X. (2)

But it is evident that the partnership principle is not equally applicable to all trades. Those kinds of manufacture where the expenditure is to a large extent paid in wages and by time, and where a large number of men are employed in a manner not allowing of any rigid test or superintendence of their work, will derive most advantage from it. Where a large amount of fixed capital is required, so that the expenditure on wages is less considerable, the advantage will not be so marked, unless indeed the fixed capital be in the form of machines or other property which can be readily injured by careless use.

The adoption of the principle, again, is of less importance where the work is paid for by the piece or by contract, as, for instance, in the Welsh slate quarries. In this case, however, a special form of co-operation has already been employed for a length of time, and attention has been called to the good results by Professor Cairnes, in “Macmillan's Magazine,” January, 1865. But even where payment is by quantity, the men might usually save a great deal were their interests enlisted in economy. Thus, in collieries, the hewing of the coal is paid by the weight got, nevertheless the value of the coal greatly depends upon the proportion of the large coal to the broken coal and slack, and also upon the careful picking of the coal from duff or rubbish. Again, the cost of the wooden props, by which the roof is supported in a colliery, is a considerable item in the expenditure, and a careful coal-hewer can extract and save more than a careless one.

The Messrs. Briggs show that the saving by care in their own works might easily be as follows:

This is independent of savings derived from superior care of the workings and property of the colliery generally.

It would be obviously undesirable to adopt the partnership arrangement where the risks of the business are very great, and arise chiefly from speculative causes, so that the amount of profit depends almost entirely upon the judgment and energy of the principals. In such cases, doubtless, the men could not compensate their masters by superior care for the dividends they would receive; and as the risks would remain undiminished, the dividends would really be subtracted from the legitimate profits of the capitalist. No one supposes for a moment that the scheme could succeed under such circumstances. But it would be entirely wrong to suppose that the scheme cannot adapt itself to trades with varying risk. As the Messrs. Briggs point out, there is no particular reason for adopting ten more than twelve or fifteen per cent., or any other rate of minimum profit that may seem fitting to the circumstances of the trade. That rate will ultimately be chosen in each trade which yields current interest in addition to compensation for risk, trouble, and all other unfavourable circumstances which are not allowed for in the depreciation fund, the bad debt fund, or the salaries of the working partners. The working classes perfectly acquiesce in the great differences of wages existing between different trades, and it is not to be supposed that any difficulty would be encountered in choosing for each trade that rate of profit which experience shows to be proper. The sharing of the excess of profit with the men will certainly prevent the masters from receiving in highly prosperous years so much as they otherwise might have done, but this will be compensated by the less chance of loss in other years, and by the fact that any deficiency below the minimum profit is to be made good out of the proceeds of subsequent years before any excess is to be distributed. The zeal of the employés to gain a dividend will thus insure the masters receiving their fair and necessary profits in addition to any excess which fortune or good management may bring. To sum up briefly the effect of the principle upon profits, I may say that I believe when the partnership principle is fully tested in various suitable trades, the effects will be as follows:

(1.) To diminish the risk of the business as arising from trade disputes and other circumstances in the control of the men.

(2.) To render the profits more steady from year to year.

(3.) To increase the average profit in some degree.

(4.) To increase the earnings of the men in a similar degree.