with
that of the last six months of 1915—two and one-half years later.
A detailed analysis of those figures shows that during the average
month of the earlier period 47 per cent of the men left the employ of
the company, while during the latter period less than 1 per cent per
* O n August 31,1916, of 49,870 employed, 36,626, or 73.5 per cent, were participating.
2 This amount does not include bonuses paid to salaried employees, class 1, as per page




96 of this report.

116

B U L L E T IN OF T H E BUBEAU OF LABOR STATISTICS.

month left the employ of the company. To augment its force for the
year by 100 men, the company had to hire 124 men (on the basis of
the 1915 record), while during the first six months of 1913 not less
than 963 men would have been needed to augment the force by 100.
“ In other words,” concludes the statement of the company, “ wehave
to hire only one-eighth as many men to make the same increase.”
That the plan, with its introduction of the 8-hour day,1 did con­
tribute materially toward increasing the individual and collective
efficiency of the organization is the unanimous testimony of all of the
officials of the company. Such increases in efficiency, they say, may
be inferred from the following decreases in the time required for the
production of specific units of the product manufactured, as well as in
the significant increases in the per capita output of specific depart­
ments, also in the more careful attendance to duties as sho\7n by the
large decrease in accidents and in the punctuality in reporting to work.
Foremen and heads of departments, say officials of this company,
insist on the correctness of the claim that the large increases in pro­
duction described below, while made possible by constant improve­
ments in methods and machinery, were due very largely to the in­
creases in wages as well as the introduction of the 8-hour day. These
changes, they say, have resulted in the creation of an unusual amount
of good will and in the reduction of the turnover of the working force,
thus enabling the company to retain the most experienced and efficient
employees. In this respect the following table is suggestive:
INCREASED PRODUCTION A T T R IB U T E D B Y TH E COM PAN Y OFFICIALS C H IE F L Y
TO THE PR O FIT-SH AR IN G PLAN .
Department.
Motor............................................ ...............
Cylinder timing of machining.................
Assembling radiator cores........................
Complete radiator assembly.................... .
Fender..........................................................
Paint shop....................................................
Gasoline tanks............................................
Miscellaneous:
Grinding taper end of drive shaft;
number per hour.
Milling cam back, cam shaft; num­
ber per hour.
Milling cam face, cam shaft; num­
ber per hour.
Grinding center bearing, cam shaft;
number per hour.
Grinding cams; number per hour...
Final assembly; average time per car
General.........................................................

Record prior to operation of
plan.

Record of Dec. 31,1914.

6,125 motors in 9-hour day.......

7.200 motors in 8-hour day
(same number of men).
83 minutes................................... 50 minutes.
750 in 9-hour day........................ 1,380 in 8-hour day (same
number of men).
21 radiators per man in 9-hour 4 radiators per man in 8-hour
day.
day.
38 fenders per man in 9-hour 50 fenders per man in 8-hour
day.
day.
Formerly required services of Doing same amount of work
230 men.
with 130 men.
800 tanks by 65 men in 9-hour 3.200 tanks by 60 men in 8-hour
day.
day.

1 ...............................
8

25.

13.................................................... 17.

12....................

14.

30.......................... ........................

44.

.

5..................................................... 6
2 hours 37 minutes..................... 1 hour 30 minutes.
16,000 men on 10-hour day 15,800 men on 8-hour day basis
basis made and shipped
made and shipped 26,000 cars
16,000 cars per month. Av­
per month.
Average num­
ber of man-hours per car per
erage number of man-hours
month: 4.8 (Feb., 1914).
per car per month: 10 (Feb.,
1913).
*

i The hours of labor per day in this establishment have been reduced as follows: October, 1913, from
10 to 9; January, 1914, from 9 to 8.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

117

During the first year's operation of the plan, in spite of the some­
what increased number of employees, as compared with the imme­
diately preceding year, the number of employees receiving compen­
sation for accident decreased by 68 per cent, the total of reported
accidents by 54 per cent, and the proportion of employees losing
over one day's time on account of injury by 29 per cent. During
the same period the average proportion of daily absentees was re­
duced from 10.5 per cent to 0.4 per cent.
CHANGES IN ECONOMIC AND SOCIAL CONDITIONS ATTRIBUTABLE TO THE PLAN.

The changes in the economic and social conditions of the employees
of this company briefly described in the following paragraphs are
to be attributed, it is believed, to the inauguration and operation of
the plan for two principal reasons: (1) The unusually large in­
creases in the earnings of the employees, thus making economic
improvements on an extensive scale possible; (2) the general but close
supervision maintained by the company over the expenditures of its
employees (elsewhere described), thus making a thrifty management
of incomes, better homes, decent and harmonious family life, and a
wise use of leisure the principal requisites for participation in the
benefits of the plan. The relatively large financial reward offered by
the plan for complying with specified conditions of life and the
financial loss incidental to a failure to comply with them, seem to
have furnished a powerful incentive for better neighborhood condi­
tions, more comfortable and up-to-date homes, larger savings
accounts, and more numerous insurance policies.
The analysis presented below is based upon the records of the annual
summaries compiled by the education department of the company.
The thorough character of the investigations upon which these sum­
maries are based has been described in detail on pages 97 to 106. The
figures thus obtained may be considered as reliable and accurate by
reason of the fact that the statements of fact as furnished by the
employees concerned or their relatives are carefully verified by the
investigators of the company through other and impartial sources,
viz, bank books, land contracts, receipts, marriage certificates, etc.
The table following presents a summary of the status of the financial,
neighborhood, and other conditions of the employees of the company
on the date of the inauguration of the plan, January 12, 1914, and
on January 12, 1915, one year after the plan had been put into
effect.




118

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

T able 4 5 .—ECONOMIC, CONJUGAL, HOME, AN D NEIGH BO R HO O D CONDITIONS OF EM­
PLOYEES ON JAN. 12, 1914, AN D JAN. 12, 1915.

Per cent of total employees
investigated on— *
Conditions.
Jan. 12,1914.
Economic:
Having bank accounts................................................................
Owning homes...............................................................................
Owning lots....................................................................................
Buying homes................................................................................
Buying lots...................................................................................
Having life insurance...................................................................
Conjugal:
Married............................................................................................
Single...............................................................................................
Naturalized.................................... - .....................................................
Speaking English.................................................................................
Home conditions:
Good.................................................. - ...........................................
Fair..................................................................................................
Poor.................................................................................................
Neighborhood conditions:
Good................................................................................................
Fair..................................................................................................
Poor.................................................................................................

Per cent of
increase ( + )
or de­
Jan. 12,1915. crease (—).

44.31
2. 75
.85
9. 48
5.13
19.41

66.04
5.08
1. 40
22.03
9.69
43. 47

+ 49.0
+ 84.7
+ 64.7
+132. 4
+ 88.9
+124.0

58.88
40.01
33.95
64.49

76.26
21.93
44.55
76.22

+
—
+
+

46. 77
30.42
22. 81

69.53
27.60
2. 87

+ 48.7
— 9.3
- 87.4

41. 43
39. 50
19.07

66.22
31.64
2.14

+ 59.1
- 19.9
- 88.8

29.5
45.2
31.2
18.2

The figures above presented show that the percentage of employees
buying homes increased 132.4 per cent, of those having life insurance
124 per cent, and of those buying lots and owning homes 88.9 and 84.7
per cent, respectively. Increases of about 50 per cent and over took
place in the percentages of those having bank accounts and owning
lots. The percentage increase in the proportion of employees living
in homes rated as good was 48.7 per cent and was accompanied by a
decrease in those living in fair homes of 9.3 per cent and by a great
decrease— over 87 per cent—in those living in homes rated as poor. A
similar change occurred in the neighborhood conditions of the employ­
ees. The proportion of those living in neighborhoods rated as good
increased over 59 per cent and was accompanied by considerable
decreases in those living in neighborhoods rated as only fair or poor.
The increase in the proportion of married employees during the
same year was 29.5 per cent and was, as would naturally be expected,
accompanied by a decrease in the number of those that were single.
The proportion of naturalized employees increased 31.2 per cent and
of those able to speak the English language over 18 per cent. Sim­
ilarly, striking improvements were shown by an investigation made
January 12, 1916.
The following two tables present detailed figures showing the
amounts of money and property owned at the end of the first year's
operation of the plan, as compared with similar figures obtained
immediately upon the inauguration of the plan:




119

PR O F IT SH A R IN G IN T H E U N IT E D STATES.

T ab le 4 6 ,—RESULTS OF O PER ATIO N OF T H E PLAN DURING T H E FIRST Y E A R OF ITS
EX IST EN C E (JAN. 12, 191,4, TO JAN. 12, 1915), AS SH O W N B Y B A N K DEPOSITS, LIFE
INSURANCE, V A L U E OF HOMES AN D LOTS O W N E D A N D AM OUNT PAID ON THEM ,
ETC., FOR A L L EM PLO YEES—HOME PL A N T .

Total amounts for all
employees on—

Gain.

Item.
Jan. 12,1914. Jan. 12,1915.

Amount.

In banks..................................................................................... $996,418.00 $3,046,301.00 $2,049,883.00
Life insurance........................................................................... 2.471.663.00 6.493.709.00 4.022.046.00
468.230.00
933.524.00
Homes owned...........................................................................
465.294.00
Lots owned. . . ...................... .................................................
67,160.00
94,136.00
26,976.00
Homes on contract, value of................................................. 3.282.331.00 8.867.159.00 5.584.828.00
413.854.00
999,327-00
Lots on contract, value of......................................................
585.473.00
Homes on contract, amount paid........................................ 1.111.258.00 3.237.864.00 2.126.606.00
276.722.00
100.757.00
Lots on contract, amount paid.............................................
175.965.00
55,887.66
114,464.19
58,576.53
Bent, paid monthly................................................................
1,218.56
2,342.56
Bent, paid weekly...................................................................
1,124.00
86,171. 50
40,103.50
Board, paid monthly..............................................................
146,068.90
12,906. 82
1 2,456.06
Board, paid weekly.................................................................
10,450. 76

Per
cent.
205
163
99
40
170
141
191
175
95
92
1 53
1 19

1 Loss.

In considering the figures presented in this tabie it should be under­
stood that the first investigation covered 13,251 employees, while
the second covered 14,255, 6,636 of whom were hired after June 12,
1914, and 3,531 of whom were still ineligible for participation in the
benefit of the plan when the second investigation was made.
From the table it may readily be seen that the totai amount of the
employees’ bank deposits increased over 200 per cent, amounts
paid in by them on homes 191 per cent, amounts paid in on lots
175 per cent, total value of homes on contract 170 per cent, and
the collective value of their life insurance 163 per cent. The
value of lots owned by them on contract increased over 140 per cent,
and the total value of homes owned by them almost doubled. The
total amounts paid out for monthly and weekly board have decreased
53 and 19 per cent, respectively, by reason of the fact, already re­
ferred to, that the proportion of boarders decreased because of the
increase in the proportion of married employees. In connection with
this table it must be noted that the average number employed dur­
ing the same period increased less than one-fourth.
In connection with the decrease shown in the total amounts paid
out for board it is interesting to note the fact (shown in the following
table) that the monthly and weekly expenditures for board, per indi­
vidual, have increased 16.7 and 6.9 per cent, respectively.
The table following shows the status of the economic and social
conditions of the individual employee on January 2, #
1915, one year
after the introduction of the plan, per employee.




120

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

T a b le 4 7 .—RESULTS OF O PER ATIO N OF THE PLAN D U R IN G THE FIR ST T W O Y E A R S
OF ITS E X IST E N C E (JAN. 12, 1914, TO JAN. 12, 1916), AS SH O W N B Y B A N K DEPOSITS,
L IF E IN SU R AN CE, V A L U E OF HOMES AND LOTS O W N ED AND AM O U N T PAID ON
TH EM , ETC., PER E M P L O Y E E —HOME PLANT.

Average per employee
on—

Gain.

Item.
Jan. 12,
1914.
In banks.....................................................................................
Life insurance...........................................................................
Homes owned............................................................................
Lots owned...............................................................................
Homes on contract, value of..................................................
Homes on contract, amount paid.........................................
Lots on contract, value of......................................................
Lots on contract, amount paid.............................................
Rent, paid monthly................................................................
Rent' paid weekly...................................................................
Board, paid monthly..............................................................
Board, paid weekly.................................................................
Deposited in savings accounts and invested in homes
and lots...................................................................................

Jan. 12,
1916.

Amount.

Per cent.

$75.20
186.53
35.33
5.07
247.70
83.86
31.23
7.60
14.91
2.99
19. 40
5. 72

$203.62
505.66
98.68
20.97
743.25
267.61
95. 55
26.45
16.60
3.02
23.09
5.80

$128.42
319.13
63.35
15.90
495. 55
183.75
64.32
18. 85
1.69
.03
3.69
.08

170.77
171.09
179.31
313.61
200.06
219.12
205.96
248.03
11.33
1.00
19.02
1.40

207.06

617.33

410.27

198,15

The per capita amount of lots owned increased over 300 per cent.
Similarly, striking improvements—gains of about 200 per cent—are
shown in the per capita values of homes and lots on contracts,
amounts paid on homes and lots, and deposits in savings accounts.
The per capita amounts paid out in life insurance as well as in value
of homes owned increased over 170 per cent. The per capita
amount of monthly board increased slightly over 19 per cent.
The following table shows in detail the changes in the home and
neighborhood conditions of the employees at the home plant by num­
ber and per cent of homes and neighborhoods classified as “ good,”
“ fair,” and “ poor” on January 12, 1914, 1915, and 1916:
T ab le 4 8 .—HOME AND NEIGH BOR H O OD CONDITIONS OF EM PLO YEES ON JAN. 12,
1914, 1915, AN D 1916.

Homes of employees investigated and reported on—
Conditions.

Jan. 12,1914.

Jan. 12,1915.

Jan. 12, 1916.

Per cent.

Home conditions:
Good......................................
Fair........................................
Poor.......................................

6,091
3,961
2,971

46.77
30.42
22.81

9,911
3,934
410

69.53
27.60
2.87

25,514
3,312
488

87.04
11.30
1.66

Total..................................

13,023

100.00

14,255

100.00

29,314

100.00

Poor.......................................

5,370
5,119
2,471

41.43
39.50
19.07

9,440
4,510
305

66.22
31.64
2.14

23,697
5,328
289

80.84
18.18
.98

Total..................................

12,960

100.00

14,255

100.00

29,314

100.00

Neighborhood conditions:
Good.....................................




Number.

Per cent.

Number.

Per cent.

Number.

PR O F IT SH A R IN G IN

121

T H E U N IT E D STATES.

As compared with the status of home conditions at the beginning
of the year in question, January 12, 1914, the proportion of homes
rated as “ good” increased from 46.77 per cent to 87.04 at the end of
the second year. A somewhat similar change for the better was found
at the end of the second year in the neighborhood conditions of the
employees. The proportion of homes and neighborhoods classified
as “ poor” greatly decreased (from 22.81 and 19.07 to 1.66 and 0.98
per cent, respectively) during the same period.
Immediately after the beginning of the plan in 1914 especial
attention was paid by the department of education of the company
(at that time the sociological department) to the neighborhood and
home conditions, family life, general habits, thrift, etc., of the em­
ployees participating or about to participate. Aside from the gen­
eral changes in the social and economic conditions of the employees
during the first year of the operation of the plan, described elsewhere,
special reference must be made to thrift, which during the first year
resulted in the total saving of $4,844,724, as per the following
statement:
A m ou n t o f “ profits” accounted fo r by employees between Jan. 12 , 1914, and Jan. 12,1915 ,
showing actual savings effected by them.

Amount in banks........................................................................ $2,049,883
Value of homes............................................................................
465, 294
Value of lots.................................................................................
26, 976
Amount paid on homes on contract.......................................... 2,126, 606
Amount paid on lots on contract..............................................
175, 965
Total..................................................................................

4, 844, 724

This sum does not include increase in amounts paid out in pre­
miums on life insurance policies', a figure difficult to arrive at.
Roughly speaking, of the total of “ profits” of slightly over
$8,000,000 paid out during the first year, almost $5,000,000, or about
two-thirds, was stored up by the employees for old age, disability,
and general emergencies.
Beginning with the second year of the operation of the plan, the
sequence of emphasis laid by the educational department as shown
above, namely, home and neighborhood conditions, family life, general
habits, thrift has been reversed, and thrift is receiving at the present
time the largest attention. This change of emphasis was not due to
any change in the policies of the company—good home conditions and
thrift still being, in equal degrees, prerequisite for participation—but
to the general improvement in the social and economic conditions of
the employees which has already taken place as a result of increased
earnings and the educational work of the company. These two factors




122

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

reduced greatly the proportion of employees in need of advice as to
home conditions, increasing proportionately the need of advice in
matters of thrift and the development of what the company calls
“ constructive life.”
Thus, at the present time (November, 1916), aside from having to
comply with a simple general standard of life, home conditions, etc.,
as described elsewhere, participants are, in addition, required to
account for the “ profits” given to them. This accounting must be
in the form of savings of some sort or other, no specific form being
urged.
The amount of “ profits” saved thus during the first two years of
the operation of the plan is shown in the following table:
A m ou nt o f “ P ro fits” accounted f o r by the employees between Jan. 12 , 1914, and Jan. 12
1916, showing actual saving effected by them.

Amount in banks........................................................................ $4, 972, 518
Value of homes............................................................................ 2,424,437
Value of lots.................................................................................
547, 630
Amount paid on homes on contract.......................................... 6, 733, 356
Amount paid on lots on contract..............................................
674, 696
Total.................................................................................. 15,352,637

This sum does not include amounts paid out in premiums on lifeinsurance policies, a figure difficult to arrive at.
On January 12, 1916, the savings effected by employees of the com­
pany accounted for $15,532,637, more than three-fourths of the total
amount paid out to them in “ profits” during the two years. This,
in the opinion of the company, is a gratifying showing of thrift.
PLAN NO. 3.
GENERAL NATURE OF PLAN.

This plan consists of three separate and distinct parts and provides
for:
1. Bonuses to employees especially selected for their meritorious
service, in the form of shares of stock in a building and loan associ­
ation organized under the laws of the State of Pennsylvania—in
operation since about 1885.
2. Bonuses to all employees engaged in manufacturing occupa­
tions who have a satisfactory record of service of one continuous year
preceding the distribution date, in the form of an annual cash pay­
ment of from 5 to 20 per cent of earnings—in operation since 1898.
3. Bonuses to selected employees in the form of common stock of
the company at par, sanie to be paid for by the accruing dividends—
in operation since 1903.
In 1914 a total of 3/207 employees, or 66 per cent of the total num­
ber employed, benefited by one or more of the provisions of the plan.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

123

The following table shows the number and per cent of employees thus
benefited:
T able 4 9 .—NUM BER AND PER CENT OF EM PLOYEES PARTICIPATING IN EACH CLASS
OF BO*NUS IN 1914.

Employe;es part ic­
ipaling.
Class.
Number. Per cent.
One bonus:
Cash............................................... 2,301
59
Common stock............................
Building and loan stock...........
161

2,521

78.6

Three bonuses.............................- ..................

449
237

14.0
7.4

Total......................................................

3,207

100.0

Two bonuses:
Cash and common stock.............. 129
Cash and building and loan
stock.............................................. 151
Common stock and building and
loan stock..................................... 169

Of all the employees benefiting by the three provisions 2,521, or 78.6
per cent, participated in one of the bonuses, receiving either cash or
stock; 449, or 14 per cent, in two; and 237, or 7.4 per cent, in all of
the bonuses.
The following table shows, by nature of the bonuses paid, the dis­
tribution of participating employees by occupation groups :
T able 5 0 .—PER CENT OF PARTICIPATING EM PLOYEES RECEIVING EACH KIND OF
BONUS IN 1914, B Y OCCUPATION GROUPS.
Per cent of participating em­
ployees whose bonuses are
in the form of—
Occupation group.
Cash.

Executive.....................................
Clerical...........................................
Manufacturing.............................

100.0

Common Building
stock of and loan
company. stock.
15.8
4.7
79.5

15.0
5.6
79.4

Over 79 per cent of the total employees participating in each of the
classified bonuses were engaged in so-called manufacturing occupa­
tions, i. e., were concerned with the actual processes of manufacturing.
No clerical employees participated in the cash bonus, but 4.7 and
5.6 per cent of those sharing in the stock distribution, common and
building and loan, respectively, were found in clerical occupations.
The percentages of participating employees belonging to executive
occupations were 15.8 per cent under the common-stock and 15 per
cent under the building and loan stock phases of the plan.




124

B u lle tin

o f

th e

bu reau

o f

la b o r

s ta tis tic s .

DISTRIBUTION OF BUILDING AND LOAN ASSOCIATION STOCK.

Asidefrom common-stock distribution, described below, the company
awards to worthy employees, irrespective of occupations, at the dis­
cretion of the president and upon recbmmendation of heads of depai^tments, shares of stock, varying from two to five, in a building and
loan association of Philadelphia, incorporated under the laws of the
State of Pennsylvania. Such an allotment implies that the company
obligates itself to make payments for the employee until the stock is
fully paid for, and money thus accumulated becomes available for
home-building purposes of the employee. Payments for such stock
are made by the company at the rate of $1 per month per share until
the maturity value of $200 is reached.
The following table shows the annual distribution of building and
loan stock among employees up to and since 1910:
T able 5 1 .—DISTRIBUTION OF BU ILDING AND LOAN ASSOCIATION STOCK, 1910 TO 1914,
B Y Y E A R S.

Total
em­
ployees
eligible.

Years.

Employees
holding build­
ing and loan
stock.

Number.

1910 and before............................................................................
1911................................................................................................
1912........................................................... .................................. .
1913................................................................................................
1914................................................................................................

9.3
10.0
12.5
13.3
14.6

Cost to
company
per year.

Per
cent.

494
545
617
690
708

Total
shares
held.

5,294
5,454
4,950
5,189
4,850

~2,787
3,012
3,377
3,754
3,901

$33,444
36,144
40,524
45,048
46,812

On December 31, 1914, 708 employees, or 14.6 per cent of the total
employed, were holders of 3,901 shares of building and loan stock,
with a cost to the company for the year 1914 alone of $46,812.
The following table shows the distribution of employee holders of
building and loan stock by occupation groups:
T a b le 5 2 .—N U M BER AN D PER CENT IN EACH OCCUPATION GROUP OF E M P LO YE ES
H AV IN G BU ILD IN G A N D LO AN STOCK.

Occupation group.
Executive....................
Clerical.........................
Manufacturing........

Number.
106
40
562

Per cent.
15.0
5.6
79.4

DISTRIBUTION OF CASH BONUSES.

This part of the plan, in operation since 1898, involves the pay­
ment of annual bonuses in cash, in terms of specified percentages of
earnings, to all manufacturing employees of the company with a
record of a continuous service of one year preceding the date of dis­




PR O F IT SH A R IN G IN

T H E U N IT E D STATES.

125

tribution. Foremen are excluded from these benefits. The per­
centage of annual earnings paid to individual employees depends
upon the department in which they are employed, the range of
variation in the scale being from 5, the lowest, to 20, the highest.
During the year ending December 31, 1914, of a total of 4,850
eligible employees, 2,818, or 58.1 per cent, received bonuses varying
from 5 to 20 per cent of their respective annual earnings. The fol­
lowing are the numbers and percentages (of the total employees
participating) that received classified percentage bonuses.
T able 5 3 .—NU M BER A N D PER CENT OF PARTICIPANTS R ECEIVING EACH SPECIFIED
PER CENT OF EAR N INGS AS BONUS.

Percentage bonus.

Number. Per cent.

20...................................
10...................................
7.5..................................
5.....................................

1,162
359
270
1,027

41.2
12.7
9.6
36.5

Total.....................

2,818

100.0

An examination of these figures shows that 53.9 per cent of the
total employees participating received 10 per cent or more on their
annual earnings and 46.1 per cent received under 10 per cent.
DISTRIBUTION OF CO M M O N STOCK.

The stockholders of this company at a speciaLmeeting held Novem­
ber 12, 1902, passed a resolution placing 5,000 shares of the common
capital stock of the company at the disposal of the president and the
board of directors of the company “ to be used by them for distri­
bution at not less than par among the company's employees, irre­
spective of occupations or type of employment” as a reward for
meritorious service.
Originally the maximum number of shares to be allotted to any one
employee was fixed by the board at 5; during recent years, however,
in view of the greatly increased market value of the stock, the maxi­
mum allotted has been reduced to 3 shares.1
Employees receiving allotments of common stock make no pay­
ments on the stock, as it pays for itself by its dividends. When it
becomes fully paid for, dividends to the holders are paid in cash.
Shares of stock allotted under the plan do not become the sole prop­
erty of the holder until 15 years after allotment.
The table following shows the number and per cent of employees
holding allotted common stock December 31, 1914, by occupation
groups.
1 The common stock of the company, par value $100, sells at the present time at about $360. The average
annual dividend paid on it during the period of existence of the plan, 1903 to 1914, was slightly over 30
per cent.




126

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

T able 5 4 .—NU M BER AN D PER CENT IN EACH OCCUPATION GROUP OF EM P LO Y E E S
HOLDING COMMON STOCK OF TH E COM PANY.

Occupation group.

Number. Per cent.

Executive....................
Clerical.........................
Manufacturing...........

94
28
473

15.8
4.7
79.5

Total.....................

595

100.0

A total of 595 employees (12.3 per cent of the number of eligible
employees in 1914) held 3,389 shares of common stock, the respective
percentages of the total employees holding classified number of shares
having been as follows: 3 shares each, 303 employees, or 59.2 per
cent; 5 shares each, 247 employees, or 41.5 per cent; 10 shares each,
23 employees, or 3.7 per cent; over 10 shares each, 22 employees, or
3.6 per cent.
BENEFITS OF THE PLAN TO THE COMPANY.

