Page:The New International Encyclopædia 1st ed. v. 16.djvu/501

* PROFIT A PRENDRE. 433 PROFIT SHARING. PROFIT A PRENDRE^ or, in brief, PROFIT. A right to take protit, that is, something pro- duced or yielded by the land, from the land of another, as the right to take coal, minerals, gravel, seaweed, grass, game, etc. The right can be acquired only by grant or prescription, and can not be acquired by custom. Although often classed as an easement, especially when attached to other laud, it is to be distinguished from a proper easement in that it involves more than a mere use of the land. See Ea.semext, and con- sult authorities referred to there and under Pbopekty. PROFIT SHARING. A modified form of the wages system by which wage-earners receive a part of the surplus of the industry according to some understood plan. Overseers receive salaries, capitalists interest, wage-earners wages, and what remains is divided among these classes, who all are res]X)nsible for success or failure. A part or all of the wage-earner's share may be given in cash; or it may l)e held in trust, invested in cap- ital stock as savings to be used by them in cases of emergency; or it may be used as a social, edu- cational, or amusement fund. Protit sharing is based upon the principle that work done varies with the degree of interest felt by those who perform it. Profits may be in- creased by the wage-earner b}- increasing the quant itj- of the product, by improving its quality, by better care of implements, by a decreased loss of materials, by lessening superintendence, and by avoiding quarrels with employers. The extent to which ])rofits may Ije increased varies also with the extent to which the wage-earner is made a sharer in profits, the form in which his share is increased, bis intelligence, and the character of the industry. Profit sharing has been successful in many industries, and has sometimes failed where the methods employed were copied from those which had met with success. Upon the whole profit sharing has been most successful in handicrafts where there is a stable market for the products, and where the price paid for labor is a large part of the cost of production. The origin of profit sharing is unknown. It is said that the American financier Albert Galla- tin made a trial of it in his glass-works, estab- lished at Xew Geneva, Pa., in 1794. John S. Vandeleur, a disciple of Robert Owen, in 1S31 tried an extensive experiment in profit sharing on an estate in the County of Clare, Ireland. It was successful in stimulating the interests of the laborers to the great improvement of the estate and of their condition, until it was unfortunately terminated through the loss of Vandeleur's entire property in consequence of his passion for gam- bling. The first notably successful profit-sharing en- terprise was begun by Le Claire, a French house painter, in 1842. . At the time of his death in 1872. $220,000 had been distributed to workmen as their share of the profits. According to his plan, capitalists received .5 per cent, on capital invested, managers were paid salaries, wage- earners wages, and then from the profits remain- ing, one-fourth went to the capitalist class, one- fourth to a ilutual Aid Association of Workmen, and one-half went to wage-earners directly. Since Le Claire's death his business has been conducted on similar lines. At the present time the Asso- ciation of Workmen receives 5 per cent, of inter- est on its capital as a half-owner of the business, and also about 20 per cent, additional to its wages, which are about as high as those paid for similar lines of work in Paris. Laroche Joubert, a paper manufacturer, adopted the system in 1843, and the Orleans Railroad Comijany in 1844. In 1847 J. H. von Thiinen introduced the system on his estate near Zellow, in ilecklenburg-Schwe- rin, where his son and grandson, succeeding in turn to the proprietorship, continued it in force. In 1875 there were about seventy-five profit-shar- ing establishments in France, and in 1878 a so- ciety of the proprietors and directors of these was formed in Paris for a comparative study of methods. Shortly after a profit-sharing scheme was recommended for the State, departments, and communes. The municipal council of Paris devised a profit-sharing arrangement to be used by the city contractors, but it was never put in operation. In the Bon ilarehe, the largest retail store in the world, a scheme of profit sharing and indus- trial cooperation prevails. Of the capital to the amount of 20,000.000 francs. 7,-500,000 is held by employees: 6 per cent, is paid on capital. The profits shared assume four forms : the heads of departments to over a hunilred. whether they have capital invested or not, participate in the ])rofits according to the percentage of sales ; the retiring fund draws about 5 per cent, of the profits: the provident fund takes another share; and what remains is then divided pro rata. An- other successful experiment in profit sharing was begun by Godin, a stove manufacturer, at Guise, about 1872. In the first fifteen years $650,000 were distributed to the workmen in dividends, and a considerable amount besides was invested in capital stock. In France more than one hundred such enterprises are managed with success at present. Elsewhere on the Continent there are comparatively few instances. In Germany the piece-work system with prizes seems to be pre- ferred. There are, however, 47 instances; in Switzerland, 14; Austria-Hungary, 5; Bel- gium, 6 : Holland, 7 ; Italy, 8 ; and but nine in Spain. Portugal. Scandinavia, and Russia. In Great Britain there are 95 instances, and in the United States 23. Conspicuous examples of successful profit shar- ing in the United States are those of the Proctor & Gamble Co.. of Ivorydale, Ohio, and the X. O. Nelson Manufacturing Company, of Saint Louis, JIo. The former compan.y employs largely un- skilled wage-earners, who receive comparatively low wages. During the year 1886 the work of the company was interfered with by many strikes, and in the following year profit sharing was in troduced to establish harmonious relations with the employees. Reasonable salaries were allowed the active members of the firm, interest was al- lowed on the capital, and the net profits were divided between the firm and ''the employees, in the proportion that the wages paid bore to the whole cost of production." Although the profits received by the wage-earners increased their in- come considerably, they were inditTerent to the success of the enterprise imtil the company di- vided them into four groups based upon their in- terest in the work, its excellence, and the preven- tion of waste. The best group received twice the regular dividend, the second the regular, the third one-half the regular dividend, while the careless and indifferent received none at all. The whole- some influence of this discrimination was at once