VIII. (2)

It only remains for us now to consider more minutely the source and nature of the advantages which have been found in practice to follow from the adoption of this principle; we must also distinguish as accurately as possible the conditions of its success, and the character of the trades to which it is most suited. The chief obstructions which will stand in the way of its adoption must not be unnoticed so far as time will allow.

It is alike the great advantage and the great difficulty of this scheme that it requires the disclosure of the amount of profit made by the capitalists. So long as the employer surrounds his business with mystery, and carefully conceals the profit he obtains, it is natural that the workman should feel distrust, and probably over-estimate the amount of the share which is taken from the produce of his work. Every demand for wages and every strike is made in the dark, and the point to which the master carries resistance is the only real test of the sincerity of his professions. The master says, “I am making no sufficient profits,” and the “state of trade will not allow me to advance your wages.” The workmen reply: “We are not allowed to know what your profits are, but so far as we can judge we think the state of trade would allow of an advance; and therefore we cannot depend upon your vague assurances; the only way in which we can arrive at the truth is to try how long you will suffer your business to stand still.” There is no doubt that this is at least a plausible argument for combinations and strikes; arbitration may overcome the difficulty in some degree, because the real state of trade and profit can be made known to a single arbitrator, or even a limited board, more freely than to the public in general. But, as I have said, arbitration presupposes that there is combination and concert on both sides, and that all the trade are willing to make the conditions of wages and prices the subject of regulation. All this is directly contrary to the principles of free labour and free trade.

The only other alternative which I can see is for the masters to dissolve the mystery surrounding their profits in some degree. There is not the slightest necessity to make known positive losses, and all that need be published is the amount of excess, if any, beyond a certain fixed minimum, the truth of the report and the accuracy of the accounts to be certified by auditors or accountants of high position. I confess I should have little hope of masters overcoming their strong prejudices against such a proceeding were it not for one circumstance. The extension of limited liability companies will tend to render trade much less secret; for where there are a score or more of shareholders, any mystery about the rate of profit is out of the question. No doubt limited companies are a little out of favour just at present, owing to reaction after their recent rash creation. But there is a great future for joint-stock enterprise in one form or another, and when there are many shareholders among the capitalists, I see no reason whatever why the partnership principle should not at once be adopted as regards the men. The first to bring this principle into operation should be large companies owning coal mines, iron works, or any other large factories employing many labourers. And as a joint-stock company can less depend upon vigilant superintendence of their business when the managers are not the actual capitalists, it is all the more necessary that they should give each man an interest in the result. I perfectly feel how slowly this principle must make its way among private employers, but there are, nevertheless, many large companies existing which might embrace the principle at once without the slightest difficulty. Not to do so will argue, I should think, the greatest blindness to their own interests, and to those of the country generally. It is but a few years since the Legislature upheld the prejudice that it was impossible to allow anyone to share profits without obliging him to share the risks. But in the Act of 1862 this prejudice was given up, and I do trust that any other prejudices which stand in the way of this great reform may shortly be dissolved, now that the law gives a full opportunity for the trial.

It may be said that no firm would long stand if they could be obliged at intervals to reveal the state of their business; any temporary embarrassment would thus become known, and their credit would be gone. But no such revelation is at all necessary. The only fact which need be published is whether the profits exceed the fixed minimum. It would be absurd to suppose that any inference as to the credit and solvency of the firm could be drawn from such a fact. As regards all the particular transactions, debts, contracts, and other affairs of a firm, exactly the same secrecy can be maintained as at present. It is clearly to be understood, too, that the sharing of profits does not entail the right to control, in any degree, the affairs of the firm, or to demand an investigation of their accounts. The employés of an industrial partnership will partially resemble the immense number of persons who now hold small shares of insufficient value to give them any appreciable voice in the management of the companies, or to make it worth their while to spend time, trouble, or money in the matter. No small part of the capital of the country is thus owned by purely passive recipients of the profits procured for them by larger capitalists, or directors and managers of companies intrusted with the money. Workmen sharing profits will be in the same position, except that in their own work or in keeping an eye upon the work of others, they will possess, every hour and every minute, the means of contributing something to the profits they share.