In a general way, one of the principal objects sought by the intro­
duction of the plan, it was stated, was to stabilize as much as possible
the working organization of the company. The managing officials be­
lieve that a high percentage of labor turnover is expensive, inasmuch
as it prevents improvement in the quality of the product manufactured
and increases the cost of maintaining the working organization.
That a stable working force has, to a considerable degree, been
attained may be inferred from two facts: First, a relatively low
percentage of labor turnover in the manufacturing force of the
company, as shown in the table presented below; second, a relatively
small number of employees who are beneficiaries under the commonstock distribution plan have forfeited their stock by either voluntary
leave or discharge.
T a b le 5 5 .—PER CENT OF T U R N O V E R IN THE M AN U FAC TU R IN G FORCE OF TH E
CO M P A N Y , 1910 TO 1914, B Y Y E A R S .

Year.
1910....................................................
1911....................................................
1912.....................................................
1913.....................................................
1914.....................................................
Average for five-year period.

Per cent.
30.3
28. 7
20.8
31.9
16.2
25.6

As will be shown in a study on the turnover of labor in different
industries to be issued in the near future by this bureau, a percentage
turnover of 25.6, as shown above, is very moderate. This phe­
nomenon, so important from the point of view of the quality of the
product turned out and the expense of maintaining the organiza­
tion, is attributable, in a considerable degree, it was stated, to the
operation of the various bonus plans described above.




F E O F IT SH A B IN G IN T H E U N IT E D STATES,

127

The fallowing is the text of an agreement signed by employees
to whom common stock is allotted:
This agreement, made th is ------day o f ---------- 191 , between----------*Co. (herein­
after called company), of the first part, a n d --------- (hereinafter called employee),
of the seoQi^ part.
Whereas the stockholders of company at the special meeting held on the 12th day
of November, 1902, passed a resolution placing 5,000 shares of proposed issue oi
common capital stock at the disposal of the president and board of directors, to be
used by them for distribution at not less than par among the company’s employees,
to be allotted and issued upon the terms, conditions, and stipulations, to be fixed
by said president and board of directors;
And whereas directors have been advised that the shares can not be actually
issued saving upon terms of payment therefor in cash, but, being desirous to give
substantially to employees the benefit of said stockholders’ resolution to such extent
as the same is legal, have decided to enter into this agreement with employee—
one of others selected by them, said employee having been long in the employ oi
company, and having heretofore rendered faithful services to the same.
Now this indenture witnesseth that company and employee do agree to and with
each other as follows:
1. Company will appropriate for the purposes of this agreement out of the said
proposed new issue of its capital stock, for the benefit of employee, upon the terms,
conditions, and restrictions of this agreement, ---------shares of its common capital
stock, each share being of the par value of $100. These shares thus appropriated
will not be disposed of otherwise than in accordance with this agreement. An em­
ployee, in said shares, shall have such rights as by this agreement are accorded to him.
These shares thus set apart shall not be deliverable, saving upon the conditions
of this contract, and employee shall have no interest whatever therein saving that
herein and hereby conferred.
2. As compensation for employee’s services during such time as he shall continue
in the employment of the company, there shall be paid to him, in addition to what
shall be due to him in the ordinary way, an additional amount which shall be allotted
to the trustees hereinafter provided for in each and every year, commencing from the
------ day o f ---------191 . This amount in each year shall be a sum equal to the
difference between five per centum of the par value of such of said allotted shares as
shall not have been delivered to trustees under the terms hereof, and an amount
equal to the dividends declared by company during the year upon a number of shares
like in number, to the additional shares thus allotted, not delivered. The compen­
sation shall be apportioned, where shares shall have been delivered during the cur­
rency of the year, at the rate aforesaid up to the time of delivery.
3. It shall be within the power of company, acting through the board of directors
or proper executive officers, at its or their sole discretion, at any time hereafter, to
terminate the employment of employee, either because of his inability further to
render services which shall be deemed by company valuable, or because of dissatis­
faction entertained by company acting as aforesaid, or for any other reason deemed
by company, so acting, as sufficient. The power of termination of employment by
company is absolute, and nmy be exercised without any right ©f question, and with
the effect of terminating all rights hereunder, saving as herein otherwise specified.
4. The sum thus allotted to employee, immediately upon the expiration of each
and every year, shall not be paid to him directly but shall be paid to trustees to be
appointed and continued in the way and manner hereinafter set forth: Provided ,
however, That if in any year, employee shall desire that out of the sum allotted ior
said year there shall be paid to him one-third or less thereof for his personal use, the
portion thus designated, not to exceed one-third, shall be paid over to him directly
by company, in no event to exceed five per centum on the par value of stock, and the
residue of the allotted sum alone shall be paid to trustees.




128

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

In such event, wherever hereinafter, the allotted fund is referred to, such reference
shall be taken as covering merely the residue remaining of the original allotted sum
for the year. It shall be necessary, however, for employee in each year to make
the request for the payment of said portion to him. Any request in one year shall
not be considered as extending beyond said year. Said trustees shall hold the fund
thus annually allotted to them under and for the purposes of this agreement. To
such extent as the fund shall pay therefor, company shall, from time to time, deliver
upon payment therefor by trustees, so many shares of its common capital stock at
par as can then be paid for. These shares shall be held by trustees, together with any
residuum of cash, the latter not to bear interest, for the benefit of employee under
the terms and conditions of this agreement. Dividends upon these shares shall be
collected by trustees as the same shall be declared, which dividends shall be used
in the way and manner provided of and concerning the annual compensation. Shares
of stock thus delivered to trustees, however, shall not be entitled to back dividends,
but only to such dividends as may be declared thereon after date of delivery.
5. In case of the death of employee, or of the termination of his employment because
of his physical or mental inability to discharge his duties, this agreement shall be
terminated. Trustees shall then transfer to employee, if he be living, or if he be
deceased, to his personal representatives, the number of shares of stock and the amount
of surplus cash which then shall be held by them as trustees. No further payments
of cash or allotments of stock shall thereafter be made. The undisposed of residue
of the allotted shares shall thereafter remain the property of the company, without
any right whatever, therein or thereto, in employee or his personal representatives.
6. If the employment of employee be terminated by company for any cause other
than his physical or mental inability to discharge his duties, and the judgment of
company as to the cause of the termination shall be final and conclusive, this agree­
ment shall terminate at the same time. Trustees shall then turn over to employee
an amount equivalent to the unused cash in their hands belonging to the trust and to
the par value of the shares of stock then held by them, even if all the allotted shares
shall then have been fully paid for. It shall be their duty to dispose of the shares
thus held in such way and manner as shall be legal, for the benefit of company, first
deducting the par value of the shares paid over to employee. All rights of employee
in the allotted shares shall terminate upon said payments being made to him.
7. In no event, saving in case of death of employee, or termination of his employ­
ment because of mental or physical inability, shall any shares be actually demanded
from trustees by employee, until the first day o f ---------, and not then unless the
dividends declared upon said stock shall have been in sum total an amount equal
to the par value of the stock and interest. Until said time, saving under said excepted
circumstances, said shares shall continue to be held by them upon an active trust,
partly to insure the continued faithful services of employee; but, after the allotted
shares have been fully paid for under the terms of this agreement, they shall be held
by trustees thereafter, without any further conditions as to the deduction of interest,
and the dividends thereon, shall thereafter, as declared, be paid over by trustees to
employee from time to time.
On the first day o f ---------, if all the shares shall then have been paid for, employee,
if he shall then be in the employ of company, shall be entitled to the transfer of
the same to him absolutely and without restriction.
8. All delivered shares shall be held by said trustees upon an active trust, the
trustees being entitled to vote the same as though absolute owners thereof.
9. If dividends be declared in stock and not in cash upon shares, the trustees shall
hold the shares thus declared as stock dividends in the same way and manner as is
herein provided of and concerning shares delivered to them upon payment therefor
in cash.
10. The trustees shall b e ---------, --------- , --------- >
> and
* • l n case °*
vacancies in the trusteeship from time to time, company shall fill the same by vote
of its board of directors. The person thus elected shall have all the rights of the
trustee originally named.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

129

11.
The compensation of trustees shall be fixed by company, and shall be paid
by it out of its own funds. No duty to compensate for said services shall be imposed
upon employee,
STOCK SUBSCRIPTION PLANS.

A clear line of distinction is to be drawn between plans under which
employees, with the assistance of their employers, but with their
own money, subscribe for stock of the employing corporation and
plans involving the distribution of gratuities or bonuses in the form
of stock instead of in cash. The following section of this report deals
wholly with plans under which employees, assisted in various ways
by their employers, subscribe for stock of the employing corporation,
paying for the same on the installment plan.
DESCRIPTIVE AND STATISTICAL SUM M ARY OF A SELECTED GROUP OF STOCK
SUBSCRIPTION PLANS.

A detailed analysis of over 25 such plans reveals the fact that none
of them involve the principle of profit sharing even remotely. In
most instances the cost of such plans to the employers is almost
negligible, the only expense borne by them being the one involved
in the keeping of the books necessary in the receiving and crediting
of the partial payments of the subscribing employees.
Under most of the plans the preferred stock of the employing
corporation is offered to employees. For this two principal reasons
may be given: (1) The fact that the fluctuations in the values of the
preferred stock are usually not as great as the fluctuations in the
common stock, and (2) the type of investor represented by the sub­
scribing employees usually prefers the certainty of a fixed return on
the investment to the uncertainty of a potentially larger return on
the common stock as returns on common stock in a great number of
industrial corporations are frequently problematical.
The prices charged for the stock offered, based upon an examina­
tion of 20 of the largest stock-subscription plans, were as follows:
Somewhat higher than the prevailing market value in 1 plan; market
value in 6 plans; from $1 to $5 below the market value in 5 plans;
from $6 to $10 below the market value in 5 plans; and $10 or more
per share below the market value in 3 plans.
Under the great majority of such plans all of the employees of the
company are eligible to subscribe in amounts determined by the man­
agement, usually on the basis of the earning capacity of the subscrib­
ing employee. The amounts of stock allotted vary from about
one-fourth to the full amount of the employee’s annual earnings.
As a matter of practice, the smaller the relative financial advantages
offered by the employer, the larger the amount of stock for which
employees are allowed to subscribe. In only a very few instances,
however, is the amount of stock that employees may subscribe for
unlimited.
56831°—Bull 208—17------9




130

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

In all of the plans studied, except one, interest ranging from 4 to 6
per cent was charged on the deferred payments of the employees.
At the same time the usual dividends accruing were credited to the
subscription accounts.
Not until the stock subscribed for is fully paid up are the holding
employees allowed to vote on it.
Aside from offering the stock at reasonable prices, frequently lower
than the market price, it is the custom of employers in many
plans to offer bonuses— a certain sum per share for a limited number
of years—for the retention by employees while in the employ of the
company of the subscribed for or owned stock. As in the case of the
stock dividends, such retention bonuses, until the stock is fully paid
for, are credited to the subscription account. When stock is fully
paid for, the dividends as well as the retention bonuses are paid to
the employee in cash.
The following table shows the different amounts per share paid
as retention bonuses under the plans studied:
T able 5 6 .—BONUSES PAID U N D ER SPECIFIED NUM BER OF PLANS TO SUBSCRIBING
EM PLOYEES FOR TH E R ETEN TIO N OF STOCK (OW N ED OR SUBSCRIBED FOR).
Retention bonuses per share.
Number of
plans.

11
1
3
2
1
2
4
1

Period
Amount
(per year). (years).
None.
$2.50
2.00
3.00
3.50
4.00
5.00
7.50*

3
5
5
5
5
5
5

Special
fund.
None.
None.
None.
(1
)
(2)
(3)
(4)
None.

1 One plan paid $5.91; the other will pay pro rata at the end of the series amount of accumulated for­
feited bonuses.
2 Will pay pro rata at the end of the series amount of accumulated forfeited bonuses.
3 One plan paid $8.86; the other pays none.
*Three plans will pay pro rata at the end of the series amounts of accumulated forfeited bonuses; the
fourth one pays none.

Of a total of 25 plans examined, 14, or about three-fifths, paid bonuses
varying from $2 to $7.50 per share for periods ranging from three to
five years. The table also shows that 11 firms out of 25 paid no reten­
tion bonus whatever on the stock purchased by their employees.
Under some of the plans the amounts of the bonuses forfeited
through cancellations revert to a special fund which, at the end of
the specific subscription series, is distributed pro rata among those of
the subscribers who have completed their payments. Provisions for
such a fund were found in seven plans, among which were two of the
largest in operation. The relative benefits derived by the sub­
scribing employees from the special fund vary directly with the
number of cancellations; the more numerous the latter the larger the
fund, and, consequently, the amount pro rated per share.
All of the plans examined without any exception allow their employ­
ees to cancel their subscriptions at will. Upon cancellation, employees




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

131

usually receive the amounts paid in by them, with interest of from
4
to 6 per cent, less dividends and other special bonuses that might
have been credited to their subscription accounts.
The following table shows for a representative year the sizes of a
selected group of establishments having stock-subscription plans in
operation:
T able 5 7 .—NUM BER AN D PER CENT OF ESTABLISH M ENTS W IT H STOCK SUBSCRIPTION PLANS IN O PER ATIO N H A V IN G EACH CLASSIFIED NU M BER OF EM PLO YEES.
Establishments
having plans in
operation.

Classified number of
employees.

Number. Percent.
100 and under 300.................
300 and under 500.................
500 and under 1,000...............
1,000 and under 3,000...........
3,000 and under 5,000 .........
5,000 and under 10,000.........
10,000 and over......................

1
2
7
2
2
1
7

4.5
9.1
31.8
9.1
9.1
4.5
31.8

Total............................

22

100.0

The majority of stock-subscription plans, unlike the profit-sharing
plans described in a preceding section of this report, were found in
establishments employing relatively large numbers of employees,
viz, from one to three thousand.
The following table shows the extent of the application of the stocksubscription plans examined as well as the frequency with which
employees avail themselves of the opportunities offered by the plans:
T able 5 8 .— EM PLO YEES ELIG IB LE TO SUBSCRIBE FOR ST O £K , E M P LO Y E E S SUB­
SCRIBING, A N D A V E R A G E NUM BER OF SHARES SUBSCRIBED FO R, IN EACH OF 21
ESTABLISH M ENTS, IN SPECIFIED Y E A R S .

E stablishment N o.

1
................................
2 ...................................
3 .....................................
4 ...................................
5 ...................................
6 ...................................
7 ...................................
9 ..................................
10 .................................
11...................................
13
............................
14 .................................
15...................................
16
..............................
17
..............................
18 .................................
19...................................
20
..............................
21...................................
22...................................
23...................................

Year.

1915
1915
1916
1915
1915
1915
(2)
(3)
(4)

1915
1907
(5)
1915
(6)
(7)
1911
1915
1914
1914

Employees eligible
Employees subscribing.
to subscribe.
Total
Per cent
Per cent Per cent
employ­
ees.
Number. of total Number. of total of eligible
employ­ employ­
employ­
ees.
ees.
ees.
3,550
151,129
1,168
333
650
6,596
480
1,178
28,400
2,827
4,334
644
160
22,000
12,461
830
300
30.000
55.000
228,906
448

3,000
78,587
1,168
333
650
6,596
183
1,178
28,400
2,827
4,334
644
160
22,000
12,461
780
300
30,000
2,300
228,906.
448

1 Entire series, 1911 to 1915.
2 Entire series, Aug. 5,1909, to Aug. 5,1914.
« Year ending Jan. 2,1915.
* Period from June 15,1914, to Jan. 1,1916.




84.5
52.0
100.0
100.0
100.0
100.0
38.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
94.0
100.0
100.0
4.2
100.0
100.0

439
33,920
290
97
17
857
13
234
4,a74
1,413
1,807
84
B
1,895
749
256
111
2,388
1,347
46,948
5

12.4
22.4
24.8
29.1
2.6
13.0
2.7
19.9
15.4
50.0
41.7
13.0
1.9
8.6
6.0
30.8
37.0
8.0
2.4
20.5
1.1

Average
number
of shares
per sub­
scription.

14.6
43.2
24.8
29.1
2.6
13.0
7.1
19.9
15.4
50.0
41.7
13.0
1.9
8.6
6.0
32.8
37.0
8.0
58.5
20.5
1.1

5 Period from Jan. 15,1900, to Nov. 14,1915.
8 Year ending Jan. 30,1915.
1 Year ending Oct. 1,1915.

2.0
3.0
2.3
6.2
1.9
6.9
9.6
2.3
7.8
1.9
3.0
1.4
4.0
7.2
3.9
2.7
2.5
8.1
5.7
1.9
2.0

132

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

An interesting feature of this table is the fact that in twothirds of the plans the proportion of subscribing employees to the
employees eligible to subscribe was less than one-fourth. In 13 out
of 21 plans studied the proportion subscribing was less than 20 per
cent, and in about two-fifths of the plans even less than 10 per cent of
the total number employed. The average number of shares per sub­
scription differed considerably—from 1.4, the lowest, to 9.6, the
highest—the average number of shares per subscription for the entire
group of plans having been slightly over 4.
The proportion of all subscriptions canceled, as well as the average
number of shares per cancellation, are shown herewith:
T a bl e 5 9 .—SHARES OF STOCK SUBSCRIBED FOR, NU M BE R A N D PER CENT CANCELED,

AN D A V E R A G E NU M BER OF SH ARES PER CANCELLATIO N , D U R IN G ONE R E PR E­
S EN T ATIVE SUBSCRIPTION PER IO D , IN EACH OF 19 ESTABLISH M ENTS.

Shares canceled.
Estab­
lish­
ment
No.

Subscription period.

5 years.. .
5 months,
3 years.. .
2 years.. .
3 years...
5 years.. .
12 years..
8 years...
3 years.. .
5 years...
1 year___
2 years...
1* years..
5 years...
3 years...
4 years...
1 year---4 years...
4 years...

Number
of shares
subscribed for.

Number.

3,269
102,706
670
600
60
5,900
395
16,444
2,224
34,252
2,725
1,492
5,332
561
2,973
1,951
272
27,668
290

739
1,696
10
268
3
2,781
10
1,684
84
5,865
837
159
751
331
154
532
22
910
90

Per cent
of shares
subscribed for.
22.6
1.7
1.5
44.7
5.0
47.1
2.5
10.2
3.8
17.1
30.7
10.7
14.1
59.0
5.2
27.3
8.1
3.3
31.0

Average
number of
shares per
cancellation.

4.1
2.4
2.0
3.6
0)
0)
0)

0)

5.8
1.7
4.7
1.6
1.8
1.4
3.3
2.1
2.4
4.5
1.0

i Not reported.

The proportion of cancellations, in per cent of the total shares
subscribed for, was less than 10 per cent in 8 establishments; from 10
to 20 per cent in 4; from 20 to 40 per cent in 4; and between 40 and
60 per cent in 3 establishments. As a rule, the tendency of cancella­
tions is to decrease with the gradual development of the plan
for the reason that during the first years, the matter being a novelty,
many employees contract for shares for which they can not pay.
In a general way also, it may be stated that cancellations, particu­
larly under the plans in operation in establishments having large
numbers of employees, increase (a) with decreases in the total num­
ber employed, inasmuch as employees laid off or discharged imme­
diately cancel their subscriptions; and (6) with changes in wages




PR O F IT SH ARIN G IN T H E U N IT E D STATES.

133

resulting in decreased earnings. Under the stock subscription plan
described in detail on pages 148 to 157 of this report, the relative num­
ber of cancellations in 1904, during which a considerable decrease in
the rate of wages was made, was four times as large as the relative
proportion of cancellations during the succeeding year.
The following table shows the number of cancellations and of
shares canceled, by causes, during one representative subscription
period in each of 16 establishments:
T able 6 0 .—NUM BER OF CANCELLATIONS, AND OF SHARES CANCELED, IN EACH OF
16 ESTABLISH M ENTS, D UR ING SPECIFIED Y E A R S , B Y CAUSES.

Cancellations caused by—

Estab­
lish­
ment
No.

Year
ending—

Leaving
employ­
ment.

Discharge.

Inability to
make pay­ Other causes.
ments.

Death.

All causes.

Can­ Shares Can­ Shares Can­ Shares Can­ Shares Can­ Shares Can­ Shares
cella­ can­ cella­ can­ cella­ can­ cella­ can­ cella­ can­ cella­ can­
tions. celed. tions. celed. tions. celed. tions. celed. tions. celed. tions. celed.
1 July 1,1915
47
226
2 July 31,191a1 2 501 21,148
4 Nov. 1,19156 2 38
2 135
2
3
5 Aug. 31,1913
96
6
576
(7)
12
19
9 Dec. 31,1915
211
324
11 Jan. 31,1915
12 May 1,1915
10
46
410
13 Jan. 1,19168 210
14 Jan. 1,1915
47
61
40
267
16 Dec. 31,1915
25
77
17 ........do.............
15
18 ........do1 ..........
71
0
6
18
19 Oct. 1,1915
21 Dec. 31,1914
92
30
52
23 Dec. 31,1914ii
39

5
(3)
(3)

15
(3)
(3)

144

834

6

67
5
61
9
(9)
6
56
2
17
5

100
22
112
13
(9)
14
102
3
59
7

4
2
6
2
3
1

10
4
2

3

25

3,525
38.9

377
12.9

1,281
14.2

54
1.8

217
2.4

Total. . 1,329
Per cent........ 45.5

16

44

26

3
24

91

62

48

278

8
15
10

71

134

8
73

130
37
141
14
24
1
18
21
547
18.7

71
707
75
2
479
15
522
35
412
93
216
57
96
9
68
65

293
1,696
238
3
2,781
25
837
152
751
131
1,304
187
226
22
235
90

2,308 2,922
25.5 100.0

9,051
100.0

4 182
11

&475
42

185
3
169
18
5

1,031
6
271
69
15

204
57
694 ” "33' ’ ” 333'
66
9
26
51
1
109
31
1,720
19.0

615
21.0

1 Five months.
2 Including those caused by discharge.
s Included under 1
‘Leaving employment.”
4 Including subscriptions canceled on account of disability, 13; leave of absence, 12; temporary lay-off,
96; other causes, 61.
&Including shares canceled on account of disability, 42; leave of absence, 43; temporary lay-off, 227;
other causes, 163.
6 Two years.
7 Entire series of 1911.
s June 15, 1914, to Jan. 1, 1916.
9 Discharge does not cause forfeiture or cancellation.
10 Two years and 9 months.
u Three years.

Of the canceled subscriptions, 58.4 per cent, representing 53.1
per cent of all the shares canceled, were occasioned through two
principal causes, leaving of service and discharge; 18.7 per cent of
the canceled subscriptions were due to the employee’s alleged inability
to continue the making of the stipulated payments.
The following table shows the proportion of subscribers in each of
the four principal occupation groups in 19 establishments.




134

B U L L E T IN OF T H E BU REA U OF LABOR ST ATISTICS.

T a bl e 6 1 .—NUM BER AN D PER CENT OF SUBSCRIBING EM PLO YEES IN EACH OCCUPA­

TION GROUP, D U R IN G ONE R E P R E SE N T A T IV E SUBSCRIPTION PERIO D (19 ESTAB­
LISHM ENTS).
______________________________________________
Subscribers.
Occupation group.
Number. Per cent.
Executive....................
Clerical.........................
Sales..............................
All others....................

8,631
10,884
174
25,130

19.2
24.2
.4
56.2

Total..................

44,819

100.0

More than one-half of the subscribers were found in the occupation
group “All others.” Inasmuch as common laborers very seldom, if
ever, take advantage of the plans, it may be assumed with a reason­
able degree of probability that the classification “ All others” included
employees who were engaged in manual and mechanical occupations
requiring some degree of training or skill.
Financial advantages accruing to subscribers.

In the following table is given an estimate of the financial advan­
tages offered by the stock subscription plans examined to employees
earning $1,000 yearly. It is evident that such advantages, if any,
may accrue to subscribing employees in either all or some of the
following ways: (1) In the relatively lower price at which the stock
may be had, as compared with the prevailing market value; (2) by
special bonuses offered for the retention of the subscribed for or
already owned stock; (3) by the difference between the rate'of
interest charged on the deferred payments and the dividends credited;
and (4) from the proportionate share in the special fund which
accumulates from the forfeited bonuses of canceled subscriptions,
and which becomes distributable at the end of the subscription series.
The total financial gain under each of the plans is shown in column
nine of the following table. By dividing the total amount of possible
gain into the aggregate earnings of a hypothetical subscriber earning
$1,000 per year for the period of years covered by the subscription
series, there is obtained what is called in column eleven the “ per cent
of gain on total earnings.” In this estimate as calculated all the
speculative features of the transaction were disregarded.




135

P R O F IT S H A R IN G IH T H E U N IT E D STA TE S.
T able 6 2 .—ESTIM ATE

OF -GAIN W H IC H M A Y ACCHUE TO A STOCK-SUBSCRIBER
E M PLO YEE EA R N IN G SI,000 PER Y E A R IN EACH OF 18 ESTABLISH M EN TS.

Es-

tablishment

Sub­
scrip­

tion

No.

1..
2 ..

3.
4..
6..
8 ..

9..
9 ..
10 .

10.
11.
12.

13.
14.
17.
18.
19.

2.
1
22.

23.

Maxi­
Number
Excess
mum
ol years
Amount of divi­
stock
dends
in which
sub­
of fixed
over
pay­
scription bonus for
ments
interest
allowed
paid for
maybe
period.
entire
com­
$1,1)00 of
period.
pleted. earnings.

1914
1915
i 1916
11913
i 1911
1 1912
1914
U914
1909
i 1909
1914
1913
1914
i 1910
1913
1912
1914
1914
i 1912
11912

en
tire

$200
300
200
1,000
1,000

200

200
200
1,000
1,000
300
200
300
500
300
200

1,000

200
300
300

$75.00

20.
100.

"m

20.

40.
150.
200.
75.
30.
75.

50.00

Special
fund
Excess of for sub- ■ Total
gain
market
scribers
from
price
retaining
stock
oversub­
for
stock
scription
entire
until
price.
period.
end of
period.
$95.00
40.50
32.00
300.00
140.00
60.00
70.00

$20.

24.
10.
50.
100
30.
2 30.
20

$16.50

2.00

.

150.00
40.00

.

20.00
8.00
95.00
60.00
15.00
8.00
45.00
130.00

.

