Home  »  A Library of American Literature  »  Profit-Sharing

Stedman and Hutchinson, comps. A Library of American Literature:
An Anthology in Eleven Volumes. 1891.
Vols. IX–XI: Literature of the Republic, Part IV., 1861–1889


By Nicholas Paine Gilman (1849–1912)

[From Profit Sharing between Employer and Employee. 1889.]


PROFIT-SHARING, the division of realized profits between the capitalist, the employer, and the employee, in addition to regular interest, salary, and wages, is the most equitable and generally satisfactory method of remunerating the three industrial agents….

The indirect sharing of profits has a large number of examples in all civilized countries; the kindly interest of the employer in his workers increases, and it remains to be proved that such humaneness is unprofitable in even the lowest sense. As a simple fact, such employers think “it pays,” and are usually those most occupied with the thought of dividing the profits of their business with their men in a more direct way.

The great majority of the employers enumerated in this volume as practises of profit-sharing have probably a touch of philanthropy in them; this, it is needless to say, has not spoiled them for business. But if profit-sharing were purely philanthropy, these employers, sagacious and successful men as most of them are, would not have prospered as they have. On the contrary, they generally agree that the division of a bonus among the workmen is good business policy, and that they have lost nothing by it; in most cases they claim that their own share is greater than the whole profits were under the simple wages system. No fallacy, indeed, could be worse in this connection than the common one, through which the logic of M. Leclaire had to make its way at the outset, that the system of participation does not increase the product, and must therefore diminish the employer’s profit. In fact, the tendency of profit-sharing is to enlarge the disposable profits to such a degree that the employer is better off financially than before. He may be more prosperous simply because of freedom from difficulties with his employees: industrial peace has a high money value, as none know better than manufacturers who have suffered from repeated strikes. But, looked at both positively and negatively, profit-sharing advances the prosperity of an establishment by increasing the quantity of the product, by improving its quality, by promoting care of implements and economy of materials, and by diminishing labor difficulties and the cost of superintendence. It thus accumulates an extra fund of profits under the same general conditions, any increased outlay being mainly for the larger amount of raw material demanded for the greater product. Out of this extra profit comes the share of the men, whose diligence and care have created it. By its ability to create such an extra fund, in one or more of the ways mentioned, profit-sharing must stand or fall with the great majority of employers, who are unable, however willing they might be, to conduct their business on philanthropic principles. But if the verdict given by nine employers out of ten who have tried profit-sharing be true, then it must be pronounced poor business policy to neglect such a means of prosperity….


Bishop Fraser declared that the duty of this generation is not so much “to christianize Socialism as to socialize Christianity.” I have purposely avoided thus far, as irrelevant, the consideration of profit-sharing in the light of moral and religious duty; but I cannot conclude without declaring my conviction that the Christianity which Bishop Fraser desired to see, the religion that its founder had in mind, is profoundly opposed to the class-selfishness which the existing wages system tends to increase, and which profit-sharing, generally diffused, would greatly diminish. The fraternity which participation promotes is thoroughly moral, thoroughly Christian. Profit-sharing recognizes the advancing democratic element which has made itself felt so forcibly in the industrial world of late in wars and rumors of war. It meets that advance with a hearty recognition of human brotherhood and the duties of prosperity. Economic science is good, but “economic science enlightened by the spirit of the Gospel,” the spirit of enthusiasm for humanity, is better. Nay, it is, in the last result, the only solution of the problems which beset, with Fate’s persistence, the too complacent commercial spirit of our day. A plutocratic development, which has far outrun the slow evolution of conscience among modern men, has at length received sullen challenge from the great majority who live by the labor of their hands. Peace between master and man will come as both begin to entertain a new spirit toward each other, and readjust thereby the relations of the labor contract. In this industrial reformation the voice of the men whose duty it is always to remind us that man does not live by bread alone should be potent on the side of a finer justice and a more philanthropic spirit. The Christian gospel has had a re-birth in more than one perplexed age. The labor difficulties of the troubled nineteenth century will find no more effectual solvent. Economics must be aided by ethics; the commercial spirit should be tempered by the Christian feeling of the brotherhood of man. The pure Christianity to which Leclaire gave expression in his last will and testament is still the strongest force making for industrial and social progress.