of the establishment, which consists of a certain number of employees of high moral character and ability. This noyau elects annually the foremen of departments, choosing them from a list proposed by the managing partners. It also elects a committee consisting of five workmen and three clerks, with the managing partners as ex-officio chairmen, and this committee is for most purposes the governing body of the house. It examines candidates for admission to the noyau, and, in the event of the death or retirement of one of the partners, nominates his successor, who is elected for life by the noyau. In order that the best qualified man, irrespective of pecuniary circumstances, may be chosen, it is provided that the capital of the outgoing partner shall be withdrawn only by consent or when it has been replaced from the sum accruing to his successor through the latter's share in the profits. In 1890 two partners were elected in the place of one who had died, and at the same time the capital of the house was doubled. There are thus at the present time three managing partners

(b) The Godin Familistère: Another plan of democratic management of an industrial partnership is that of the Familistère at Guise, where participation was first introduced in 1877. The scheme, as originally outlined and as finally carried out by M. Godin, involved the gradual transformation of the business, including houses and schools as well as manufacturing plant, to a coöperative basis. The plan is complicated and provides for a regular hierarchy in the government of the institution.

Of the net profits after the payment of wages and interest, twenty-five per cent. go to the officials who manage the affairs of the society, and the remainder is divided between labor and capital. "The usual interest on the capital of the establishment, and the whole amount paid out during the year in wages and salaries, are added together. The proportion each sum bears to the total amount determines the shares of capital and labor."" As wages, however, amount to about eight times the interest on capital, the share of the wage earners is eight times that of the interest receivers. Moreover, as the bonus is paid in shares in the business, the capital is itself owned by present or former employees, and provision is made for the retention of ownership within the association.

"The receipts of a member from the operations of the society consist of: (1) His wages; (2) the amount of profits apportioned to his wages; (3) the amount of profits apportioned to the certificates of stock owned by him; (4) 5 per cent. interest on such certificates; (5) participation in the social institutions maintained by the society, chiefly insurance and old-age pensions and schooling; (6) profits realized by the coöperative store, if patronized by him."" Since 1894 the receipts of the members have been further augmented by the payment to them in cash of the sums formerly appropriated to purchase the shares owned by the founder.

(c) The Bon Marché: The Bon Marché, one of the

1 Gilman, Profit Sharing, p. 175.

"Bulletin of the (United States) Department of Labor, No. 6, p. 587.

largest retail distributive establishments in the world, began profit sharing in 1876 with the formation of a provident society, to be supported by sums annually paid out of net profits. The amount to be so paid, however, was reserved for the decision of the proprietor, M. Boucicaut, and is even now determined by custom and not by agreement.

In the provident society a separate account is opened in the name of every employee who has worked continuously for five years in the house, and this account is credited with a share of the profits set aside for distribution, the share being proportionate to the amount received in wages during the year. These accounts are also credited with interest at four per cent., and thus an annuity, accumulating at compound interest, is created. A male employee can claim cash payment of the entire amount to his credit when he is sixty years of age or has completed twenty years of uninterrupted work for the house, and a female employee at fifty years of age or after fifteen years of service. If a member dies, full payment is immediately made to his surviving relatives. There is also a retiring fund, which draws annually five per cent. of the profits of the Civil Society, an organization of the proprietors of the establishment, but a pension is available only when the employee has retired from active service.

In 1877 the founder died, and the business was thereafter conducted by his widow, who in 1880 carried his ideas a step farther by formally admitting into partnership with herself ninety-six heads of departments, who

put into the business sums ranging from $10,000 to $20,000 each. In some instances these sums, though standing in a single name, were contributed by a group of employees, so that the benefits were actually extended to an even larger number of persons than appeared in the formal partnership. It was arranged, too, that Madame Boucicaut could cede her capital in shares of $10,000 to the employees of the house as fast as they desired to obtain them, that she could name one or three managers to take her place, and that at her death the establishment was to become a joint stock company. She died in 1887 and the institution passed without a jar into the hands of the joint stock company, all of the beneficent institutions remaining unchanged.

(d) Wm. Thomson and Sons: In England the only business house which employs methods comparable to those of the great French establishments described is the firm of Wm. Thomson and Sons, woolen and worsted manufacturers of Huddersfield. In 1886 this business was turned over to a society, over which Mr. Thomson remains in control as manager, subject to removal "by the vote of five-sixths of all the members of the association, and five-sixths of all the votes capable of being given at a special general meeting." He may appoint his successor, A committee composed of Mr. Thomson, three employees of the society, two representatives of coöperative societies, and two representatives of trade unions, though its functions are mainly consultative, modifies the power of the manager, and tends to produce a true coöperative spirit.

The capital is divided into loan capital, owned by Mr. Thomson, and share capital, a large part of which is held by the employees of the house, and by the coöperative societies and trade unions concerned in the business. A fixed interest of 5 per cent. is allowed on the share capital, and if in any year not paid in full, the deficit is a first charge on subsequent profits. Assurance and pension funds for the benefit of the employees are also provided for, after which the remainder of the profits "go one-half to the customers of the society and the other half to all persons employed by the society for not less than six months, as a bonus in proportion to wages earned, this bonus being applied in or towards purchase of shares in the society."

4. History and Present Status of Profit Sharing: Though the principle of profit sharing was recognized by Turgot in 1775, the first experiments in the system were made in the second quarter of the nineteenth century. The earliest known was that of Lord Wallscourt, begun on his Irish estate about 1829 and said to have been in suc cessful operation as late as 1845.

(a) In France: Complete success, however, was first attained in France by M. Leclaire, who began his system of participation in 1842. To him "undoubtedly belongs the honor of having done more than any other one man to work out the details and demonstrate the practical merits of industrial partnership."

The next year, 1843, saw the inauguration of profit sharing in the paper factory of Laroche-Joubert, Lacroix

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