100
112.
18.
30.

20.

15.
50.
80.

$59.10
88.60

(<
)

20.00

16.00
39.00
52.65

18.00

Total
earn­
ings
for
entire
period.

15.00

$5,000
2,000
5,000
5,000
5,000
5,000
5,000
5,000
3 304.10
5,000
448.60
5,000
5,000
6 202.50
40.00
3,000
150.00
5,000
150.00
2,000
5,000
15.00
5,000
136.00
4,000
80.00
54.00 fi 1,300
105.15
5,000
33.00
3,000

€8 0
.0

Per
cent
of
gain
on
total
earn­
ings.

1.9
2.0
.6
6.0
2.8
1.2
1.4
1.4
6.1
9.1
4.1
1.3
3.0
7.5
.3
2.7
2.0
4.2
2.1
1.1

1 Preferred stock.
2 Based on normal dividend of 8 per cent.
3 Not including a stock dividend of 33$ per cent distributed in first year of series, in which subscribers
shared.
4 Amount not known until end of series.
&Not including special fund, amount not known until end of series,
e Employees earning less than $1,300 per year not included in plan.

For convenience the estimated percentage gains on earnings shown
in the foregoing table have been summarized as follows:
T a b l e 6 3 . — CLASSIFIED

PER CENT OF GAINS ON E A R N IN G S (20 PLAN S).

Classified per cent of gains.

Under 2 per cent........................
2 and under 4 per oent.............
4 and under 6 per oent.............
6 and under 8 per cent.............
8 and under 10 per oent...........

Number
of plans.
8
6
2
3
1
20

Under 14, or 70 per cent, of the plans the estimated financial ad­
vantages to the employees amounted to less than .4 per cent of their
earnings during the period covered by specific subscription series.
In over one-third of the plans the estimated benefit amounted to
less than 2 per cent on earnings, slightly above 1 per cent mostly.
Only one plan offered a financial advantage exceeding 8 per cent on
earnings.




136

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.
ANALYSIS OF WORKING OF FOUR TYPICAL PLANS.
Plan No. 1.

The essential features of this plan, as announced on January 1,
1915, are as follows:
(а) Any employee who on January 1, 1915, has been continuously in the service of
--------- two years or more may purchase one share of stock at $110 per share for each
$300 of his or her annual wages, but not exceeding 10 shares to any one employee.
(б) All purchase agreements must be filed with immediate superior officers on or
before January 30, 1915.
(c) Continuous service and “ rate of p a y” under this plan shall be determined in
the same manner as under the regulations of the Employees’ Benefit Fund Plan.
( d) The following table shows the maximum number of shares which any employee
may purchase, but any employee may purchase one or more shares up to the maximum
he is entitled to purchase:
Employees receiving at Dec.
31,1914, rate of pay equivalent to a rate per year of—

May purchase not
exceeding—

$300 or less.................................................................................1 share.
Over $300.01 to $600, inclusive.........................................2 shares.
Over $600.01 to $900, inclusive.........................................3 shares.
Over $900.01 to $1,200, inclusive.........................................4 shares. Over $1,200.01 to $1,500, inclusive.........................................5 shares.
Over $1,500.01 to $1,800, inclusive.........................................6 shares.
Over $1,800.01 to $2,100, inclusive.........................................7 shares.
Over $2,100.01 to $2,400, inclusive.........................................8 shares.
Over $2,400.01 to $2,700, inclusive...................................... ...9 shares.
Over $2,700............................................................................. 10 shares.

Payment for the stock must be made beginning with March, 1915,
in monthly installments of $2 per share, to be deducted from wages
until stock is paid for, but payments may not be completed before
March 1,1917. Dividends are applied toward payment, and interest
of 4 per cent is charged on unpaid balances.
Stock purchased, until payments have been completed, is to be
held by three trustees appointed by the board of directors. When
the stock has been fully paid for, the subscriber may keep or sell it,
as he chooses, but before then no assignment, pledge, or sale of
rights is permitted.
If a subscriber-employee leaves the company’s service or dies in
the service before his payments have been completed, the net amount
paid in is returned in cash. If he leaves or dies after March 1,
1917, the amount still unpaid may be paid in and the stock taken up.
If for any reason other than leaving service, temporary absence, or
death, any employee desires to withdraw from the purchase agree­
ment, and if his reasons appear sufficient to the trustees, he may
receive back the total amount paid in, together with 4 per cent
interest.
Of a total of 151,129 employed, 78,587, or 52 per cent, were eligible
to subscribe for stock under this plan; 33,920, or 22 per cent of the




137

P R O F IT SH A R IN G IN T H E TJNITED STATES.

total employed, and over 43 per cent of all the eligibles, took ad­
vantage of the offer of the company and subscribed for a total of
102,706 shares of common stock. Over two-thirds of all the sub­
scriptions were for three shares or less, one-third of all having been
for two shares only. Less than one-tenth of all the subscriptions were
for six shares or more.
During the first five months of the operation of the plan 2.1 per cent
of all the subscribers canceled 1.7 per cent of all the shares subscribed
for, the average number of shares per cancellation having been 2.4,
as against 3 per original subscription, showing, in a general way,
that employees holding small numbers of shares were responsible to
a great extent for the cancellations. Most of the cancellations—over
two-thirds of them—were caused through employees leaving the
service of the company.
The types of employment or occupations of the subscribers under
the plan are shown in detail in the following table:
T able 6 3 .—NUM BER OF STOCK SUBSCRIBERS AND OF I H ARES H E L D , B Y

OCCUPATIONS.

Stock subscribers.

Shares held by—

Occupations.
Males.

Females.

Total.

General officers.................................................
General staff assistants...................................
Attorneys...........................................................
Accountants......................................................
Engineers...........................................................
Main operating department heads...............
Assistants to main operating department
heads...............................................................
Managers and assistant managers................
Collectors and canvassers...............................
Cashiers, tellers, paymasters, etc.................
Operators...........................................................
Foremen.............................................................
Right of way agents.........................................
Inspectors..........................................................
Inside plant force.............................................
Outside plant forces.........................................
Doctors, matrons, nurses, etc........................
Clerks, including storekeepers, stockkeepers, and students (except operators).
Stenographers and typists.............................
Draftsmen.........................................................
Messengers.........................................................
Artisans.............................................................
Unskilled workers...........................................
Manufacturing shop, warehouse, distribut­
ing house, and installation workers.........

138
113
65
436
1,321
79

1,170

1,265

Total...................................................... .

23,744

33,920

1,949
848
1,178
209
43
1,916
156
730
4,348
4,105

28

25
63
11
211
7,127

1

2
3,820
40
274
54
299
451

1,635
821

Males.

Females.

138
118
65
464
1,321
79

1,267
936
551
2,276
7,177
727

1,974
911
1,189
420
7,170
1,919
156
738
4,352
4,105

11,286
2,975
3,990
784
116
7,248
703
2,415
12,626
11,007
9

73
181
19
435
12,718

5,453
861
274
57
299
493

11,348
124
887
82
784
933

3,414
2,140

26
63

1

20
179

Total,

I,267
962
551
2,339
7,177
727
11,359
3,156
4,009
1,219
12,834
7,254
703
2,435
12,634
II,007
188

’ *60

14,757
2,264
'887
86
784
993

2,958

156

3,114

83,209

19,497

102,706

4

An inspection of the foregoing table shows that almost one-third
of the total number of subscribers were females and that every branch
of the service of the company is represented among the subscribers.
Considerably over one-half of the total number of subscribers belonged
to occupations other than executive, clerical, or commercial, the bulk
of them, apparently, having been engaged in mechanical and manual
occupations.




138

BULLETIN- OP T H E B U REA U OF LABOR STATISTICS.
Plan No. 2.

This plan was put into operation in 1909, when 12,500 shares of
preferred stock, at $ 115 per share, and 15,000 shares of common stock,
at $75 per share, were offered for subscription to officers and employees.
The amount of subscription in any case was limited to the amount
of annual wages or salary.
Minimum monthly installments were to be $1.50 per share for pre­
ferred stock and $1 per share for common stock, the stock to be fully
paid for within five years, with an interest charge in the meantime of
5 per cent on unpaid balances. Dividends were to be credited from
the time of allotment.
As soon as the subscription payments were completed the stock
was to be issued to the subscriber; but when an allotment included
both preferred and common stock no certificate was to be issued
until the entire subscription was paid, and then certificates for both
classes of stock were to be issued.
As an inducement to subscribers to retain their stock and “ to have
and show the active interest in the business of a stockholder or work­
ing partner,” a special allowance of $4 per share of preferred stock and
$3 per share of common stock for five consecutive years beginning
with August, 1910, was offered. This special allowance was to be
credited to subscribers whose subscriptions were still in force, yet not
fully paid, but paid in cash to employees who had fully paid for their
stock.
Subscribers who discontinued payments at any time before their
subscriptions were fully paid up would forfeit these special allowances,
which would then go into a special fund, credited with 5 per cent annual
interest. At the end of the five-year period, the total amount thus
accumulated would then be divided into as many parts as would equal
the number of shares of preferred stock plus two-thirds of the number
of shares of common stock which had remained continuously in the
hands of the subscribers for five years. Each subscriber would then
be awarded as many parts as the number of shares then held by
him under this plan would entitle him to; i. e., one part for each share
of preferred stock and one part for each one and one-half shares of com­
mon stock.
The series of stock subscription described above was completely
closed out in 1915, with the following results:
Of a total of 28,400 employed by this company, 4,374, or 15.4 per
cent, availed themselves of the opportunity offered, and subscribed
for 34,252 shares of common and preferred stock, in almost equal
proportions. Over 86 per cent of all the subscriptions were for three
shares or less, 55.8 per cent of all the subscribers contracting for one
share only. Prior to the closing of the series, 1,247 subscribers can­
celed subscriptions amounting to 5,865 shares, making the propor­




PR O F IT SH A R IN G IN

T H E U N IT E D STATES.

139

tions of total subscribers and shares that were canceled 28.5 per cent
and 17.1 per cent, respectively. From the fact that the proportion
of subscribers who canceled their subscriptions was considerably
larger than the proportion of shares canceled by them, it may be
inferred that employees who subscribed for a small number of shares
were responsible for most of the cancellations- This conclusion is
partly supported by the fact that while the average number of shares
per subscription was 7.8, the average number of shares per cancella­
tion was only 4.7.
On December 23, 1915, this company in a circular to its employees
announced the establishment of a new plan, as follows:
To the employees o f --------- Co., o f ---------, and its subsidiary companies:

In order to reward continuous service and assist employees to become stockholders
in this company and share in its profits, the directors announce the following
PROFIT-SHARING PLAN:

1. Any employee may subscribe for a profit-sharing certificate for $50 or any multiple
thereof up to the sum of $1,000. The payments for the certificate shall be made
in specified sums of not less than $1 nor more than $25 per month, which may be regu­
larly deducted from the employee’s wages. The amount thus agreed to be paid must
be sufficient with the other credits hereinafter provided, to pay such certificate in
full on or before January 2, 1921.
Whenever the employee is unable to work for the company because of shutdown or
of his sickness or accident disability, his payments may be temporarily reduced or
suspended.
Each employee who subscribes for a profit-sharing certificate before March 1, 1916,
and has earned $100 or more during the year 1915, will also be credited on such cer­
tificate at the date of his subscription with a sum equal to 1 per cent of his wages during
1915. If he has been in the company’s employment throughout that year, this credit
will be not less than $10.
2. The company agrees to credit annually on January 2 of each year, from 1917 to
1921, inclusive, on the profit-sharing certificate, in addition to the employee’s pay­
ments thereon, the following:
(a) An amount equal to 1 per cent of the employee’s wages earned during the pre­
ceding calendar year, if such wages amount to not less than $100 and the employee
is still working for the company. If he has been in the company’s employment
throughout the preceding year, this credit will be not less than $10.
If any holder of & profit-sharing certificate, because of a shutdown in his department
or his sickness or injury disability, is absent from work on January 2 of any year prior
to and including 1921, the company will make the above credit if he resumes work
not later than April 1 of the same year, either when the work in his department is
resumed or upon his recovery from such disability.
( b) Interest at the rate of 5 per cent per annum on all his payments and credits on
his profit-sharing certificate.
In case the holder of a profit-sharing certificate ceases to be an employee of the
company, the amount to the credit of his certificate shall be payable to him in cash
within 30 days thereafter, after which date it will not bear interest.
3. Em ployee’ s options.— Every employee holding a profit-sharing certificate shall
have the right:
(a)
To apply the amount credited upon his profit-sharing certificate to the pur­
chase, from the company, of its common stock at $3 per share below its then market
price at any time when such amount is sufficient to pay for one or more such shares; or




140

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

(b)
To receive in cash the full amouut of his certificate, with accrued interest,
any time after such certificate is fully paid; or
. (c) To leave with the company until January 2, 1921, the amount of his paid-up
profit-sharing certificate, and (if he continues in the employ of the company) to receive
in cash on every January 2, to and including the year 1921, interest thereon at 5 per
cent per annum and also an amount equal to 1 per cent of his wages for the preceding
year but not less than $10; and
( d)
To subscribe from time to time for additional profit-sharing certificates upon
the terms and conditions above set forth, provided the total amount of certificates
subscribed for by any employee shall not exceed $1,000, and his payments thereon
shall not exceed $25 per month.
4. Special profit-sharing to employee stockholders.—The company agrees to pay to
each employee, while he shall continue to be an employee and to own stock under
this plan, in addition to the dividends on his stock, an amount equal to the extra
dividend which he would receive upon his said stock if the entire excess of the net
profits of the company for each calendar year prior to January, 1921, over and above
an amount equal to 6 per cent on the moneys invested in the company’s business
during such year, were distributed pro rata to all the holders of its common stock.
The company guarantees that this amount shall not be less than $2 a year for each
share of stock so held by the employee. The guaranteed $2 per share will be paid
by January 10 and the remainder as soon thereafter as the balance sheet has been
approved by the board of directors.
The “ moneys invested in the company’s business” for each year shall be the capital
stock and surplus as shown by its annual balance sheet as of December 31 of the
preceding year approved by its board of directors. The “ net profits” for each year
shall be the amount shown as net profits upon the company’s balance sheet as of
December 31 for that year approved by its directors.
Such additional annual payments to employee stockholders, for any year, shall
be paid upon only such shares of stock as are acquired hereunder prior to February 1
and held until the end of that year.
5. This profit-sharing plan ends January 2, 1921. The company does not agree to
continue any of the rights, interest, or profit sharing above outlined beyond January 2,
1921. It hopes, however, to be able to announce an extension of the plan beyond
that date.
6. Participation in this profit-sharing plan is not compulsory upon any employee.
Failure to accept any of the offers made by the company under this plan will not in
any way affect the employment or standing of anyone who is now or may hereafter
be in the service of the company.
The following tables have been prepared to show how monthly payments of $1 and
upward will pay for profit-sharing certificates in amounts ranging from $50 to $1,000.
While the profit-sharing plan provides that the yearly credit shall be 1 per cent of the
employee’s wages, these tables show in each case a credit of $10, this being the
minimum amount which will be credited to each subscriber who has been in the
company’s employment throughout the preceding year.




$1 per $2 per $3 per $4 per $5 per $6 per $7 per $8 per $9 per $10 per $11 per $12 per $13 per $14 per
month. month. month. month. month. month. month. month. month. month. month. month. month. month.

1916.
Jan, 2
Dec. 31
31

$15 per
month.

$20 per
month.

$25 per
month.

1 per cent of wages (minimum)___ $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
12 monthly payments...................... 12.00 24.00 36.00 48.00 60.00 72.00 84.00 96.00 108.00 120.00 132.00 144.00 156.00
4.08
3.80
2.98
3.25
3.53
2.70
1.88
2.15
2.43
1.33
1.60
.78
1.05
Interest at 5 per cent........................

$10.00
168.00
4.35

$10.00
180.00
4.63

$10.00
240.00
6.00

$10.00
300.00
7.38

256.00

317.38

Balance............................................... 22.78
1 per cent of wages (minimum)___ 10.00
12 monthly payments...................... 12.00
Interest at 5 per cent........................ 1.92

35.05
10.00
24.00
2.80

47.33
10.00
36.00
3.69

59. 60
10.00
48.00
4.58

71.88
10.00
60.00
5.47

84.15
10.00
72.00
6.36

96.43 108.70 120.98 133.25 145.53 157.80 170.08
10.00 10.00 10.00 10.00 10.00 10.00 10.00
84.00 96.00 108.00 120.00 132.00 144.00 156.00
9.02
9.91 10.80 11.69 12.58
8.14
7.25

182.35
10.00
168.00
13.47

194.63
10.00
180.00
14.36

256.00
10.00
240.00
18.80

317.38
10.00
300.00
23.24

71.85

97.02 122.18 147.35 172. 51 197.68 222.84 248.00 273.16 298.33 323.49 348.66

373.82

398.99

524.80

650.62

Balance............................................... 46.70
1 per cent of wages (minimum)___ 10.00
12 monthly payments...................... 12.00
Interest at 5 per cent........................ 3.11

71.85
10.00
24.00
4.65

97.02 122.18 147.35 172.51 197.68 222.84 248.00 273.16 298.33 323.49 348.66
10. D 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
O
36.00 48.00 60.00 72.00 84.00 96.00 108.00 120.00 132.00 144.00 156.00
9.24 10. 78 12.31 13.84 15.38 16.91 18.44 19.97 21.51
6.17
7.71

373.82
10.00
168.00
23.04

398.99
10.00
180.00
24.57

524.80
10.00
240.00
32.24

650.62
10.00
1 200.00
39.28

574.86

613.56

807.04

899.90

Balance............................................... 71.81 110.50 149.19 187.89 226.59 265.29 303.99 342.68 381.38 420.07 458.77 497.46 536.17
1 per cent of wages (minimum)___ 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
12.00 24.00 36.00 48.00 60.00 72.00 84.00 96.00 108.00 120'. 00 132.00 144.00 156.00
12 monthly payments
8.78 10.99 13.20 15.41 17.62 19.83 22.04 24.25 26.46 28.67 30.88
6.57
Interest at 5 per cent........................ 4.36

574.86
10.00
168.00
33.09

613.56
10.00
180.00
35.30

807.04
10.00
2 80.00
44.02

899.90
10.00

785.95

838.86

941.06

955.40

838.86
785.95
10.00
10.00
168.00 3 105.00
45.94
43.65

941.06
10.00

955.40
10.00

Balance............................................... 98.17 151.07 203.97 256.88 309.79 362.70 415.61 468.51 521.42 574.32 627.23 680.13 733.05
1 per cent of wages (minimum)___ 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
12.00 24.00 36.00 48.00 60.00 72.00 84.00 96.00 108.00 120.00 132.00 144.00 156.00
12 monthly payments
8.60 11.53 14.45 17.36 20.28 23.21 26.13 29.05 31.97 34.89 37.81 40.73
Interest at 5 per cent........................ 5.68

45.50

47.55

48.27

125.85 193.67 261.50 329.33 397.15 464.98 532.82 600.64 668.47 736.29 804.12 871.94 939.78 1,007.60
1921.
Jan. 2
2

999.80

998.61

1,013.67

Balance............................................... 125.85 193.67 261.50 329.33 397.15 464.98 532.82 600.64 668.47 736.29 804.12 871.94 939.78 1,007.60
10.00
10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00
1 per cent of wages (minimum)—

999.80
10.00

998.61
10.00

1,013.67
10.00

135.85 203.67 271.50 339.33 407.15 474.98 542.82 610.64 678.47 746.29 814.12 881.94 949.78 1,017.60 1,009.80 1,008.61

STATES.

194.63

UNITED

182.35

THE

96.43 108.70 120.98 133.25 145.53 157.80 170.08

I
N

84.15

SHARING

1920.
Jan. 2
2
Dec. 31
’ 31

71.88

98.17 151.07 203.97 256.88 309.79 362. 70 415.61 468.51 521.42 574.32 627.23 680.13 733.05

1919.
Jan. 2
2
Dec. 31
*31

59.60

71.81 110.50 149.19 187.89 226.59 265.29 303.99 342.68 381.38 420.07 458.77 497.46 536.17

1918.
Jan. 2
, 2
Dec. 31
31

47.33

46.70

2
Dec. 31
31

35.05

PROFIT

22.78
1917.

1,023.67

Total credit—Jan. 2,1921—

2 Monthly payments for 4 months.

a Monthly payments for 7 months.

141




i Monthly payments for 8 months.

142

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.
EXAM PLE 1— $50 CERTIFICATE.

A $50 certificate subscribed for during January, 1916, by an employee who Trna
worked for the company one year or more and who pays thereon $1 each month, will
be fully paid by January 2, 1918, as follows:
1 per cent of wages for 1915,1916 and 1917 (minimum)................. $30. 00
24 monthly payments of $1 each................... .................................. 24. 00
5 per cent interest to Jan. 2, 1918....................................................
2. 70
Total.........................................................................................

56. 70

He may draw in cash the full amount on January 2,1918, or he may leave this amount
with the company until January 2, 1921, and if he continues in the employ of the
company he will receive in cash on January 2,1919, $12.84, on January 2,1920, $12.84,
and on January 2, 1921, $12.84. The principal sum, $56.70, will also be paid on
January 2, 1921.
EXAM PLE 2— $200 CERTIFICATE.

An employee, who has worked for the company one year or more, subscribing
during January, 1916, for a $200 certificate with a monthly payment of $2, will have
to his credit on January 2, 1919, $120.50, of which he will have paid in $72. If he
then withdraws a sufficient amount to purchase one share of stock at $3 below the
then market price, he will continue to receive, as credits on the balance of his account,
interest at 5 per cent and the percentage of his wages as set forth in this plan. He will
also receive dividends upon his share of stock in common with all other stockholders
and an additional annual payment on account of his share of stock guaranteed to be
not less than $2, and which, on the basis of the earnings of the company for the year
1914, would amount to $5.20 each year.
ADDITIONAL PAYMENTS TO EMPLOYEE STOCKHOLDERS.

The following statement shows how the rate of additional payments to employee
stockholders, described in section 4, will be figured:
Capital stock and surplus L^ j . 31, 1913:
Preferred stock................................................................... $30, 000, 000
Common stock.................................................................... 40,000,000
Surplus................................................................................ 19, 608, 797
89, 608, 797
Net profit for year 1914........ ....................................................
Deduct 6 per cent on above capital stock and surplus..

7,463, 231
5, 376, 527

“ Excess net profits” on^which rate of additional payment
is figured.................................................................................

2, 086, 704

This balance, $2,086,704, is equal to 5.2 per cent on the $40,000,000 common stock,
and represents an additional payment of $5.20 per share. This statement is figured
on 1914 business merely for illustration, and does not fix the rate of additional pay­
ment for any year. The company guarantees, however, that this additional payment
shall amount to at least $2 per share each year. Any increase in the dividends on
the common stock will be shared in by the employee stockholder without any reduc­
tion being made in the additional payments to which he may be entitled under this
plan.
Plan No- 3.

Under the provisions of this plan common stock (series of 1914) is
offered for subscription at $60 per share to officers and employees
whose annual wages or salaries are $1,300 or over. The maximum
amount to be subscribed for by any employee is determined in each




PR O F IT SH A R IN G I N

T H E U N IT E D STATES.

143

instance by the executive committee in charge of the plan, due consid­
eration being given to the salary and importance of position of each
employee.
The maximum amount of stock that an employee may subscribe
for varies from 10 per cent of his annual earnings, in the case of the
employees earning $1,300, to 20 per cent of annual earnings in the
case of employees earning $10,000 per year or more.
Payments on subscriptions are to be made in monthly installments,
deducted from the salary or wages in such amounts as the employee
may desire, subject to a minimiim of $6 per share. Interest at 5
per cent is charged on all unpaid balances and dividends are credited to
the employee’s account until the subscription is fully paid. Employees
canceling their subscription before the stock is fully paid for, or who
have failed to pay their installments for three consecutive months,
have the exact amount of their payments returned to them, together
with 5 per cent interest; they forfeit, however, the dividends and
the special allowances referred to below.
As soon as the payments on the stock have been completed, the
shares are issued in the employee’s name, to dispose of as he chooses.
As a special inducement to keep it, however, the company pays $3
per share for five successive years to those exhibiting each year a cer­
tificate from an authorized official of the company stating that the
employee has been continuously in the company’s employ for the
preceding year and “ has shown a proper interest in its welfare and
progress.” At the end of five years he receives an additional allow­
ance, which is paid out of a fund accumulated from bonuses which
become forfeited through noncompliance with the regulations or
through leaving the company’s employ.
Employees who have taken advantage of the stock subscription
plan may also, on being selected by the executive committee, share
in the distribution of a certain sum set aside as a “ participation
(so-called profit-sharing) fund,” out of the earnings for the cur­
rent fiscal year. As a matter of actual practice, participation in
this fund, based upon amount of salary and subscription of spe­
cific employees, is awarded to every one of those who subscribe for
stock under the plan. The exact basis of apportionment of the fund
is not made known. In the past, in instances of lower paid subscrib­
ers—those earning $1,300—the participation amounted to 3 per cent
of annual earnings or a bonus equivalent to $39 on a total stock
subscription of $120; viz, two shares at $60 each. The so-called
participation amounts have been correspondingly larger in the cases
of the higher paid employees, the governing principle of distribution
apparently being that the higher the salary and the greater the
importance of the subscribing employee the larger his proportionate
share in the fund.




144

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

When the salary of the subscribing employee is less than $5,000
a year, his share is paid to him in cash; officers or employees receiv­
ing more than $5,000 a year receive about 60 per cent in cash and the
remainder in nonassignable, conditional “ certificates of interest”
in the common stock on the basis of $60 per share, on which full
dividends are paid. Such a participant remaining in the employ of
the company for five years, until April 1, 1919, and having rendered
“ faithful and satisfactory service,” may exchange his “ certificate
of interest” for ordinary share certificates.
The following facts indicate the working of this plan for the period
of 1912 to 1915, inclusive.
Out of a total of about 55,000 employed only 2,500, or approximately
4.5 per cent, were eligible to subscribe for stock under the terms
specified in the plan. On the average during the first four years of
the operation of the plan, slightly over one-half of the eligibles took
advantage of the offer of the company, thus making the proportion
of actual beneficiaries under the plan to the total employed about
2.2 per cent. A total of 4,923 employees subscribed for 27,668
shares of stock. The subscriptions for three shares or less were
44.4 per cent of all subscriptions in 1912, 74.2 per cent in 1913,
73.7 per cent in 1914, and 60.4 per cent in 1915. Only 910, or 3.3
per cent, of all the shares subscribed for were subsequently canceled.
During the year 1914, 68 subscribing employees canceled subscrip­
tions amounting to 285 shares, giving the following reasons for their
cancellations: (1) Leaving employment of the company, 30; (2)
inability to continue the making of the stipulated payments, 18;
(3) discharge, 17. The other three cancellations were due to death
of the employees.
The following table shows the amounts paid out, during the first
four years of the operation of the plan, of the special fund distributable
immediately upon subscription and in special bonuses for the reten­
tion of stock.
T a bl e 6 5 .—N U M BER OF BEN EFIC IAR IES AN D AM OUNTS D ISTR IBU TED FROM SPECIAL

FUN D AN D AS BONUSES FOR R E T E N TIO N OF STOCK.

Special fund.
Year.

1912 ...........................................................................................................
1913............................................................................................................
1914............................................................................................................
1915.............................................................................................................
Total...............................................................................................




Special bonuses for
retention of stock.

Number
Number
of bene­ Amount. of bene­ Amount.
ficiaries.
ficiaries.
1,090
1,201
1,285
1,347

$172,915
140', 041
152,877
156,333
622,166

1,078
2,203
3,420
4,710

$24,645
40,218
57,954
80,274
203,091

PROFIT SH A R IN G IN

T H E U N IT E D STATES.

145

Over $200,000 was paid out by the company as special bonuses
for the retention of the subscribed-for stock, at the rate of $3 per
share per year, as per section 8a of the plan reproduced below.
The special participation fund during the four-year period amounted
to $622,166, of which amount $138,590 was paid in so-called certifi­
cates of interest to employees with an earning capacity of over $5,000
per year. Inasmuch as the latter amount constituted only 40 per
cent of the aggregate amount paid out to this class of employees,
the total amount paid out to them was $346,475, or 55.7 per cent
of the entire fund; that is, over one-half of the total amount distributed
was apportioned to employees with an earning capacity of over
$5,000 per year.
The text of this plan, as addressed by the company to its officers
and employees in a circular dated April 20, 1914, follows:
The company offers to officers and employees whose wages or salaries are at the rate
of $1,300 per annum or over the opportunity to subscribe for shares of its common
stock heretofore issued and now held by and in the treasury of the company at
the price of $60 per share, subject to the following conditions:
First. All subscriptions shall be for the Value of one or more shares of common
stock at the price of $60 per share and upon the express condition that there may be
allotted to the subscriber all or any part of his subscription as the executive committee
may determine.
Second. The maximum amount which may be subscribed for hereunder by such
officers and employees respectively will be governed by varying percentages of their
respective salaries or wages, which percentages will be determined in each case by
the executive committee, it keeping in mind the salary and position of the individual;
) shares.
and, as respects---------o f ----------such maximum amount is — — (
No officer or employee of any class is obliged to subscribe for any or for the full
amou'nt of stock which he may be thus privileged to subscribe for, but if he so elects
he may subscribe for a lesser amount.
Third. Payment on the subscriptions shall be made in monthly installments, to be
deducted from the salary or wages of the subscriber in such amounts as he may desire,
subject to the provision that the minimum amount of a monthly installment shall be
$6 per share. The subscriber may anticipate such payment to such extent as he may
desire, but any amount so paid in anticipation shall be in even dollars. Interest at
5 per cent per annum will be charged by the company on all amounts unpaid on the
stock.
Fourth. From the date on which payments begin and during the continuation of
such payments all dividends paid on the stock will be credited to the subscription
account of the subscriber until the stock is fully paid for and issued to him, after which
dividends will be paid in the same manner as to other stockholders.
Fifth. In case a subscriber shall cancel his subscription before his stock shall have
been fully paid for there will be returned to him the exact amount of his payments
made on account, with interest at 5 per cent per annum on the same from time of
payment, no credit being given him for dividends or for the special allowance referred
to in section sixth hereof, and no interest being charged on deferred payments, and
thereupon his subscription and all interest in the stock to which the same relates
shall cease and determine. Whenever such payments shall have been discontinued
without the consent of the company for the period of three months, his account will
be closed forthwith and his interest in the stock shall cease and his payments on
account will be returned to him as above stated.
56831°—Bull. 208—17------10




146

B U L L E T IN OF T H E B U REA U OF LABOR STATISTICS.

No subscriber can cancel his subscription unless he cancels all of it.
Sixth. As soon as the stock shall have been fully paid for, and not before, it will be
issued in the name of the subscriber. The subscriber may then sell his certificate
whenever he chooses, but as an inducement for him to keep it and to remain continu­
ously in the employ of the company or of one or another of its subsidiary companies,
the following offer is made, viz:
If he does not sell or part with any part of the said stock but shall keep it and on
the 1st of April, 1915, and the 1st of April for four consecutive years thereafter shall
exhibit the certificate to an official designated by this company and obtain from him
a certificate to the effect that he has been continuously in the employ of the company
or of one or another of its subsidiary companies during the whole preceding year and
has shown a proper interest in its welfare and progress, he will for each of such five
years receive from the company a cash payment at the rate of $3 a share for each
said share of said stock.
Seventh. If the subscriber shall retain his said certificate and remain continuously
in the service of the company or of one or more of its subsidiary companies for said
five years, the company intends that he shall then feceive a still further compen­
sation, which can not now be ascertained, but which it is intended will be derived
from the following sources,-viz:
Subscribers for stock under this offer whose subscriptions are canceled before being
paid in full will forfeit and will not receive the special allowance of $3 per share
referred to in section sixth hereof. Nor will such special allowance be paid for such
of the five years as remain after forfeiture to subscribers whose certificates may be
transferred from their names at any time during the five years, whether intentionally
or otherwise; nor to subscribers who after receiving their certificates do not remain
continuously in the service as provided in said section sixth. The company will,
however, pay into a special fund at the end of each remaining year of said five years
the said $3 allowances forfeited by subscribers as aforesaid. This latter fund shall
be credited with 5 per cent annual interest, and at the end of the five years’ period
the total amount thus accumulated will be divided into as many equal parts as shall
be equal to the number of shares of said common stock issued as aforesaid to and then
remaining in the hands of subscribers who shall have so continued in such employ
for the whole of said five years. The company will then by its own final determination
award to each then remaining subscriber whom it shall find deserving thereof as many
parts of such accumulated fund as he shall be entitled to on the basis of the number
of said shares then held by him under this plan as compared with said total number.
Eighth. In case a subscriber dies or becomes permanently disabled while faithfully
serving the company or one of its subsidiary companies during such five years’ period
payments will be made to his estate or to him as follows:
(a) If his subscription is fully paid and he has received and not disposed of his
certificate, the company will pay, as above stated in section sixth a sum equal to
$3 per share for each of the five years not then expired, and also a pro rata amount of
the special fund mentioned in section seventh, arising from the said forfeitures which
may have accrued at the time of his death or disablement.
(b) If his subscription has not been paid in full, the company will pay, as stated,
the money theretofore paid in by him on account, together with the dividends paid
on the stock subscribed for, the special compensation for the entire five years’
period and a pro rata share of the amount of the special fund mentioned in paragraph
(a) preceding, less interest at 5 per cent per annum on unpaid amounts.
(c) If at the time of decease or permanent disablement the subscription has been
fully paid but certificate not yet delivered, the company will deliver the certificate
as first stated above, together with the additional payments as mentioned in para­
graph (a) preceding.
Ninth. A subscriber may designate in his subscription the person to whom in the
event of his death he desires the company to deliver all amounts or stock in connec­




PR O F IT SH A R IN G IN

T H E U N IT E D STATES.

147

tion with his subscription which would otherwise be deliverable to his estate. When
such designation has been made and shall not have been changed, the company, upon
satisfactory proof of death under the conditions of the subscription, will deliver to
the person designated, if then living, all amounts of stock in connection with the
subscription which would otherwise be deliverable to the estate of the subscriber.
When such designation has been made the subscriber’s estate shall have no claim to
any such amounts or stock unless the person designated or his substitute or substi­
tutes should die before the subscriber, and in that event delivery will be made to
the subscriber’s estate. By written notice delivered to the treasurer of the company
by which he is employed a subscriber may change the person designated.
Tenth. Subscribing officers and employees whose employment has been or may be
suspended by reason of the temporary closing of the company’s plants and who shall
continue ready and willing when required to resume their service will not be deprived
of the special cash payment of $3 per share per year during such suspension. During
such suspension monthly payments will not be required, though if so desired by the
officer or employee they may then be made.
In case of the death during such suspension of any such officer or employee his
estate or his designee as above will be entitled to the same benefits accruing to his
subscription as if he had died while under employment.
Failure to present the original certificate, as provided, or the withdrawal of a partly
paid subscription or the failure to resume employment when requested will constitute
and will be deemed conclusive evidence of the termination of his employment by
such officer or employee and a relinquishment of all benefits referred to above.
Eleventh. All subscriptions shall be upon the express understanding and con­
dition that the decision of the executive committee of t h e ------— Co., as said
committee shall from time to time be constituted, shall at all times be final with
respect to the construction and meaning hereof and to the rights or interests of the
subscribers or any question relating to or arising out of the same, and that the vote of a
majority of the committee shall be as conclusive as the unanimous vote of said
committee.
Twelfth. Subscriptions will be received until May 10, 1914, inclusive, and allot­
ment will be made a few days later. The first deductions will be made from May salary
or wages.
The executive committee of t h e ---------Co. announces that:
First. There has been set aside a certain sum as a profit-sharing fund for the calendar
year ending on March 31, 1914, for distribution as soon after May 15, 1914, as shall be
practicable, among various officers and employees of said company and its subsidiary
companies to be selected by said committee. In so far as any employee receiving a
salary less than $5,000 per annum is selected to share in said fund, his share will be
paid to him as soon as possible in cash. When the salary of the officer or employee thus
selected shall be at the rate of $5,000 per annum or more, about 60 per cent of his share
of said fund will be so paid in cash and the remainder, under conditions hereinafter
stated, in nonassignable, conditional certificates of interest in the common stock
of t h e --------- Co. on the basis of $60 per share. If 40 per cent of any such
allotment is insufficient to so purchase one share of said stock, then said 40 per cent
shall be paid in cash, and if such 40 per cent shall purchase one share or a multiple
thereof, then any excess over such purchase price shall be paid in cash.
The certificates of interest above referred to shall provide, among other things, as
follows:
(a)
That if such participant shall remain continuously in the service of the com­
pany or of one or another of its subsidiary companies until April 1, 1919, and shell
during all of such time have rendered faithful and satisfactory service to such company
or to one or another of its subsidiary companies, the stock called for by his con­




148

B U L L E T IN

OF T H E BU REA U OF LABOR STATISTICS.

ditio’nal certificate will be delivered to him as his property upon surrender of his said
conditional certificate.
(b) That he will receive such dividends as are declared on the stock while it is so
held for his account.
(c) That if he shall voluntarily quit the service of the company or of a subsidiary com­
pany (except that such voluntary retirement be made under any general pension
scheme which may hereafter be adopted), or shall be discharged or removed for cause
by his employer before April 1, 1919, he shall forfeit all right to the stock and to the
conditional certificate; and in that case such stock will be held in a fund which at the
end of the five years above named will be divided pro rata according to their respective
interests among such officers and employees as shall then be entitled to the delivery
of the stock called for by the certificates of interest held by them.
(d) That if before April 1, 1919, he dies, or becomes totally and permanently dis­
abled while in the employ of the company or of one or more of its subsidiary com­
panies, the stock will be delivered to his estate (or to him if disabled), together with
such pro rata amount of additions, if any, as have accrued up to the time of his death
or disablement. If a beneficiary has been named in his subscription agreement,
saries 1914, referred to below, and such designation has not been changed, delivery
will be made to the person so designated, if then living, and the participant’s estate
shall have no claim to such stock or additions.
Second. All questions relating to the meaning or construction hereof or to the rights
or interests of any officer or employee in, or growing out of, the stock or fund above
mentioned or referred to shall be determined by the executive committee of the
---------Co., and by it alone; and its decision shall be final and conclusive as to all
parties; and the fund above referred to is to be created on that condition; and the
action of a majority of said executive committee shall be as binding and conclusive
in every case as the unanimous action of the entire committee would be.
Third. It is understood that the above-mentioned profit-sharing fund will be
distributed and plan administered with special reference to those whose subscription
agreement, series 1914, shall have been approved and accepted by the company.
Plan No. 4.

In December, 1902, a certain corporation announced to its officers
and employees that out of its earnings during the year 1902 about
$2,000,000 would be set aside for the purchase of at least 25,000
shares of the preferred stock, for the purpose of offering it to all
employees of the corporation and its subsidiary companies at the
price of $82.50 per share, the market price at that time being $86.25
to $89.75. This offer (series 1) was to be as of 1903.
For the purpose of administering the plan the employees then in
the service of the corporation were divided into six classes, graded
according to salary received, each class having been given an op­
portunity to subscribe for a specified number of shares, based upon
their annual salary or wages. Thus, employees in class A, receiving
an annual salary of $20,000 or more, were allowed to subscribe for
an amount not to exceed 5 per cent of their annual salary; employees
in class B, with a salary of from $10,000 to $20,000 a year, could
subscribe for an amount equal to 8 per cent of their salary; class C,
with annual salaries ranging from $5,000 to &10.000, could sub­




PRO FIT SH A R IN G IN

T H E U N IT E D STATES.

149

scribe for an amount of stock equal to 10 per cent of their salary;
class D, with salaries from $2,500 to $5,000 a year, to 12 per cent;
class E, with salaries from $800 to $2,500 a year, to 15 per cent;
and finally, class F, including all employees earning $800 a year or
less, were allowed to subscribe for an amount equal to 20 per cent of
their yearly earnings.
The latest series—December 24, 1915— offers for subscription to
employees the common stock of the corporation at $85 per share.
The maximum number of shares that an employee may subscribe for
under this series is determined in accordance with his yearly salary
or earnings, and varies from 1 share (in the case of employees earn­
ing $637.50 or less per year) to 19 shares (in the case of those earn­
ing from $19,658.25 to $31,450 per year).
Payments are to be made in monthly installments, to be deducted
from the salary or wages, in such amounts as the subscriber may
desire, with a fixed minimum amount of $2 per share per month,
but not to exceed 25 per cent of any one month’s salary or wages.
The stock must be paid for within three years. Dividends on the stock
are credited to the account of the subscriber from the date on which
he commences to make payments, and 5 per cent interest is charged
on unpaid balances.
An employee forfeits all interest in the stock if he leaves the com­
pany’s service or is three months in arrears with his payments, in
which cases his payments are returned with 5 per cent interest, less
dividends or special allowances referred to below.
When the stock is fully paid for, it is issued in the name of the
subscriber. He may sell his certificates whenever he chooses, but as
an inducement to retain it while he remains in the service the cor­
poration offers a yearly cash bonus of $5 per share for five years,
beginning with January, 1916, on the condition that the subscriber
is to produce his stock certificate together with a statement from a
proper official of the company to the effect that he has been con­
tinuously in the corporation’s service during the preceding year,
“ and has shown a proper interest in its welfare and progress.”
Subscribers who have not fully paid their subscriptions, but who
otherwise fulfill “ all the conditions of continuous and faithful serv­
ice,” are also given this bonus.
A holder of a stock certificate remaining five years continuously in
the corporation’s service may be awarded, if found “ deserving
thereof,” a further pro rata bonus from a fund to be derived from the
forfeited bonuses of employees (a) canceling subscriptions; (b) trans­
ferring certificates, whether intentionally or otherwise; (c) leaving
the service or failing to resume employment when requested.




150

BU TIN O TH B R A O L B R ST TISTIC
LLE
F E UEU F AO
A
S.

The following is a copy of the full text of the offer of 1915:
To the officers and employees of the -

Corporation and of its subsidiary companies:

The corporation again offers the opportunity to subscribe for shares of its common
stock, not exceeding an aggregate total of 35,000 shares, under the following terms
and conditions:
First. All subscriptions shall be made upon the express condition and agreement
that all questions concerning the said subscriptions, and the allotments and interests
thereunder, shall be decided by the finance committee in its discretion, and such
decision shall be final and conclusive upon all parties.
Second. Subscriptions shall be for one or more shares of common stock at the sub­
scription price of $85 per share.
Third. The following table shows the maximum number of shares which may be
subscribed for by employees whose salaries or wages are within the respective limits
stated, but employees at their option may subscribe for less than such maximum
number of shares:
SUBSCRIPTIONS TO COMMON STOCK.

Employees receiving
annual salaries of—

May subscribe for a
maximum number of—

$637.50 or less...........................
1 share.
$637.51 to $1,416.66.................. 2 shares.
$1,416.67 to $1,893.33............... 3 shares.
$1,983.34 to $3,187.50............... 4 shares.
$3,187.51 to $3,895.83............... 5 shares.
$3,895.84 to $4,604.16............... 6 shares.
$4,604.17 to $6,375.00............... 7 shares.
$6,375.01 to $7,225.00............... 8 shares.
$7,225.01 to $8,075.00....... ....... 9 shares.
$8,075.01 to $8,925.00............... 10 shares.

Employees receiving
annual salaries of—

May subscribe for a
maximum number of—

$8,925.01 to $9,775.00..:......... .11 shares.
$9,775.01 to $13,281.25............. .12 shares.
$13,281.26 to $14,343.75........... 13 shares.
$14,343.76 to $15,406.25........... .14 shares.
$15,406.26 to $16,468.75........... .15 shares.
$16,468.76 to $17,531.25........... .16 shares.
$17,531.26 to $18,593.75........... .17 shares.
$18,593.76 to $19,656.25........... .18 shares.
$19,656.26 to $31,450.00........... .19 shares.

PAYM ENTS FOR STOCK.

Fourth. Payment of subscriptions shall be in monthly installments, to be deducted
from the salary or wages of the subscriber. The first deduction will be made from
February salary or wages. No installment shall be less than $2 per share and shall
not exceed one-quarter of any one month’s salary or wages. Installments exceeding
the minimum must be in even dollars. Payment for the stock must be completed
within three years. Interest at 5 per cent per annum will be charged on deferred
payments.
d iv id e n d s .

Fifth. Until payment of the subscription has been completed, any dividends paid
on the stock subscribed for will be credited to the account of the subscriber as part of
his payment. After the stock is issued to the subscriber, future dividends will go
direct to him.
CANCELLATIONS— REFUND OF INSTALLM ENTS.

Sixth. Subscriptions will be canceled for the following reasons:
(1) By request of subscriber.
(2) By (a) voluntarily leaving the service, or (b) being discharged for cause, or (c)
failing to resume employment when requested. (See sec. 11.)
(3) By discontinuing payments without the consent of the corporation for three
consecutive months.
The cancellation of a subscription forfeits all interest and benefits which the sub­
scriber would have received if he had continued such subscription. There will then.
be returned to him the full amount of payments made on the subscription so canceled




PR O F IT S H A R IN G IN

T H E U N IT E D STATES.

151

with interest at 5 per cent per annum, no credit being given him for dividends or for
the special allowance referred to in the third paragraph of section 7, and no interest
being charged on deferred payments. A subscription may not be canceled in part.
SPECIAL B ENEFITS.

Seventh. When the stock is fully paid for, it will be issued in the name of the
subscriber. He may sell his certificate, but as an inducement for him to keep it
while he remains in the service the following offer is made, viz:
If he will keep the stock and in January of each year, for five years, commencing
with January, 1917, will exhibit the certificate to the treasurer of his company,
together with a statement from a proper official that he has been continuously in the
employ of the corporation or of one or another of its subsidiary companies during the
preceding year, and has shown a proper interest in its welfare and progress, he will
for each of such five years receive a cash payment at the rate of $5 a share for each
share of common stock.
Subscribers who may not have fully paid their subscriptions by January in any year
will, if their subscriptions are still in force, and they have otherwise fulfilled all the
conditions of continuous and faithful service as provided, be credited in their subscrip­
tion accounts with the foregoing special allowance of $5 per share on their subscrip­
tions for common stock.
ADDITIONAL COMPENSATION.

Eighth. If a subscriber keeps his certificate and remains continuously in the service
for five years, the corporation intends that he shall then receive a still further compen­
sation, which can not now be ascertained or stated, but which will be derived from
the following sources, v iz :
The special allowances referred to in section 7, which, after a subscription is fully
paid, are forfeited by (a) transfer of certificate from name of a subscriber, whether
intentionally or otherwise; (b) voluntarily leaving the service, or being discharged
for cause, or failing to resume employment when requested (see sec. 11), will be paid
by the corporation into a special fund at the end of each year. This fund will be
credited with interest at 5 per cent per annum and at the end of the five years’ period
the total amount thus accumulated will be divided into as many parts as shall be equal
to the number of shares of common stock subscribed for hereunder and then remaining
in the hands of subscribers who shall have continued in such employ for the whole
five years. The corporation will then by its own final determination in its discre­
tion award to each subscriber whom it shall find deserving thereof as many parts of
such accumulated fund as he shall be entitled to on basis of the number of shares then
held by him under this plan.
D EATH OR PE R M AN EN T DISABILITY.

Ninth. If a subscriber dies or is permanently disabled while rendering faithful
service during such five years’ period, payments will be made to his estate or to him
as follows:
(а) If his subscription is fully paid and he has received and not disposed of his cer­
tificate of stock, the corporation will pay a sum equal to $5 per share for each of the five
years not then expired, and also a pro rata amount of the special fund arising from for­
feitures, referred to in section 8 preceding, which may have accrued at the time of his
death or disability.
(б) If his subscription has not been paid in full, the corporation will pay the money
theretofore paid in by him on account, together with the dividends paid on the stock
subscribed for, the special allowance for the entire five years’ period, and a pro rata
share of the amount of the special fund mentioned, less interest at 5 per cent per
annum on deferred installments.




152

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

(c)
Ii at time of decease or permanent disablement the subscription has been fully
paid but certificate not yet delivered, the corporation will turn over the certificate,
as first stated above, together with the additional payments mentioned in paragraph
(a) preceding.
PEN SION ED EM PLOYEES.

A pensioner will not be permitted to subscribe, but any subscriber who is subse­
quently pensioned may continue payments on his subscription, and when fully paid
he will receive the certificate for the stock subscribed for and the payments referred
to in paragraph (a) of section 9: Provided , however , That as soon as he shall have fully
paid his subscription and received his certificate of stock, he will be treated as
though permanently disabled, and payments will be made to him in accordance with
provisions of paragraph (a), section 9.
B EN EFIC IAR Y.

Tenth. A subscriber may name in his subscription as beneficiary the person to
whom in the event of his death he desires the corporation to pay all amounts in con­
nection with his subscription which would otherwise be payable to his estate. The
corporation, upon satisfactory proof of death under the conditions of the subscription,
will pay to such beneficiary all amounts in connection with the subscription which
would otherwise be payable to the estate of the subscriber. When such beneficiary
has been named, the subscriber’s estate shall have no claim to any such amounts,
unless the beneficiary should die before the subscriber, and in that event payment
will be made to the subscriber’s estate. By written notice delivered to the treasurer
of the company by which he is employed, a subscriber may substitute another
beneficiary.
SU SPENSION OF EM PLOYM ENT.

Eleventh. Subscribers whose employment has been suspended by reason of the
temporary closing of a plant, and who shall continue ready and willing when required
to resume their service, will not be deprived of the special allowance of $5 per share
per year during such suspension, although they may have accepted employment
during such suspension. As presumptive evidence of willingness to resume employ­
ment, the corporation will accept (1) from the holders of fully paid subscriptions the
exhibition of the original certificate in January of each year, and (2) from the holders
of partly paid subscriptions the retention by them of their subscription during the
preceding year.
The above period of suspension will not be counted as part of the three years limited
for the full payment of the subscriptions, and during such suspension monthly pay­
ments will not be required, though if so desired by the employee they may be
continued.
In case of the death during such suspension of any such subscribing and continuing
employee, his estate or his beneficiary will be entitled to the same benefits accruing
to his subscription as if he had died while under employment.
Failure to present the original certificate as provided, or the withdrawal of a partly
paid subscription, or the failure to resume employment when requested, will consti­
tute a relinquishment of all benefits referred to in this circular.
Twelfth. Subscriptions will be received until January 29,1916, and allotment made
as soon thereafter as possible.

The following table shows the number employed and eligible to
subscribe for stock, the proportion that took advantage of the oppor­
tunity offered, and the number of shares subscribed for, by years,
since the inception of the plan in 1903:




PRO FIT SH A R IN G IN

T H E U N IT E D STATES.

153

T a b le 6 6 . — NUMBER EM PLOYED AND ELIG IB LE, PROPORTION

SUBSCRIBING, AND
SHARES SUBSCRIBED FOR, B Y Y E A R S, 1903 TO 1916.

Shares subscribed
Subscribers.
for.
Average
number
Per cent
employed
of all em­
and
Average
eligible. Number. ployed Number. per sub­
and
scriber.
eligible.

Year.

168,127
167,709
147,343
180,158
202,457
210,180
165,211
195,500
218,435
196,888
221,025
228,906
179,353
191,126

1903.
1904.
1905.
1906.
1907.
1908.
1909.
1910.
1911.
1912.
1913.
1914.
1915.
1916.

26,339
9,912
8,494
12,192
14,163
24,562
19,123
17,363
26,313
36,946
35,460
46,498

C
1
)

24,939

15.7
5.9
5.8
6.8
7.0
11.7
11.6
8.9
12.0
18.8
16.4
20.5

0)
13.0

47,551
31,644
18,180
24,001
27,150
30,450
33,347
24,580
48,411
59,502
60,344
90,609

C
1
)

49,741

1.8
3.2

2.1
2.0
1.9

1.2
1.7
1.4

1.8
1.7
1.7
1.9

(**2.0
)

1 No stock was offered in 1915.

During the entire existence of the plan, the relative proportion of
the total employed and eligible that subscribed for stock varied from
5.8 per cent in 1905, to 20.5 per cent in 1914, the average proportion
subscribing having been slightly below 12 per cent. The average
number of shares per subscription varied from 1.4 in 1910, to 3.2 in
1904, the highest since the plan was put into operation.
The table following shows for each year the class of stock offered,
the subscription price, and the range of market quotations for this
class of stock.
T a b le

6 7 .—K IN D OF STOCK O F FE R E D TO E M P L O Y E E S , SUBSCRIPTION PR ICE, A N D
R AN G E OF M A R K E T Q U O TATION S, B Y Y E A R S , 1903 TO 1916.

Range of market
quotations.

1911..
1912.
1913.
1914...
19151 .
1916...
1 No stock offered in 1915.




Lowest.

$82. 50
55.00
87. 50
100.00
102.00
87.50
110.00
50.00
124.00
114.00
70.00
108.00
65.00
109.00
66.00
105. 00
57.00

$86,250
54.625
91.125
105.000
104.000
87.500
112.250
51.1250
121.250
116.250
71. 375
110.125
62. 875
102.500
49. 875
106. 500
50. 500

$89.750
60.000
95. 750
113.250
107.750
95. 375
115.000
55.125
125. 375
120.000
80.000
111. 500
69.875'
110.750
69.125
112.750
67.250

Common.

1903..
1904..
1905..
1906.
1907.
1908..
1909..
1910..

Sub­
scription
price
per
snare.

Preferred.
Preferred.
Preferred.
Preferred.
Preferred.
Preferred.
/Preferred.
\Common..
Preferred.
/Preferred.
\Common..
/Preferred.
\Common..
/Preferred.
\Common..
/Preferred.
1Common..

Year.

85.00

79.875

2 89.000

Class of stock.

* During January and February, 1916.

Highest,

154

B U L L E T IN OF T H E B U REA U OF LABOR STATISTICS.

Annually from 1903 to 1908, inclusive, and in 1910, preferred
stock only was offered to employees. During the years 1909 and
1911 to 1914, inclusive, common as well as preferred stock was
offered. No offer was made for 1915. For 1916 an offer of common
stock at $85 per share was announced.
On September 30, 1903, in view of the decline then occurring in
the market value of the preferred stock of the corporation which fact
might have excited apprehension of possible loss to the employees
who subscribed for it under the offer of that year, the finance
committee of the corporation issued, to subscribing employees a cir­
cular letter to the effect that “ the corporation will at any time dur­
ing January and February, 1908, pay to every subscribing officer or
employee who shall have retained his stock for the full period of five
years * * * $82.50 per share for the stock, less the rebates and
benefits he shall have been entitled to under the circular of 1903
(not including benefits received on account of the difference between
interest and dividend, which he will in any event retain) provided
he wishes to sell the stock for that price at that time.”
The table following shows, by classified salary groups, the num­
ber of employees subscribing for stock during each year from 1903
to 1912.
T a b le 6 8 . — NUM BER OF EM PLOYEES SUBSCRIBING FOR STOCK, CLASSIFIED ACCORD­

ING TO A N N U A L S A L A R Y , B Y Y E A R S , 1903 TO 1916.

Number of subscribers whose salaries were—
Year.

Under
$800

190 3
190 4
190 5
190 6
190 7
190 8
190 9
191 0
191 1
- ................
191 2
191 3
191 4
..............
19153
1916..................................................

..............

$800
and
under
$2,500

$2,500
and
under
$5,000

$5,000
and
under
$10,000

$10,000
and
under
$20,000

$20,000
and over.

Total
subscrib­
ers.

11,373
4,126
3,531
5,070
5,276
9,098
6,950
5,923
9,198
15,349
12,280
15,295

13,845
5,094
4,297
6,277
7,915
14,302
11,139
10,344
15,841
20,096
21,499
29,290

942
514
495
641
731
903
783
844
995
1,215
11,681
11,943

179
135
132
156
192
203
196
201
223
234
(2)
(2)

(2
)
(2
)

(2)
(2)

26,399
9,912
8,494
12,192
14,163
24,562
19,123
17,363
26,313
36,946
35,460
46,498

7,231

16,152

11,556

(2)

(2
)

(2
)

24,939

45
31
26
31
32
36
35
32
37
34

15
12
13
17
17
20
20
19
19
18

1 Including those receiving $2,500 and over.
2Included in the group $2,500 and under $5,000.
3No stock offered.

The following table shows the per cent of the subscribers who
received each classified amount of annual salary during each of the
years from 1903 to 1916e




P R O F IT SH A R IN G IN

T H E U N IT E D STATES.

155

T a b le 6 9 _ PER CENT OF T O TAL SUBSCRIBERS FOR STOCK R ECEIVIN G EACH CLASSI­
_

FIED AM O UNT OF A N N U A L S A L A R Y , B Y Y E A R S , 1903 TO 1912.

Per cent of total subscribers whose salaries were—
Year.
Under
$800

1903...................................................
1901..................................................
1906...................................................
1907.................................................<
1908..................................................
1909..................................................
1910...................................................
1911...................................................
1912...................................................
1913..................................................
1914..................................................
19153................................................
1916..................................................

$800
and
under
$2,500

$2,500
and
under
$5,000

$5,000
and
under
$10,000

$10,000
$20,000
and
and
under
$20,000 _ over.

Total.

43.1
41. 6
41.6
41.6
37.3
37.0
36.3
31.1
35.0
41.5
34.5
33.0

52.4
51.4
50.6
51.5
* 55.9
58.2
58.3
59.6
*
60.2
54.4
60.6
62.8

3.6
5.2
5.8
5.3
5.2
3.7
4.1
4.9
3.8
3.3
J4. 7
14.3

0.7
1.4
1.6
1.3
1.4
.8
1.0
1.2
.8
.6
(2
)
(2)

0.2
.3
.3
.3
.2
.1
.2
.2
.1
.1
(2)
(2)

0.10
.10
.20
.10
.10
.08
.10
.10
.07
.05
(2
)
(2)

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

28.9

64.9

16.2

(2)

(2)

(2)

100.0

1 Including those receiving $2,50(J and over.
2 Included in the group $2,500 and under $5,000.
3 No stock offered.

The table following shows for each year since 1903 the number of
shares of stock allotted to employees in each specified salary group.
T a b le 7 0 . — NUM BER OF SHARES OF STOCK ALLO TTED TO EM PLOYEES IN EACH CLASSI-

FIED S A L A R Y GROUP, B Y Y E A R S , 1903 TO 1916.

Number of shares allotted to subscribers whose annual salaries were—
Year.

Class of stock.

1903.............

Under
$800

Preferred................
Preferred...............
Preferred...............
Preferred...............
Preferred...............
Preferred...............
/Preferred...............
\Common.................
Preferred................
/Preferred................
(Common.................
1912............. /Common................
\Preferred................
/Preferred................
1913............. [Common................. }
/Com mon................
1914............. \Preferred................ }
19153...........
1916............. Common.................

1905___
1906
1907...........
1908
1909.............
1910.............
1911.............

$800
and
under
$2,500

12,844
28,203
8,701
1904..15,709
9,921
4,512
5,610
13,641
6,058
16,051
9,369
17,392
5,264
11,161
2,574
7,377
5,923
14,122
5,783
12,012
5,008
17,574
7,154
17,805
10,079
17,450
13.661
36,557

$2,500
and
under
$5,000
4,688
4,045
2,228
2,884
3,026
2,296
783
3,444
2, 715
1,065
3,826
3,667
2,144
i 9,284

$5,000
and
under
$10,000

$10,000
and
under
$20,000

1,232
1,982
890
1,170
1,312
922
474
1,256
1,196
316
1,798
1,443
667

396
735
372
352
365
251
154
358
323
104
459
339
166

$20,000
and
over.

188
472
257
344
338
220
124
376
301
50
416
327
113

Total.

(2)

(2)

(2)

47,551
31,644
18,180
24,001
27,150
30,450
17,960
15,387
24,580
19,330
29,081
30,735
30,619
59,502

18,465

59,310

i 12,834

(2)

(2
)

(?)

90,609

8,872

31,635

i 9,234

(2)

(2)

(2)

49,741

1 Including shares of all receiving $2,500 and over.
2 Included in salary group $2,500 and under $5,000.
3No stock offered.

The next table shows what proportion of the total shares of stock
allotted to employees was subscribed for by those in each salary
group.




156

B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

T a b l e 7 1 . — PER CENT OF T O TAL SHARES OF STOCK A L L O T T E D TO EM PLO Y EE S IN

EACH CLASSIFIED S A L A R Y GROUP, B Y Y E A R S , 1903 TO 1916.

Per cent of total shares allotted to subscribers whose annual
salaries were—
Year.

Class of stock.
Under
$800

1903.............
1904 .
1905.............
1906.............
1907.............
1908.............
1909.............
1910.............
1911.............
1912.............
1913.............
1914.............
19153...........
1916.............

Preferred................
Preferred................
Preferred................
Preferred................
Preferred................
Preferred................
f Preferred................
\Common.................
Preferred................
fPreferred................
\Common.................
fCommon.................
\ Preferred................
fPreferred................
\Common................. |
fCommon.................
\ Preferred................ j
Common.......................

$800 and
under
$2,500

$2,500
and
under
$5,000

$5,000
and
under
$10,000

$10,000
and
under
$20,000

2.6

0.8
2.0
1
.5
1.3
.8

Total.
$20,000
and
over.

0.4
1.5
1.4
1.4

ioao

27.0
27. 5
24. 8
23. 4
22.3
30. 8
29.3
16.7
24.0
29.9
17.2
23.3
32.9
23.0

59.3
49. 6
54. 6
56. 8
59.1
57.1
62.1
47.9
57. 5
•62.1
60.5
57.9
57.0
61.4

7.5
4.4
22,4
.0
5.5
13.2
11.9
7.0
i 15.6

(2)

(2)

(2)

20.4

65.5

i 14.2

(2)

(2)

(2)

10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0
10
0 .0

17.8

63.6

i 18.6

(2)

(2)

(2)

100.0

9.9

1 .8
2
12.3
1 .0
2
1 .1
1
1
1

6.3
4.9
4.9
4.8
3.0

2.6
8
.2
4.9
1
.6
6.2
4.7
2.2

2.3

.9
2.3
1.3
.5

1
.6
1
.1
.

5

1
.2

.7
.7
2.4

1
.2
.3
1.4

1
.1
.4

1 Including shares of all receiving $2,500 and over.
2 Included in salary group $2,500 and under $5,000.
3 No stock offered.

The extent to which the lower-paid employees, presumably those
engaged in the processes of manufacturing, have benefited by this
plan may be inferred from the figures shown in Tables 70 and 71.
Since the inception of the plan, in 1903, the relative proportions of
the total numbers of shares allotted annually to employees earning
less than $800 per year varied from about one-third (32.9 percent)
of the preferred-stock allotment of 1912 to less than one-fifth (16.7
per cent) of the common-stock allotment of 1909.
The tables show that the bulk of the allotted stock went to em­
ployees with an earning capacity of $800 and under $2,500 per year,
this group, embracing presumably the better grades of the manu­
facturing, clerical, and supervisory forces of the organization, hav­
ing been allotted annually from one-half to three-fifths of the total
number of shares.
The same tables show that whenever common and preferred stock
was offered, employees earning less than $800 per year preferred the
latter to the former, while the opposite seems to have been true of
the better-paid employees, the latter preferring usually the common
stock of the company.
During the years 1903 to 1916 the proportions that were allotted
to employees earning between $2,500 and $5,000 per year varied
from 22.4 per cent of the common-stock allotment of 1909 to 4.4 per
cent of the preferred-stock allotment of the same year.




PROFIT SH A R IN G IN
B

e n e f it s o f t h e

Plan

TH E U N IT E D STATES.

to

157

S u b s c r ib in g E m p l o y e e s .

The various bonuses paid by this company constituted -a consider­
able inducement to subscribe for stock. Thus, a subscriber under
the series of 1903 who remained in the service of the company until
the end of the series— 1908—received per share purchased in 1903 at
$82.50 the following bonuses:
(1) Dividends (5 years at $7)....................................................
(2) Annual bonuses (5 years at $5).........................................
(3) Pro rata share in special fund at end of series.................
Total................................................................................

$35. 00
25. 00
1 62. 50
122. 50

Assuming a charge of $5 per share as interest on the deferred pay­
ments, the net gain to the subscriber of the series of 1903 was $117.50,
an average of 28.5 per cent per year on the original investment
of $82.50.
In 1910 the pro rata amount per share in the special fund of series
of 1905 was $16.80, the aggregate net gain per share (including divi­
dends and bonus) having been $71.80; allowing a charge of $5 per
share as interest on deferred payments, the net gain per share in the
series of 1905 amounted to 16.4 per cent per annum on the original
investment of $87.50. A subscriber of the series of 1907 (termin­
ating in 1912) received 15.2 psr cent per annum on his original
investment of $102.
Computed as a percentage of the employees’ earnings during the
period covered by a series—5 years—the total gains in the case, for
instance, of an employee earning $800 per year, amounted to : Series
terminating in 1908, 6.1 per cent; in 1910, 3.8 per cent; in 1912, 3.9
per cent. Percentage gains on the earnings of subscribing em­
ployees approximating closely that of the latter series resulted from
the operation of the plan in the series that terminated in 1913, 1914,
and 1915.
CASH BONUS PLANS BASED UPON LENGTH OF SERVICE.
GENERAL NATURE OF PLANS.

The term “ profit sharing” has frequently been used to denote plans
involving more or less systematic annual distributions of cash bonuses
in the form of a fixed percentage on earnings, varying with the length
of continuous service of individual employees. The theory under­
lying the majority of such plans is the recognition by employers of
the fact that the longer a person remains in the continuous service
of the firm the greater is the value of his services.
1 This unusually large amount was caused by the large number of cancellations during series, due mostly
to: (a) Large number of employees dismissed in 1904 on account of the business depression in the
industry; (6) reduction in wages made in 1904 that made it difficult for many employees to continue pay­
ments.




158

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

As in most of the plans described in the preceding sections of this
report, the extra payments made to employees under these plans bear
no direct relation to individual efficiency, and are purely voluntary
on the part of the employer, the latter reserving to himself the right
to discontinue them at will and without notice. The bonuses paid
are in the majority of instances fixed in advance and do not vary
with the profits of the business, employers considering the extra ex­
pense involved in the payment of these bonuses a part of their labor
cost.
In the great majority of the plans under discussion the only pre­
requisite for participation is a minimum length of continuous service,
varying from three months (the lowest), in a very few instances, to
five years (the highest), the average being about one year. The longer
the service the larger the bonus percentage paid. In every instance,
the bonuses under these plans are paid in cash and forfeited amounts
revert to the company.
The text of a plan as prepared by a certain company and promul­
gated among its shop employees in the form of a circular follows.
It embodies all of the features common to such plans:
The company recognizes that the longer a person remains in the continuous service
of the company, the greater is the value of his services to it, and in view of this fact,
and in order that he may himself benefit by such continued service, we have decided
upon a system of extra payments to be made depending upon the length of time which
the employee remains with us. These extra payments will date from May 1, 1915,
and will apply to all employees on the shop roll in the service of the company on that
' date, and to those who may thereafter be so employed, as follows:
To each employee who shall have remained continuously in the company’s service
for a period of three months, there will at the expiration of such period be paid an
amount equal to 3 per cent of his total earnings during the said three months’ period.
To each employee who shall have remained continuously in the company’s service
for a period of six months, there will be paid an amount, at the expiration of such
period, that, after deducting the amount already paid for the three months’ period,
will equal 6 per cent of his total earnings during the six months’ period.
To each employee who shall have remained continuously in the company’s service
for a period of nine months, there will be paid to him an amount, at the expiration of
such period, that, after deducting the amount already paid for the three and six
months’ periods, will equal 9 per cent of his total earnings during the nine months*
period.
To each employee who shall have remained continuously in the company’s service
for a period of one year, there will be paid to him an amount that, after deducting
the amount already paid for the three, six, and nine months’ periods, will equal
12 per cent of his total annual earnings.
These extra payments will be paid each year during the employee’s continuous
service with the company, until further notice, on the above basis, except that at the
end of the second year of continuous service on the part of the employee, a further
bonus will be paid in such an amount as to make the total for the year equal to 15
per cent of the employee’s earnings during that year.




PR O F IT S H A R IN G IN T H E U N IT E D STATES.

159

Leaving the company’s employ or being absent from duty without permission,
or without a good and sufficient reason, will operate to cancel the obligations of the
company herein set forth toward the employee. Absence on account of sickness or
other unavoidable causes will not operate to deprive the employee of the benefits of
this plan.
We wish to point out that these percentages are calculated on the total earnings
of the employee during the periods indicated and are not based upon the hourly rate.
The company reserves the right to modify or terminate this arrangement upon
due notice being given, but such notice shall not affect any employee who has been
employed prior to such notice until his two years of service shall have expired.

Firms having such plans in operation are very numerous,, In
view, however, of the fact that these plans may not properly be
classified as involving the principle of profit sharing—the main
subject of this report—no effort was made to compile a complete list
of such plans in operation in the United States at the present time.
ANALYSIS OF W ORKING OF A SELECTED GROUP OF CASH BONUS PLANS.

For the purpose of comparing the results of the operation of these
plans with those of plans involving the application of the principle of
profit sharing, namely, extent of application, benefits to employees,
cost to employer, etc., the results of the working of a representa­
tive group of such plans are herewith presented.
Extent of Participation.

The extent to which employees in a selected group of 22 of these
establishments participated is shown in the following table:
T a b le 12 , —CLASSIFIED PER CEN TAGE OF TO TAL EM PLO YEES PAR TICIPATIN G D U R ­

ING ONE R E P R E SE N TA TIV E Y E A R IN 22 ESTABLISH M ENTS.

Classified percentage of total em­
ployees participating.

Number
of estab­
lish­
ments.

5 and under 10................................
20 and under 40..............................
40 and under 60..............................
60 and under 80.............................
80 and over.....................................

1
2
5
5
9

Total.......................................

22

In over four-fifths of the establishments in this group the propor­
tion of the total employees that received cash bonuses at the end of
one representative year was 40 per cent or more. In almost twothirds of the establishments 60 or more per cent of all the employees
participated.




160

B U L L E T IN OF T H E B U REA U OP LABOR STATISTICS.
Benefit Accruing to Employees.

Below is given a summary table showing the benefits that accrued
to the employees under these plans during one representative year:
T a b l e 7 3 ___NUM BER OF ESTABLISH M ENTS GRANTING EACH CLASSIFIED PE R CENT

OF W AG ES AS BONUS TO EM PLO Y EES DUR ING ONE R E P R E SE N T A T IV E Y E A R .

Classified percentage of wages
granted as bonus.

Number
of estab­
lish­
ments.

2 and under 4.................................
4 and under 6.................................
6 and under 8.................................
8 and under 10................................
10 and under 15.............................
15 and under 20.............................
20 and under 30.............................

2
2
4
5
7
1
1

Total.........................................

22

Only one establishment paid a bonus exceeding 20 per cent of the
regular earnings of its employees. In 9 of the establishments the
bonus percentage paid was 10 per cent or more. In over four-fifths
of all the percentage paid on the earnings of the participating em­
ployees was more than six.
Cost of Plans to Employees.

The cost to the employers of operating these plans in terms of per­
centage of the total pay roll is shown below:
T a b l e 7 4 .—COST OF BONUS PLANS TO 22 EM PLOYER S IN PE R CENT OF T O TA L P A Y

ROLLS FOR ONE Y E A R .

Classified per cent of pay rolls.

Number
of estab­
lish­
ments.

■ Under 1 ...........................................
2 and under 4.................................
4 and under 6.................................
6 and under 8.................................
8 and under 10...............................
10 and under 15..............................

2
2
8
5
1
4

Total........................................

22

In four instances the cost of the plans to the employer amounted to
10 per cent or more of total pay roll. In over one-half of the estab­
lishments it was less than 6 per cent.




PK OFIT SH AK IN G IN

T H E U N IT E D STATES.

161

, Occupations of Participants.

The number and per cent of employees that received bonuses dur­
ing the year under discussion axe shown below in occupation groups:
t a b l e 7 5 , — N U M B E R A N D P E R C E N T O F P A R T IC IP A T IN G E M P L O Y E E S IN E A C H OCCU­
P A T IO N G R O U P .

Participating em­
ployees.
Occupation group.
Number.

Per cent.

415
770

3.2
5.9

Executive..............
Clerical...................
M a n u fa ctu rin g
and all others. .

11,876

90.9

T o ta l...........

13,061

100.0

Over four-fifths of the beneficiaries under these plans were engaged
in occupations other than executive or clerical; that is, were engaged
in a mechanical or manual way in the actual processes of manufac­
turing or distribution.
MISCELLANEOUS PLANS.
A SO-CALLED COOPERATIVE WAGE SYSTEM.

In August, 1911, the management of a certain company put into
effect a so-called cooperative wage plan as representing its policy in
determining the rates of wages of its trainmen—motormen and con­
ductors. Under this plan approximately 22 per cent of the gross
passenger receipts of the company is set aside in a separate fund for
use in payment of wages, pensions, and deach benefits to the train­
men engaged in the passenger service.
Many increases in the rates of wages of motormen and conductors
have been made since the plan was put into operation. The follow­
ing table shows the scale of hourly rates of wages adopted at each
specified date, attributable to the operation of the plan.
T a b l e 7 6 . — C H A N G E S IN SC A L E O F W A G E S SIN C E 1911.

Rate per hour after a service of—

June 5,1911 (ill settlement of 1910 strike). .
July 1,1911................. ...........................................
Jan. 1,1912..............................................................
July 1,1912..............................................................
Jan. 1,1913..............................................................
May 1,1913..............................................................
July 1,1913..............................................................
Sept. 1,1913............................................................

56831°—Bull. 208—17------11




Begin­
ners rate
(per
hour).

1 year.

2 years.

3 years.

4 years.

Cents.

Scale made effective—

Cents.

Cents.

Cents.

Cents.

22
22
22
22
224
23
24
25

23
23
23
23
23|
24
25
26

23
234
234
234
24
25
26
27

23
234
24
24
25
26
27
28

23
234
24
244
26
27
28
29

5 years.

Cents.
23
23*
24
25
27
28
29
30

162

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.
A PLAN BASED ON PRICE OF PRODUCT.

A company engaged in the mining of copper has had in operation
since 1914 a method for the determination of wages for its mining
force which is sometimes improperly termed profit sharing. Under
this plan the wage paid per day depends wholly upon' the price per
pound that the extracted copper is sold for, this price being “ the
average price for each month” as reported by the Mining and
Engineering Journal.
The plan establishes a minimum wage of $3.50 per day, based
upon a price of 13.99 cents or less per pound for copper. With
increases in the price of copper corresponding increases in the wage
per day are automatically effected. The following table shows this
sliding scale of wages and the minimum and maximum per day that
may be reached.1
T a b le 7 7 .—SCALE OF W AG ES.

^

Price of copper per pound
(cents).

Wage
per day.

13.99 and under.................
14.00 to 14.99.......................
15.00 to 15.99.......................
16.00 to 16.99.......................
17.00 to 17.99.......................
18.00 to 18.99.......................
19.00 to 19.99. .. ..................
1 Minimum.

i $3.50
3.65
3.75
3.90
4.00
4.15
4.25

Price of copper per pound
(cents).
20.00 to 20.99.......................
21.00 to 21.99.......................
22.00 to 22.99.......................
23.00 to 23.99.......................
24.00 to 24.99.......................
25.00 and over....................

Wage
per day.
$4.40
4.50
4.65
4.75
4.90
2 5.00

2 Maximum.

Thus it may be seen that, depending upon the price of copper, the
plan establishes a minimum of $3.50 and a maximum of $5 per day.
Under this plan, at the end of 1915, when the price of copper
mounted to 27 cents per pound, the wage per day of the miners was
automatically put at $5.
BONUS PLAN OF SUGAR PLANTATIONS OF HAW AII.

A plan providing for a sliding scale of bonuses has been in opera­
tion in many sugar plantations on the Hawaiian Islands since Janu­
ary 1, 1912. In April, 1916, it was decided by the planters of the
territory that in view of the unusual prosperity brought about by
the continuance of the war in Europe and the consequent high
prices of sugar, that the laborers should participate more largely in
the prosperity of the industry. The planters therefore adopted a
more liberal bonus system than that of 1912, the essential features
of which are shown below.
1 A method of wage payment strikingly similar to the one of this company is provided for in many of
the collective agreements between the employers and the Amalgamated Association of Iron, Steel, and
Tin Workers.




PR O F IT SH A R IN G IN T H E U N IT E D STATES.

163

S l id in g S ca le B o n u s .
(Amended as of Apr. 1, 1916.)
FIRST. AM END M EN TS TO SLIDING SCALE B ON US.

The sliding scale bonus plan adopted by the plantations January 1, 1912, shall be
amended to read and be as hereinafter set forth.
The current bonus period from November 1, 1915, to October 31, 1916, will be
divided into two parts. The first will include the five months to April 1, 1916, for
which the bonus will be settled October 31, 1916, according to the schedule heretofore
existing. For the remaining seven months from April 1, 1916, to October 31, 1916,
the bonus will be based upon the schedule hereinafter set forth. Thereafter the bonus
period will be for the 12 months to end October 31 in each year until further notice.
SECOND. DETERM INATION AN D BASIS OF B ONUS.

(A) The bonus shall be based on the average of the daily New York market price
for 96° centrifugal raw sugar, duty paid, for the year, as reported to the Hawaiian
Sugar Planters’ Association b y ------------------- , of New York.
(B) If the New York market price for 96° raw sugar averages for the year 3.55 cents
per pound—$71 per ton—laborers shall receive a bonus at the rate of 1J per cent of
their wages or earnings as hereinafter set forth, and for every dollar per ton increase
over said $71 per ton the bonus will be increased 1J per cent, as follows:
Market
Market
price per price per
ton.
pound.

Cents.
3.55
3.60
3.65
3.70
3. 75
3.80
3.85
3.90
3.95
4.00
4.05
4.10
4.15
4.20
4. 25
4.30
4.35
4.40
4. 45
4. 50
4. 55
4.60
4. 65
4. 70
4. 75

Dollars .
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95

Bonus.

Market
price per
pound.

Market
price per
ton.

Bonus.

Per cent.

Per cent.

Cents.

Dollars.

1.5
3.0
4.5
6.0
7.5
9.0
10.5
12.0
13.5
15.0
16.5
18.0
19.5
21.0
22.5
24.0
25.5
27.0
28.5
30.0
31.5
33.0
34.5
36.0
37.5

4.80
4.85
4.90
4.95
5.00
5.05
5.10
5.15
5. 20
5.25
5.30
5. 35
5. 40
5.45
5. 50
5.55
5. 60
5.65
5.70
5.75
5.80
5.85
5.90
5. 95
6.00

96
97
98
99
100
101
102
103
104
105
106
107
108
109
no
111
112
113
114
115
116
117
118
119
120

39.0
40.5
42.0
43.5
45.0
46.5
48.0
49.5
51.0
52.5
54.0
55.5
57.0
58.5
60.0
61.5
63.0
64.5
66.0
67.5
69.0
70.5
72.0
73.5
75.0

And so on in like proportion.
THIRD. LABORERS ENTITLED TO B O N U S.

(A)
Day-wage laborers and short-term contractors.—(1) All laborers on a day-wage
basis receiving wages of $24 per month and under and all short-term contractors shall
be entitled to a bonus provided they work, in the case of men, not less than 20 days
per calendar month, and in the case of women, not less than 15 days per calendar
month.




164

B U L L E T IN OF T H E BUREAU OF LABOR STATISTICS.

(2) To these laborers 20 per cent of their monthly earnings shall be paid monthly
on account of the annual bonus due October 31, and if they shall thereafter continue
in the employ of the same plantation until the end of the bonus period they shall then
be paid the balance of the bonus, if any.
(B)
Cultivating contractors.— { 1) Cultivating contractors shall be paid a bonus on
the basis of wages at the rate of $24 per month of 26 days in the case of men, and $18
per month in the case of women, provided they work not less than 20 days in any
calendar month in the case of men and 15 days in any calendar month in the case of
women.
(2) To these cultivating contractors, 20 per cent of their monthly wage, calculated
on the above basis, shall be paid monthly on account of the annual bonus due October
31, and the balance of the bonus, if any, shall be paid at the end of-the bonus period.
FOURTH. CONTRACTS BASED ON PRICE OF SUGAR.

None of-the above provisions in regard to the payment of bonus shall apply to the
contractors whose contracts are settled according to the price of sugar.
FIFTH. SETTLEMENT PERIODS AND PARTICIPATION.

The first settlement under this amended bonus shall be made on the May, 1916,
pay day for the months of April and May.
All laborers entitled to a bonus, who are working on a plantation on October 31, shall
be paid the full amount of the bonus for each and every month of the bonus period
during which they have worked on such plantation 20 days per calendar month in
the case of men and 15 days per calendar month in the case of women, less what they
have received as a monthly advance as hereinabove provided.
If the laborer shall have been excused from work by the manager because of physical
disability, or other good reason, the loss of time caused thereby shall not be construed
to deprive him of the entire amount of the bonus, but he shall be entitled to a propor­
tion of the same for the number of days work performed.

In addition, the various plantations have adopted a different
schedule of bonus to be applied to skilled laborers (from manager
down), the directors of one of the largest plantations having decided
to pay a bonus of 20 per cent on the earnings of 1916 to this class of
employees. No conditions are attached to this bonus as to the num­
ber of days to be worked, nor is it regulated by the price of sugar.
In other words, no matter what the price of sugar may be during
the year, every skilled employee on this plantation will receive for
1916 a bonus of 20 per cent on his earnings.
ANOTHER SO-CALLED COOPERATIVE WAGE SYSTEM .

The cooperative wage system of a certain company was put in
operation in 1911. It is a plan for equally distributing between
employer and employees the savings collectively effected in labor costs,
either through the increased efficiency of labor itself or the intro­
duction of improved machinery or improved methods of work. The
plan requires the division of the several shops into departments, each
department being made a cooperating unit. Every member of the
organization in each department, from foreman to errand boy,
inclusive, is employed under this plan.




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T H E U N IT E D STATES.

165

With each cooperative department an account is opened which is
known as the departmental cooperative wage account. To this account
is charged the actual labor cost in the department for work finished
during the week. To this amount is added the proportionate
indirect labor expense of the department for the same period. The
account is at the same time credited with the “ standard labor value.”
It needs to be stated that every operation on each item of product is
given a standard labor value, which is carefully determined before the
first order for work on a part is issued to the shops. These values
include allowances for both direct and indirect labor costs of the
product. Once set, the standard labor values remain unchanged
regardless of the savings subsequently effected because of increased
efficiency of labor itself, of the introduction of new machinery, or
of any other reason.
The difference between the actual expenditure for labor on the
total product of the department and the corresponding labor value
taken at standard labor rates, when the former is less than the latter,
indicates a saving due to increased efficiency in the department.
It is this saving which is then divided equally between the company
and its employees.
The employees’ share of the saving is apportioned to them on the
basis of their earnings during the period in which the saving is made.
It is the practice to place a statement before the employees once
each week setting forth the exact facts concerning the saving. The
results of the working of the plan in one of the departments in 1915
is shown below.

,

Erecting and testing department 1915.

Standard labor value of product completed during the year, as
per detailed schedules on file with foreman.............................$47, 618
Actual expenditure for wages charged direct to said orders and
proportionate expenditure for indirect labor charges for the
year; foreman, shop laborers, tool repairs, etc.......................... 30, 172
Difference being saving effected on product completed during
the year.......................................................................................... 17, 446
One-half of the saving is..................................................................
8, 723
The actual pay roll of the department for the year is.................. 30,172
The bonus percentage for cooperative effort, which bonus is to
be added to each man’s wages for the year is.............................. 28.8 per cent.
(Participated in by all of the employees of the depart­
ment—-54.)

The introduction of the cooperative wage system into departments
which had been operating on piecework and individual bonus
schemes required the rerating of all employees in such departments
on a day-wage basis which guaranteed returns equal to those secured
previous to the introduction of the plan and which also gave a cor­
respondingly just basis for the distribution of savings effected by
the organization as a whole. Such action showed the workmen that




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B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

the change was made in the spirit of fairness and that the com­
pany, even before the results justified such action, placed confidence
in its individual employees to make a success of the new plan.
Standard labor rates on all product of the shops which had been
made previous to the installation of the cooperative wage system
were figured at actual labor cost as of the date when the cooperative
wage system went into effect. Standard labor rates for all new work
placed in the shops subsequent to the installation of the cooperative
wage system are figured by an experienced mechanic, who in setting
these rates bases them on labor costs such as are to be expected in
the best of competitive shops.
DISCONTINUED PLANS.
A number of inquiries were addressed to employers who were
known as having had profit-sharing plans in operation in the past.
The following were given by 26 of them as the causes for discontinu­
ance of their respective plans: (1) Plan didn’t satisfy employees, 8;
(2) men went out on strike, 5; (3) men preferred increase in pay, 5;
(4) plan did not increase interest or efficiency of employees, 4;
(5) plan benefited undeserving employees, 2; (6) plan did not tend
to increase the stability of the force, 1; (7) general upward trend
of wages and competition, 1. Thus from the reasons given for the
discontinuance of the plans it may be inferred that the above-men­
tioned phenomena were not expected to occur with the principle of
profit sharing in operation and that their occurrence made its fur­
ther application unwise.
Mr. W. W. Nearing, vice president of the Pejepscot Paper Co., of
Brunswick, Me., writes:
Briefly, would say that we tried at our mills a number of years ago
a system which consisted in arriving at the profits for the year, de­
ducting 6 per cent on the capital employed, and consider the balance
profits on the business operation, part of which was set aside as a
labor dividend. The trial was simply preliminary to try to work
something out of it and was fairly satisfactory as long as the profits
warranted a substantial return to labor; but in off years, when it did
not yield as much, it caused so much dissatisfaction and ill feeling
that we decided to abandon it.
Mr. Thomas Elder, of the Elder & Johnston Co., merchants of Day­
ton, Ohio, describing the experiences of the company in profit sharing,
concludes:
Up to the present time, nowever, we have not found any plan that
works satisfactorily to both the employees and the employer. In the
first place, in season of prosperity, when the profits and earnings were
large, the employe3 thought it a fine thing; but in the off years, when
the company’s earnings were reduced by business depressions or some




PR O F IT SH A R IN G IN

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167

other causes which come to all business concerns, the employee could
not see any advantage, and it always resulted in dissatisfaction.
Another informant, one of the executive officers of the Austin H.
Perry Co., of Haverhill, Mass., states:
We made two distributions and, as the number participating in the
distribution increased the second year, which necessarily made the
amount received by each individual decrease, we found that there wes
a great deal of dissatisfaction; and we felt, for the interest of our busi­
ness, that it would be better for us to discontinue the profit-sharing
plan.
The profit-sharing plan in operation in the printing establishment
of the Wright & Potter Co., of Boston, Mass., was discontinued on
account of its being “ entirely unsatisfactory, because it applied only
to certain favored ones—journeymen and printers only— thereby
causing so much complaint and friction that the company abandoned
all efforts in that direction after trying the same either one or two
years.”
A profit-sharing plan in operation some years ago in the wholesale
dry-goods establishment of the E. Guthrie Co., of Paducah, Ky., was
abandoned because “ it was found that the employees did not appre­
ciate the plan and took very little interest in it.”
The Peacedale Co., manufacturers of woolens, of Peacedale, R. I.,
abandoned its profit-sharing plan because “ it was found that it did
not satisfy the employees.”
The following firms abandoned profit-sharing plans because of the
fact that their employees struck: S. M. Jones Co., Toledo, Ohio; the
Rogers Peet Co., New York, N. Y .; Parsons Paper Co., Holyoke, Mass.;
Brewster & Co., carriage makers, New York, N. Y.; Driver-Harris
Ware Co., Harris, N. J.
The Columbus Railway & Lighting Co., of Columbus, Ohio; the
Thomas G. Plant Co., shoe manufacturers, Boston, Mass.; the C. G.
Conn Co., manufacturers of musical instruments, of Elkhart, Ind.; the
New England Granite Works, of Westerly, R. I., and the Washing­
ton (D. C.) Railway & Electric Co., abandoned their respective plans
because the employees insisted upon increases in wages.
The Theo. L. De Yinne Co., printers, of New York, N. Y., abandoned
their plan because same did not prove to be “ an incentive to increased
efficiency.” For similar reasons the profit-sharing plans of Spratt’s
Patent (America) (Ltd.) Co., of Newark, N. J., and of the Hoffman
& Billings Co., of Milwaukee, Wis., were abandoned.
The Saugerties Manufacturing Co., of Saugerties, N. Y., and the
John T. Connor Co., importers and wholesale grocers, of Boston, Mass.,
give as the reason for the discontinuance of the system of sharing of
profits with their employees the fact that “ it was considered that
many profited who were not entitled to it.”




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B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

Mr. Rodney E. Ross, treasurer of the Hyde Windlass Co., manu­
facturers of steel gears and brass castings, of Bath, Me., gives as the
reason for the abandonment of their profit-sharing plan “ the gen­
eral upward trend of wages during the years immediately preceding
the abolishment of the profit-sharing plan.”
About 25 years ago Mr. A. Reinle, then the sole proprietor of the
Reinle-Salmon Co., manufacturers of showcases and fixtures, of Bal­
timore, Md., introduced a profit-sharing system among a limited
number of his employees, determined by service and responsibility.
Under this system approximately 50 per cent of the profits of
the firm was distributed among the participants. As the business
grew and developed, Mr. Reinle realized that his share of the
profits was being absorbed by improvements and extensions of the
business, while the profit-sharing employees received their share
in cash. He became convinced that those who were receiving or
participating in the profits of the business should also assume the
risk incident to the business. Accordingly, a corporation was formed
in 1903, and approximately 60 per cent of the stock was distributed
to the heads of the departments and others, with the understanding
that same was to be paid for out of the dividends accruing until the
par value had been paid.
Since 1903 no stock distribution of any sort has taken place. On
January 1, 1916, about one-fifth of the total employed (about 100)
were interested in the company as stockholders. Of this number
six (officers of the company) own about 80 per cent of the stock,
the remaining employees who are stockholders holding from one
to five shares each. Mr. Reinle, the founder of the business and
its present general manager, thinks that although the plan enabled
some of the executive employees to make considerable amounts of
money, the business has suffered on account of lack of harmony;
somehow or other ‘ 'an employee stockholder is an employee first and
a stockholder second.” In managing the business Mr. Reinle finds
great difficulty in manipulating the services of his important em­
ployees, all stockholders, because “ most of them refuse to enter into
any esprit de corps and lack business knowledge to grasp the situa­
tion.”
In 1914 the Miami Copper Co., of New York City, employing about
1,000 people, announced for the benefit of employees a plan of stock
subscription in line with plan designated as No. 4, on page 148 of
this report. This plan, however, was abandoned within less than
one year, because “ only 40 of a total of 1,000 participated, and the
plan entirely failed to benefit those men -whom it was primarily
designed to benefit, namely, the wage earners, practically all those
subscribing being salaried men.”




PR O F IT SH A R IN G IK

T H E U N IT E D STATES.

169

EXTENT TO WHICH OBJECTS SOUGHT BY ESTABLISHMENT
OF PROFIT-SHARING PLANS HAVE BEEN REALIZED.
The principal objects of the establishment of the profit-sharing
plans described in this report were stated by the employers to be as fol­
lows : (1) To stimulate the elimination of waste and to foster economy,
(2) to increase efficiency, (3) to stabilize the working force, and (4)
to improve relations between the management and its employees.1
One of the interviewed employers, a leader and advocate of profit
sharing in New England, stated that the object of profit sharing is
“ to furnish additional stimuli for increased efficiency in establish­
ments where piecework or any other efficiency method, for some
reason or another, can not successfully be applied/’ Accordingly,
the application of the profit-sharing principle is “ undesirable and
unwise where more direct stimuli, such as bonuses on individual
efficiency or output, may be applied/7 A strikingly similar point of
view, seemingly prevalent among most of the profit-sharing employers,
is presented by the vice president of the Executives7 Club of Detroit
in an article entitled, “ Where profit sharing fails and where it suc­
ceeds.” 2 The author says:
Considered merely as a stimulus to increased production and greater
net gain, profit sharing is of particular value in plants where (1) indi­
vidual efficiency can not yet be exactly measured, or where, (2) much
work is done far away from supervision, or where (3) longevity of
service is necessary to preserve the quality of the product or to guard
trade secrets, or where (4) a supplement to the wage system pro­
moting individual efficiency is needed to minimize plant waste. In
other cases, where the motives are merely practical, better results are
obtained by improvements in working conditions, by increases in
wages, and by the payment of these increases upon the basis of
individual efficiency.
One employer stated that “ the purpose of the employees’ profitsharing fund is not alone to enable each employee to share in a pro­
portion of the net profits earned by the firm, but also to be an addi­
tional incentive for each employee to give the maximum of service to
the firm.”
An employer in New England with a profit-sharing plan in opera­
tion for the benefit of his executive, supervisory, and sales people
gives as the reason for the introduction of his plan the fact that
the plan “ places the responsibility of maintaining a wise manage­
ment upon the principal workers and offers them a reward commen­
surate with their collective and individual efforts, but makes this
reward fully contingent upon their performing their whole obligation.
1 On page 166 of this report additional light is thrown on the reasons that prompt employers in the
initiation of profit-sharing schemes by an examination of the causes specified by some employers as
having been responsible for the discontinuance of plans known to have been in operation in their estab­
lishments.
2 The System Magazine, March, 1916.




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B U L L E T IN OF T H E B U REA U OF LABOR STATISTICS.

It offers to the present capital owners a property whose permanent
value is trebly safeguarded and whose return is practically as certain
as the return on a bond.”
Of all the interviewed employers only three stated that the main
object of their respective plans was to furnish “ an equitable dis­
tribution of the profits of the undertaking, as a matter of justice, ir­
respective altogether of hopes for increased efficiency.” The correct­
ness of these reasons is substantiated by the fact that their plans
are unusually liberal to the employees, two of them distributing
all their profits over and above what is thought to be a moderate
return on their investments, and the third, one-third of all the net
profits. One of the first two gave as the reason for the existence of
his plan the fact that he was the owner of more property than he
needed, that as this property was created in the business, through the
efforts of his employees, he now wanted them to have the benefit of it.
As the immediate cause for the launching of their plans most of
the informants gave the fact that they had learned from fellow em­
ployers and periodicals that such plans worked well and in the
interest of all concerned.
In order to discover the precise extent to which the hopes of em­
ployers in the establishment of the plans were realized, they were
asked to state the result as to—
(1) Improvement of relations with their employees;
(2) Increase of permanency of their working force, and
(3) Increase of efficiency.
The following represent a summary of their statements.
IMPROVEMENT OF RELATIONS BETWEEN EMPLOYERS AND EMPLOYEES.

The consensus of opinion, almost unanimous, seems to be that the
plans did have a very decided tendency to establish more satis­
factory relations between employer and employee. This seems to be
particularly true of establishments where the profit-sharing plans
have been in operation for a considerable length of time. Under the
influence of the plans, employers report, a sort of esprit de corps de­
veloped. The plans, they further say* make the employees realize
that their employers are treating them fairly and squarely.
INCREASED PERMANENCY OF WORKING FORCE.

All of the informants without exception were also of the opinion
that the establishment of the plans had a tendency to reduce the
percentage turnover of their working organization. One of the em­
ployers describes this effect as follows: “ It works precisely like an
increase in wages, but is more valuable because the employee, in
order to receive his share, has to wait till the end of the distribution
period, a fact that makes him hesitate before quitting which would
naturally involve the forfeiting of his share in the profits.” Another




PR O F IT S H A R IN G IN T H E U N IT E D STATES.

171

employer emphatically states that his “ valuable help would cer­
tainly have been stolen had the plan not been in operation.” Still
another, whose plan has been in operation since 1899, and paid
profit-sharing dividends ranging from 50 to 100 per cent of earnings,
states that his working force “ is rather permanent now, more so than
in the years gone by; we attribute this fact to the plan.” The
general manager of another establishment thinks that “ the company
has positive proof that its skilled help is far more permanent now,
and because of the plan.” “ We have noticed a great improvement
in the quality and permanency of our force since the plan was put
into operation,” writes another.
INCREASED EFFICIENCY.

Although substantially agreeing that the plans have greatly im­
proved their relations with the employees and contributed con­
siderably to the stabilization of their working force, employers dis­
agree greatly as to the results achieved with reference to increasing
the individual or collective efficiency of the participating employees.
In all, only three of them stated definitely that this has been the
result. All of these have paid unusually high profit-sharing divi­
dends to their employees in the past. “ The plan,” says one of these
employers, “ developed the individual sense of responsibility, in­
creased thrift, and increased efficiency.” It should be noted, as
throwing some light on this opinion, that under the plan in opera­
tion in this establishment since 1903 profit-sharing dividends ranging
from 16 to 24 per cent of the annual earnings of the participants
were paid. Another employer under whose plan unusually large
shares of profits were paid—shares ranging from 50 to 100 per cent of
annual earnings—believed that the “ profit-sharing scheme has made
the employees more efficient. It has removed all friction between
the company and its employees.”
A manufacturing chemist whose plan has been in operation since
1887, paying shares of profits ranging from 5 to 15 per cent of annual
earnings, is “ not certain that the plan leads directly to increased
efficiency, although it apparently tends to increase the permanency
of the working force—a factor conducive to increased efficiency.”
A manufacturer of insulated wires and cables, whose plan appears to
be the least arbitrary of all examined, and under which participa­
tion dividends ranging from 8 to 20 per cent of wages have been
paid since 1901, expresses his opinion as follows: “ The plan has a
tendency to keep men awake, but not necessarily hustling; however,
it does make them more interested in their work. If there is no
material difference to the employee he would rather do his work well.
Our people are a good deal more permanent now [1915] than they
were. This fact is to be attributed to the profit-sharing plan, as we do
not penalize our employees for leaving.”







LIST OF REFERENCES (IN ENGLISH) ON PROFIT SHARING.
PROFIT SHARING IN THE UNITED STATES.
BOOKS AND PAMPHLETS.

Adams, Thomas S., and Sumner, Helen L. Labor problems; a textbook. New
York, Macmillan, 1905. Appendix B. Profit sharing in the United States,
pp. 555-558. Profit sharing, by H. L. S. pp. 333-378. Descriptive and critical
account; elementary but inclusive.
Alexander Hamilton Institute. New York. Modern business service. [New York,
cl914] 21 leaves.
American Telephone and Telegraph Co. New York City. Annual report for 1914.
New York, 1915. Profit sharing, pp. 29-36.
Ashley, Ossian D. Railways and their employees. Chicago, The Railway Age, 1895.
Profit sharing, pp. 71-79. Examples of cooperative methods, pp. 80-97.
Babson conference on cooperation, 2d, Wellesley, Hills, Mass., 1915. Summary of
2d annual conference on cooperation. Wellesley Hills, 1915. 10 pp. (Reprint
of a supplement to Babson’s reports on fundamental business conditions, issued
Oct. 19, 1915.)
Babson’s Statistical Organization. Wellesley Hills, Mass. Confidential bulletin of
the cooperation service. No. L -l, March, 1914, to date. Wellesley Hills, 1914,
to date. Various numbers contain descriptions of specific plans, e. g., L-59 for
August, 1916, describes the new profit-sharing plan of the American Multigraph Co.
Barnett, Maurice. A plea for profit sharing. Presented at the 15th annual conven­
tion of the National Metal Trades Association, New York City, April, 1913. [New
York, 1913] 10 pp.
Barnes, Albert. Division of profits. Chicago, Press of the American Building Associ­
ation News, 1894. 22 pp. Paper read at the annual meeting of the Building
Association League of Illinois, held at Galesburg, June 13, 1894.
Bams, William E., editor. The labor problem; plain questions and practical answers.
New York, Harper, 1886. Plea for profit sharing, pp. 200-230.
Boley, Daniel C. Profit-sharing investments. Profit-sharing bonds versus capital
stock of corporations as a means of profit sharing. [Chicago, cl895] 32 pp.
Borden Milk Company Employees Investment Association. Plan, constitution, and
by-laws. Dated July 1, 1914. [n. p., 1914] 27 pp.
Boston Consolidated Gas Company. Profit sharing with employees. Boston, 1906.
8 pp.
Carlton, F. T. History and problems of organized labor. Boston, Heath, 1911.
Industrial remuneration, pp. 190-227.
Carnegie, Andrew. Presidential address. (Profit sharing.) London, Offices of the
Iron and Steel Institute, [1903] 37 pp. Appendix: Circular issued by the
United States Steel Corporation regarding its profit-sharing scheme. (Reprinted
from the Journal of the Iron and Steel Institute, number 1 for 1903.)
Cleveland. Chamber of Commerce. Committee on industrial welfare. Industrial
profit sharing and welfare work. [Cleveland, 1916] 85 pp.
Cooperation. A magazine of economic progress. Vol. 1-6; April, 1909, to December,
1914. Minneapolis, Minn., 1909 to 1914. Monthly. (Suspended publication,
December, 1914.)
Copartnership. The organ of the Labour Copartnership Association and the Copart­
nership Tenants Housing Council. Vol. 1, 1895 to date. London, 1895 to date.
Monthly.
Dennison Manufacturing Co. South Framingham, Mass. Articles of association and
by-laws. South Framingham, Lakeview press, 1914. 33 pp.




174

B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

Dennison Manufacturing Co. Industrial partnership plan. n. p., n. d. 7 pp.
Dolge, Alfred. Just distribution of earnings. So-called profit sharing; being an
account of the labors of Alfred Dolge in the town of Dolgeville, U. S. A. New
York. Printed for the section, “ Participation du Personel dans les Benefices,”
Paris exposition, 1889. 93 pp.
Doolittle, James R. Special address . . . on the liberty of pursuit as affected by com­
binations of either labor or capital, before the Illinois State Bar Association.
Springfield, Barnard, [1893] 10 pp.
Duffy, James F. The ideal solution of the labor problem. (Cooperation and profit
sharing.) Chicago, Duffy Manufacturing Co., 1914. 32 pp.
Eliot, Charles W. Profit sharing. (In Profit sharing and scientific management.
Four addresses. Boston, Efficiency Society of New England, 1914. pp. 3-9.)
Ely, Richard T. The labor movement in America. New edition. New York, Mac­
millan, 1905. Productive cooperation, pp. 180-195. Includes account of the
profit-sharing plan of Pillsbury and Co., Minneapolis, Minn.
Employer and employed. Vol. 1-4; October, 1892 to January, 1896. Boston, 1892 to
1896. 4 vols. in 1. “ Published for the association for the promotion of profit
sharing.’ ’
Fay, Charles R. Copartnership in industry. New York, Putnam, 1913. 146 pp.
Outline of history of copartnership, with illustrations of various types. Profit
sharing in England and France.
Femley, Thomas A. The profit-sharing system as a plan of remunerating traveling
salesmen. Philadelphia, 1915 (?) ^ 12 pp.
Ford, Henry. The Ford plan; a human document. Report of the testimony of
Henry Ford before the Federal Commission on Industrial Relations, Jan. 22, 1915.
New York, Anderson, [1915] 8 pp.
For«JtAlotor Co., Detroit. Helpful hints and advice to employees to help them grasp
the opportunities which are presented to them by the Ford profit-sharing plan.
Detroit, Ford Motor Co., 1915. 41 pp.
Gantt, H. L. A bonus system of rewarding labor. [New York, 1901] 20 pp. “ To
be presented at the New York meeting, December, 1901, of the American Society
of Mechanical Engineers, and forming Part Y of Vol. X X II I of the Transactions.”
------ Work, wages, and profits. New York, Engineering Magazine, 1910. 194 pp.
Giddings, F. H., and Johnson, A. S. Profit sharing. (In New International Ency­
clopedia. New York, 1909. Vol. 16, pp. 433-434.) Digest of subject up to 1904,
with concise analyses of successful experiments at Maison Leclaire, Bon Marche,
Proctor & Gamble, N. O. Nelson, and United States Steel Corporation. Estimate
of value of profit sharing.
Gilman, Nicholas Paine. Cooperation and profit sharing. Boston, Wright, cl900.
8 pp. (Monographs on American social economics. X II.)
------ A dividend on wages. (In Peters, J. P ., editor. Labor and Capital. New York,
Putnam, 1902. pp. 330-343.)
------ A dividend to labor; a study of employers’ welfare institutions. Boston,
Houghton, 1899. 400 pp. Part 3: A direct dividend to labor—profit sharing.
(Reviewed by J. Carter in Economic Review, April, 1900. Vol. 10: 286-288.)
------ Industrial partnership or profit sharing. A word to the employer. Boston,
Printed for the Association for the Promotion of Profit Sharing, 1893. 18 pp.
------ Profit sharing. (In Bliss, W. D. P., editor. New Encyclopedia of Social
Reform. New York, Funk and Wagnalls, 1908. pp. 962-966.) “ Objections to
profit sharing. ” pp. 965-966.
Gilman, Nicholas P. Profit sharing between employer and employee. Boston,
Houghton, 1896. 460 pp. History of product and profit sharing, with descrip­
tions of cases in Europe and America prior to 1889, summary and analyses; argu­
ments for the system. 1st edition reviewed in Nation, May 2, 1889. Vol. 48,
p. 370.




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Great Britain. Boardof Trade. Profit sharing and copartnership abroad. Report . . .
London, 1914. 164 pp. (Cd. 7283.) (This supplements the 1912 report (Cd.
6496). Gives statistics for France, Germany, and the United States. Reviewed
in the Labour Gazette for April, 1914, vol. 22: 122, 123; Sept., 1914, vol. 22: p.
235.)
-------------Report on “ gain-sharing ” and certain other systems of bonus on production.
London, 1895. 132 pp. Supplement to report by Mr. D. F. Schloss.
Gregory, Theodore. Labour copartnership and labour unrest. London, Heywood,
1913. 28 pp.
Hale, Edward E. How they lived in Hampton. A study of practical Christianity
applied in the manufacture of'woolens. Boston, Smith, [cl888] 281 pp.
Halsey, F. A. Experience with the premium plan of paying for labor, [n. p., 1899]
23 pp. Reprinted from the American Machinist, Mar. 9, 1889.
------The premium plan of paying for labor. (In American Economic Association.
Economic studies. April, 1896. Vol. 1, pp. 75-88.)
Harrison, Fairfax. Are we ready for industrial cooperation? An address before the
State convention of the Indiana Y. M. C. A., Hammond, Nov. 22,1912. [Chicago,
1912] 10 pp.
Henderson, Charles R. Citizens in industry. New York, Appleton, 1915. 341 pp.
Profit sharing, pp. 117-140.
History of cooperation in the United States. Baltimore, 1888. 540 pp. (Johns
Hopkins University studies in historical and political science. 6th series.) See
index under “ Profit sharing.”
Ingalls, Melville E. A plea for profit sharing. (In National Civic Federation.
9th annual meeting. 1908. New York, 1909. pp. 38-41.)
International Cooperative Alliance. Reports of proceedings of congresses. 1st, 1895
to date. (Especially the report of the 5th congress, held at Manchester ^ 1902.
London, King, 1902. Contains “ Reports on profit sharing in various countries.”
pp. 153-220.)
International Efficiency Society. Loss-sharing, [n. p., 1915?] 4 typewritten
leaves.
Iowa. Bureau of labor statistics. Cooperative railroading (stock ownership). (In
its 8th biennial report, 1897-1898. pp. 13-15. Des Moines, 1899.) Plan of
the Illinois Central Railroad System.
Kent, William. A problem in profit sharing. [New York, 1887] 4 pp. “ Pre­
sented at the X V meeting of the American Society of Mechanical Engineers,
Washington, 1887.” Published also in Transactions of the American Society of
Mechanical Engineers, vol. 8, 1886-87, pp. 630-633. Discussion, pp. 633-662.
Knoeppel, Charles E. The psychology and ethics of wage payment. A lecture on
piecework and the bonus system before the class in scientific management,
Springfield, Mass., Y. M. C. A., Dec. 11; 1912. New York, [1912] 25 pp.
Labour Copartnership Association, London. Reports and Proceedings.
Laub, D. Kenneth. An investigation . . . of . . . profit sharing . . . [Detroit,
1914] 27 pp. Ford Motor company’s work with profit sharing. An investigation
by the Detroit Evening News. Nov. 24, 1914.
Lee, John R. The so-called profit-sharing system in the Ford plant. (In Annals of
the American academy of political and social science. Philadelphia. May,
1916. Vol. 65, pp. 297-310.)
Levasseur, P. E. American Workmen. Baltimore, J. H. U. press, 1901. Profit
sharing, pp. 468-477.
Massachusetts. Bureau of statistics. Current comment on labor questions; profit
sharing. (In its Bulletin number 36, June, 1905. Boston, 1905. pp. 130-139.)
------------- Profit sharing, by Franklin H. Giddings. (In 17th annual report of the
Massachusetts Bureau of Statistics for 1886. Boston, 1886. pp. 155-236.)




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Massachusetts. Bureau of statistics. Profits to labor. (In its 21st annual report
for 1890. Boston, 1891. p. 562 ff.)
Minneapolis Civic and Commerce Association. Committee on industrial welfare.
Report. [Suggestive plans for the establishment of profit sharing, stock purchase,
industrial insurance . . . associations] [Minneapolis] 1916. 18 leaves.
National Civic Federation. Welfare department. Profit sharing by American
employers; percentage of profits, special distributions, stock for wage earners,
exceptional—abandoned—proposed plans; examples from England. Types in
France. New York, Welfare department of the National Civic Federation,
1916. 261 pp. “ An extensive investigation and analysis of more than 200
plans in the United States, undertaken with a view to presenting an accurate
and unbiased statement of the facts.”
Nelson, N. O. Associated workers idea. (In Peters, J. P., editor. Labor and Capi­
tal. New York, Putnam, 1902. pp. 344-352.)
------Cooperation and profit sharing. (In Jones, Samuel M. The new right. New
York, Eastern book concern, 1899. pp. 323-356.)
■---- Profit sharing. St. Louis, 1887. 40 pp. Reprinted from the Missouri Repub­
lican, Oct. 11, 1886.
Parks, G. M., Co., Fitchburg, Mass. Profit sharing for 1915. [Fitchburg, 1915.]
4 pp.
Pomeroy, Eltweed. Democracy versus profit and prosperity sharing. (In Peters,
J. P., editor. Labor and Capital. New York, Putnam, 1902. pp. 353-357.)
Proctor & Gamble Co., Cincinnati, Ohio. Addresses of Washington Gladden, “ The
relations of capital and labor” ; Benjamin Butterworth, “ Higher citizenship/1
on the occasion of the 17th semiannual dividend meeting of the Proctor & Gamble
Co. at Ivorydale, Ohio, Feb. 3, 1896. [Ivorydale, 1896] 32 pp.
------Revised plan for trust receipt dividends for employees through stock ownership.
n. p., 1913. 13 pp.
Profit sharing. (In Information Annual, 1915. New York, Bowker, 1916. pp. •
467-469.)
Profit sharing and copartnership. Vol. 1-2, June, 1912, to October, 1913. London,
1912-1913. Monthly. Amalgamated with copartnership after October, 1913.
Profit-sharing plan and bonus fund of the United States Steel corporation. (In
Pittsburg survey; finding . . . Edited by Paul U. Kellogg. Vol. 4. New
York, Survey Associates, 1911. pp. 306-324.)
Simplex Wire & Cable Co., Boston. Profit sharing. Address by President Everett
Morss at the May, 1913, meeting of the Electrical Manufacturers Club at Hot
Springs, Va. Boston, [Simplex Wire & Cable Co., 1913] 14 pp. Includes
profit-sharing rules of the company for 1914.
Solvay Process Co. Syracuse, N. Y. Profit sharing, pensions, mutual aid, and wel­
fare work. January, 1915. 8 pp.
Stanford, Leland. Cooperation of labor. Report of an interview . . . which
appeared in the New York Tribune, May 4, 1887. [New York? 1887?] 20 pp.
Pp. 17-20. A bill to encourage cooperation, introduced in the Senate by Senator
Stanford* 1886.
The Studebaker Corporation. South Bend, Ind. Employees’ profit-sharing announce­
ment. 1913. [South Bend, 1913.] 9 pp.
Sumner, Helen L. See Adams, Thomas S., and Sumner, Helen L.
Taylor, Frederick W. Competitive profit sharing. (In Profit sharing and scientific
management. Four addresses. Boston, Efficiency Society of New England,
1914. pp. 10-15.)
Tolman, William H. Social engineering; a record of things done by American indus­
trialists . . . New York, McGraw, 1909. 384 pp.




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Towns, Henry R. The adjustment of wages to efficiency; gain-sharing. (In American
Economic Association. Economic studies. June, 1896. Vol. 1, pp. 51-73.)
Concise discussion of the gain-sharing, contract work, and piecework systems.
Townsend, George R. The cooperative wage system. A description of the plan for
sharing labor savings between employer and employees, developed and intro­
duced at the Henry R. Worthington Hydraulic Works, Harrison, N. J. [n. p.,
1914.] 9 pp. (Prepared for the . . . Babson Statistical Organization confer­
ence on profit-sharing . . . held in Wellesley Hills, Mass., October, 1914.)
United States Bureau of Labor. References on profit sharing may be found in the
following reports.
1st Annual Report. 1886. Industrial depressions; Profit sharing, pp. 279-286.
8th Special Report. 1895. Housing of the working people, pp. 339.
Bulletin 6, September, 1896. Industrial communities; Familistere Society of
Guise, France, by W. F. Willoughby, pp. 582-589.
Bulletin 7, NoA^ember, 1896. Industrial communities: Netherlands Yeast and
Alcohol Factory, Agneta Park, Delft, Holland, by W. F. Willoughby, pp. 716.
Bulletin 31, November, 1900. The betterment of industrial conditions, by Y. H.
Olmsted, pp. 1138-1140; 1147; 1150; 1151.
Condition of railway labor in Italy, by Dr. Luigi Einaudi. System of gain
sharing in the stations, pp. 1232-1254.
Bulletin 34, May, 1901. Social economics at the Paris exposition, by N. P.
Gilman, pp. 445, 446.
Bulletin 43, November, 1902. Report to the President on anthracite coal strike,
by Carroll D. Wright, pp. 1158; 1159; 1205.
Report. 1911. Conditions of employment in the iron and steel industry in the
United States. Vol. IFI. Working conditions and the relations of employers
and employees, pp. 461-469. (62d Cong., 1st sess., S. Doc. No. 110.)
Report. 1910-1912. Report on condition of woman and child wage earners in
the United States. Vol. 1. Cotton textile industry, pp. 343-345. (61st
Cong., 2d sess., S. Doc. 645.)
Bulletin 112. 1912. Decisions of the court affecting labor. Profit-sharing by­
laws of corporations—rewards—acceptance of offer, by L. D. Clark, pp.
178-181.
Bulletin 123. May 15, 1913. Employers’ welfare work, by Elizabeth L. Otey.
pp. 32, 39, 60, 69.
Williams, Aneurin. Copartnership and profit sharing. New York, Holt, 1913.
256 pp.
Wing, George C. Applied profit sharing. [Cleveland, Gardner Printing Co., cl912.]
13 pp. United States Steel Corporation.
ARTICLES IN PERIODICALS.

1886. Snow, F. E. The legal aspects of industrial copartnership. American Law
Review, September-October, 1886, vol. 20: 698-702.
1887. Giddings, F. H. The theory of profit sharing. Quarterly Journal of Economics,
April, 1887, vol. 1: 367-377.
Gilman, N. P. Profit sharing. Forum, September, 1887, vol. 4: 96-104.
Kingsbury, F. J. Profit sharing as a method of remunerating labor. American
Social Science Association. Journal, November, 1887, vol. 23: 25-36.
-------------New Englander and Yale Review, November, 1887, vol. 47: 333-345.
Nelson, N. O. Profit sharing. North American Review, April, 1887, vol. 144:
388-394.
Powell, George M. Profit sharing, historically and theoretically considered.
American Social Science Association. Journal, November, 1887, vol. 23:
47-57. Discussion: 58-67.
56831°—Bull. 208------12




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B U L L E T IN OP T H E BU REA U OF LABOR STATISTICS.

1887. Richard, Ernst. Mr. Alfred Dolge and his employees. American Social
Science Association, Journal, November, 1887, vol. 23 : 37-46.
1889. Ray, W. H. Profit sharing. Dial, May, 1889, vol. 10: 5-9.
1891. A new departure in profit sharing. Chambers Journal, September 19, .1891,
vol. 68: 596-598. (Dolge Manufacturing Co., Dolgeville, N. Y .)
Profit sharing in the Pillsbury mills. American Review of Reviews, Sep­
tember, 1891, vol. 4: 172-174.
1892. Dolge, Alfred. Economic distribution of earnings v. profit sharing. Social
Economist, January, 1892, vol. 2: 129-140.
Gilman, N. P. Profit sharing in the United States. New England Magazine,
September, 1892, n. s. vol. 7: 120-128.
Jenks, J. W. Railway profit sharing. Charities Review, May, 1892, vol. 1:
299-303.
1893. Theory and practice of profit sharing. Catholic World, October, 1893, vol. 58:
111-116.
1894. Ehrich, Louis R. Stock sharing as a preventive of labor troubles. Forum,
December, 1894, vol. 18: 433-438. [Profit sharing.] Public Opinion, 1894,
vol. 17: 86; 97; 367; 573.
1895. Blackmar, F. W. Two examples of successful profit sharing. Forum, March,
1895, vol. 19: 57-67.
Procter & Gamble, Ivorydale, Ohio.
N. O. Nelson Manufacturing Co., St. Louis, Mo.
Proctor, William C. Does profit sharing pay? Our Day, June, 1895, vol. 14:
317-320.
------An experiment in profit sharing. Independent Magazine, May 2, 1895,
vol. 47: 7—
8.
Account of Procter & Gamble’s successful experience.
1896. Experience with profit sharing. American Architect and Building News,
January 18, 1896, vol. 51: 28-29.
Gladden, Washington. Profit sharing. Lend a Hand, June, 1896, vol. 16:
407-415.
(Procter & Gamble Co.)
Howorth, I. W. Profit sharing at Ivorydale. American Journal of Sociology,
July, 1896, vol. 2: 43-57.
Mather, F. G. Both sides of profit sharing. Popular Science Monthly, Janu­
ary, 1896, yol. 48 : 401-406.
Monroe, Paul. Profit sharing in the United States. American Journal of
Sociology, May, 1896, vol. 1: 685-709.
1898. Parker, Jane M. Profit sharing and domestic service as discussed at a woman’s
club. North American Review, May, 1898, vol. 166: 639-640.
1899. Halsey, F. A. The premium plan criticised. American Machinist, June 22,
1899, vol. 22: 556-559.
Monroe, P. Profit sharing and cooperation. American Journal of Sociology,
March-May, 1899, vol. 4: 593-302; 788-806.
Premium plan and profit sharing. American Machinist, June 29, 1899, vol. 22:
576.
1900. Katscher, Leopold. Is profit sharing justifiable? Catholic World, May, 1900,
vol. 71: 225-232.
1901. Phillips, R. E. Sharing prosperity. World’s Work, May, 1901, vol. 2: 761-763.
1902. Armstrong, H. E. Profit sharing in America. Ainslee’s Magazine, February,
1902, vol. 9: 20-28.
Cabot, S. Instance of profit sharing. American Review of Reviews, Sep­
tember, 1902, vol. 26: 325-326.
Gantt, H. L. The bonus system of rewarding labor. American Review of
Reviews, September, 1902, vol. 26: 326-328.




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179

1902. Mathieson, George. Some aspects of profit sharing. Economic Review,
January 15, 1902, vol. 12: 35-42. General treatise on the subject.
Purves, A. Harmonizing labor and capital by means of industrial partner­
ship. American Academy of Political and Social Science. ' Annals, July, 1902,
* vol. 20: 61-77.
Waldo, F. L. What employers say of it. (Profit sharing.) World’s Work,
December, 1902, vol. 5: 2853-2855.
1903. Carnegie, A. Labor partnership and profit sharing. Cassier’s Magazine, July,
1903, vol. 24: 183-193. (U. S. Steel Corporation.)
Employees as partners. Harper’s Weekly, Mar. 7, 1903, vol. 47: 403-404.
(U. S. Steel Corporation.)
Falconer, Kenneth. Profit sharing and the premium plan. Cassier’s Magazine,
December, 1903, vol. 25: 173-175.
Freeman, Albert T. Labor system of the John B. Stetson Co. Ameri­
can Academy of Political and Social Science. Annals, November, 1903,
vol. 22: 445-450.
Goodrich, A. Steel Corporation’s profit sharing plan. World’s Work, Febru­
ary, 1903, vol. 5: 3055-3058.
Kershaw, J. B. C. The promotion of industrial efficiency and national pros­
perity. Engineering Magazine, June-August, 1903, vol. 25: 329-341; 533-538;
641-646. Premium wage system as practiced in Germany, the United King­
dom, and the United States.
McNutt, G. L. Real profit sharing and the results; Baker Co., Independent,
Mar. 12, 1903, vol. 55: 619-622.
Outerbridge, Alexander E. The premium system of wage payment. Ameri­
can Academy of Political and Social Science. Annals, January, 1903, vol.
21: 10-19.
Quinn, C. H. Unique experiment in profit sharing. Outlook, Feb. 21, 1903,
vol. 73: 451-452. Eastman Kodak Co., Rochester, N. Y.
Wellman, W. Steel Corporation’s profit-sharing plan. American Review of
Reviews, March, 1903, vol. 27: 327-331.
1904. Cabot, Samuel. “ A seventeen-year trial of profit sharing.” Journal of Social
Science, September, 1904, No. 42: 95-97. Samuel Cabot, manufacturer of
chemicals, Boston.
1905. Clark, J. B. Profit sharing, old and new. Harper’s Magazine, April, 1905,
vol. 110: 772-776.
Nelson, N. O. Profit sharing with the customer. Independent, May 25, 1905,
vol. 58: 1179-1182.
Parsons, F. Experiment in industrial harmony. Outlook, July 15, 1905, vol.
80: 671-676. A Boston firm.
Vermont Company. Outlook, Apr. 29, 1905, vol. 79: 1019-1020.
1906. Donney, R. H. Profit sharing as a peace and profit maker. Iron Age, Mar.
29, 1906, vol. 77: 1106-1107. Plan of the Keystone Driller Co.
Eads, A. W. Practical cooperation at Leclaire. (Illinois.) Arena, Novem­
ber, 1906, vol. 36: 463-480.
Emerson, H. Shop betterment and the individual effort of profit sharing.
Engineering Magazine, March, 1906, vol. 30: 898-900.
Nelson, N. O. Profit sharing in practice. American Review of Reviews,
December, 1906, vol. 34: 728-730.
1908. Profit sharing and strikes. Outlook, Nov. 21, 1908, vol. 90: 604-605.
Successful plan of the United States Steel Corporation. Harper’s Weekly, Feb.
8, 1908, vol. 52: 5.
1909. Carnegie, Andrew. Future of labor. American Academy of Political and
Social Science. Annals, March, 1909, vol. 33: 239-245.




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B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

1909. Carnegie, Andrew. How labor will absorb capital. World’s Work, January,
1909, vol. 17: 11124-11128.
Cooperation pf the employer and employed as a solution of socialism and the
labor problem. Craftsman, February, 1909, vol. 15: 618-622.
Crane, R. T. Profit sharing. Iron Age, April 22, 1909, vol. 83: 1270-1272.
Two papers read at the New York meeting of the National Metal Trades
Association, by It. T. Crane and N. O. Nelson.
Perkins, George W. Profit sharing, benefits, pensions. Iron Age, Dec. 2, 1909,
vol. 84: 1704-1705. International Harvester Co.
Nelson, N. O. My business life. World’s Work, December, 1909-January,
1910, vol. 19: 12387-12393, 12504-12511. “ How I came through my own
experience to believe in profit sharing.”
Tolman, W. H. Prosperity sharing. Century Magazine, March, 1909, vol. 77:
795-797.
1911. Boutell, A. A. Profit sharing in Detroit. Human Engineering, January, 1911,
vol. 1: 20. Detroit Graphite Co.
Brewster, Chauncey B. Industrial war or peace. Independent, July 13, 1911,
vol. 71: 75-78.
Fitch, John A. New profit sharing plan. Survey, April 1, 1911, vol. 26: 30-31.
Giving the corporation a soul. Current Literature, October, 1911, vol. 51:
460-462.
Kellogg, Paul U. Pioneering by employers. Survey, Aug. 19, 1911, vol. 26:
712-717.
Lupke, P. Master and men. Survey, Aug. 19,1911, vol. 26: 717-719.
Nelson, N. O. Profit sharing. Independent, Oct. 19, 1911, vol. 71: 858-860.
Perkins, G. W. Practical profit sharing and its moral. World’s Work, July,
1911, vol. 22: 14619-14625. International Harvester Co.
Schmidlapp, Jacob G. Profit sharing, pension, and annuity funds. Editorial
Review, August, 1911, vol. 5: 749-754. Union Savings Bank & Trust Co.,
Cincinnati, Ohio.
Social program of the National Electric Light Association. Survey, Aug. 19,
1911, vol. 26: 730-734.
1912. Fitch, John A. The United States Steel Corporation and labor. American
Academy of Political and Social Science. Annals, July, 1912, vol. 42: 10-19.
Foerster, Robert F. Promising venture in industrial partnership. American
Academy of Political and Social Science. Annals, November, 1912, vol. 44:
97-103. Discussion of scheme of the Dennison Manufacturing Co.
Profit sharing and small business. American Review of Reviews, April, 1912,
vol. 45: 502-503.
Profit sharing in a Wisconsin plant. Iron Age, July 18, 1912, vol. 90: 128-129.
Stock distribution plan of the Baker Manufacturing Co.
Williams, A. Industrial peace activities of the National Electric Light Asso­
ciation. American Academy of Political and Social Science. Annals,
November, 1912, vol. 44: 94-96.
Wuest, R. Industrial betterment activities of the National Metal Trade
Association. American Academy of Political and Social Science. Annals,
November, 1912, vol. 44: 74-85. Profit sharing, pp. 79-80.
3913. Church, A. Hamilton. Bonus systems and the expense burden. Engineering
Magazine, November, 1913, vol. 46: 207-216. General treatment of the
subject.
----- Premium piecework and the expense burden. Engineering Magazine,
October, 1913, vol. 41: 7-18.
Eliot, Charles W. Successful profit sharing. System, August, 1913, vol. 24:
139-145.' Simplex Wire & Cable Co.




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1913. Ham, W. F. Profit-sharing plan of the Washington Railway & Electric Co.
Electric Railway Journal, Oct. 16, 1913, vol. 42: 814-815.
TIow profit sharing in steel has resulted. Literary Digest, Dec. 6, 1913, vol. 47:
1140.
Nelson, John. Bonus and rating for works executives. Iron Age, May 15,1913,
vol. 91: 1159-1162. Royal Type Writer Co., Hartford, Conn.
Perkins, George W. Let workers share in profits. American Employer, Octo­
ber, 1913, vol. 2: 149-152.
------------- Square Deal, Battle Creek, Mich., August, 1913, vol. 13: 7-11.
Post, C. W. A peaceful industrial family. Square Deal, Battle Creek, Mich.,
July, 1913, vol. 12: 495-506.
Profit sharing. American Machinist, May 1, 1913, vol. 38: 749-750.
Profit sharing by the Washington Railway & Electric Co. Electric Railway
Journal. Jan. 11, 1913, vol. 41: 87.
Profit sharing in big business. Literary Digest, Nov. 22, 1913, vol. 47: 1027.
Stock distribution to employees. Square Deal, Battle Creek, Mich., June,
1913, vol. 12: 417-419. Spirella Co., Midvale, Penn.
Yarros, V. S. Social Science and what labor wants. American Journal of
Sociology, November, 1913, vol. 19: 308-322.
Youngstown Sheet & Tube Co.’s plan of distributing a surplus. Iron Age, Nov.
13, 1913, vol. 92: 1115.
1914. Abell, O. J. Labor classified on a skill wages basis by the Ford Motor Co.
Iron Age, Jan. 1, 1914, vol. 93: 48-51.
-------------Scientific American Supplement, Feb. 7, 1914, vol. 7: 80-88.
Account of the first year’s operation of the Ford profit sharing plan. Detroit
News for Tuesday, Nov. 24, 1914.
Arnold, H. L. Ford methods and the Ford shops. Engineering Magazine.
April-October, December, 1914, vol. 47: 1-26; 179-203; 331-358; 507-532.
667-692; S57-886; vol. 48: 33-60; 338-366.
Babson, Roger W. Real profit sharing; next step forward in the labor world.
Square Deal, Battle Creek, Mich., August-October, 1914, vol. 15: 71-74;
129-132; 251-256.
Benson, Allen L. The bombshell that Henry Ford fired. Pearson’s Magazine,
April, 1914, vol. 31: 403-413.
Buckley, E. J. Is a profit sharer always a partner? Metal Worker, Dec. 18,
1914, vol. 82: 803.
Clipper profit sharing plan nearly doubles both production and wages. Auto­
mobile, June 4, 1914, vol. 30: 1171-1173.
Dividing the profits—the Ford way. Square Deal, Battle Creek, Mich.,
February, 1914, vol. 14: 13-15.
Fitch, John A. Ford of Detroit and his ten-million-dollar-profit-sharing plan.
Survey, Feb. 7, 1914, vol. 31: 545-550.
Ford melon for labor. Literary Digest, Jan. 17,1914, vol. 48: 95-96.
Ford plan for employees’ betterment. Iron Age, Jan. 29,1914, vol. 93: 306-309.
Fuessle, Newton A. Henry Ford, a traitor to his class. American photo­
engraver, February, 1914, vol. 6: 71-75.
Garrett, G. Henry Ford’s experiment in good will. Everybody’s, April, 1914,
vol. 30: 462-474.
Henry Ford and profit sharing. Outlook, Jan. 17, 1914, vol. 106: 105, 106.
Lee, J. R. Bank accounts of Ford employees gain 30 per cent in 6J months.
Automobile, Oct. 8, 1914, vol. 31: 683-685.
Louis, G. L. Paying more than wages; which profit-sharing system to use and
why. System, June, 1914, vol. 25: 604-609.
Millions of profits to employees. Independent, Jan. 19, 1914, vol. 77: 83,




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B U L L E T IN OF T H E BU REAU OF LABOR STATISTICS.

1914. Nathan, Jacob. Where men are made to appreciate their own work. Square
Deal, Battle Creek, Mich., March, 1914, vol. 14: 147, 148. Ford Motor Co.
and J. E. Bolles Iron Works, Detroit.
Nelson, N. O. Leclaire—an existing city of the future. Independent, Jan. 19,
1914, vol. 77: 100.
Probing the Ford labor melon. Literary Digest, Jan. 24, 1914, vol. 48: 143.
Profit sharing. A discussion of the Ford plan; (1) its defects, by G. M. Verity;
(2)
its merits, by L. F. Abbott. Outlook, Mar. 21, 1914, vol. 106: 627-631.
Profit sharing as an investment. Industrial Engineering, May, 1914, vol. 14:
207. Clipper Belt Lacer Co., Grand Rapids, Mich.
Profit sharing or largesse? Nation, Jan. 15, 1914, vol. 98: 51-52. The Ford
plan.
Profit sharing plan of the Farr Alpaca Co., Holyoke, Mass. Iron Age, Feb. 12,
1914, vol. 93: 452.
Profit-sharing scheme of a Cleveland firm. (W. S. Tyler Co.) Survey, Oct. 10,
1914, vol. 33: 50.
Rankin, J. R. Profit sharing for savings; W. C. Proctor’s successful plan.
World's Work, July, 1914, vol. 28: 316-320.
Rockwell, T. S. Payroll partners. System, December, 1914, vol. 26: 624-629.
Rumely, E. A. Mr. Ford’s plan to share profits. World’s Work, April, 1914,
vol. 27: 664-669.
Sensationalism in profit sharing. Living Age, Feb. 28, 1914, vol. 280; 568-571.
The Ford plan.
------Spectator, Jan. 17, 1914, vol. 112: 83-84.
Slauson, H. W. Ten-million-dollar efficiency plan. Machinery, October,
1914, vol. 21: 83-87.
Spence, J. C. How may we and our men earn more money? Industrial En­
gineering, June, 1914, vol. 14: 239-241.
Successful profit sharing; plan of the Clipper Belt Lacer Co. Grand Rapids,
Mich. Iron Age, May 7, 1914, vol. 93: 1133.
------Metal Worker, June 26, 1914, vol. 81: 856.
Todd, Frederick. Trading profits for brains. World’s Work, August, 1914,
vol. 28: 461-466. United States Rubber Co.
Two experiences in profit sharing. American Industries, May, 1914, vol. 14:
20. Proctor & Gamble and the Clipper Belt Lacer Co.
■
----- Square Deal, Battle Creek, Mich., June, 1914, vol. 14: 415, 416.
Verity, G. M. Profit sharing in operation. Outlook, May 16, 1914, vol. 107:
123-126. American Rolling Mill Co.
1915. Abell, O. J. The making of men, motor cars, and profits. Iron Age, Jan. 7,
1915, vol. 95: 33-41.
------A year of profit sharing at the plant of the Ford Motor Co. Hardware Age,
Jan. 14, 1915, vol. 95: 48-52.
Benson, Allen L. What Ford wages have done. Pearson’s Magazine, March,
1915, vol. 33 : 259-268.
Beringer, P. N. Profit sharing in theory and practice. American Industries,
July, 1915, vol. 15: 11-12. “ Why should not workers share losses as well as
profits? ”
Buckley, E. J. Danger from giving employee stock in one’s business. National
Laundry Journal, Sept. 1, 1915, vol. 74: 50.
-------------Hardware Age, Sept. 16, 1915, vol. 96: 47.
Cardullo, Forrest E. Industrial betterment, A study of safety and welfare
work in manufacturing and selling organizations. Machinery, November?
1915, vol. 22: 171-201. ~
Dewhurst, M. Something better than philanthropy. Outlook, Sept. 1, 1915,
vol. 111:48-51. Profit sharing scheme of the Dennison Manufacturing Co.




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1915. Dunn, Harry H. Fifty shops given to clerks. Technical World Magazine,
June, 1915, vol. 23 : 444-448. N. O. Nelson, New Orleans.
Farrell, J. A. Profit sharing. When? Why? How? System, March, 1916,
vol. 29 : 227-232.
Ford, Henry. Paying $5 a day; a year’s experience. Survey, Mar. 20, 1915,
vol. 33 : 673-674.
Fisher, Boyd. Employers and profit sharing. Journal of the Efficiency So­
ciety, March, 1915, vol. 4 : 2-12.
Ford, Henry. Profit-sharing plan explained to the Federal Commission on
Industrial Relations. Iron Trade Review, Jan. 28, 1915, vol. 56 : 234-235.
Gaunt, Ernest H. Profit sharing not a dream. Steam Shovel and Dredge,
February, 1915, vol. 19 : 131-133.
-----------— Outlook, Dec. 30, 1914, vol. 108: 1016-1018.
Giving away $10,000,000 every year. Literary Digest, Mar. 6,1915, vol. 50 :498.
Gorgan, John B. The triumph of Henry Ford’s ideals. National Magazine,
January, 1915, vol. 41 : 623-632.
Investigation and analysis of profit-sharing plans. Efficiency Magazine, March,
1915, vol. 5 : 1, 2, 15. Concerning the Babson conference.
King, C. P. Washington Railway & Electric Co.’s profit-sharing checks.
Electric Railway Journal, Jan. 16, 1915, vol. 45:157-158.
McCubbin, T. P. Profit sharing. Industrial Outlook, April, 1915, vol. 2:16-18.
Nelson, N. O. Why I share my profits. System, October, 1915, vol. 28:
338-344.
Pfahler, A. E. Profit sharing as an influence in industrial relations. American
Academy of Political and Social Science. Annals, May, 1915, vol. 59:
200-208.
Pittsburg Coal employees stock investment plan working well. Coal Trade
Bulletin, Nov. 15, 1915, vol. 33 : 25-26.
Profit sharing. Motorman and Conductor, June, 1915, vol. 23 : 3-5.
------Tile Layers’ Journal, September, 1915, vol. 15: 3-5.
Profit sharing as a booster for cooperation. Dodge Idea, June, 1915, vol. 31:229.
Profit sharing as a means of enlisting better cooperation. Dodge Idea, Feb­
ruary, 1915, vol. 31: 69, 81.
The share of labor from what is produced in industry in the United States.
Economic World, July 17, 1915, vol. 96 : 77-79.
Sharing the profits with factory employees. Dodge Idea, April, 1915, vol. 31:
152, 164.
Sharing the day’s profits—some plans and results. Dodge Idea, December,
1915, vol. 31 f 471, 484-485.
Tarbell, I. M. Experiments in justice. American Magazine, March, 1915,
vol. 79: 37-41.
------Model industrial village in Illinois town. Metal Worker, Mar. 19, 1915,
vol. 83: 409.
Trowbridge, Aura E. Making principal employees partners in business.
Dodge Idea, September, 1915, vol. 31: 341.
Views of industrial employees. American Review of Reviews, October, 1915,
vol. 52 : 495-496.
Ways to share profits. System, October, 1915, vol. 28: 344-350.
What the men are thinking. System, September, 1915, vol. 28 : 230-237.
Whitehead, H. Making the workmen happy. Domestic Engineering, July
10, 1915, vol. 72 : 33-34.
1916. An arraignment of the so-called profit-sharing system. Union Leader, Chicago,
July 22, 1916, vol. 17: 1-2.
Coffey, Morris. Sharing the profits in a furniture factory. Wood-worker,
January, 1916, vol. 34 : 32-33.




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1916. Fisher, Boyd. Where profit sharing fails and where it succeeds. The first of
two articles based on an expert’ s analysis of 125 profit-sharing plans. System,
March, 1916, vol. 29 : 233-239. Includes a model profit sharing plan.
------WTiere profit sharing fails and where it succeeds. System, April, 1916,
vol. 29: 379-386.
Guck, H. A. Profit sharing in lead and copper mining. Engineering and
Mining Journal, Apr. 1, 1916, vol. 101: 612-613.
Marsh, A. R. Economic and other difficulties with profit sharing. Economic
World, Apr. 29, 1916, n. s. vol. 11 : 557-558.
A model profit-sharing plan. System, April, 1916, vol. 29 : 386-387.
Perkins, George W. The worker’s fair share. Economic World, Feb. 12, 1916,
vol. 11: 209-212.
Profit sharing. 100 per cent Efficiency, August, 1916, vol. 7 : 98, 100.
Profit-sharing system, Cleveland Twist Drill Co. Machinery, February, 1916,
vol. 22: 505.
Profit sharing in American industrial concerns. Economic World, Feb. 12,
1916, n. s. vol. 11: 201-202.
Profit sharing in the United States. Economic World, Mar. 25, 1916, n. s. vol.
11: 403-405.
Sears, Roebuck profit-sharing plan. Survey, July 22, 1916, vol. 36 : 426-437.
The Stetson strike and profit sharing. American Federationist, May, 1916, vol.
• 23 : 383-385.
Washington Railway & Electric Co.’s employees receive bonus. Electric
Railway Journal, Jan. 8, 1916, vol. 47 : 74.
PROFIT SHARING IN FOREIGN COUNTRIES.
BOOKS AND PAMPHLETS.

Auerbach, Felix. The Zeiss works and the Carl Zeiss stiftung in Jena; their scientific,
technical and sociological development and importance. Translated from the 2d
German edition. London, Marshall [1904]. 146 pp.
Aves, Ernest. Cooperative industry.1 London, Methuen, 1907. 310 pp.
Bolen, George L. Getting a living.1 New York, Macmillan, 1903. Profit sharing,
pp. 97-122.
Bolton, Sarah K. Social studies in England. Boston, Lothrop [1900]. 206 pp.
Profit sharing with employees, pp. 167-174.
Bushill, T. W. Profit sharing and the labour question. London, Methuen, 1893.
262 pp.
Cadbury, Edward. Experiments in industrial organization.1 London, Longmans,
1912. Chap. 5: Methods of remuneration, pp. 140-199.
Calkins, Mary W. Sharing the profits.1 Boston, Ginn, 1888. 70 pp.
Carpenter, Charles C. Copartnership in industry. With an appendix comprising
chronological notes on British profit sharing and copartnership, 1829-1912. Lon­
don, Copartnership publishers, ltd., 1912. 28 pp.
------------- 2d edition. 1914. 62 pp.
------Industrial copartnership. London, Copartnership Publishing Co., 1914. 51 pp.
Cooperative Congress. Annual cooperative congress, 1st, 1889 to date. Manchester.
England, 1890 to date.
Donisthorpe, Wordsworth. Labour capitalization. London, Harmsworth, 1887,
218 pp.
Egerton, Hugh E. Profit sharing. (In Palgrave, R. H. I., editor. Dictionary of
Political Economy. Vol. 3, pp. 225-227. London, 1901.)
Emerson, Harrington. Comparative study of wage and bonus systems.1 New York.
The Emerson Co. [1912]. 27 pp.
i General treatises on profit sharing, without reference to specific country or individual plan.




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185

Fay, Charles R. Cooperation at home and abroad; a description and an analysis,
New York, Macmillan, 1908. 403 pp.
Furness, Sir Christopher. Industrial peace and industrial efficiency. Proposals sub­
mitted . . . to a conference of trades-union representatives, held . . . on the
7th of October, 1908. [West Hartlepool, Salton, 1908.] 40 pp. Profit sharing in
the ship-building industry in England.
George, W. L. Labour and housing at Port Sunlight. London, Rivers, 1909. 218
pp. Description of every phase of the prosperity sharing principle in Mr. Lever’s
model factory community and works just outside of Liverpool, England. Disad-'
vantages of profit sharing, pp. 9-17.
Great Britain. Report (by J. Lowry Whittle) on profit sharing. London, Printed
for H. M. Stationery office, 1891. 43 pp. (Gt. Brit. Parliament, Papers by com­
mand, Cd. 6267.) (Accounts and papers, vol. 78.) Reprinted in United States
Consular reports, March, 1891. Vol. 35, pp. 385-430.
----• Board o f trade. Report by Mr. D. F. Schloss on profit sharing. London, 1894.
198 pp. (Cd. 7458.) Yearly addenda may be found in the Labour gazette, vol.
3, 1895 to date.
------------ Profit sharing and copartnership . . . Report on profit sharing and copart­
■
nership in the United Kingdom. London, 1912. 160 pp. (Cd. 6496.) Includes
Profit sharing in private firms and companies, including opinions as to results;
Tables of cases in which profit sharing now exists or has been abandoned; Rates
of bonus; Rules of various schemes; Bibliography.
-------------Profit-sharing system in Great Britain. (In its 15th abstract of labour sta­
tistics of the United Kingdom. London, Wyman, 1912. pp. 134-136.)
-------------(In same for 1913. Vol. 16, pp. 119-122; 236-238.)
-------------(In same for 1914. Vol. 17, pp. 83-86; 229; 245-246.)
Greening, E. O. Complete cooperation. (In Cooperative life. A course of lec­
tures . . . developed at Working Men’s College, London, January-March, 1889.
London, Cooperative Printing Society, 1889. pp. 186-202.)
Hadley, Arthur T. Economics . . . 1 New York, Putnam, 1896. Profit sharing,
pp. 373-378.
Hall, W. H. “ Leclaire, ” a lecture. Manchester, England, Central cooperative
board, 1880. 17 pp.
Hart, Mary H. Capital and labour. A brief sketch of the “ Maison Leclaire” and its
founder. London, Labour Copartnership Association, 1909. 18 p p .------------3d edition. London, 1912. 14 pp.
Hawaiian Islands. Labor commission. Report of the labor commission on coopera­
tion and profit sharing. Honolulu, Grieve, 1895. 68 pp.
Holyoake, George J. Partnerships of industry; a statement of the cooperative case
divested of sentimentality. London [Austin], 1865. 16 pp. A paper read at the
Social Science Congress, 1865.
Holyoake, George J. History of .cooperation. London, Unwin, 1906. 2 vols. Vol..
2. Chapter 50. Copartnership with labour, pp. 661-665.
Industrial remuneration conference,1 London, 1885. Report of the proceedings and
papers . . . Jan. 28-30, 1885. London, Cassell, 1885. 528 pp.
Jones, Benjamin. Cooperative production. Oxford, Clarendon Press, 1894. Profits
and profit sharing, pp. 782-808.
Labour Copartnership Association, London. Publications. For list see its annual
reports.
Layton, W. T. The relations of capital and labour.1 London, Collins, 1914. 264 pp.
Sliding scales and profit sharing, pp. 172-186.
Lever Brothers, ltd., Port Sunlight, England. Port Sunlight and prosperity sharing.
[Port Sunlight, n. d.] 24 pp.
i General treaties on profit sharing, without reference to specific country or individual plan.




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B U L L E T IN OF T H E BU REA U OF LABOR STATISTICS.

Lever Brothers, ltd., Port Sunlight; a successful experiment in prosperity sharing.
[Port Sunlight, Lever Brothers, n. d.] 36 pp.
Livesey, Sir George T. Copartnership. London, Printed by King, Sell, and Olding,
ltd. [1908?], 30 pp. (Paper read before the Institute of Gas Engineers, June 16,
1908.)
Lloyd, Henry D. Labor copartnership; notes of a visit to cooperative workshops,
factories, and farms in Great Britain and Ireland in which employer, employe,
and consumer share in ownership, management, and results. New York, Harper,
1898. 351 pp.
Loomis, F. B. Cooperation and profit sharing. (In United States Bureau of Foreign
Commerce. Reports from the Consuls of the United States, January, 1893. Vol.
41, pp. 21-56. Washington, 1893.) 52d Cong., 2d sess., House Mis. Doc. No. 109.
McCabe, David A. Premium and bonus systems of payment.1 (In his Standard
rate in American trade-unions. Baltimore, J. H. U. press, 1912. pp. 235-41.)
Mackmurdo, A. H. Pressing questions; profit sharing . . . 1 London, Lane, 1913.
342 pp. The Magazine of Commerce. Industrial peace and industrial efficiency.
An experiment in copartnership. London, Magazine of commerce [1908]. 39 pp.
Sir Christopher Furness’s copartnership scheme. An account of the “ Treaty at
the Hartlepools. ”
Nicholson, Guy M. Profit sharing and national insurance as an aid to the solution of
the labour question. London, King, n. d. 20 pp. (National liberal club. Po­
litical and economic circle. Transactions, vol. 5, Part X V .)
Pease, Edward R. Profit sharing and copartnership. London, Fabin Scoiety, 1913.
16 pp. (Fabian tract 170.)
Price, Langford L. F. R. Cooperation and copartnership.1 London, Collins, cl914.
264 pp.
Rawson, H. G. Profit-sharing precedents. London, Stevens, 1891. 192 pp.
Schloss, David F. Methods of industrial remuneration. 3d edition, revised. Lon­
don, Williams, 1898. 446 pp.
------See also Gt. Britain. Board of trade. Report by Mr. D. F. Schloss on profit
sharing.
Schomerus, Fr. System of employment at the Carl Zeiss works at Jena. Jena, 1910.
24 pp.
Shadwell, Arthur. Industrial efficiency.1 New York, Longmans, 1906. 2 vols.
Profit sharing. Vol. 2, pp. 136-146.
Smith, Edward J. The new trades combination movement, its principles, methods,
and progress.1 London, Rivingtons, 1889. 96 pp.
Smith, James C. Money and profit sharing; or the double standard money system.1
London, Paul, 1908. 232 pp.
Stead, W. T. Profit sharing plus copartnership. (In Peters, J. P., editor. Labor
and capital. New York, Putnam, 1902. pp. 323-329.) South Metropolitan
Gas Co., London.
Taussig, Frank W. Principles of economics.1 2d edition. New York, Macmillan
1915. 2 vols. Profit sharing. Vol. 2, pp. 303-313.
Taylor, Sedley. Profit sharing between capital and labour. Six essays . . . to
which is added a memorandum on the industrial partnership at the Whitwood
collieries. (1865-1874.) London, Paul, 1884. 170 pp. Discussions of historic
profit-sharing arrangements in England and on the Continent.
Taylor, Theodore C. Profit sharing and labour copartnership. Batley, Newsome,
1912. 12 pp. Reprinted from the Contemporary Review, May, 1912.
Tolman, William H. Prosperity sharing. (In Peters, J. P., editor. Labor and
capital. New York, Putnam, 1902. pp. 309-322.)
i General treatises on profit sharing, without reference to specific country or individual plan.




PRO FIT SH AK IN G 11 T T H E U N IT E D STATES.
S

187

U. S. Consulate, Bradford, England. Report on a profit-sharing plan. J. T. and J.
Taylor, ltd., Batley. [Bradford, England, 1912]. 17 typewritten leaves.
Vivian, Henry. Copartnership in practice. London, Labour Copartnership Asso­
ciation, [1912]. 18 pp.
------------ Revised and brought up to date. May, 1914. London, 1914. 18 pp.
Whittle, J. Lowry. See Great Britain. Board of trade. Report (by J. Lowry
Whittle) on profit sharing. . . 1891.
Williams, Aneurin. Labour copartnership and the aspirations of labour.1 Letchworth, Garden City press, ltd., 190-? 11 pp.
----• Labour copartnership. Its theory and practice.1 London, Copartnership Asso­
ciation, 1903. 14 pp.
ARTICLES IN PERIODICALS.

1867. Godkin, E. L.

Wages against cooperation.

Nation, Aug. 8, 1867, vol. 5:

111 - 1 12 .

1882. Taylor, Sedley. Profit sharing in agriculture. Nineteenth Century, October,
1882, vol. 12: 583-590.
1891. Bushill, T. W., and Schloss, D. F. List of British profit-sharing firms. Eco­
nomic Review, January, 1891, vol. 1: 92-96.
Grey, Albert. Profit sharing in agriculture. Journal of Royal Agricultural
Society, December, 1891, 3d ser., vol. 2: 771-793.
Whittle, J. L. Profit sharing. Lend a Hand, July, 1891, vol. 7: 15-24. Ex­
tracts from Board of Trade Report by J. L. Whittle—Cd. 6267.
1893. Moffat, Warneford. Profit sharing and cooperation. (Pottery trade.) Eco­
nomic Review, April, 1893, vol. 3: 247-250.
1899. Successful profit sharing. (South Metropolitan Gas Co., London.) Economic
Journal, 1899, vol. 9: 585-588.
1900. Phillips, Lawrence. Two profit-sharing concerns. Economic Review, April,
1900, vol. 10: 239-241.
1902. Holyoake, George J. Higher cooperation; its inner history. Fortnightly
Review, January, 1902, n. s. vol. 71: 81-101.
Ludlow, J. M. An industrial partnership. Economic Review, April, 1902,
vol. 12: 218-219.
1903. Middleton, M. W. Profit-sharing experiments. Economic Review, April,
1903, vol. 13: 213-215.
Street railway profit sharing. Current Literature, January, 1903, vol. 34: 88.
British Columbia Electric Railway Co., London.
1905. Profit sharing and copartnership. Quarterly Review, January, 1905, vol. 202:
61-87.
1909. Spiller, Gustav. A method of dealing with the labor problem. International
Journal of Ethics, Apr. 6, 1909, pp. 358-367. Zeiss Optical works at Jena.
1912. Bartholeyns, A. O’D. Profit sharing between capital and labour. Westmin­
ster Review, May, 1912, vol. 177: 493-500.
Bremner, C. S. Profit-sharing experiment; how Monsieur Godin tried to
socialize his stove foundry. Harper’s Weekly, Oct. 19, 1912, vol. 56: 12.
Fay, C. R. Copartnership in industry. Economic Journal, December, 1912
vol. 22: 529-541.
Harrison, Fairfax. A plan for industrial cooperation. Basing wages of rail­
way employees on gross earnings proposed as a substitute for present means
of settlement. Railway Age Gazette, Nov. 22, 1912, vol. 53: 987-989.
Jones, G. Labour unrest; its cure. Westminster Review, November, 1912,
vol. 178: 503-508.
1 General treatises on profit sharing, without reference to specific country or individual plan.
General publications dealing with profit sharing both in this country and abroad, have been
included in the United States list.
N o t e .—




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BULLETIN OF THE BUREAU OF LABOR STATISTICS.

1912. Kershaw, John B. C. Copartnership and profit sharing as a solution for the
wages problem. Engineering Magazine, September, 1912, vol. 43: 837-845.
McDermott, Frederick. British railways and profit sharing. Railway News,
July 13, 1912, vol. 98: 143-148.
Stocks, J. Profit sharing in operation. Economic Review, July, 1912, vol.
22: 313-317.
Taylor, Theodore C. Profit sharing and labour copartnership. Contemporary
Review, May, 1912, vol. 101: 625-634.
Wolmer, Viscount. Copartnership and industrial unrest. National Review,
May, 1912, vol. 59: 524-537.
1913. Ashley, W. J. Profit sharing. Quarterly Review, October, 1913, vol. 219:
509-530.
Furness, H. S. Copartnership and labour unrest. Economic Review, January,
1913, vol. 23: 61-72.
Kershaw, J. B. C. Future relations of capital and labor. Fortnightly Review,
December, 1913, vol. 100: 1145-1163.
Lester-Garland, L. V. Copartnership and labour. Economic Review, April,
1913, vol. 23: 150-157.
Smith, James C. Theory of equitable profit sharing. Westminster Review,
November, 1913, vol. 180: 492-512.
1914. Profit sharing and labor copartnership. Metal Worker, June 19, 1914, vol. 81:
822.
Cooperative production and profit sharing. New Statesman. Special Supple­
ment, Feb. 14, 1914, 32 pp. Draft of 1st report of the committee of the
Fabian Research Department in its investigation of “ The control of industry. ”
Submitted by Sidney and Beatrice Webb. Deals with the question, “ Can
the organization of industry be based exclusively on associations of pro­
ducers. ”
Loop, Carl R. Profit sharing in the United Kingdom. U. S. Daily Consular
and Trade Reports, Oct. 22, 1914, 17th year, No. 248, p. 397.
Profit sharing and copartnership abroad. Iron and Coal Trades Review, Mar.
20, 1914, vol. 88:428.
1915. English railway men’s war bonus. Railway Age Gazette, Nov. 12, 1915, vol.
60: 899.
Profit sharing in the United Kingdom, 1914-1915. Great Britain. Board of
Trade. Labour Gazette, November, 1915, vol. 23: 394.
For list of publications in foreign languages, consult—
International cooperative alliance. International cooperative bibliography. Lon­
don, King, 1906.
Profit sharing and labour copartnership, pp. 140-150. Arranged by country,
including publications on profit sharing in Germany, France, Austria, Belgium,
Denmark, Italy, Netherlands, the United Kingdom, and Switzerland, in addi­
tion to general works on the subject.
Great Britain. Board of trade. Report on profit sharing and labour copartnership
abroad . . . 1914. List of publications in the library of the Department of
Labour dealing with profit sharing and labour copartnership, pp. 149-157.
Includes “ Foreign countries.”
Bibliographie der Sozialwissenschaften. 1., jahrgang, 1905 to date. Dresden, Bohmert, 1906 to date. Semimonthly.